Working Paper #8, Erickson and Owen
Blood Avocados? Trade Liberalization and Cartel Violence in Mexico
Megan Erickson
Abstract:
How do expanding markets shape organized crime and violence in the developing world? We consider two competing theories predicting the effect of market shocks on violence — the rapacity hypothesis which holds that violence will increase, and the opportunity cost hypothesis which holds that violence will decrease. We test this logic in the Mexican avocado industry with a difference-in-differences design leveraging plausibly exogenous changes in municipal export certification, and find that trade liberalization throughout the 2010s led to significant and substantial decreases in cartel-related homicides. We argue that this finding is consistent with three main explanations — labor shifting from illicit to licit markets, community-coordinated armed resistance to cartels, and cartels intentionally limiting violence. This article contributes to the literature on the domestic consequences of trade liberalization by examining its impact on the local economy, violence, and state building in areas of low state capacity.
