Economic governance and homicide: Some theory and empirics, 1990–2017

Indra De Soysa

doi:10.1177/0022343320962566

Abstract

This article posits that free-market institutions and practices reduce economic distortions that provide rents for underground organizations, which ultimately form criminogenic environments. Rents from market distortions provide ‘lootable income’ that feeds ‘criminal organizations’, which rely on violence for enforcement of contracts. Using an index of economic freedom, this study contrasts several relevant measures of political freedoms, political discrimination of individuals and groups, and measures of equal access to state ‘goods’ as proxies for political legitimacy and discrimination on the homicide rate. Fixed effects regression results suggest robustly that economic freedom, not political legitimacy, inclusive politics, or state capacity, reduces the homicide rate, results that are stubbornly significant and substantively large. The basic results are robust to a barrage of model specifications, different sample sizes, and estimation strategies, including instrumental variables analysis. The evidence suggests that unusually high homicide rates might be based in quotidian organizational activities related to ‘illegal’ markets rather than to political grievance-based explanations relating to relative deprivation and political legitimacy. Countries wishing to encourage growth-promoting policies need not fear higher levels of interpersonal violence based on various arguments linking free-market policies to societal disarray.

Highlights

This article posits that free-market institutions and practices reduce economic distortions that provide rents for underground organizations, which form criminogenic environments
This study argues that independently of state capacity and political legitimacy, economic governance that ensures open, competitive free-market conditions reduces the incentive for investment in violence-specific organizations rooted in shadow economy activities
There is good reason to believe, that previous results based on cross-sectional analyses, many of which show democracy to increase homicide rates, are seriously biased (Nivette, 2011). These results suggest that state capacity measured as the level of development and economic freedom independently affect homicide rates with weak support for the political legitimacy argument

Summary

Introduction

This article posits that free-market institutions and practices reduce economic distortions that provide rents for underground organizations, which form criminogenic environments. Utilizing the latest data for a large cross-section of countries over a period of roughly three decades, fixed effects regression analysis reveals robustly that more open, free-market economic policies and practices reduce the homicide rate independently of state capacity measured by per capita income levels and the strength of legal institutions.

Results

Conclusion