A theory of organized crime, corruption and economic growth

Rana, MP; Blackbourn, K; Neanidis, KC

Abstract

We develop a framework for studying the interactions between organized crime and corruption, together with the individual and combined effects of these phenomena on economic growth. Criminal organizations co-exist with law-abiding productive agents and potentially corrupt law enforcers. The crime syndicate obstructs the economic activities of agents through extortion, and may pay bribes to law enforcers in return for their compliance in this. We show how organized crime has a negative effect on growth, and how this effect may be either enhanced or mitigated in the presence of corruption. The outcome depends critically on a trade-off generated when corruption exists, that between a lower supply of crimes and the probability these crimes are more likely to be successful.

Citation

Rana, M., Blackbourn, K., & Neanidis, K. (2017). A theory of organized crime, corruption and economic growth. Economic Theory Bulletin, 5(2), 227-245. https://doi.org/10.1007/s40505-017-0116-5

• Journal Article Type: Article
• Online Publication Date: Apr 5, 2017
• Publication Date: Oct 1, 2017
• Deposit Date: Jan 19, 2018
• Publicly Available Date: Jan 19, 2018
• Journal: Economic Theory Bulletin
• Electronic ISSN: 2196-1093
• Publisher: Springer Verlag
• Volume: 5
• Issue: 2
• Pages: 227-245
• DOI: https://doi.org/10.1007/s40505-017-0116-5
• Publisher URL: http://dx.doi.org/10.1007/s40505-017-0116-5
• Related Public URLs: https://link.springer.com/journal/40505