Gang Rule: Understanding and Countering Criminal Governance

Abstract

Criminal groups govern millions of people worldwide. In Medellín, Colombia, for instance, gangs resolve disputes, police neighborhoods, enforce contracts, and tax businesses in their territories. Why do they rule? Many argue that criminals step into vacuums of order. If so, increasing state security services should crowd out gang rule. But interviews with Medellín gangs suggest this overlooks an indirect incentive to rule: governing protects other illicit businesses, such as drug-selling. We begin with a model of imperfect competition and show how drug profits and the need for civilian loyalty could drive gangs to respond to state competition by intensifying their governance. Empirically, we show this is what happened in Medellín over 32 years. When new borders exogenously increased government services on some blocks, gangs raised their civilian rule in protective response—especially in neighborhoods with larger drug markets. Strategic incentives like these severely complicate efforts to fight organized crime.

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