How Criminal Organizations Expand to Strong States: Migrants' Exploitation and Vote Buying in Northern Italy

Gemma Dipoppa (University of Pennsylvania)

Abstract:  Criminal organizations are widely believed to emerge in weak states unable to protect the property rights and safety of their citizens. Yet, criminal groups often expand to states with strong capacity and well-functioning institutions. This paper proposes a theory accounting for this phenomenon. I focus on one distinctive feature of strong states: their capacity to enforce competition. I argue that criminal organizations expand by striking agreements with political and economic actors facing competition and to which they can offer critical resources to gain an edge over competitors. I test this theory in the context of Northern Italy, a region with high social capital and well-functioning democratic institutions, but which has suffered increasing levels of mafia infiltration since the 1960s. I construct a new measure of mafia presence at the municipality level, by scraping mafia-related news from historic newspapers and validating them with present time mafias indicators from judicial sources and NGOs. I test two predictions of the theory. First, using an instrumental variable approach, I show that increases in market competition (due to a construction boom) and in mafias’ capacity to offer cheap illegal labor (by exploiting migrants from mafia-controlled areas in the south) allowed criminal groups to expand to the north. Second, I show that parties that entered in agreements with criminal groups gained a persistent electoral advantage in mafia-infiltrated cities and only after infiltration. This evidence suggests that mafias’ expansion leveraged deals with economic and political actors in strong states, pointing to the need to re-conceptualize criminal organizations not only as substitutes for weak states, but also as complements to states with strong institutions.

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