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Crime, Contraband, and Property Rights: Explaining Variations in Violent Crime Rates

Abstract

Violent crime affects quality of life on an individual level and development on a national level (Kleiman, 2009), and could be the most important factor in determining whether many low and middle-income countries develop stable governments and implement effective economic policies. I propose a political and natural resource based explanation of the variation in crime rates in order to overcome the lack of connections between macro-level statistical data and causal mechanisms identified up to this point. My explanation involves the dynamics between state strength, property rights formation and enforcement, and the specific nature of criminal markets.

When the state is weak crime rates usually increase due to the state's inability to enforce property rights, including the inability to control contraband markets (or adequately taxing legal markets), and the inability to effectively punish defectors. Property rights are established through a political bargaining process between actors that generally depends on the capacity for violence of interested parties (DeSoto, 2000; Umbeck, 1981). Well-defined and enforced property rights reduce transaction costs, and therefore reduce levels of violence (Anderson and Hill, 2003). The specific properties of markets, including the resources they are based on, can shape the market environment, including legality, and affect the resulting "institutions of extraction" (Snyder, 2006, 952). Lootable resources make property rights harder to enforce and interact with the state's ability to provide the rule of law, especially in the case of prohibitions. Illicit markets engender violence because normal business disputes are often settled with violence (Kleiman, 1993, 104-107, 115).

My hypotheses examine the relationship between the production of lootable products, while controlling for other factors commonly attributed to crime. My analysis suggests that, all else being equal, the production of lootable resources increases crime rates, while the enforcement of property rights, whether by a state, non-state actor, or community, reduces violent crime rates. To test my hypotheses I use a mix of statistical analysis, case studies based on archival research, and structured interviews. Cross-national data was collected through archival research and existing databases, spanning over seventy countries and fifty years. Local level data comes from fieldwork in Colombia, and includes quantitative data for every municipality in Colombia over a span of nine years, and qualitative data for several regions critical to testing my hypotheses.

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