The effect of violent crime on sector-specific FDI in Latin America. (2nd October 2019)

• Record Type: Journal Article
• Authors: Blanco, Luisa R.; Ruiz, Isabel; Wooster, Rossitza B.
• Is Part Of: Oxford development studies. Volume 47:Number 4(2019)
• Page Start: 420
• Page End: 434
• Publication Date: 2019-10-02
• Subjects: Investment -- capital flows -- homicide rates -- organized crime -- crime victimization; F210 -- F230 -- O190; Economic development -- Periodicals; Economic policy -- Periodicals; Economic history -- Periodicals; 338.9
• DOI: 10.1080/13600818.2019.1611754
• Languages: English
• ISSNs: 1360-0818

Abstract

ABSTRACT: This article looks at the impact of violent crime on FDI into Latin America and the Caribbean during the 1996–2010 period. FDI is disaggregated into primary, secondary and tertiary sectors and three variables related to violent crime are used: homicides, crime victimization and organized crime. Controlling for institutions and the traditional determinants of FDI, we find that the impact of crime on FDI depends on the sector and types of crime considered. Higher homicide rates are associated with less FDI in the secondary sector while organized crime reduces tertiary sector FDI. Crime victimization has a robust significant negative impact on the tertiary sector and in some estimations of the secondary sector. Crime has no impact on primary sector FDI. Our study highlights the need to continue efforts to decrease crime as we show in our analysis that crime has a negative effect on FDI in the secondary and tertiary sector.