I came across the following story in the International Herald Tribune on how the mafia accounts for a whopping 7% of Italy's GDP according to Confesercenti, a business group in the country. To the left is a map accompanying the report indicating that mafia activity is concentrated in southern parts of the country. It has long been noted that the northern part of Italy has economically outperformed the south because institutions in the former are better formed. Robert Putnam's well-known book Making Democracy Work noted the (dysfunctional) role played by the mafia. Here is a brief summary of the book's premise...In a study of Italian politics, Making Democracy Work, he contrasted the flourishing democracy of northern Italy with the collapse of politics in the south. Putnam looked back into Italian history and found in the self-governing city republics of the north a strong tradition of voluntary association, trust and civic engagement. The result was a flourishing economy and a healthy polity. The south, by contrast, was riddled by mutual distrust and defection, a Mafia culture of exploitation with little history of voluntary association. In the absence of strong social capital, democracy fell apart and economic growth was hindered.
Anyway, to the article:
Organized crime represents the biggest segment of the Italian economy, accounting for €90 billion in receipts, according to an annual report issued Monday.The report, titled "SOS Businesses" and released by the Confesercenti, a major business association in Italy, asserts that through various activities - extortion, usury, contraband, robberies, gambling and Internet piracy - organized-crime syndicates account for 7 percent of Italy's gross domestic product.
"From the weaving factories, to tourism to business and personal services, from farming to public contracts to real estate and finance, the criminal presence is consolidated in every economic activity," the report said.
The €90 billion, or $128 billion, compares with the figure of €75 billion in the group's 2006 report.
Also highlighted is the trend of collusion that big businesses, especially in public works, participate in. "The businessmen prefer to make a pact with the Mafia rather than denounce the blackmail," the report said.
On Sunday, Pope Benedict XVI visited Naples and condemned a "deplorable" mob violence that he said had insinuated itself into everyday life. Long considered one of Italy's most dangerous cities, Naples is home to the Camorra crime syndicate, the local version of the Sicilian Mafia.
Usury is the most lucrative of activities by organized crime, with syndicates pulling in €30 billion and racketeering €10 billion, the report estimated. Illegal construction nets €13 billion, it added.
The businesses most afflicted by organized crime are in the south, in Sicily, Campania, Calabria and Puglia, the report said.
According to the report, 80 percent of the businesses in the Sicilian cities of Catania and Palermo regularly pay protection money, or "pizzo."
