Organised crime infiltration in the legitimate private economy - An empirical network analysis approach

TL;DR

This paper investigates how organized crime infiltrates legitimate private economies by analyzing network data from a Sicilian city, revealing that central and smaller firms in key sectors are most vulnerable to criminal infiltration.

Contribution

It introduces an empirical network analysis approach to uncover patterns of criminal infiltration in private economies, focusing on sector centrality and firm vulnerability.

Findings

High centrality sectors are more susceptible to infiltration.

Fewer firms in a sector increase vulnerability.

Centrality is a key factor for firm sensitivity to infiltration.

Abstract

It is estimated that Italian Mafias registered 135 billion euros in profits only in 2010. Part of this huge amount of money, coming mostly from the drugs, prostitution and arms illicit markets, is often used to invest into legitimate private economies. As a consequence, the affected economies destabilise, become entrenched with violent forms of competition and are bound to stagnation. Nonetheless, few are the attempts to uncover the patterns followed by criminal organisations in their business ventures. The reason lays mostly in the poor availability of data on criminal activity, or in the highly risky task of gather it. This paper partially fills this gap thanks to access to information about the Sicilian Mafia in a city. More specifically, it tries to analyse the nature and extent of criminal infiltration into the legitimate private economy of the case-study using network techniques. The research demonstrates that sectors with a high degree of centrality and comprising fewer firms are the most vulnerable to this kind of security threat. It also shows that centrality is also the key criterion that makes a firm sensitive to infiltration, provided it belongs to a susceptible economic sector.