Study: How Removing Mafia Infiltration in Cities Impacts Economic Growth
Why it Matters: Organized crime significantly impacts economic and social landscapes. Its deep-seated influence challenges growth and development, especially in regions where it has firmly entrenched itself over the years.
The Big Picture: A recent study (Organized Crime and Economic Growth: Evidence from Municipalities Infiltrated by the Mafia by Alessandra Fenizia & Raffaele Saggio) sheds light on Italy's robust strategy against Mafia infiltration within local governments. Termed 'city council dismissal' (CCD), this policy involves a complete overhaul of municipal governance under Mafia suspicion, replacing local officials with government-appointed commissioners.
By the Numbers:
The study analyzed 245 CCD instances from 1991 to 2016.
A notable outcome is a 16.9% increase in employment and a 9.4% rise in the number of firms in affected areas, observed over a nine-year period.
Additionally, there was a 15% hike in industrial real estate prices, signaling a boost in economic activities.
Yes, But: The economic turnaround following CCDs isn't immediate. The most significant changes were observed a few years after the policy implementation.
Between the Lines: CCDs' success is largely attributed to reducing Mafia influence. This is evident from:
A shift in the political landscape, with an influx of younger, more educated politicians, including an increase in female representation.
A reduction in business-politics connections.
Growth in sectors previously dominated by the Mafia, suggesting a decrease in its controlling power.
The Other Side: Alternative theories like increased government funding or enhanced administrative efficiency due to CCDs were found to be less significant.
What They're Saying: Experts highlight that CCDs target not just illegal activities but also aim at uprooting corrupt institutional frameworks, marking a shift in anti-organized crime strategies.
The Bottom Line: CCDs emerge as a powerful measure against entrenched organized crime, emphasizing the need for breaking the nexus between crime and politics and reinstating trust in local governance. However, the effectiveness hinges on local perceptions and the gradual erosion of criminal influence to foster sustainable economic growth.