The Expansion of Criminal Organizations to Strong States: Evidence from Italy

• In Event: Crime and Organized Crime

Abstract

The emergence of criminal organizations is often attributed to weak states’ inability to protect the property rights and safety of their citizens. Yet, criminal organizations often expand to states with strong capacity and well-functioning institutions. This paper proposes a theory accounting for this phenomenon. I focus on one distinctive feature of strong states: their capacity to enforce political and economic competition. I argue that criminal organizations take advantage of the resulting highly competitive environments and expand by offering political and economic actors critical resources to gain an edge over competitors. I test this theory in the context of Northern Italy, a region with high social capital and well-functioning democratic institutions, but which has suffered increasing levels of mafia infiltration since the 1960s. I construct a new measure of mafia presence at the municipality level, by scraping mafia-related news from historic newspapers and validating them with present time mafias indicators from judicial sources and NGOs. My main result, obtained using an instrumental variable approach, is that increases in competition in the construction market (due to a construction boom) and in mafias’ capacity to offer cheap illegal labor (by exploiting migrants from mafia-controlled areas in the south) allowed them to expand to the north. In addition, I show that cities affected by mafias display higher support for the Christian Democracy, a support that is stable in the face of political scandals (Tangentopoli) and that comes from cities with higher southern migration. In the long run, cities affected by mafias are also more likely to vote for Berlusconi. This evidence is more indirect but in line with the interpretation that mafias’ expansion leveraged deals not only with economic actors but also with political actors, including vote buying for specific parties.

Author

• Gemma Dipoppa, Stanford