- By Prerna MankadPrerna Mankad is a researcher at Foreign Policy.
Crime does pay—in Italy, at least. According to a recently released annual report by Confesercenti, a major business association in Italy, the four main mafia groups in the country together earn about $126 billion a year (more than Italy’s largest companies), amounting to an astonishing 7 percent of Italy’s GDP. Most of the money is “earned” through drugs, extortion, loan sharking and prostitution, though the estimate excludes the revenues from the sale of drugs.
The mafia’s negative impact has been felt throughout Italy’s economy, though southern Italy remains the most affected region. More than one in five retailers fork over a share of their earnings to racketeers, and at least 150,000 businesses face loan sharking. For most firms, it’s easier to just cut deals with mobsters rather than challenge them.
The mafia may be taking a bite out of the country’s growth. Deterred by mafia activities, just one in ten of Italy’s foreign investors set up companies in the south of the country. Leoluca Orlando, the former mayor of Sicily’s Palermo, laments that were it not for organized crime, “we could be one of the most modern of European countries, with state-of-the-art social services and infrastructure.” Maybe, but Italy’s famous north-side divide has persisted for a long time; in many ways, the mafia is a symptom of broader social underdevelopment in the south and not merely a cause.