Organized Crime and Foreign Direct Investment: The Italian Case
Magna Graecia University of Catanzaro
University of Naples Federico II - Department of Economics
The paper estimates the effects of organized crime on FDI inflows in 103 Italian provinces in the period 2004-06. The presence of organized crime at a provincial level is quantified through several indicators, based on data for different kinds of crimes: extortion; association for criminal purposes, including mafia (Art. 416 and 416 bis of the Italian Penal Code); attacks; arson. Several control variables are used, included a proxy for (financial) investment incentives provided by public sectors. Estimation suggests that FDI inflows are influenced by different variables. Our results show that the extent of extortion and the number of persons denounced for "criminal association" are significantly and negatively correlated with FDI inflows. Finally, our analysis suggests the presence of organized crime is a strong disincentive for foreign investors, particularly in the less developed Italian provinces.
Number of Pages in PDF File: 30
Keywords: FDI determinants, Italy, Mezzogiorno, crime, regional attractiveness
JEL Classification: F23, R30, R38
Date posted: February 17, 2008