Seeking Rents and Taking Names: Exploring the Nexus Between State Institutions, Public Good Provision, and Organized Crime Restricted; Files Only

Ribel, Matthew (Spring 2019)

Permanent URL: https://etd.library.emory.edu/concern/etds/ks65hd26p?locale=en
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Abstract

Since the Great Recession of 2008, organized crime groups across the globe have expanded aggressively, capitalizing on the insecurity engendered by crippling austerity measures (Naim 2012). This troubling trend warrants a re-examination of the root causes of organized crime, a question which has remained largely unanswered for over five decades. For many years, the root of organized crime’s existence was assumed to be prohibitions on vicious goods and services, or alternatively, sluggish economic conditions pushing impoverished groups to engage in crime out of financial desperation (Lotspeich 1995; Phongpaichit, Piriyarangsan, and Treerat, 1998; Rawlison 1998; Sutton 2000; Sung 2004). More recently, scholars have reframed the issue of as one that originates with power vacuums, centering their analyses around unmet demand for security in the face of an absentee or predatory state (Bandiera 2003; Konrad and Skaperdas 2010; Skaperdas 2001). Due to data limitations, few studies have assessed these theories cross-nationally, limiting the generalizability of existing scholarship (Sung 2004). In this thesis, I seek to provide causal clarity, empirically testing the explanatory power of these competing theories with a first-of-its-kind panel analysis spanning 150 countries and ten years (2007 – 2017). Further, I employ instrumental variable regression to mitigate endogeneity between institutional variables and organized crime power. Panel regressions indicate a strong relationship between the state’s ability to enforce private property rights and contracts and the presence of organized crime, though it appears that trust in state institutions is the most powerful predictor of organized crime’s reach in a state. On the contrary: prohibition, supply-side economic variables, and level of economic development do not have any appreciable effect on organized crime. These findings have significant implications for our understanding of how organized crime groups thrive, and should encourage policymakers to stop conceptualizing these groups merely as providers of vicious goods, and begin conceptualizing them as a direct competitor with the state in the provision of public goods. Governments should move away from strategies built solely around interdiction, and instead take steps to reduce insecurity, address institutional deficiencies, and fill holes in the social safety net.

Table of Contents

Introduction………………………………………………………………………….............…….……...1

Conceptualizing “Organized Crime”………………………………………………..........…………..4

Criminal Group Behavior & Illicit Market Foundations……………………….…….....….….....7

The Role of the State………………………………………………………………………….............….16

How Do Organized Crime Groups Come to Exist? Theory & Hypotheses .........................19

Data…………………………………………………………………………………………….................….27

Model Specification……………………………………………..……………………….............……….43

Results……………………………………………………………………………………................……….44

Endogeneity & Two-Stage Least Squares Regression……………………………......……………49

Discussion & Implications……………………………………………………………..............……….57

Appendix A: Cultural Conservatism Index………………….………………….........…………...…60

Appendix B: Expanded Fixed Effects Regressions…………………………….......……………….61

Appendix C: Expanded Random Effects Regressions………………………………......…………62

Appendix D: Countries Included in Panel………………………………………….......…………...63

References………………………………………………………………………………................………64

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