Tráfico de drogas, corrupción e inversión extranjera directa: Teoría y evidencia

Espinosa Ramirez, Rafael and Ruiz-Porras, Antonio (2012): Tráfico de drogas, corrupción e inversión extranjera directa: Teoría y evidencia.

Abstract

We develop a microeconomic model to explain why sanction policies used by developed countries have had ambiguous effects to reduce drug trafficking in developing countries. In the model, a country receives FDI depending on its government effort to reduce drug exports. However, local drug producers lobby and offer contributions whose impact depends on the level of government corruption. The government sets the level of enforcement against drug trafficking taking into account the contributions paid and the welfare of the local habitants. Analytically, we use the common agency theory to justify and explain diverse sanction policy outcomes. We also show evidence about the relationships among drug trafficking, corruption and FDI for some Latin-American countries.

• Item Type: MPRA Paper
• English Title: Drug trafficking, corruption and foreign direct investment: Theory and evidence
• Language: Spanish
• Keywords: Drug Trafficking; FDI; Corruption; Latin America
• Subjects: H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements

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