Gemma Dipoppa, University of Pennsylvania

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

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 political and economic competition. I argue that criminal organizations take advantage of the resulting highly competitive environments and expand by offering political and economic actors 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. My main result, obtained using an instrumental variable approach, is that increases in competition in the construction market (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 them to expand to the north. Finally, I show that mafia presence impacts politics in the long-run: infiltrated cities display higher support for the Christian Democracy and for Berlusconi, a support that is stable even when political scandals hit the party. 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.