This document is a dissertation submitted by José Eduardo Almaraz Reséndez for his MSc in Applied Economics and Data Analysis at the University of Essex. The dissertation analyzes the impact of organized crime on foreign direct investment in Mexico. It provides background on the escalation of drug violence in Mexico since 2006 and reviews relevant theoretical and empirical literature. It then describes the dataset compiled from Mexican government agencies and NGOs on crime rates, FDI, and economic indicators for 32 Mexican states from 1997-2011. The dissertation aims to estimate econometric models to assess the magnitude of organized crime's negative impact on FDI in Mexico.
Presentation.. media and challenges of global corruption slideshareMuhammad Ahmad
The document discusses challenges faced by media in exposing corruption globally and domestically. It provides examples of major corruption scandals exposed by media, including Watergate and Absam scandals. Internationally, Panama Papers exposed hidden wealth and tax evasion of world leaders. Domestically, Pakistani media exposed scandals involving politicians, judges and businessmen. However, media faces challenges like lack of resources, censorship, legal hurdles, and influence of powerful interests. International cooperation and protection of whistleblowers and journalists is needed to more effectively combat corruption through investigative reporting.
2010 Russian Banks & Money LaunderingEthan Burger
The document discusses money laundering in Russia and its implications for Western countries. It summarizes that Russian laws against money laundering are often not enforced against senior officials and their associates. While Russia complies with international anti-money laundering standards, this may be more for appearances than effectiveness. Major Russian banks and industries have opaque ownership and dealings that likely involve laundering illicit funds and influencing foreign politics.
Rod Rosenstein, the deputy attorney general of the United States, has become a lightning rod for criticism from the White House and Republican supporters due to his refusal to interfere in the ongoing Justice Department investigation into Russian interference in the 2016 US election. The document discusses Rosenstein's defiant independence in upholding the rule of law and the separation of powers despite pressure, as well as the importance of an impartial justice system free from political interference when investigating high-ranking officials. It also draws parallels to issues with the Indian system of government in upholding these principles.
This document is a white paper submitted for graduation from the Leadership Command College that argues for the creation of offense-specific fusion centers focused on identity fraud. It notes that identity fraud costs the U.S. $25 billion annually and discusses how current efforts across different levels of law enforcement and private industry are not well coordinated. The paper argues that fusion centers could help mitigate these costs by facilitating real-time information sharing between relevant organizations to more efficiently investigate identity fraud cases and criminal rings. However, some counterarguments relate to concerns about privacy violations and agencies' reluctance to share information. The paper ultimately recommends establishing identity fraud fusion centers with proper oversight and policies to address these issues.
Spire Law Group has filed a lawsuit in New York seeking the return of $43 trillion to the U.S. Treasury, which they allege was laundered by major banks and governmental officials. The suit names high-level individuals as participants in the scheme, including Attorney General Holder, Treasury Secretary Geithner, and former New Jersey Governor Jon Corzine. It also claims that the money was laundered through offshore accounts in places like Switzerland and Cyprus. The children of a CNBC producer were murdered shortly after CNBC reported on the lawsuit, and the story was then removed from their website, raising suspicions about the case.
This document summarizes a dissertation examining whether Mexico is emerging as a powerful nation or failing as a state. It discusses Mexico's political and bureaucratic reforms, human security issues, and economic outlook. Regarding reforms, the document outlines Mexico's "Pact for Mexico" signed in 2012 which established 95 goals across education, telecommunications, judicial systems, and regional reforms to strengthen the state. It aims to transition Mexico towards greater democracy and address longstanding corruption issues. Violence from the drug war poses major human security challenges. However, economically Mexico has pursued NAFTA and reforms to become a potentially powerful MINT nation alongside emerging economies India, Nigeria and Turkey. Overall the dissertation evaluates arguments for and against Mexico's failure or emergence
This document provides an introduction and literature review for a senior thesis examining political corruption and ethics reform in New York state government. The introduction discusses the high levels of corruption scandals in New York and the public's dissatisfaction with this, yet lack of serious ethics reform. The literature review covers definitions of corruption, theories on why corruption occurs such as Elazar's theory of political culture, the importance of public trust, causes of corruption like inequality, and New York's history with reform efforts. The thesis will examine past corruption cases, Governor Cuomo's ethics commission, and conclusions about why more serious reform has not passed given corruption and dissatisfaction.
Presentation.. media and challenges of global corruption slideshareMuhammad Ahmad
The document discusses challenges faced by media in exposing corruption globally and domestically. It provides examples of major corruption scandals exposed by media, including Watergate and Absam scandals. Internationally, Panama Papers exposed hidden wealth and tax evasion of world leaders. Domestically, Pakistani media exposed scandals involving politicians, judges and businessmen. However, media faces challenges like lack of resources, censorship, legal hurdles, and influence of powerful interests. International cooperation and protection of whistleblowers and journalists is needed to more effectively combat corruption through investigative reporting.
2010 Russian Banks & Money LaunderingEthan Burger
The document discusses money laundering in Russia and its implications for Western countries. It summarizes that Russian laws against money laundering are often not enforced against senior officials and their associates. While Russia complies with international anti-money laundering standards, this may be more for appearances than effectiveness. Major Russian banks and industries have opaque ownership and dealings that likely involve laundering illicit funds and influencing foreign politics.
Rod Rosenstein, the deputy attorney general of the United States, has become a lightning rod for criticism from the White House and Republican supporters due to his refusal to interfere in the ongoing Justice Department investigation into Russian interference in the 2016 US election. The document discusses Rosenstein's defiant independence in upholding the rule of law and the separation of powers despite pressure, as well as the importance of an impartial justice system free from political interference when investigating high-ranking officials. It also draws parallels to issues with the Indian system of government in upholding these principles.
This document is a white paper submitted for graduation from the Leadership Command College that argues for the creation of offense-specific fusion centers focused on identity fraud. It notes that identity fraud costs the U.S. $25 billion annually and discusses how current efforts across different levels of law enforcement and private industry are not well coordinated. The paper argues that fusion centers could help mitigate these costs by facilitating real-time information sharing between relevant organizations to more efficiently investigate identity fraud cases and criminal rings. However, some counterarguments relate to concerns about privacy violations and agencies' reluctance to share information. The paper ultimately recommends establishing identity fraud fusion centers with proper oversight and policies to address these issues.
Spire Law Group has filed a lawsuit in New York seeking the return of $43 trillion to the U.S. Treasury, which they allege was laundered by major banks and governmental officials. The suit names high-level individuals as participants in the scheme, including Attorney General Holder, Treasury Secretary Geithner, and former New Jersey Governor Jon Corzine. It also claims that the money was laundered through offshore accounts in places like Switzerland and Cyprus. The children of a CNBC producer were murdered shortly after CNBC reported on the lawsuit, and the story was then removed from their website, raising suspicions about the case.
This document summarizes a dissertation examining whether Mexico is emerging as a powerful nation or failing as a state. It discusses Mexico's political and bureaucratic reforms, human security issues, and economic outlook. Regarding reforms, the document outlines Mexico's "Pact for Mexico" signed in 2012 which established 95 goals across education, telecommunications, judicial systems, and regional reforms to strengthen the state. It aims to transition Mexico towards greater democracy and address longstanding corruption issues. Violence from the drug war poses major human security challenges. However, economically Mexico has pursued NAFTA and reforms to become a potentially powerful MINT nation alongside emerging economies India, Nigeria and Turkey. Overall the dissertation evaluates arguments for and against Mexico's failure or emergence
This document provides an introduction and literature review for a senior thesis examining political corruption and ethics reform in New York state government. The introduction discusses the high levels of corruption scandals in New York and the public's dissatisfaction with this, yet lack of serious ethics reform. The literature review covers definitions of corruption, theories on why corruption occurs such as Elazar's theory of political culture, the importance of public trust, causes of corruption like inequality, and New York's history with reform efforts. The thesis will examine past corruption cases, Governor Cuomo's ethics commission, and conclusions about why more serious reform has not passed given corruption and dissatisfaction.
D+c 2011 03 – focus – robles why filipinos have reason to fear their nation’...hotmanila
The document discusses the issues with the Philippine National Police (PNP). It notes that the PNP is institutionally weak and subservient to local politicians. This was demonstrated by the involvement of police in the 2009 Maguindanao massacre where 58 people were killed. The PNP also has problems with corruption, lack of training and equipment, and human rights abuses. The new administration under President Aquino promises reforms, but transforming the PNP will be challenging given its history of being used for political purposes and suppressing dissent.
This document presents an abstract for a paper that develops a political-economic model to analyze how a government sets optimal institutional reforms while considering foreign direct investment, benefits to honest and dishonest citizens, and political contributions from dishonest citizens who want lower institutional standards. The model suggests the optimal level of institutional reform depends on the efficiency of legal structures compared to illegal structures like corruption. It aims to provide an institutional explanation for how corruption and foreign investment interact to determine appropriate reform policies.
This document summarizes a study examining the characteristics and effects of political influence on firms in developing countries. The study finds that politically influential firms receive economic benefits like lower taxes and easier access to credit. However, these firms also provide benefits to politicians through maintaining higher employment levels and paying more taxes. While influential firms earn higher profits, they are less productive than non-influential firms and are less likely to invest or innovate due to restrictions on firing workers and unpredictable taxes imposed on them. Overall, the study suggests that political influence undermines firm performance and can prolong economic underdevelopment.
This policy brief examines the timing of Turkey’s authoritarian turn using raw data measuring freedoms from the Freedom House (FH). It shows that Turkey’s authoritarian turn under the ruling AKP is not a recent phenomenon. Instead, the country’s institutional erosion – especially in terms of freedoms of expression and political pluralism – in fact began much earlier, and the losses in the earlier periods so far tend to dwarf those occurring later.
The document presents a theoretical political-economic model that analyzes how corruption and foreign direct investment (FDI) interact to determine an optimal institutional policy level in a developing country. There are two types of people - honest people who work in the private sector, and dishonest people who work for the corrupt civil service. The model considers the costs to firms of paying taxes through both legal and illegal structures, and how the institutional policy level affects these costs. The optimal policy level depends on the relative efficiency of the legal versus illegal structures, as well as the degree of corruption in the political process and the size of political contributions from dishonest lobby groups.
National Money Laundering Risk Assessment – 06-12-2015Edmond Martin
The document presents the 2015 National Money Laundering Risk Assessment, which identifies money laundering risks in the United States by examining threats such as fraud and drug trafficking, vulnerabilities in the financial system that are exploited for money laundering, and residual risks despite regulatory safeguards. Fraud generates the largest illicit proceeds while cash and certain banking and money services are vulnerable to money laundering. Risks remain from widespread cash use, structured transactions, and occasional compliance issues.
This document summarizes a research paper that examines the economic development effects of coups. It finds that coups overthrowing democratic governments have distinctly negative effects on economic growth, lowering GDP per capita by 1-1.3% per year over a decade. By contrast, coups in autocratic countries show smaller and imprecise positive effects. These results are robust across different empirical methods and not explained by alternative hypotheses. Additionally, coups reversing economic reforms, increasing debt, and reducing social spending, suggesting a shift in priorities away from the public.
Organized crime has existed for many years and provides illegal or regulated goods and services. Globalization has increased organized crime by removing borders and increasing wealth inequality. It has made money laundering easier through open markets and tax havens. Organized crime threatens democracy by limiting freedom through violence, corruption and fear. When crime groups fully control a region, they often do so through collusion with the government, undermining the rule of law. Strategies to confront organized crime must be international in scope to address its global nature.
This document discusses the links between organized crime and terrorism. It provides examples of how terrorist groups like Hezbollah, FARC, and the Taliban generate significant funds through involvement in drug trafficking and other criminal enterprises. These groups have turned to criminal activities as other sources of funding have diminished or due to the lucrative profits generated from drug sales and other illicit activities. The document also examines how Mexican drug trafficking organizations have used violence, like attacks against government officials, to counter government crackdowns and influence policy in similar ways to how terrorist groups operate. Overall, the document analyzes the convergence between organized crime and terrorism organizations and how their activities and methods of operating can become intertwined.
Money laundering concept significance and its impactAlexander Decker
This document discusses the concept, significance, and impact of money laundering. It defines money laundering as the process of making illegally obtained money appear to come from legitimate sources. The document notes that money laundering is a major global industry worth $1.5 trillion that allows criminals to maintain control over illegal profits and disguise their source. It has negative economic impacts such as diverting resources to less productive areas, depressing economic growth, and threatening economic and political stability by infiltrating legitimate financial systems.
This document summarizes an article about money laundering. It defines money laundering as disguising illegally obtained money to make it appear legitimate. It discusses how money laundering has negative impacts on economies by diverting resources to less productive areas, weakening financial institutions, and facilitating crime and corruption. It also explains how money laundering harms developing countries' attempts to establish offshore financial centers and distorts international trade and capital flows. The document concludes that money laundering is a global problem requiring international cooperation to address.
This document discusses slush funds, which are off-the-books funds used by governments, politicians, corporations and other organizations for illicit purposes like bribery, embezzlement and money laundering. It provides several examples of uncovered slush funds, including a $1 billion fund in Kazakhstan, secret political campaign funds in the US and Germany, and a $200 million fund at a Spanish bank allegedly used to bribe officials. Slush funds are said to be a widespread problem that infects countries and organizations around the world.
Arrangements by which politically connected firms receive economic favors are a common feature around the world, but little is known of the form or effects of influence in business-government relationships. We argue that influence not only brings significant privileges for selected firms, but requires firms to relinquish certain control rights in exchange for subsidies and protection. We show that, under these conditions, political influence can actually harm firm performance. Enterprise surveys from approximately 8,000 firms in 40 developing countries indicate that influential firms benefit from lower administrative and regulatory barriers (including bribe taxes), greater pricing power, and easier access to credit. But these firms also provide politically valuable benefits to incumbents through bloated payrolls and greater tax payments. These firms are also less likely to invest and innovate, and suffer from lower productivity than their non-influential counterparts. Our results highlight a potential channel by which cronyism leads to persistent underdevelopment.
The document discusses several topics related to globalization including:
1. Globalization represents a complex process that reshapes the international scenario and roles of global players as companies become more multinational and states face new challenges in regulating economic activity.
2. Migration, human/sex trafficking, and transnational organized crime tend to increase with globalization as borders become more porous, but states still have alternatives for effectively participating in globalization.
3. Human/sex trafficking definitions, statistics, and country tier rankings according to compliance with anti-trafficking standards are reviewed, noting it remains a problem in the US as well as globally.
4. Transnational organized criminal groups like drug cartels present strategic
This document is a project report submitted by Ayush Mukherjee for the degree of B.Com Honours in Accounting & Finance from the University of Calcutta. The project title is "A Study on White Collar Fraud", focusing on case studies of the Satyam Computer Services fraud case and Vijay Mallya's bank loan fraud case. The report includes an introduction, literature review, research methodology, and planned chapter structure. It was supervised by Prof. Dipankar Bhattacharya of The Bhawanipur Education Society College.
https://www.gla.ac.uk/media/media_184189_en.pdf
Sources of Corruption: Military in Politics, Income Distribution
http://factsanddetails.com/southeast-asia/Thailand/sub5_8f/entry-3279.html
CORRUPTION IN THAILAND: CRONYISM, POLICE, MILITARY, THAKSIN AND POLITICIANS AFTER THAKSIN
https://thediplomat.com/2017/11/chinas-senior-general-commits-suicide-under-corruption-investigation/
Chinese Senior General Commits Suicide Under Corruption Investigation
https://en.wikipedia.org/wiki/Corruption_in_Myanmar
Corruption in Myanmar
http://www.wired.co.uk/article/jade-trade-burma-corruption
Global Witness: corruption inside Myanmar's military-run jade trade
https://www.globalwitness.org/fr/campaigns/myanmar/jade-and-generals/
Jade and the Generals | Global Witness
http://www.abc.net.au/news/2017-09-24/how-military-controls-myanmar-not-aung-san-suu-kyi/8978042
Myanmar: How the military still controls the country, not Aung San Suu Kyi
https://www.youtube.com/watch?v=kwGuSUM2kh0
This document provides an overview of a research proposal on white-collar crime. It discusses definitions of white-collar crime, types of white-collar crimes, and theoretical frameworks for studying white-collar crime, including criminal-based and crime-based viewpoints. It also outlines objectives, research questions, and methodology for the proposed study, which will examine differences in jail adjustment between white-collar criminals and other criminals based on factors like age, socioeconomic status, criminal history, race, gender, and mental illness. The study aims to test two hypotheses: 1) that white-collar criminals will fare worse in jail than other criminals, or 2) that white-collar criminals will fare better in jail than other criminals.
This document provides an overview of a research proposal on white-collar crime submitted by Rebekah Samuel. The proposal discusses white-collar crime theory and definitions. It notes debates around defining white-collar crime based on the offender's characteristics versus the crime's characteristics. The objectives are to study white-collar crime concepts and impacts, analyze types of these crimes, and suggest legal reforms. Literature review discusses definitions from Edwin Sutherland and others, types of white-collar crimes, and challenges in studying this area.
D+c 2011 03 – focus – robles why filipinos have reason to fear their nation’...hotmanila
The document discusses the issues with the Philippine National Police (PNP). It notes that the PNP is institutionally weak and subservient to local politicians. This was demonstrated by the involvement of police in the 2009 Maguindanao massacre where 58 people were killed. The PNP also has problems with corruption, lack of training and equipment, and human rights abuses. The new administration under President Aquino promises reforms, but transforming the PNP will be challenging given its history of being used for political purposes and suppressing dissent.
This document presents an abstract for a paper that develops a political-economic model to analyze how a government sets optimal institutional reforms while considering foreign direct investment, benefits to honest and dishonest citizens, and political contributions from dishonest citizens who want lower institutional standards. The model suggests the optimal level of institutional reform depends on the efficiency of legal structures compared to illegal structures like corruption. It aims to provide an institutional explanation for how corruption and foreign investment interact to determine appropriate reform policies.
This document summarizes a study examining the characteristics and effects of political influence on firms in developing countries. The study finds that politically influential firms receive economic benefits like lower taxes and easier access to credit. However, these firms also provide benefits to politicians through maintaining higher employment levels and paying more taxes. While influential firms earn higher profits, they are less productive than non-influential firms and are less likely to invest or innovate due to restrictions on firing workers and unpredictable taxes imposed on them. Overall, the study suggests that political influence undermines firm performance and can prolong economic underdevelopment.
This policy brief examines the timing of Turkey’s authoritarian turn using raw data measuring freedoms from the Freedom House (FH). It shows that Turkey’s authoritarian turn under the ruling AKP is not a recent phenomenon. Instead, the country’s institutional erosion – especially in terms of freedoms of expression and political pluralism – in fact began much earlier, and the losses in the earlier periods so far tend to dwarf those occurring later.
The document presents a theoretical political-economic model that analyzes how corruption and foreign direct investment (FDI) interact to determine an optimal institutional policy level in a developing country. There are two types of people - honest people who work in the private sector, and dishonest people who work for the corrupt civil service. The model considers the costs to firms of paying taxes through both legal and illegal structures, and how the institutional policy level affects these costs. The optimal policy level depends on the relative efficiency of the legal versus illegal structures, as well as the degree of corruption in the political process and the size of political contributions from dishonest lobby groups.
National Money Laundering Risk Assessment – 06-12-2015Edmond Martin
The document presents the 2015 National Money Laundering Risk Assessment, which identifies money laundering risks in the United States by examining threats such as fraud and drug trafficking, vulnerabilities in the financial system that are exploited for money laundering, and residual risks despite regulatory safeguards. Fraud generates the largest illicit proceeds while cash and certain banking and money services are vulnerable to money laundering. Risks remain from widespread cash use, structured transactions, and occasional compliance issues.
This document summarizes a research paper that examines the economic development effects of coups. It finds that coups overthrowing democratic governments have distinctly negative effects on economic growth, lowering GDP per capita by 1-1.3% per year over a decade. By contrast, coups in autocratic countries show smaller and imprecise positive effects. These results are robust across different empirical methods and not explained by alternative hypotheses. Additionally, coups reversing economic reforms, increasing debt, and reducing social spending, suggesting a shift in priorities away from the public.
Organized crime has existed for many years and provides illegal or regulated goods and services. Globalization has increased organized crime by removing borders and increasing wealth inequality. It has made money laundering easier through open markets and tax havens. Organized crime threatens democracy by limiting freedom through violence, corruption and fear. When crime groups fully control a region, they often do so through collusion with the government, undermining the rule of law. Strategies to confront organized crime must be international in scope to address its global nature.
This document discusses the links between organized crime and terrorism. It provides examples of how terrorist groups like Hezbollah, FARC, and the Taliban generate significant funds through involvement in drug trafficking and other criminal enterprises. These groups have turned to criminal activities as other sources of funding have diminished or due to the lucrative profits generated from drug sales and other illicit activities. The document also examines how Mexican drug trafficking organizations have used violence, like attacks against government officials, to counter government crackdowns and influence policy in similar ways to how terrorist groups operate. Overall, the document analyzes the convergence between organized crime and terrorism organizations and how their activities and methods of operating can become intertwined.
Money laundering concept significance and its impactAlexander Decker
This document discusses the concept, significance, and impact of money laundering. It defines money laundering as the process of making illegally obtained money appear to come from legitimate sources. The document notes that money laundering is a major global industry worth $1.5 trillion that allows criminals to maintain control over illegal profits and disguise their source. It has negative economic impacts such as diverting resources to less productive areas, depressing economic growth, and threatening economic and political stability by infiltrating legitimate financial systems.
This document summarizes an article about money laundering. It defines money laundering as disguising illegally obtained money to make it appear legitimate. It discusses how money laundering has negative impacts on economies by diverting resources to less productive areas, weakening financial institutions, and facilitating crime and corruption. It also explains how money laundering harms developing countries' attempts to establish offshore financial centers and distorts international trade and capital flows. The document concludes that money laundering is a global problem requiring international cooperation to address.
This document discusses slush funds, which are off-the-books funds used by governments, politicians, corporations and other organizations for illicit purposes like bribery, embezzlement and money laundering. It provides several examples of uncovered slush funds, including a $1 billion fund in Kazakhstan, secret political campaign funds in the US and Germany, and a $200 million fund at a Spanish bank allegedly used to bribe officials. Slush funds are said to be a widespread problem that infects countries and organizations around the world.
Arrangements by which politically connected firms receive economic favors are a common feature around the world, but little is known of the form or effects of influence in business-government relationships. We argue that influence not only brings significant privileges for selected firms, but requires firms to relinquish certain control rights in exchange for subsidies and protection. We show that, under these conditions, political influence can actually harm firm performance. Enterprise surveys from approximately 8,000 firms in 40 developing countries indicate that influential firms benefit from lower administrative and regulatory barriers (including bribe taxes), greater pricing power, and easier access to credit. But these firms also provide politically valuable benefits to incumbents through bloated payrolls and greater tax payments. These firms are also less likely to invest and innovate, and suffer from lower productivity than their non-influential counterparts. Our results highlight a potential channel by which cronyism leads to persistent underdevelopment.
The document discusses several topics related to globalization including:
1. Globalization represents a complex process that reshapes the international scenario and roles of global players as companies become more multinational and states face new challenges in regulating economic activity.
2. Migration, human/sex trafficking, and transnational organized crime tend to increase with globalization as borders become more porous, but states still have alternatives for effectively participating in globalization.
3. Human/sex trafficking definitions, statistics, and country tier rankings according to compliance with anti-trafficking standards are reviewed, noting it remains a problem in the US as well as globally.
4. Transnational organized criminal groups like drug cartels present strategic
This document is a project report submitted by Ayush Mukherjee for the degree of B.Com Honours in Accounting & Finance from the University of Calcutta. The project title is "A Study on White Collar Fraud", focusing on case studies of the Satyam Computer Services fraud case and Vijay Mallya's bank loan fraud case. The report includes an introduction, literature review, research methodology, and planned chapter structure. It was supervised by Prof. Dipankar Bhattacharya of The Bhawanipur Education Society College.
https://www.gla.ac.uk/media/media_184189_en.pdf
Sources of Corruption: Military in Politics, Income Distribution
http://factsanddetails.com/southeast-asia/Thailand/sub5_8f/entry-3279.html
CORRUPTION IN THAILAND: CRONYISM, POLICE, MILITARY, THAKSIN AND POLITICIANS AFTER THAKSIN
https://thediplomat.com/2017/11/chinas-senior-general-commits-suicide-under-corruption-investigation/
Chinese Senior General Commits Suicide Under Corruption Investigation
https://en.wikipedia.org/wiki/Corruption_in_Myanmar
Corruption in Myanmar
http://www.wired.co.uk/article/jade-trade-burma-corruption
Global Witness: corruption inside Myanmar's military-run jade trade
https://www.globalwitness.org/fr/campaigns/myanmar/jade-and-generals/
Jade and the Generals | Global Witness
http://www.abc.net.au/news/2017-09-24/how-military-controls-myanmar-not-aung-san-suu-kyi/8978042
Myanmar: How the military still controls the country, not Aung San Suu Kyi
https://www.youtube.com/watch?v=kwGuSUM2kh0
This document provides an overview of a research proposal on white-collar crime. It discusses definitions of white-collar crime, types of white-collar crimes, and theoretical frameworks for studying white-collar crime, including criminal-based and crime-based viewpoints. It also outlines objectives, research questions, and methodology for the proposed study, which will examine differences in jail adjustment between white-collar criminals and other criminals based on factors like age, socioeconomic status, criminal history, race, gender, and mental illness. The study aims to test two hypotheses: 1) that white-collar criminals will fare worse in jail than other criminals, or 2) that white-collar criminals will fare better in jail than other criminals.
This document provides an overview of a research proposal on white-collar crime submitted by Rebekah Samuel. The proposal discusses white-collar crime theory and definitions. It notes debates around defining white-collar crime based on the offender's characteristics versus the crime's characteristics. The objectives are to study white-collar crime concepts and impacts, analyze types of these crimes, and suggest legal reforms. Literature review discusses definitions from Edwin Sutherland and others, types of white-collar crimes, and challenges in studying this area.
The document summarizes research on white-collar crime. It discusses debates around defining white-collar crime, with some arguing definitions should focus on the characteristics of criminals and others saying the focus should be on crime characteristics. The document also reviews literature on criminal-based and crime-based approaches to defining and studying white-collar crime. A crime-based definition sees it as illegal acts committed through deception to obtain money, avoid losses, or gain advantages. Crime-based approaches are now more popular among scholars as they allow variables like social status to be examined as predictors.
Principles and Approaches to Criminal Investigation, .docxharrisonhoward80223
Principles and
Approaches
to Criminal
Investigation,
Part 4
By Gregory M. Vecchi, PhD, CFC, CHS-V,
DABCIP, DABLEE
For the purposes of this series of articles, the
term investigative processes will be used to de-
scribe both criminal investigation and crime
scene processing. Any distinctions between crim-
inal investigation and crime scene processing
will be designated as such. Although crime scene
processing is part of criminal investigation, it is
distinct; crime scene processing requires rigorous
scientific methodologies (i.e., collection proce-
dures, testing protocols, etc.), while criminal in-
vestigation has less of a “hard science” character
and relies more on the experience and skills of
the investigator rather than rigid scientific pro-
tocols and procedures. In this light, crime scene
processing can be viewed as the “science” of in-
vestigative processes, whereas criminal investi-
gation can be viewed as the “art.” The format of
this article series is to provide information on the
entire spectrum of investigative processes that is
useful for all individuals involved in investiga-
tions: the responding officer, detectives/investi-
gators, police supervisors, lawyers, judges, and
other criminal justice professionals. This article
examines special investigations such as white
collar crime, drug trafficking, high-tech crime,
and terrorism using the Enterprise Theory of
Investigation; trial and testimony; and conflict
and perspective.
Special Investigations
Special investigations include white-collar crime,
drug trafficking, organized crime, high tech-
nology or cyber crime, cults, and terrorism
(Criminology Today, 1995-2002a, 1995-2002b;
Dyson, 2005). These crimes require special in-
vestigative techniques, such as undercover op-
erations and the use of the Enterprise Theory
of Investigation. White-collar crime is often
related to corporate crime, such as the Enron
and WorldCom scandals; however, it is also as-
sociated with health care, telemarketing, bank
and securities, contract, and residential mov-
ing. Organized crime is usually associated with
centrally controlled organized criminal organi-
zations, such as Italian, Italian-American, and
Colombian criminal groups; however, lesser
known decentralized criminal organizations
are making inroads. For example, Russian and
Israeli criminal groups are threatening to take
control of rackets like drugs, money launder-
ing, and many extortion-related schemes, which
were once the exclusive realm of the centralized
organized criminal groups.
The views
expressed in
this article do
not necessarily
represent the
views of the FBI.
10 THE FORENSIC EXAMINER® Spring 2010 www.acfei.com
CASE STUDY
Drug trafficking still remains a very lucrative
and corrupting influence in the United States
(Criminology Today, 1995-2002a). Although
there has been some success in curbing the influx
of illegal drugs through enforcement and educa-
tional programs,.
C. Wright Mills' theory of the distribution of power argues that power is concentrated among elite groups like corporations, the military, and government, rather than being widely distributed. This concentration of power allows corporations to influence policymaking and regulation in ways that help them avoid criminalization for harmful acts. Some ways corporations do this include direct lobbying, representation on government committees, and covertly setting agendas and suppressing information. As a result, many corporate harms go unregulated or unpunished despite their massive impacts, such as hundreds of thousands of workplace deaths annually. Mills' theory provides some explanation but does not fully account for how corporations leverage power and ethics to escape criminalization for acts of theft, fraud, and violence.
Running Head OPENING A NEW COMPANY1OPENING A NEW FACTORY .docxcharisellington63520
Running Head: OPENING A NEW COMPANY
1
OPENING A NEW FACTORY
3
Opening a New Factory
Name
Tutor
Institution
Course
Date
Opening a New Factory
Differences in Political Economy
The Cold War period pitted the United States against several South American nations, including Chile. The Honduran case was a bit different since the country provided bases for Nicaraguan rebels who were being funded and trained by the United States. Mexico has never been in significant contradiction with the United States, and it has also never played a key role in the America’s intervention in other Latin American nations (Kingstone, 2013).
Lately, the political environments in the three nations, i.e. Honduras, Mexico, and Chile have been favorable to the business community from the United States. Indeed, it is notable that the right-wing authorities in Chile and Mexico have sought to foster closer ties with the United States of America. Such ties have made Mexico become the third largest trading partner of the United States, and this is mainly due to the signing of the North American Free Trade Agreement in 1994. Honduras and Mexico are, however, straggling with a higher rate of crime as compared to Chile, and the instances of political intimidation in the two nations are also apparent (Kingstone, 2013).
The Cultural Barriers
The most notable cultural aspect in Mexico is that individuals regard traditional and family values highly. For instance, many women consider working within their homes as being of more importance than working commercially in organizations. Children, especially those belonging in the middle and high income households, remain in their homes longer than is the case in the United States. This means that they do not have to work unlike is the case in the United States (Baer & Miles, 2013).
In Honduras, it is evident that there has been a significant integration of the Spanish and Native American cultures. The Chilean culture is mainly Spanish. Nonetheless, there are two contrasting strains: the cosmopolitan strain which belong to the urban and affluent population, and another strain which is regarded to be popular with the peasants. The urban strain is educated, and has actually adopted a Westernized lifestyle meaning that people begin working as soon as they complete college (Nicholls, 2013).
Corruptions Perceptions Index (CPI)
Chile is among the Latin American nations which have the least levels of corruption. Indeed, statistics indicate that Chile records lesser instances of corruption than Spain. According to Transparency International, corruption cases in government are isolated, and this makes service delivery more efficient than in such nations as Honduras. In Chile, the Freedom of Information Act makes it mandatory for the government of the day as well as its agencies to avail all the unclassified information to the public. In this regard, all ministries and government agencies possess web pages where information relating to oper.
Running head: WHITE COLLAR CRIMES 1
WHITE COLLAR CRIMES 6
White Collar Crimes
Tiara Miller
Dr. Clinton Miller
CRJ 105
Spring Quarter
July 8, 2015
White Collar Crimes
Criminal activities range from bloody violent crimes to crimes that do not present any physical threat or injury to the society. White collar crime is the topic in the heart of my research. White collar crimes can be defined as those crimes that result to financial gain through the use of deceit and persuasion. This type of an offense is very brutal and one offender could affect thousands and millions of people unlike violent crimes. Such crimes are committed by people with access to large amounts of money at their disposal and normally those that commit such crimes are people that one may not suspect, the men in suits and that is why people always fall prey to such fraudsters (Friedrichs, 2009). This research will focus on this topic pointing out why it is of interest, it further focuses on why white collar crime is becoming difficult to eradicate as the research outcomes. A reaction to this is on how best we can eradicate white collar crimes.
The research question is why white collar crime is becoming a challenge to control. The hypothesis in the topic is that white collar crimes gaining popularity and there will be such incidences in the future if something is not done. In addressing the topic, the research shall focus on literature on white collar crimes which will contribute to an in depth knowledge about white collar crimes.
There are so many scams of white collar crimes which range from intellectual property theft, insurance theft, identity fraud, business frauds and even frauds involving government officials. Several factors have contributed to the fact that these crimes have always existed despite efforts to track and hunt down the culprits. Finding out why these crimes have always happened despite their devastating effects like costing investors, wiping out savings and leaving families bankrupt as well destroying multibillion companies is the basis of my research.
To begin with, due to the nature of the crimes where blood may not be shed at all, unlike other crimes like murder, or drug abuse, burglary and gangster crimes, the society has ended up treating fraudsters with a lot of respect. To some extent, the society has even blamed victims for their loses arguing that it was their fate. Such perceptions have affected the way the law enforcement has ended up dealing with such cases making such cases fail to get the attention they should deserve yet they affect millions of people unlike other offenses (Braithwaite, 1982) .
On a different perspective, most of the police resources have been priories for violent crimes. Some cases involving white collar jobs are never priories and the rese.
This document discusses various perspectives on socio-economic offenses and economic crimes. It provides definitions and theories related to economic crimes, organized crime, white-collar crime, and corruption. Some key points include:
- Economic crimes are illegal acts committed for financial gain, such as theft, fraud, and tax evasion. Motives can include pure economic gain or other personal interests.
- Leading theories of economic crime include the neoclassical approach that views criminal decisions as rational choices based on risk/reward calculations, and illegal enterprise theory that sees criminal organizations operating like legal businesses.
- Organized crime refers to criminal groups that operate over long periods for material benefits through serious criminal acts like drug trafficking. Leading theories are
Running head FIGHTING ORGANIZED CRIME AND TERRORISM IN THE US.docxwlynn1
Running head: FIGHTING ORGANIZED CRIME AND TERRORISM IN THE US
1
FIGHTING ORGANIZED CRIME AND TERRORISM IN THE US
6
Fighting Organized Crime and Terrorism in the US
Kathy Posey
Colorado Technical University
Abstract
Fighting Organized Crime and Terrorism in the US
Organized crime and terrorism are some of the leading security threats for America and its people in the 21st century. The two types of criminal acts are so rampant that, besides national security, they also threaten multiple aspects of the United States including the economy, politics and other interests. Having assumed an increasingly transnational nature due to the expansion of the internet and more open borders, organized crime is perpetrated by local and foreign criminals who endanger the US both within and beyond its frontiers (Finklea, 2010). Motivated by profit, organized crime can potentially jeopardize the economy through illegal activities like tax evasion. Specifically, tax evasion culminates in a loss of tax revenue for federal as well as state governments. Terrorism, although motivated by ideology, has the same effects as organized crime. However, loss of lives and destruction of property is synonymous with it. It is also important to note that terrorists can partner with organized criminal networks to obtain financial support to conduct their terrorist operations across America ((Finklea, 2010). The need for America to use all that is within its capacity to deal with such threats is paramount. Using examples of a criminal organization currently operating in the US and an act of terrorism to have been perpetrated in America, this paper discusses why it is important for the US government to focus the bulk of its law enforcement resources on fighting organized crime, or counter-terrorism.
Discussion
1. Organized Crime in America
Organized crime can be defined as the illegitimate activities performed my members of a highly organized and meticulous gang or association that involves acts such as supplying illegal products, narcotics, racketeering, gambling, pornography, and loan sharking among others (Finklea, 2010). According to Finklea (2010), some of the characteristics of organized crime include restricted membership, a structure, illegal enterprises, threats of employing violence and using violence, continuity, penetrating legal businesses, and corruption among others. Indeed, with such attributes, limited law enforcement resources would not accomplish much in the fight against such criminal groups.
The origin of a group (s) of people working collaboratively to make profit through unlawful and often violent means can be traced the street gangs dominating the American urban centers in the late 1800s and early 1900s (History.com, 2019). Notorious gangs like the Italian Mafia and Forty Thieves in New York came into being as thousands of immigrants from Europe, specif.
Mexico The Third War Security Weekly Wednesday, February 18.docxandreecapon
Mexico: The Third War
Security Weekly Wednesday, February 18, 2009 - 13:23 Print Text Size
By Fred Burton and Scott Stewart
Mexico has pretty much always been a rough-and
-tumble place. In recent years, however, the
security environment has deteriorated rapidly, and
parts of the country have become incredibly
violent. It is now common to see military
weaponry such as fragmentation grenades and
assault rifles used almost daily in attacks.
In fact, just last week we noted two separate
strings of grenade attacks directed against police
in Durango and Michoacan states. In the
Michoacan incident, police in Uruapan and Lazaro Cardenas were targeted by three grenade attacks during a 12-hour period.
Then on Feb. 17, a major firefight occurred just across the border from the United States in Reynosa, when Mexican
authorities attempted to apprehend several armed men seen riding in a vehicle. The men fled to a nearby residence and
engaged the pursuing police with gunfire, hand grenades and rocket-propelled grenades (RPGs). After the incident, in which
five cartel gunmen were killed and several gunmen, cops, soldiers and civilians were wounded, authorities recovered a 60 mm
mortar, five RPG rounds and two fragmentation grenades.
Make no mistake, considering the military weapons now being used in Mexico and the number of deaths involved, the country
is in the middle of a war. In fact, there are actually three concurrent wars being waged in Mexico involving the Mexican drug
cartels. The first is the battle being waged among the various Mexican drug cartels seeking control over lucrative smuggling
corridors, called plazas. One such battleground is Ciudad Juarez, which provides access to the Interstate 10, Interstate 20 and
Interstate 25 corridors inside the United States. The second battle is being fought between the various cartels and the Mexican
government forces who are seeking to interrupt smuggling operations, curb violence and bring the cartel members to justice.
Then there is a third war being waged in Mexico, though because of its nature it is a bit more subdued. It does not get the
same degree of international media attention generated by the running gun battles and grenade and RPG attacks. However, it
is no less real, and in many ways it is more dangerous to innocent civilians (as well as foreign tourists and business travelers)
than the pitched battles between the cartels and the Mexican government. This third war is the war being waged on the
Mexican population by criminals who may or may not be involved with the cartels. Unlike the other battles, where cartel
members or government forces are the primary targets and civilians are only killed as collateral damage, on this battlefront,
civilians are squarely in the crosshairs.
The Criminal Front
There are many different shapes and sizes of criminal gangs in Mexico. While many of them are in some way related to the
drug cartels, others have various types of c ...
1) Marxists argue that law and the definition of crime are determined by and protect the interests of the ruling class rather than society as a whole. While some laws like those against murder and theft benefit everyone, they do not protect the less powerful equally.
2) Corporate and white collar crimes committed by powerful individuals and organizations often cause much greater harm and economic damage than street crimes, but are rarely prosecuted. The definition of crimes excludes acts like corporate negligence that lead to death or harm.
3) Law enforcement serves to maintain the capitalist system and divert attention from its structural causes of problems. Crimes are blamed on individual deviance rather than the social conditions created by inequality of the system.
This document is a dissertation submitted by Mohammed Abdalla to Middlesex University in partial fulfillment of an MA in International Relations in 2015. The dissertation examines the link between organized crime and terrorism, using the Revolutionary Armed Forces of Colombia (FARC) as a case study. The introduction provides background on FARC and outlines the research questions that will be addressed. The literature review will explore the main forms of organized crime associated with terrorism, including narcoterrorism, kidnapping for ransom, and money laundering, and how FARC has utilized these activities. Subsequent chapters will analyze state and non-state relationships regarding organized crime and terrorism and discuss conclusions and recommendations.
250 words agree or disagreeWeek 5 ForumMaiwand Khyber(Jul .docxvickeryr87
250 words agree or disagree
Week 5 Forum
Maiwand Khyber(Jul 31, 2019 1:01 PM) - Read by: 1
Reply
Organized crime refers to the crime conducted by local, national, or international groupings. These groups are highly centralized enterprises and are run by criminals who are engaged in illegal conduct for profit intention. They have an organized hierarchy, non-ideological motives, and are governed by rules and codes (Jones and Bartlett Learning, n.d.).
Three major types of organized crime include gang criminality, racketeering, and syndicate crime. Gang criminals are usually engaged in local offense like robbery, vehicle theft, kidnapping, ransom, and murder. They are hardened criminals who are dangerous to society. Racketeering is an activity in which the criminal gang is involved in extorting money from legitimate as well as illegitimate businesses by the use of intimidation. It consists in selling adulterated commodities, deceiving people, selling spurious drugs, and so forth. Racketeers usually don’t take away all profits and share it with the owners of businesses. In return, they want fixed money from the owners of illegal activities and allow prostitution, liquor selling, and gambling to continue unabated. Syndicate crime refers to the furnishing of unlawful goods and services by organized criminal groups, often known as mafia. Illegal products include liquor and drugs, while illicit services involve trafficking of girls, gambling, and so forth.
Several groups as The Cosa Nostra, The Russian mafia, The Mexican drug cartels, and The Asian Organized Crime Groups have been considered as criminal groups involved in the organized crime at national and transnational levels. International criminal groups operate under various structures with stable hierarchies and network. They try to influence government policies by using corrupt as well as legitimate methods (The United States Department of Justice, 2015).
With changing industrial contours, organized crime has also shifted from traditional ways to tech-savvy crimes (example: cybercrime). It has exploited technological advancements and communication strategies to expand cross-border. This high-tech realm has made many crimes an international threat rather than a local danger. Today, these crimes are conducted by nimble and loosely structured groups that have a global reach. Refined telephone networks have fostered rapid communication, thereby revolutionizing the illicit commerce (Bjelopera & Finklea, 2012).
While technology has facilitated the growth of organized crime, challenges posed by technological advancements in tracking and investigating organized crime need special mention. Investigation of cases has become difficult because of the sophisticated screening options as firewalls. In a drug investigation case that was carried out jointly by the United States and Colombian authorities, it was found that the presence of the firewall made it intricate for authorities to reach them.
The document discusses terrorism risk in the insurance sector. It defines terrorism and outlines the challenges in quantifying terrorism risk due to the unpredictable nature of terrorist attacks. Terrorism risk has three main components - threat, vulnerability, and consequence. Threat refers to the probability of an attack occurring, vulnerability is the probability of damage resulting from an attack, and consequence is the expected magnitude of damage. Terrorism risk is calculated as the product of these three components. Estimating each component is challenging due to uncertainties. The document also provides a brief history of terrorism and different types of terrorism.
Financial institutions spends millions of dollars every year bolstering their defences against terrorist financing. Terrorists operate by camouflaging themselves amongst civilian populations. If they can evade the authorities and intelligence communities, how can financial institutions mount a credible defence against the threat they pose to society?
For more information on ManchesterCF and other issues of Analytics please visit http://bit.ly/1p6UZyS
150 words long if your agree or disagreeThere is a good chancecargillfilberto
150 words long if your agree or disagree
There is a good chance that if you watch any national news broadcast, there is a good chance that there will be a mention of some sort of white collar crime. The three infamous white collar crimes that come to mind after reading this week’s lesson is that of Charles Ponzi (Ponzi Scheme), Kenneth Lay (ENRON) and John Rigas (Adelphia Communications). Albeit these cases are historical, they continue to effect current events and public opinions as it pertains to current case laws.
White collar, also known as corporate crime, as the name demonstrates, focuses around criminal acts pertaining to businesses. These wrongdoings normally include monetary value and different types of fraud. One of the biggest issues that face these types of crime is the loss of trust by the citizens when dealing with large corporations. An article that was published in Crime & Delinquency attempted to highlight a study of why white collar crime is committed by those in corporate positions. One of the theories pertained to the “fear of falling”. In other words, those that have worked hard and dedicated so much time to one’s success may violate laws for the fear of losing what they have worked for (Piquero, 2012). Case laws and sentencing guidelines are constantly being reviewed as it pertains to the sentencing of these white-collar crimes. In 2008, an article was published in the Wall Street Journal that discussed revising the current policies on punishments and how the Department of Justice and the United States Attorney’s Office handle these types of investigations. Some law makers felt that the DOJ and the USAO were to aggressive in pursuing criminal charges against companies (Perez, 2008). Regardless on the stance, public trust is paramount when it comes to investing and that is why it is imperative that these individuals that break the regulatory standards are held accountable and punishment should be swift and harsh.
The Federal Bureau of Investigation and their Uniform Crime Reporting Data does not show the complete picture of frequency on white-collar crimes in the United States. According to the Federal Bureau of Investigation – Criminal Information Services Division, the definition itself of a white-collar crime is contentiously debated. There are currently three placements for the term: white-collar crime defined by the type of offender, type of offense and organizational culture. Utilizing the traditional Summary Reporting System, the data would be incomplete due to the socioeconomic characteristics (Barnett, 2000).
Since this crime typically does not illicit violence and is not placed in the same conversation socially with criminal offenders, many view this simply as fraud with minimal retribution. These crimes are serious and misplace the trust of many citizens. Speaking on the cooperate level, I believe that punishments should impact more than just the upper fall guy but more encompassing thro ...
Similar to Almaraz Resendez (2012) - The Impact of Crime on FDI (17)
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Almaraz Resendez (2012) - The Impact of Crime on FDI
1. The Impact Of Crime On Foreign Direct Investment:
The Case Of The Mexican War Against Organized Crime
José Eduardo Almaraz Reséndez
The following dissertation is presented in partial fulfilment of the requirements for the
MSc Applied Economics and Data Analysis.
University of Essex
United Kingdom
September 2012
2. ii
Table of Contents
Acknowledgments………………………………………………………………………… iii
Abstract………………………………………………………………………………….... iv
I. Introduction……………………………………………………………………………... 1
II. Background…………………………………………………………………………….. 2
III. Literature review……………………………………………………………………… 5
i. Theoretical literature………………………………………………………. 5
ii. Empirical literature………………………………………………………... 6
IV. Data description………………………………………………………………………. 8
V. Modelling crime and FDI……………………………………………………………… 11
i. Model 1: Violent crimes……………………………………………………. 11
ii. Model 2: Criminality index………………………………………………... 14
iii. Post-estimation tests………………………………………………………. 17
iv. Further results…….………………………………………………………. 21
VI. Limitations and suggestions for further research……………………………………. 23
VII. Conclusions………………………………………………………………………….. 23
Bibliography……………………………………………………………………………… 25
Appendix………………………………………………………………………………….. 28
3. iii
Acknowledgments
Firstly, I would like to thank my family, especially my parents José Héctor Eduardo
Almaraz Hernández and Carmen Deyanira Reséndez de Almaraz. Without their unconditional
support, both financial and moral, this work would not have been possible. I will also like to
thank my lecturers both at the University of Essex and at ITESM (Mexico) whose support and
passion for teaching were of paramount importance for the development of my work.
4. iv
Abstract
Violent crime has accelerated substantially in Mexico in the past five years as criminal
organizations have attempted to gain control over certain territories. Crime, especially organized
crime (which is generally more violent), deters FDI as it represents higher costs as well as higher
risks for potential or existing investors. The aim of this work is to assess the impact of organized
crime on FDI. Results from constructing a criminality index show that an increase of 1% in
typical DTO crime will reduce FDI by about 0.44% in a given state of Mexico the following year.
5. 1
I. Introduction
Violence derived from drug-trafficking organizations (DTOs) has escalated dramatically
in the past five years in Mexico. Shortly after President Felipe Calderón took office in December
2006, he focused on the attacks on DTOs which he made the centrepiece of his administration.
However, as drug kingpins are arrested or killed, their members have fought amongst each other
to try to gain control over the various drug trafficking organizations, substantially increasing the
number of violent crimes committed. Moreover, the deployment of the army created a triangular
conflict that even further increased the number of deaths. The conflicts are greatly concentrated
in a number of states, mainly in drug trafficking routes or in states where two or more rival
DTOs clash. Therefore, these states have suffered from a consequent reduction in the amount of
Foreign Direct Investment (FDI), as investors think twice before exposing their capital to the
increasing violence.
The purpose of this essay is to assess the magnitude on FDI of violent crimes, such as
murders1
, violent thefts, kidnaps, extortions and violent thefts on highways (where a number of
typical crimes are committed by DTOs). The structure of this work is as follows. In section II, a
background is presented with a brief description of the nature of Mexican territory and its
relevance for DTOs, together with a recapitulation of the events that marked Calderón’s
administration. Section III presents a review of theories discussed in the literature for this study,
as well as a review of some previous work in similar countries and backgrounds. In section IV,
the dataset utilized is presented, which was collected mainly from different Mexican agencies,
institutions and non-governmental organizations (NGOs). In section V, two different models are
estimated, together with several post-estimation tests and other supporting results. Section VI
1
Murders are a form of premeditate or intentional homicide, classified as homicidio doloso. Not to be confused with
manslaughter or homicidio culposo.
6. 2
presents the limitations of this work, together with recommendations for further research. Section
VII provides a conclusion for the study.
II. Background
Drug trafficking in Mexico began in the 1980s, with drugs being transported mainly from
South America into the USA. The single-party system, which predominated in Mexico for most
of the 20th century, provided a favourable environment for drug trafficking. A system network
operated that “ensured distribution rights, market access, and even official protection to drug
trafficking organizations in exchange for very lucrative bribes dispensed at very high levels of
power” (Shirk, 2011, p. 8). The first major attack on a DTO was in 1989, partly incited by
pressure from the USA, when Miguel Ángel Félix Gallardo - the boss of the Guadalajara Cartel
and head of the cocaine trade - was arrested (Shirk, 2011; Miles, 2002). Since then, however, the
power and scope of DTOs activities have grown.
In December 2006, shortly after President Felipe Calderón took office, he launched a
frontal attack on drug cartels2
. From that month and up to September 2011 (when data became
available) more than 47,500 people have died by “presumptuous delinquency rivalry”,3
according to official statistics (SESNSP, 2012; PGR, 2012). The first bold action of Calderón’s
administration was the deployment of the army to Michoacán, his home state. Some critics argue
that this was done to legitimize his government after the close elections where the runner-up
declared fraud and swore himself in as the “legitimate president” of Mexico (Molzahn, Ríos, and
Shirk, 2012; McKinley Jr., 2007). From around 2007, and after a steady decline from the late
2
Drug-trafficking organizations (DTOs) are commonly referred to as ‘cartels’. However, these should not be
confused with the term used in economics, which describes price or output setting. In fact, drug cartels are quite
competitive.
3
This classification means that at least one of the parts involved in the crime forms part of a DTO.
7. 3
1990s, most violent crimes have increased substantially at a national scale, as depicted in Figure
1.
Figure 1. Violent Crimes (logarithmic scale)
As the figure shows, these crimes have increased as DTOs have diversified their activities
into other areas of crime (rather than just trafficking drugs) that have a greater effect on the
general population, such as murders, extortions, kidnappings for ransom,4
violent thefts and
4
Another type of kidnap that became known is as a source of recruitment - typically of Central American
immigrants - for gunmen and other roles within the criminal organization.
8. 4
thefts on highways.5
Furthermore, the nature of the crimes committed has become more brutal.
In 2011 the number of corpses beheaded, mutilated or with evidence of torture increased
compared to 2010 (Molzahn, Ríos, and Shirk, 2012). Therefore, even though each of these
counts as a singular homicide, the impact on security perception may differ when the crime
committed is more brutal, or when the victim is high-profile (such as politicians and public
officers).
Mexico is now at an important point in time. Felipe Calderón will be leaving office on
the 1st
of December 2012, to be replaced by Enrique Peña Nieto, the elected president from the
opposition Institutional Revolutionary Party (PRI). Mr. Peña has declared that he will continue
the attack DTOs but will adopt a change of strategy. However, the outlook might appear to be
not encouraging. By 2011, about 16 major DTOs or criminal organizations were operating in the
country; these are mainly fragments of the six DTOs that operated in 2006 (Guerrero-Gutiérrez,
2011). The degree of change Peña will be able to make remains unclear and some sectors claim
for a radical change in strategy while others would prefer him to continue dismantling the drug
cartels.
Meanwhile, investors have fled the country (or have been deterred from entering), or at
least from the most violent states, to seek safer places to invest. From an economic point of view,
the increase in crime discourages investment - and thus depresses the economy - in two different
ways: it represents higher risks (i.e. investors are less confident that the value of their physical
assets will be safeguarded after incurring a sunk cost) as well as higher costs (they now need to
spend more on security and the price of their assets insurance increases).
5
It may as well be the case that other criminals (non-DTOs) take advantage of the situation as they face a lower
probability of punishment when the enforcement system gets saturated. However, since this would be an indirect
effect of DTO-ridden crime, it will not be considered explicitly.
9. 5
III. Literature Review
i. Theoretical literature
A convenient way to determine why a certain region or country attracts FDI is to explore
firms’ perspectives. John Dunning’s ‘eclectic’ approach, first developed in 1977, is a useful
example. Dunning’s ‘OLI framework’ illustrates that firms will seek to expand to foreign
markets by means of ownership, location and internalization. Firms will seek to transform inputs
that are specific to particular locations, including not only endowments such as natural resources,
different kinds of labour and proximity to markets, but also legal and commercial environments
such as market structures and government policies. Other types of inputs Dunning specifies are
those an enterprise may purchase or create for itself (e.g. certain types of technology and
organizational skills) but needs different types of legally protected rights (e.g. patents). The
management of these inputs creates what Dunning calls the ownership-advantage. However, the
acquisition of inputs may only be possible in certain locations. The third component of the
framework, internalizing, assumes a vertical integration in which the firm may gain advantages
by growing vertically to ensure stability of supply and to control input prices in order to reduce
uncertainty (Dunning, 1980).
In a later work, more than three decades after the OLI framework was presented,
Dunning (2008) recognised the changing environment and the emergence of new players on the
world economic stage. The author points out the increasing role of institutions and governance as
determinants of capital allocation by MNEs. Furthermore, when referring to a country’s
environment, he classifies the term ‘environment’ into three types: physical, human, and
contextual. The human environment is of particular concern for the present study since, the
author points out, this involves the role of institutions such as those related to private property
10. 6
protection, promoting freedom of enterprise and furthering social equity among others (Dunning,
2008).
Blonigen (2005) provides a thorough review of the determinants of FDI. Interest rate,
taxes, the quality of institutions and trade protection are amongst the most commonly cited
determinants of Multinational Enterprises’ (MNEs) decisions on FDI, although most of them
with mixed evidence or different magnitude. According to Bloningen, the literature on FDI
determinants might still be in its infancy and determinants of cross-country FDI are statistically
fragile. While Bolingen’s paper is not theoretical (he merely compiles theories and does not
develop them), it is a good place to start when assessing which components should be included
as determinants when modelling FDI in a macroeconomic framework.
ii. Empirical literature
A component of crime is not always included as a determinant of FDI. However, research
that has assessed the effect of crime usually concludes that at least some types of crime affect
economic growth and/or FDI. This section includes a brief summary of various papers that were
useful to this present study for assessing the impact of organized crime on FDI for the Mexican
case, as well as papers that provided insight for other components that were later included as
explanatory variables in the model.
Garfield Oneil Blake (2010) found a significant negative effect of crime on economic
growth. He uses the increase of criminal deportees from the USA as an exogenous variation of
crime. Oneil Blake’s study is relevant because most of the observations he uses are from Latin
America and the Caribbean and, more specifically, Mexico took the largest share of US
deportees from that period (1985-1996). Therefore, the results are also valid for Mexico.
11. 7
However, his findings do not suggest the components of GDP that are most affected by the
increase of crime or the types of crime that deter growth.
Daniele and Marani (2010) explore the impact of Mafia-style crime on FDI in Italy. They
constructed an index by documenting extortion, bomb attacks, arson and criminal association per
100,000 inhabitants. Their results show that the correlation between organized crime and FDI is
both negative and significant. Their main contribution is that the index helps mitigate the
problem of under-recording of crime because, apart from extortion, these types of crime are more
likely to be reported to the authorities. However, the landscape of the Italian Mafia is quite
different from that of the Mexican DTOs. In Italy, most of the crimes are concentrated in poorer
southern areas. On the other hand, in Mexico the poor southern states have experienced
comparatively low levels of crime in the past years and Mafia-style crimes occur generally on
drug-trafficking routes or where DTOs incur in congestion costs, i.e. on routes where opponent
DTOs clash or when the route is diverted from a municipality that has more fiercely enforced the
antidrug policy (Dell, 2011).
Krkoska and Robeck (2006) developed a theoretical model based in the interaction
between a representative firm and a representative criminal. Albeit using the same empirical
linear approximation for street and organized crime, the authors performed separate regressions
for each since they acknowledged that the impact on firms can differ. They used survey data
which documented approximately 9,500 firms in 26 transition countries, as well as data on 4,000
firms of eight non-transition countries; both types were countries in Europe and Asia. The data
not only included objective indicators but also a measure of the perception of crime, which is
clearly subjective. According to the survey, the perception of crime “has a highly detrimental
impact on the willingness of foreign investors to enter a country” (Krkoska and Robeck, 2006, p.
12. 8
21). Therefore, there is evidence of causality between crime and FDI.
Madrazo Rojas (2009) used a fixed-effects model and a pooled OLS for the Mexican case
between 1998-2006. He included a variable for homicides and a variable for kidnappings and
found a negative and significant relationship for homicides and an insignificant coefficient for
kidnappings. However, most of his determinants were insignificant, including those for kidnaps.
Moreover, the landscape of Mexico during that time period differed somewhat to the following
period, as explained above. Even though organized crime was prevalent at the time, violence
escalated between 2008 and 2010 (see Figure 1) and for most of the time period covered by
Madrazo Rojas, there was relative peace and diminishing violence. Nevertheless, even though
his results must be considered with caution, in the literature reviewed for this study, this was the
only research in the body of literature studied that directly linked violence and FDI in Mexico.
IV. Data Description
The dataset utilized is composed of annual figures mostly from 1997 to 2011 and it is
available at the state level for the 32 Mexican states.6
Since no single source provides the dataset
as a whole, it is a compilation of data generated by different agencies, including the National
Institute of Statistics and Geography (INEGI), the Executive Secretariat of the National System
of Public Security (SESNSP, a dependency of the Secretariat of the Interior), the Secretariat of
Economy (SE), the Secretariat of Finance and Public Credit (SHCP), the Mexican Social
Security Institute (IMSS), the National Council of Population (CONAPO), Mexican
Transparency, the Bank of Mexico, Eurostat and the US Bureau of Economic Analysis. A
detailed description of the different sources and the period covered, together with the summary
6
Mexico is legally composed by 31 states and a Federal District (DF). However, for data-gathering and modelling
purposes, DF serves just as another state and therefore it will be referred to as such.
13. 9
statistics, can be found in the Appendix. However, it should be noted that the data on some types
of crime is likely to underestimate the actual situation since many crimes are not reported in
cases where people fear denouncing certain crimes (such as extortions or kidnappings) or when
there are legal loopholes that jeopardize or complicate the ability to make changes in police
reports.
The data can be grouped into three different categories. The first category is FDI, the
dependent variable, in current terms as well as a logarithmic transformation. The second group of
data is crime-related; this includes murders, violent thefts and violent thefts on highways,
kidnappings and extortions. The third group includes control variables such as socioeconomic
and demographic measures, as well as variables that control the international environment.
An examination a priori, depicted in Figure 2, sheds some evidence on the negative
correlation between FDI and the murder rate (which is probably the most important of violent
crimes.) The negative relationship is especially notable in states of the north, west and, to a lesser
extent, in the centre. In 2005, one of the safest years in the period covered by the data, FDI was
41.5% higher in real terms than in 2011, the year with most violent crimes registered.
14. 10
Sources: Own elaboration with data from SESNSP and the Secretariat of Economy.
1999
2005
2011
Murder Rate
Murders per 100,000 inhabitants
FDI
Millions of 2005 USD
Figure 2. Murder Rate and FDI
15. 11
V. Modelling crime and FDI
i. Model 1: Violent crimes
The first type of model to be estimated is as follows.
𝐹𝐷𝐼!" = 𝛼 + 𝛽! 𝑀𝑈𝑅!"!! + 𝛽! 𝑉𝑇!"!! + 𝛽! 𝑉𝑇𝐻!"!! + 𝛽! 𝐾𝑁!"!! + 𝛽! 𝐸𝑋𝑇!"!!
+ 𝜆! 𝐷𝑒𝑚!"#!!
!
!!!
+ 𝜆! 𝐸𝑐𝑜𝑛!"#!!
!!
!!!
+ 𝜆! 𝑃𝑜𝑙!"#!!
!"
!!!"
+ 𝜆! 𝑅𝑒𝑔𝑖𝑜𝑛!" + 𝜆! 𝐼𝑛𝑡!"#
!"
!!!"
!"
!!!"
+𝜇! + 𝜀!"
(1)
where
𝐹𝐷𝐼: Logarithmic transformation of the real FDI (in 2005 USD).
𝑀𝑈𝑅: Change in the number of murders per 100,000 inhabitants
𝑉𝑇: Change in the number of violent thefts per 100,000 inhabitants.
𝑉𝑇𝐻: Change in the number of violent thefts on highways per 100,000 inhabitants.
𝐾𝑁: Change in the number of kidnappings per 100,000 inhabitants.
𝐸𝑋𝑇: Change in the number of extortions per 100,000 inhabitants.
The subscript 𝑖𝑡 represents the observation for state 𝑖 in time period 𝑡. Observe, however,
that the five different types of crime included are lagged by one time period. This is done since
investors are likely to make the decision whether or not to enter into the market from the level of
violence they can observe. Moreover, the remaining variables are a set of demographic,
economic, political and macroeconomic variables, as well as regional dummies that were
selected based on the work of Dell (2011) and complemented by the review by Blonigen (2005)
in order to isolate the particular context of each state (such as its endowments and location, as
16. 12
expressed by the OLI framework). Furthermore, since historically the vast majority of FDI
comes from the US and, to a lesser extent, Europe (see Appendix), a logarithmic transformation
of both GDPs was included mainly to take into account the effect of the 2008 economic crisis.
The entire set of variables is listed in Table 1 and their individual descriptions can be found in
the Appendix. Finally, 𝛼 is a constant term, 𝜇! is the individual (state) effect and 𝜀!" is the error
term.
The data set is a slightly unbalanced panel, with an average of 7.4 observations per state,
a minimum of three observations per state, and a maximum of nine. A fixed effects and a random
effects regression were run, together with a pooled OLS for comparison purposes and the results
are shown in Table 1.
Table 1. Violent crime rates on FDI
Dependent variable: Natural logarithm of FDI (2005 USD)
Pooled OLS Fixed Effects Random
Effects (GLS)
Constant -210.9365 -249.8264 -171.6913
(134.9302) (151.5879) (112.8906)
Violent crimes+
Homicides .0017* .0015 .0014
(0.0010) (0.0014) (0.0014)
Kidnaps -.0008 -.0009 -.0007
(0.0005) (0.0020) (0.0021)
Violent thefts -.0001 -.0000 -.0001
(0.0001) (0.0001) (0.0001)
Extortions -.00128 -.0015 -.0013
(0.0033) (0.0032) (0.0032)
Violent thefts on highways .0034 .0107* .0077
(0.0094) (0.0061) (0.0062)
Demographic characteristics++
Population .0003** -.0007 .0003**
(0.0001) (0.0011) (0.0001)
Population density -.0001 .0041 -.0000
(0.0003) (0.0264) (0.0003)
Migration rate .3508 .7850 .4319
(0.2416) (1.3524) (0.3030)
Economic characteristics++
Wages .0093 .0219 .0082
17. 13
(0.0087) (0.0135) (0.0088)
No sewage -.0045 -.4114*** -.0515
(0.0460) (0.1184) (0.0521)
No electricity .1882 .3924 .0787
(0.1577) (0.2163) (0.1362)
No water -.0052 -.0187 .0059
(0.0441) (0.1365) (0.0522)
HDI 31.0632 -8.5977 25.7293*
(21.6815) (24.6256) (14.9013)
Schooling -.1883 -3.2013** -.1480
(0.5566) (1.3984) (0.6559)
Infant mortality .2452 .2534 .2261
(0.2706) (0.3463) (0.2223)
Marginality index -.8118 omitted -.5651
(0.9083) (0.8016)
Political and macroeconomic
variables++
Corruption index .0560 .0420 .0212
(0.0487) (0.0448) (0.0427)
Debt percentage .0553 .0918 .0078
(0.1238) (0.1471) (0.1154)
Interest rate .2177* .1527 .1931*
(0.1207) (0.1160) (0.1049)
Inflation -.2904* -.1608 -.2540**
(0.1453) (0.1275) (0.1215)
Foreign exchange .2341 .3406 .1177
(0.2020) (0.2505) (0.2076)
Regional dummies++
North .5777 omitted .2139
(0.7222) (0.8835)
West .5936 omitted -.0260
(0.7141) (0.8461)
South -.4401 omitted -1.1711
(0.7098) (0.7421)
International economy
US GDP -28.1160 -10.1704 -23.7858*
(16.3946) (15.6172) (12.7492)
Europe GDP 27.7342 23.2043 23.2079*
(15.4682) (14.6057) (11.9649)
Observations 237 237 237
R2
0.6886 0.1822 0.6739
Notes: +
All the violent crimes are lagged one year and per 100,000 inhabitants. ++
Variables are lagged one
year (except for the interest rate and the foreign exchange). The variable centre is omitted to avoid
multicollinearity. *, ** and *** represent significance at the 10%, 5%, and 1% levels, respectively. Robust
standard errors are shown in parentheses.
18. 14
As the results show, the majority of variables of interest appear insignificant and two
variables (the homicide rate and violent thefts on highways) have positive signs in both the fixed
effects and random effects setups. Therefore, the results are inconclusive. Notice as well that the
coefficient of determination of the models differs greatly between the fixed effects and random
effects. This occurs because a greater share of variation occurs between states rather than within
them. Also, a Haussmann test for specification was conducted and the null hypothesis was not
rejected with a p-value of 0.1746. Hence, there is evidence that supports that the GLS is more
efficient, although the fixed effects specification is still unbiased (Hsiao, 2005).
ii. Model 2: Criminality index
In addition, following the work of Daniele and Marani (2010) for the Italian case, a
criminality index is constructed and incorporated in the model, instead of the types of violent
crimes. The index is intended to mitigate the effects of the under-recording of crimes, as
discussed above. Therefore, model 2 is as follows.
𝐹𝐷𝐼!" = 𝑎 + 𝛾! 𝐶𝑅𝐼𝑀!"!! + 𝜆! 𝐷𝑒𝑚!"#!!
!
!!!
+ 𝜆! 𝐸𝑐𝑜𝑛!"#!!
!!
!!!
+ 𝜆! 𝑃𝑜𝑙!"#!!
!"
!!!"
+ 𝜆! 𝑅𝑒𝑔𝑖𝑜𝑛!" + 𝜆! 𝐼𝑛𝑡!"#
!"
!!!"
!"
!!!"
+ 𝜇! + 𝜀!"
(2)
where 𝐶𝑅𝐼𝑀 is the criminality index (in changes), although this differs from that constructed by
Daniele and Mariani. Their index is a sum of extortion, bomb attacks, arson and criminal
association per 10,000 inhabitants. However, to the best of the author’s knowledge, only data for
extortion and criminal association is readily available of the four aforementioned crimes. Hence,
𝐶𝑅𝐼𝑀 is constructed by the sum of extortions, criminal associations, infringements to the
19. 15
Federal Law of Firearms and Explosives7
(LFAFE), infringements to the Federal Law Against
Organized Crime (LFCDO), and murders, per 10,000 inhabitants. It is set at 100 for the index at
the national level in 2001. The criminality index is a proxy for crimes typically committed by
DTOs. The results for the estimation of equation 2 are shown in Table 2.
Table 2. Criminality index on FDI.
Dependent variable: Natural logarithm of FDI (2005 USD)
Pooled OLS Fixed Effects Random
Effects (GLS)
Constant -229.0183* -220.7951 -169.9394
(131.8738) (147.7465) (114.2551)
Criminality index+
-.0022 -.0032** -.0025
(.00134) (.0015381) (.0016)
Demographic characteristics++
Population .0003** -.0005 .0002**
(.0001) (.0011) (.0001)
Population density -.0001 -.0032 .0000
(.0003) (.0256) (.0003)
Migration rate .3197 1.1181 .4379
(.2282) (1.3224) (.3392)
Economic characteristics++
Wages .0089 .0222* .0087
(.00886) (.0133) (.0091)
No sewage -.0031 -.3832** -.0633
(.0450) (.1156) (.0565)
No electricity .2133 .3730* .0900
(.1578) (.2127) (.1418)
No water -.0042 .0333 .0118
(.0446) (.1336) (.0571)
HDI 31.7517 -9.9110 22.6028
(21.6394) (24.3489) (15.5886)
Schooling -.2475 -3.0962** -.2695
(.5403) (1.3714) (.7079)
Infant mortality .2313 .1097 .1617
(.2687) (.3381) (.2334)
Marginality index -.8954 omitted -.5817
(.8745) (.835)
Political and macroeconomic
variables++
Corruption index .0633 .0511 .0278
7
The LFAFE penalizes not only the possession of unregistered arms but also the possession of weaponry of which
the use is confined to the army and federal armed forces (Cámara de Diputados, 2004). The latter is a crime typically
commited by DTOs.
20. 16
(.0502) (.044) (.042)
Debt percentage .0661 .0645 .0083
(.1243) (.1458) (.1151)
Interest rate .2173* .1588 .1915*
(.1132) (.1128) (.1028)
Inflation -.2815* -.1380 -.2299*
(.1382) (.1248) (.118)
Foreign exchange .2291 .2292 .0588
(.1942) (.2420) (.2033)
Regional dummies++
North .5656 omitted .1627
(.7056) (.9727)
West .6063 omitted -.1495
(.7097) (.9346)
South -.4308 omitted -1.2936
(.7267) (.8210)
International economy
US GDP -28.311* -11.0834 -23.9984*
(16.0764) (15.213) (12.6904)
Europe GDP 28.9760* 22.2072 23.5447**
(15.0900) (14.2388) (11.9985)
Observations 237 237 237
R2
.6875 .1816 0.6647
Notes: +
The criminality index is shown in changes and lagged one year. ++
Variables are lagged one year
(except for the interest rate and the foreign exchange); The variable centre is omitted to avoid
multicollinearity. *, ** and *** represent significance at the 10%, 5%, and 1% levels, respectively. Robust
standard errors are shown in parentheses.
As the results show, the coefficient of the criminality index is now negative and
statistically significant in the fixed effects model. It is also negative in the GLS regression and,
although it is insignificant at the conventional levels, it lies just below the conventional level,
with a significance of 10.1%. A Hausman specification test was performed and the null
hypothesis (which states that the difference in coefficients is not systematic) was not rejected
with a p-value of 0.2893. Therefore, there is evidence that supports that the correct specification
is, once again, the random effects setup. From this, the coefficient suggests that an increase in the
criminality index of one will reduce FDI in the next period by about 0.2543% in a given state.
Nevertheless, the fixed effects model is still unbiased and might even be preferred since the
21. 17
sample is not random and the individual effect might be correlated with the regressors8
, as is
discussed in the following subsection (Hsiao, 2005, p. 43; Krkoska and Robeck, 2006). From the
latter, an increase in the criminality index of one will reduce FDI in the next period by about
0.312%. The fact that both models yield similar results indicates that in fact violence has a non-
negligible negative impact on crime.
Moreover, similar regressions were run but absolute values were taken of the crime
variables for model 1 and the criminality index instead of its changes for model 2; non-
significant coefficients were then obtained. This might be thought as evidence that changes in
crime have a greater impact than crime itself. Changes in crime may signal a further deterioration
of institutions and thus a greater perception of insecurity, while investors may be able to cope
with a steady level of crime. However, as shown in the following subsection, this might only be a
result of autocorrelation and hence this inference cannot be made.
iii. Post-estimation tests
Subsequent to the Hausman specification test carried out above, several tests are
performed to identify whether or not the data exhibit multicollinearity, stationarity and
endogeneity.
A. Multicollinearity
The presence of multicollinearity is a plausible concern since the model contains an
important number of variables that may be jointly determined. In fact, if the variables are
collinear, the coefficients can exhibit signs that differ from those in reality or be statistically
8
The various features of the state, such as its location, might be correlated with crime if DTOs consider it to be a
strategic drug-trafficking route. For example, Tamaulipas has both a port that connects to South America and a
border with the US. Therefore, it is an essential route for trafficking and has seen an important increase in homicides
and arson attacks as two different DTOs (the Cartel del Golfo and its former armed unit, Los Zetas) have attempted
to gain control over the state.
22. 18
insignificant. However, the use of panel data offers more degrees of freedom that “can reduce the
gap between the information requirements of a model and the information provided by the data.”
(Hsiao, 2005, p. 312). Therefore, it becomes less of a concern than in cross sectional or time
series analysis. Nevertheless, auxiliary regressions are performed of the variables of interest.
For equation (1), the following auxiliary regressions were performed.
𝐇𝐎𝐌 = 𝐗 𝟏 𝛅 𝟏 ∗ + 𝛜 𝟏 (4)
where HOM is a 250∗1 matrix containing the differences in homicides per capita, 𝐗 𝟏 is a
250∗26 matrix containing the four other types of crimes, also given in differences, as well as the
remaining explanatory variables in Table 1 plus a column of ones (for the constant). 𝛅 𝟏 is a 26∗1
coefficients matrix and 𝛜 𝟏 is a 250∗1 error matrix. The auxiliary regression was performed using
pooled OLS and the resulting coefficient of determination is R2
=0.2632. Equivalent regressions
where performed for kidnappings, violent thefts, extortions and violent thefts on highways, with
resulting coefficients of determination of 0.0236, 0.111, 0.1456, and 0.1229, respectively.
For equation (2) the following auxiliary regression was run.
𝐂𝐑𝐈𝐌 = 𝐗 𝟐 𝛅 𝟐 ∗ + 𝛜 𝟐 (5)
where 𝐂𝐑𝐈𝐌 is a 250∗1 matrix containing the differences of the criminality index and 𝐗 is a
237∗22 matrix containing the remaining the explanatory variables described in Table 2 as well as
a column of variables. 𝛅 𝟐 is a 22∗ 1 matrix of coefficients, and 𝛜 𝟐 is a 250∗1 error matrix. The
resulting coefficient of determination is R2
=0.1689.
Therefore, in all the coefficients of interest, the low coefficients of determination (R2
)
suggest that multicollinearity is not a concern and thus can be discarded. There might still be
concern for multicollinearity in the remaining regressors. Nevertheless, as long as the
coefficients, both in sign and statistical significance, are not of interest and they guard the same
23. 19
relation within (new) sample observations, forecasting is still possible (Griffiths, Hill, & Judge,
1993).
B. Stationarity
Since the crime variables and the crime index are given in changes and terms per capita,
it is reasonable to assume they will exhibit stationarity (crime cannot increase forever), even
when they might exhibit some sort of non-stationary process in levels. Therefore, the variable to
be tested for an autoregressive process of the first order is the dependent variable, i.e. the
logarithm of the real FDI the states attract. The standard test for unit roots in panel data is the
Levin-Li, which can be considered as a pooled Dickey-Fuller. However, the test to be used here
is the one developed by Maddala-Wu (MW) in 1999 (see for example Hoang and MacNown,
2006 for a discussion on panel data unit root tests). The MW is feasible in unbalanced panels
such as that presented.
Table 3. Maddala-Wu Panel Unit Root Test with one lag. P-values are displayed
Variable Specification without trend Specification with trend
Real FDI (logarithm) 0.003 0
Criminality index 0.25 0.578
Homicides 0.964 0.423
Kidnaps 0.611 0.955
Violent thefts 0 0.511
Extortions 0.998 0.508
Violent thefts on highways 0.539 0.999
Observations 332
Under the null hypothesis, the variables are non-stationary. Therefore, the independent
variable, logarithm of the Real FDI, is stationary while all the other logarithms have a non-
24. 20
stationary AR(1) process. However, first-differencing them eliminates the autocorrelation and
hence the results obtained in both tables remain valid.
C. Endogeneity
The regressors may be endogenous in two different ways. Firstly, it can be as an
unobserved common factor, such as the states’ location and endowments. Secondly, when
violence reduces FDI, the lack of FDI depresses economic growth and poor economic growth
then lead to further increases in crime (simultaneity). Figure 3 outlines these two causes.
Figure 3. Forms of endogeneity
In fact, the first type of endogeneity concurs with the OLI framework developed by
Dunning (2008) and described in Section III. Both the geographic location and endowments are
variables that affect the MNEs decisions to invest in a certain place. Crime derived from drug
trafficking in Mexico, on the other hand, is also greatly influenced by the location of each state
or municipality, as described by Dell (2011). However, endogeneity caused by an individual
factor that persists over time is overcome in the fixed-effect specification, since the individual
effects are eliminated from the model. Therefore, there is further theoretical support to the fixed-
effect specification even when the Hausman specification test suggested otherwise.
Unobserved common factor Simultaneity
25. 21
The second type of endogeneity, simultaneity, might be the case for the Italian mafia
described Daniele & Marani (2010), since the poorer southern states are also the ones where the
most crimes are committed. However, a quick glance at Figure 2 suggests that this differs for
Mexico. In fact, the poorer southern states in Mexico, which also attract less FDI, have relatively
lower homicide rates than the wealthier northern and western states. Therefore, even though it is
possible that mild endogeneity exists, it will be discarded in the absence of availability of strong
instruments.
iv. Further results
The discussion on endogeneity sheds light on the preference for the within-group
regression. Therefore, a reduced-form model is estimated, eliminating variables that appear
statistically insignificant. Most of these, such as the economic and demographic characteristics,
do not change much in the time period covered and thus can form part of the individual fixed
effect. Moreover, another regression is estimated that includes only the criminality index and
time dummies. Both results are displayed in Table 3.
Table 3. Reduced form model and model including year dummies
Dependent variable: Natural logarithm of FDI (2005 USD). Fixed effects estimations.
Reduced Form Year Dummies
Constant -166.4598* 4.4571***
(95.5427) (0.1995)
Criminality index+
-0.0032* -0.0029*
(0.0017) (0.0017)
Economic characteristics++
Wages 0.0186
(0.0123)
No sewage -0.3392***
(0.0960)
No electricity 0.3235**
(0.1614)
Schooling -2.8668**
26. 22
(1.2572)
Political and macroeconomic
variables++
Inflation -0.1452
(0.1155)
Foreign exchange 0.1137
(0.2064)
International economy
US GDP -12.5054
(12.7917)
Europe GDP 19.1525*
(9.7507)
Year dummies+++
2004 0.3743
(0.2722)
2005 0.3819
(0.2804)
2006 0.5299*
(0.2842)
2007 0.7685**
(0.2927)
2008 0.9560**
(0.2867)
2009 -0.0554
(0.2822)
2010 0.0352
(0.2825)
2011 -0.0562
(0.2766)
Observations 237 240
R2
0.1659 0.1085
Note: +
The criminality index is shown in changes and lagged one year. ++
Variables are lagged one year
(except for the interest rate and the foreign exchange rate);
+++
The year 2003 is omitted to avoid
multicollinearity. *, ** and *** represent significance at the 10%, 5%, and 1% levels, respectively. Robust
standard errors are shown in parentheses.
As the results show, the estimated coefficient for the criminality index is similar to those
presented in Table 2. Hence, this confirms that an increase in the criminality index, which
reflects organized-crime type delinquency, will reduce real FDI by about 0.30% the following
year (it ranges from approximately 0.29% in the year dummy model in Table 3 to 0.31% in the
full model of Table 2).
27. 23
VI. Limitations and suggestions for further research
One of the main limitations of the model was the low reliability of crime data. There is
evidence, as explained above, of a systematic under-recording of crimes. This downward bias
may vary among states (for example, if the state’s government is of the same party or not as the
federal government). Even though the criminality index helps reduce this bias, it may still be an
under-estimation of the true parameters. Moreover, this downward bias of crimes may be greater
when more crimes are committed, since it is more difficult to keep a record of them and to
monitor the actions of the government. Therefore, future research of the issue of the impact of
crime, and especially of organized crime, has on FDI in Mexico must be assessed more
thoroughly.
There are numerous ways to accomplish this. Firstly, data that is more easily captured can
be collected on crimes such as arson attacks, attacks to journalists, high-impact figures and
public officers. Secondly, the murders can be changed and use instead the Homicides by
Presumptuous Rivalry Delinquency. The latter method was used in this study, whereby the
expected signs for the index were obtained; although highly insignificant in both, the fixed
effects and random effects specification were similar. However, this might reflect the fact that
the sample was small, with a minimum of one observation per state and a maximum of three,
since this database was gathered for the first time in December 2006, and thus only four
complete years were available (the data for 2011 is still incomplete). Thirdly, although the
interpretation of results would slightly differ, the Security Perception Index can be used that
INEGI started collecting in May 2009, and which observations were too few to consider in this
work.
Another limitation of this study is that it does not point out which industries are more
affected by crime. The manufacturing industry, for example, which is capital intensive, may be
more affected by organized crime than the services industry.
VI. Conclusions
Assessing the overall economic impact of organized crime is difficult, since it acts in
both ways. There is a positive impact as money enters the country from abroad and a negative
effect as crimes become more murderous and affect the image of the country by damaging the
28. 24
state of institutions, and more specifically, threatening the state’s monopoly on the legitimate use
of public force. The latter undermines FDI as cost on security and concerns for safety rise.
There is growing number of researches on the determinants of FDI, although, as pointed
out in Section III, it might still be in its infancy. Nevertheless, a convenient way to regard FDI is
from the perspective of MNEs. The findings of this research concur with the framework
developed by Dunning (1980), since the ownership of assets by MNEs is threatened when there
is lack of law and order. Moreover, even though some previous works have assessed the impact
of organized crime in different contexts or via surveys of MNEs, to the best of the author’s
knowledge this is the first to do so for organized crime in Mexico. Therefore, there is evidence
that an increase in the criminality index, which is a proxy for crime typically attributed to DTOs,
will deter FDI by about 0.31%. However, since the index does not have units it is difficult to
interpret the results. The results can be interpreted by examining the mean of the index, which is
141.36. Therefore, a 1% deviation from the mean, that is 1.41 points, will deter FDI by 0.44%.
The upcoming government in Mexico will face great challenges, but a challenge of
paramount importance is definitively security. If DTOs are properly managed and murders,
extortions, arson attacks, kidnaps, and violent thefts (to name some of the most important) come
into a halt, a greater inflow of FDI would be expected.
29. 25
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32. 28
Appendix
1. Description of variables and sources
Variable Description Sources
FDI FDI in millions of US Dollars. Secretariat of Economy
Real FDI FDI in millions of 2005 US Dollars using
the US GDP implicit deflator.
Secretariat of Economy;
US Bureau of Economic
Analysis
Murders Number of murders (homicidios dolosos). SESNSP
Murder rate Number of murders per 100,000 inhabitants. SESNSP; CONAPO
Violent thefts SESNSP
Violent thefts on
highways
Idem
Kidnaps Idem
Extortion Presented cases of extortion. Idem
LFAFE Infringements to the Federal Law Against
Firearms and Explosives (Ley Federal
Contra Armas de Fuego y Explosivos). Data
available from 2001.
SESNSP
LFCDO Infringements to the Federal Law Against
Organized Crime (Ley Federal Contra la
Delincuencia Organizada)
Idem
Wages Daily average of wages from registered
workers of the Mexican Social Security
Institute. Data available from 2002-2011
except for DF, which is available from 2005
onwards.
IMSS
Debt State debt in millions of pesos and as a
percentage of GDP.
SHCP
Interbank interest
rate
National rate. Bank of Mexico
Inflation Idem
33. 29
Exchange rate MXP/USD exchange rate, averaged from
monthly rates.
Idem
Population Number of inhabitants per state, divided by
1,000 for visualization purposes of the
estimate.
CONAPO
Population density Number of inhabitants per squared
kilometer.
CONAPO; INEGI
Migrants per capita Migrants include interstate and international. CONAPO
Infant mortality Infant mortality per 1,000 inhabitants. Idem
No electricity Percentage of population without electricity.
Available figures for 2000, 2005 and 2010
and linear approximation made between
these dates.
Idem
No running water Percentage of population without access to
running water. Available figures for 2000,
2005 and 2010 and linear approximation
made between.
Idem
No sewage Percentage of population without sewage.
Available figures for 2000, 2005 and 2010
and linear approximation made between.
Idem
Marginality index Among the components of this index are
literacy, schooling, and access to running
water and access to electricity. Only the
value for 2005 is taken.
Idem
Schooling Average years of school attendance. Data
available for 2000, 2005, and 2010 and
linear approximations were made for the
years in between.
INEGI
GDP per capita Proxy for level of income in each state. INEGI
Corruption Proxy for the level of corruption. This index
is elaborated via a survey, which asks
citizens of each state how many times they
had to pay a bribe, and this is divided by the
number of times they used that particular
service. It is available for 2001, 2003, 2005,
Mexican Transparency
34. 30
2007, and 2010 and the gaps between were
constructed taking averages.
US GDP US GDP in billions of 2005 USD. US Bureau of Economic
Analysis
EU + CH GDP GDP of the EU15 countries (Austria,
Belgium, Denmark, Finland, France,
Germany, Greece, Ireland, Italy,
Luxembourg, Netherlands, Portugal, Spain,
Sweden, United Kingdom) plus Switzerland.
Millions of 2000 euros.
Eurostat
North Dummy variable for Aguascalientes,
Chihuahua, Coahuila, Durango, Nuevo
León, San Luis Potosí, Tamaulipas, and
Zacatecas.
Taken from the
classification of wages
by region made by
INEGI
West Dummy variable for Baja California, Baja
California Sur, Colima, Guanajuato, Jalisco,
Michoacán, Nayarit, Sinaloa, and Sonora.
Idem
South Dummy variable for Campeche, Chiapas,
Hidalgo, Oaxaca, Puebla, Quintana Roo,
Tabasco, Tlaxcala, Veracruz, and Yucatán.
Idem
Centre Dummy variable for DF, Guerrero, State of
Mexico, Morelos, and Querétaro.
Idem
Notes: The definition for each acronym can be found in the bibliography. Some variables lack
definition as they are self-explicative. The data covers the period 1997-2011 unless otherwise
specified.
2. Descriptive statistics
Variable Observations Overall Mean Std. Dev. Min Max
FDI 457 679.4 2239 0.100 22043
Real FDI 457 689.6 2291 0.120 24296
Murders 457 450.5 562.3 0 3903
Kidnaps 457 22.96 40.29 0 408
Violent thefts 457 6641 13814 0 88636
Highway thefts 457 32.09 79.33 0 580
36. 32
HDI 330 0.813 0.0382 0.708 0.923
Schooling 330 8.065 0.949 5.400 10.50
Corruption index 300 7.961 3.288 1.800 22.60
No water 330 9.106 7.807 0.985 31.34
No electricity 330 3.061 2.350 0.0799 12.01
No sewage 330 6.418 6.007 0.0819 35.29
3. Total FDI in Mexico by country of origin.
0
5000
10000
15000
20000
25000
30000
35000
Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Note: FDI in millions of US dollars.
Source: General Direction of FDI, Secretariat of Economy.
Others
EU15+CH
USA