Poor Institutions, Rich Mines: Resource Curse in the Origins of the Sicilian Mafia
Abstract: Under weak law-enforcement institutions a positive shock to the value of natural resources can increase demand for private protection and opportunities for rent appropriation through extortion, favoring the emergence of mafia-type organizations specialized in such activities. We test this hypothesis by investigating mafia's emergence in XIX century Sicilian municipalities, 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. We find robust evidence of higher early mafia activity in municipalities with greater sulfur availability. Other proposed drivers of mafia's origins are neither clearly identifiable nor statistically relevant.
