Organized Crime and Foreign Direct Investment: the Italian Case

The paper estimates the effects of organized crime on FDI inflows in 103 Italian provinces in the period 2004-06. The presence of organized crime at a provincial level is quantified through several indicators, based on data for different kinds of crimes: extortion; association for criminal purposes, including mafia (Art. 416 and 416 bis of the Italian Penal Code); attacks; arson. Several control variables are used, included a proxy for (financial) investment incentives provided by public sectors. Estimation suggests that FDI inflows are influenced by different variables. Our results show that the extent of extortion and the number of persons denounced for "criminal association" are significantly and negatively correlated with FDI inflows. Finally, our analysis suggests the presence of organized crime is a strong disincentive for foreign investors, particularly in the less developed Italian provinces.Foreign Direct Investments determinants; Italy: Mezzogiorno; crime; regional attractiveness

Organized Crime and Foreign Direct Investment: The Italian Case

This paper examines the impact of organized crime on the regional distribution of foreign direct investment (FDI) inflows into Italy. The incidence of crime has been calculated considering the number of complaints for different crimes. The analysis shows how the correlation between organized crime is both negative and significant. This relationship appears strong even when a financial investment incentives indicator is included into the regressions. Furthermore, such a correlation between crime and FDI seems to be valid only for certain crimes, traditionally related to the presence of organized crime of the Mafia type. Although our analysis shows that organized crime is, in itself, a disincentive for investment, it also suggests that certain levels of crime can be perceived by foreign investors as a signal of an unfavorable business climate.FDI determinants, Italy, crime, regional attractiveness

Do institutions matter for FDI? A comparative analysis for the MENA countries

The paper analyses the underpinning factors of foreign direct investments towards the MENA countries. Our main interpretative hypothesis is based on the significant role of the quality of institutions to attract FDI. In MENA experience the growth of FDI flows proved to be notably inferior to that recorded in the EU or in Asian economies, such as China and India. Our research, firstly, stresses three major factors for such a poor performance: i) the small size of local markets and the lack of real economic integration; ii) the changes in the scenario of international competition; iii) economic and trading reforms in the MENA have been slow and mostly insufficient. Using the Kaufmann, Kraay and Mastruzzi (2005) governance indicators, we examine the role of “institutional quality” on FDI trough a regression analysis. Our analysis show as institutions play an important role in the relative performances of countries in attracting FDI. At last, data on institutional quality and business climate show the relative disvantages of MENA. Our paper suggests as MENA countries require deep institutional reforms in order to improve the attractiveness in terms of FDI.FDI; Institutions; MENA Countries

Organized Crime and Foreign Direct Investment: the Italian Case

The paper estimates the effects of organized crime on FDI inflows in 103 Italian provinces in the period 2004-06. The presence of organized crime at a provincial level is quantified through several indicators, based on data for different kinds of crimes: extortion; association for criminal purposes, including mafia (Art. 416 and 416 bis of the Italian Penal Code); attacks; arson. Several control variables are used, included a proxy for (financial) investment incentives provided by public sectors. Estimation suggests that FDI inflows are influenced by different variables. Our results show that the extent of extortion and the number of persons denounced for "criminal association" are significantly and negatively correlated with FDI inflows. Finally, our analysis suggests the presence of organized crime is a strong disincentive for foreign investors, particularly in the less developed Italian provinces.FDI determinants; Italy: Mezzogiorno; crime; regional attractiveness

Organized crime, the quality of local institutions and FDI in Italy: A panel data analysis

This paper examines the impact of crime on foreign direct investment (FDI) inflows in the Italian provinces. The incidence of organized crime is measured by the number of complaints regarding criminal offences of different kinds traditionally related to the mafia organizations. The results show how the correlation between organized crime and FDI is both negative and significant, even when an indicator of financial incentives for investment is included in the regressions. Our analysis shows that crime represents a deterrent for foreign investors, suggesting that high levels of (certain) crimes may be perceived as a signal of a local socioinstitutional environment unfavourable for FDI

European Economic Policies at Work : the costs of Price Stability and Budget Consolidation

The paper investigates whether the policy framework adopted by the EMU participating countries might create recessive tendencies. First, we check the existence of a deflationary bias by separately analysing monetary and fiscal policy. The analysis of monetary policy focuses on a backward- and a forward-looking monetary rule. The reaction functions are estimated to capture the criteria that a centralized monetary authority should use in setting short-term interest rate. Second, a comparative analysis is made of the ability of different central banks to stabilize output and inflation. Precisely, we compare the strategy followed by the European Central Bank, the Deutsche Bundesbank and the US Federal Reserve. Then, a measure of fiscal bias is retrieved by estimating the impact that a change in the primary surplus to GDP ratio has on the real economy. Finally, we search for a quantitative assessment of the recessive propensity of the European economic policies by estimating an overall policy bias. The results suggest the EU institutional set-up might create and/or amplify the recessive tendencies. The policy constraints the EMU members face were dreamt when the Community was struggling with an inflationary legacy. The danger nowadays is not inflation but rather its opposite, deflation. As a consequence, the EU institutions need to be at least partially reformedMonetary and Fiscal Strategy; ECB; EMU

On Keynesian effects of (apparent) non-Keynesian fiscal policies

The aim of this paper is to evaluate the robustness of the theory that claims restrictive effects of expansionary fiscal policy. It shows that such so-called “non-Keynesian effects” may arise from synchronous and opposite monetary policy interventions. The paper demonstrates this conclusion through a stylized model – supported by an empirical investigation on ECB and FED reaction functions – in which Central Banks consider deficit spending as an element that generates inflation expectations. Econometric analysis also shows that the ECB reacts asymmetrically to deficit spending variations while the FED has a linear reaction to this indicator.Fiscal policy; Monetary policy; Central Banks Policy strategies

On Keynesian effects of (apparent) non-Keynesian fiscal policies

The aim of the paper is to evaluate the robustness of the theory that claims for restrictive effects of expansionary fiscal policy. It shows that such socalled “non-Keynesian effects” may arise as a consequence of a synchronous and opposite monetary policy intervention. The paper demonstrate this conclusion through a stylized model – supported by an empirical investigation on ECB and FED reaction functions - in which Central Banks take into account deficit spending as an element that generate inflation expectations. The econometric analysis shows also that the ECB reacts asymmetrically to deficit spending variations while the FED has a linear reaction to this indicator.Fiscal policy, Monetary policy, Central Banks Policy strategies

Criminalità e investimenti esteri. Un’analisi per le province italiane

The paper estimates the effects of organized crime on FDI inflows in 103 Italian Provinces in the period 2004-06. The presence of organized crime at provincial level is quantified through several indicators, based on data for different kinds of crimes: extortions; criminal association, included mafia (art. 416 and 416 bis Italian Penal Code); attempts; crime of arsons. Several control variables are used, included a proxy for (financial) investment incentives provided by public sectors. Estimation suggests that FDI inflows are influenced by different variables. Results show as the number of extortions and the number of persons denounced for "crime association" are significantly and negatively correlated with FDI inflows. Finally, our analysis suggests the presence of organized crime as a strong disincentive for foreign investors, particularly in the less developed Italian provinces

Organized Crime and Foreign Direct Investment: the Italian Case

The paper estimates the effects of organized crime on FDI inflows in 103 Italian provinces in the period 2004-06. The presence of organized crime at a provincial level is quantified through several indicators, based on data for different kinds of crimes: extortion; association for criminal purposes, including mafia (Art. 416 and 416 bis of the Italian Penal Code); attacks; arson. Several control variables are used, included a proxy for (financial) investment incentives provided by public sectors. Estimation suggests that FDI inflows are influenced by different variables. Our results show that the extent of extortion and the number of persons denounced for "criminal association" are significantly and negatively correlated with FDI inflows. Finally, our analysis suggests the presence of organized crime is a strong disincentive for foreign investors, particularly in the less developed Italian provinces