Essays on Organized Crime and Political Capture in Development Economics

Abstract

This dissertation explores three topics covering the economics of crime and political economy within the field of development economics. In the first research chapter, I explore how the number of criminal organizations impacts homicides and school dropout. To do so, I the number and locations of large Drug Trafficking Organizations (DTOs) in Mexico. I use instrumental variables in a selection model which models DTO entry. The instruments are based on the distance to DTOs' existing networks. I find more DTOs increase homicides and school dropout. Furthermore the pattern of results suggest more DTOs cause more students to dropout via an opportunity cost channel, with students leaving school to join criminal activities. The second research chapter examines the important of transport costs for DTOs within Mexico. DTOs in Mexico engage in a wide variety of activities, including producing drugs within Mexico using illicit crops grown in Mexico. Here, I explore whether or not lower transport costs for these illicit inputs results in more crime. I use variation in travel times induced by landslides to identify the effects of lower transport costs in a panel data setting. I find that lower transport costs increase homicides, while it reduces robberies in areas more likely to be involved in the drug trade.The final chapter focuses on political economy. This chapter, co-authored with Kate Vyborny and Sadia Hussain, examines political favoritism in public procurement programs. Government procurement programs represents a significant share of output worldwide, however, these public procurement programs have high potential for corruption and political capture. We study political favoritism in the context of government procurement of wheat from farmers in Punjab, Pakistan. Using a panel fixed effects approach, we show that wheat procurement increases in governing party constituencies when the government procurement price is high relative to world prices.