Berkeley Program in Law and Economics

The legal and economic analysis presented here empirically tests the theoretical framework advanced by Kugler, Verdier, and Zenou (2004) and Buscaglia (1997). This paper goes beyond the prior literature by focusing on the empirical assessment of the actual implementation of the institutional deterrence and prevention mechanisms contained in the United Nations' Convention against Transnational Organized Crime (Palermo Convention). A sample of 107 countries that have already signed and/or ratified the Convention was selected. The paper verifies that the most effective measures against organized crime linked to high level public sector corruption (that captures and feudalizes public sectors) are mainly founded on three pillars: (i) the introduction of more effective judicial decisionmaking control systems causing reductions in the frequencies of abuses of procedural and substantive discretion; (ii) the higher frequencies of successful judicial convictions based on evidentiary material provided by financial intelligence systems aimed at the systematic confiscation of assets in the hands of criminal groups; and (iii) the operational presence of government and/or non-governmental preventive programs (that are funded by the private sector and/or governments and/or international organizations) addressing technical assistance to the private sector, educational opportunities, job training programs and/or rehabilitation (health and/or behavioral) of youth linked to organized crime in high-risk areas (with high-crime, high unemployment, and high poverty).