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AA00260492-19900001-0041.pdf
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Title |
Title |
CRIME AND ECONOMIC DEVELOPMENT IN A SMALL, OPEN ECONOMY
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SANSARRICQ, Frank
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Brooklyn College of The City University of New York
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Keio Economic Society, Keio University
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1990
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Keio economic studies
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27
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1
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1990
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41
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49
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Abstract |
This paper provides a simple model of a small, open economy whose resources are partially used in illegal activities. Taxes on legal income pay for law enforcement. If, at given terms of trade, economic growth is originally "proillegality biased" ("anti-illegality biased"), even more resources will be channeled (withdrawn) to (form) the illegal sector, because of the associated decrease (increase) in law enforcement expenditures. Thus, we observe a "magnified" Rybczinski effect in either case. This prediction does not depend on whether the government adjusts its law enforcement efforts to the degree of lawlessness. The large country case requires a few qualifications.
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