Poor Institutions, Rich Mines: Resource Curse in the Origins of the Sicilian Mafia
With weak law-enforcement institutions, a positive shock to the value of natural resources may increase demand for private protection and opportunities for rent appropriation through extortion, favoring the emergence of mafia-type organizations. We test this hypothesis by investigating the emergence of the mafia in XIX century Sicily, where a severe lack of state property-right enforcement coincided with a steep rise in international demand for sulfur, Sicily's most valuable export commodity. Using historical data on the early incidence of mafia activity and on the distribution of sulfur reserves, we document that the mafia was more present in municipalities with greater sulfur availability.
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