Bricks or cooks? Geographical and social determinants of the investment choices of mafia-type organized crime

This article studies legitimate businesses confiscated from mafia groups in Italy to assess whether mafia investment patterns across industries depend on the characteristics of the geographical environment in which infiltrated firms operate. We carry out a spatial regression analysis of more than 1700 firms, with special emphasis on restaurants/hotels and construction, confiscated from mafia groups in Italy against a set of variables related to the social and criminal environment (with a special emphasis on mafia presence) after controlling for the local business structure and the economic/financial composition of the areas. Ceteris paribus, mafia investments in the construction industry are greater in regions with a higher level of mafia presence, infiltration of public administration and more protected markets; while investments in bars, restaurants and hotels are greater in areas characterized by less rooted mafia presence, higher violence, higher trade openness and cash intensity. The results suggest that mafia investments in construction can benefit from the opportunities offered by grip on the territory and on the public administration; and those in restaurants by concealment drivers, such as money laundering. This article contributes to the understanding of the geography of mafia economy and of the mobility of mafia groups beyond territories of origin, by highlighting the possible instrumental use of legitimate businesses, and the relationship between mafias’ migration and infiltration mechanisms.