Police and Crime in Developing Economies: Evidence from Firm Surveys

Abstract

Economic theory predicts that a rise in police presence will reduce criminal activity. However several studies in the literature have found mixed results. This study adds to the literature by exploring the relationship between the size of police and crime against firms. Using survey data for about 12,000 firms in a cross-section of 27 developing countries we find that increasing the police force is negatively associated with crime against firms. Results are confirmed using a panel of firms for a subset of countries for which data are available. We also find that this negative relationship is stronger under certain macro-economic circumstances.

Keywords: crime, firms, development, police size

JEL Classification: K42, O10, O50