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Bloody investment: misaligned incentives, money laundering and violence

Romero, Vidal (2022) Bloody investment: misaligned incentives, money laundering and violence. Trends in Organized Crime, 25 (1). 8 - 36. ISSN 1084-4791

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Identification Number: 10.1007/s12117-020-09391-x


Money laundering is not a victimless crime. Under certain circumstances, it may lead to significant criminal violence. We analyze the specific case of money laundering in local economies. Criminal organizations invest dirty money in legal local businesses, which may lead to short-term improvements in the economy that benefit the population. Authorities with access to local information may (purposely) fail to report suspicious economic activities to specialized agencies in charge of money laundering because it is politically and economically convenient. The economic windfall generated from illicit money can eventually attract additional criminal organizations to the community, or may fragment the dominant criminal organization, endogenously increasing violence. The violence generated in no way compensates the previous economic growth. We develop theoretical insights on the conditions under which this mechanism exists, and empirically test its incidence and the magnitude of its effects, using Mexican municipalities as units of analysis.

Item Type: Article
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Additional Information: © 2020 Springer Science+Business Media, LLC, part of Springer Nature.
Divisions: IGA: Latin America and Caribbean Centre
Subjects: H Social Sciences > HV Social pathology. Social and public welfare. Criminology
Date Deposited: 25 Mar 2022 11:12
Last Modified: 31 Mar 2022 10:57

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