Policy tolerance of economic crime? An empirical analysis of the effect of counterfeiting on Italian trade |
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Institution: | Sapienza – University of Rome, Department of Economics and Law, Via Del Castro Laurenziano 9, 00161, Roma, Italy |
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Abstract: | Some governments seem ambivalent towards economic crime because, on the one hand, there are adverse effects on competition and legal businesses; on the other hand, there are benefits through (shadow) employment and income in less-developed areas, as well as benefits through relations of political clientage. We focus on counterfeiting and its economic effects on trade in Italy during the economic crisis. Using a newly built regional dataset and a dynamic panel model, we find evidence of the dual impact of counterfeiting. The production (and exchange) of fake goods depresses the legal market that relies on intellectual property rights but supports shadow-economic activities for the benefit of illegal workers, criminal organisations, and political clientele. We show that the negative effects outweigh the positive effects. |
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Keywords: | Trade openness Export Economic crime Counterfeiting Italy Public policy ambiguity E26 F14 F19 C23 K14 |
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