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Economic Liberalization and Violent Crime

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  • Kislaya Prasad

Abstract

I study the effect of economic liberalization on violent crime. The particular emphasis is on the case of India, where, in the years following 1991, there was a virtual dismantling of controls on entry and production in registered manufacturing. This was accompanied by a significant reduction in impediments to foreign trade and access to foreign exchange. Economic controls create an incentive for illegal trade, and a frequent by-product of illegal trade is violent crime. Consequently, violent crimes such as murders would be expected to decline following market-based reforms. Analysis of aggregate all-India data, as well as data at the state level, suggests that economic reforms did indeed lead to a reduction in violent crime. I extend the analysis to a panel of countries and find strong evidence that greater trade openness is negatively related to violent crime.

Suggested Citation

  • Kislaya Prasad, 2012. "Economic Liberalization and Violent Crime," Journal of Law and Economics, University of Chicago Press, vol. 55(4), pages 925-948.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/666487
    DOI: 10.1086/666487
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    2. HERNANDEZ-PEREZ, Fernando, 2023. "How Does Intra-State Violence Affect Nations’ Trade Flows? A Quantitative Assessment On South American Countries, 2003-2018," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 23(2), pages 51-80.
    3. Lakshmi Iyer & Anandi Mani & Prachi Mishra & Petia Topalova, 2012. "The Power of Political Voice: Women's Political Representation and Crime in India," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 165-193, October.
    4. Angela K. Dills & Jeffrey A. Miron & Garrett Summers, 2010. "What Do Economists Know about Crime?," NBER Chapters, in: The Economics of Crime: Lessons For and From Latin America, pages 269-302, National Bureau of Economic Research, Inc.
    5. Yew-Kwang NG, 2016. "Extending Economic Analysis to Analyze Policy Issues More Broadly," Economic Growth Centre Working Paper Series 1609, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    6. Dix-Carneiro, Rafael & Soares, Rodrigo R. & Ulyssea, Gabriel, 2016. "Local Labor Market Conditions and Crime: Evidence from the Brazilian Trade Liberalization," IZA Discussion Papers 9638, Institute of Labor Economics (IZA).
    7. Satadru Das & Naci Mocan, 2020. "Analyzing The Impact Of The World'S Largest Public Works Project On Crime," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1167-1182, July.
    8. Sharma, Smriti, 2015. "Caste-based crimes and economic status: Evidence from India," Journal of Comparative Economics, Elsevier, vol. 43(1), pages 204-226.
    9. Kumar, Surender, 2013. "Crime and Economic Growth: Evidence from India," MPRA Paper 48794, University Library of Munich, Germany.
    10. Mishra, Ankita & Mishra, Vinod & Parasnis, Jaai, 2021. "The asymmetric role of crime in women's and men's labour force participation: Evidence from India," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 933-961.
    11. Aldo Pignataro, 2021. "Becoming member of the European Union: What is the relationship with the robbery rate?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(2), pages 533-558, May.
    12. Sofia Amaral & Siddhartha Bandyopadhyay, 2015. "Court Backlogs and Crime in India," IIM Kozhikode Society & Management Review, , vol. 4(2), pages 86-91, July.
    13. Lakshmi Iyer & Petia Topalova, 2014. "Poverty and Crime: Evidence from Rainfall and Trade Shocks in India," Harvard Business School Working Papers 14-067, Harvard Business School, revised Aug 2014.

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