Does globalisation affect crime? theory and evidence

Globalization skeptics argue that trade liberalization has high social costs, including an increase in expropriative behavior such as civil-conflict, coercion of labor and crime. We show that a theoretical relationship between trade and expropriation exists, but the sign differs for developed and developing economies. We verify this empirically using data on crime rates. Specifically we find trade liberalization,as measured by both higher openness and lower import duty rates, tends to increase burglaries and theft in very labor abundant countries. For other countries, however,we find that trade liberalization has either a small negative effect on crime,or no effect, depending on the country’s capital abundance.