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Smaller firms suffer far more from organised, mafia-style crime

Whether organised crime undermines productivity has been studied extensively in broad terms, but not at the firm level. This column uses extensive firm-level data from across Italy to suggest that this is firmly the case, both through direct and indirect channels. The results point to a substantial negative direct effect of organised crime on firms' productivity growth. Moreover, any positive impact derived from industrial clustering and agglomeration economies is thoroughly debilitated by a strong presence of organised criminality.
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