Does crime undermine support for privatization? Evidence from Ukraine

Abstract

In this article, we consider the relationship between crime and attitudes toward privatization in Ukraine. In our theory, crime is a source of vulnerability that undermines citizens’ support for privatization. However, the success of privatization may also depend on the ability of the government to control crime. To discern these relationships, we first demonstrate that higher rates of crime are associated with less support for privatization, as our theory suggests. To address the possibility that institutional weaknesses during privatization affect the ability to control crime, we use Soviet institutional legacies, specifically industrialization, as an instrumental variable to assess the causal impact of crime on attitudes toward privatization. Soviet-led industrialization contributed to rapid economic growth, but at the cost of declining social and family structures. The instrumental variables analysis suggests crime causes a decline in support for privatization. This evidence suggests controlling crime should be part of Ukraine’s reconstruction effort in the wake of Russia’s unprovoked invasion in February 2022.