Does “green gold” breed bloody violence? The effect of export shocks on criminal violence in Mexico

Abstract

AbstractObjectiveDo positive export shocks fuel or dampen criminal violence? The predation mechanism predicts that increasing export revenue generates a larger contested resource, and it prompts more violence by increasing the expected benefit of expropriation. The opportunity cost mechanism instead argues that an increase in exports may deter individuals from engaging in criminal activity, as it drives up labor demand and wages in the formal labor market. I test these competing claims using a case of the Mexican avocado industry.MethodI test these claims by estimating a causal effect of avocado production on criminal violence in Mexico. I further address the endogeneity issue with an instrumental variable approach, exploiting exogenous variations in climatic conditions that affect agricultural crop yields.ResultMoving from the lowest to the highest level of monthly avocado production, this positive change in avocado production reduces the homicide rate by 0.65 per hundred thousand relative to the average monthly homicide rate of 2.02.ConclusionThis finding suggests that the opportunity cost effect is largely at play in the avocado‐growing Mexican states, showing a new context of theory application. Limitations and future research avenues are discussed.