From Drug Lords to Police State:The Effects of Order Transition on Local Economies


What is the effect on local economies when the state intervenes to capture its own territoriesback from non-state actors? In 2008, the government of Rio de Janeiro, Brazil implementeda policy to take control offavelasthat were previously dominated by criminal organizations.We use day and night luminosity to assess the effects of this program on economic growth.The difference-in-differences design shows that state intervention has a significant and neg-ative average treatment effect on thefavelasthat received the intervention. We further testa mechanism to explain this economic downturn institutional replacement. Based on crimedata, we demonstrate that this effect is caused by the destruction of local markets, especiallyillicit activities. The data highlight the perils of order transition, even when OCGs are removedby state actors. Furthermore, this paper reinforces the need for policies that are mindful of theexternalities of institutional shifts

Comparative Political Studies
José Incio
José Incio
Ph.D in Political Science

My research interests include democratic backsliding, subnational politics, methodology.