Economic Gangsters: Corruption, Violence, and the Poverty of Nations (Hardcover)

~ (Author), Edward Miguel (Author)
Key Phrases: smuggling gap, economic gangsters, mission diplomats, United States, Hong Kong, Sierra Leone (more...)

Editorial Reviews

From Publishers Weekly

Starred Review. In this surprisingly spry read, authors and economics professors Fisman and Miguel tackle economic development issues in Africa, Asia and Latin America, beginning with the question: after decades of independence and billions in foreign aid, why are so many developing countries still mired in poverty? A big reason, they contend, is corruption. Looking at specific examples, Fisman and Miguel examine various methods and motives of corruption, how agencies counteract it, and what it means with regard to human nature and the fate of nations. Fascinating insights abound: the high correlation between UN diplomats' parking violations and corruption in the home country; the successful public shaming techniques used by Bogata's Mayor Antanas Mockus to reduce criminality; the drastic reduction in road building corruption resulting from Indonesia's simple statement that projects would be audited. Ultimately, Fisman and Miguel conclude that there's not enough verifiable, reproducible results to say whether poverty is intractable and corruption inevitable, or whether poor countries remain poor because they haven't received enough quality aid. Instead, they argue forcefully for more blind trials in economics research to evaluate various development approaches. This thorough, thoughtful guide to global corruption is an engaging, disarmingly upbeat read for fans of Freakonomics and Malcolm Gladwell.
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Review

[S]mart and eminently readable . . . [F]isman and Miguel try to do for global poverty what [Steven] Levitt did for domestic economic issues. For example, they look at the way 'witches' are killed in Tanzania whenever rainfalls fail and food is scarce; it turns out that families try to save food by executing less-productive elderly women as witches.
(Nicholas Kristof NYTimes.com's On the Ground blog )

Columbia's Ray Fisman and Berkeley's Ted Miguel are two of the most creative and interesting economists I know. Each is driven to better understand just what keeps poor countries in poverty, and they are willing to try some pretty amazing research strategies to figure it out. They have traveled far and wide--both geographically and intellectually--and in their beautifully written book Economic Gangsters, they shine a well-honed statistical spotlight on the twin evils of corruption and violence. The book is a dead-set page turner, and there's nothing more fun than feeling like you are next to them as they travel the world in search of the scoundrels responsible for so much suffering.
(Justin Wolfers Freakonomics blog )

[Fisman and Miguel] avoid academic jargon and write for a general audience in explaining how economists study the problem of pervasive endemic poverty. . . . Reminiscent of other lighter looks at economics, e.g., Steven D. Levitt and Stephen J. Dubner's Freakonomics and Tim Harford's The Undercover Economist, this book makes developmental economics both entertaining and accessible to a broad audience.
(Library Journal )

Like many a good television sleuth (think Jessica Fletcher or Ellery Queen), [Fisman] is also an author, even if there the similarity ends. He has written Economic Gangsters and in it he and co-author Edward Miguel trace the steps oft eh corrupt using not DNA or forensic science but data and statistics. Theirs is a treatment to the truism that when you are looking for clues, follow the money. The book gives half a dozen examples of how data can be used to find corrupt behaviour, particularly in developing countries.
(Parminder Bahra The Times (of London) )

In this surprisingly spry read, authors and economics professors Fisman and Miguel tackle economic development issues in Africa, Asia, and Latin America, beginning with the question: after decades of independence and billions in foreign aid, why are so many developing countries still mired in poverty? . . . This thorough, thoughtful guide to global corruption is an engaging, disarmingly upbeat read for fans of Freakonomics and Malcolm Gladwell.
(PublishersWeekly.com )

In their new book Economic Gangsters, authors Raymond Fisman and Edward Miguel try to understand what motivates people to break the law, the consequences of their actions and the implications for prevention. Their effort stands out among many others for their cool-headed application of economic cost-benefit analysis to this shady human behavior.
(Shanghai Daily )

Raymond Fisman and Edward Miguel, two young rising stars of economics, apply the Freakonomics approach to the problems of development in their new book Economic Gangsters. It's a superbly crafted set of essays that raise the bar for clear, accessible pop-economics writing, and offers an excellent overview of recent research into the corruption, violence, and poverty that have long bedeviled the developing world.
(Bradford Plumer The National )

Freakonomics for the Third World. . . . So far this is sounding very much like Steven Levitt's and Stephen Dubner's Freakonomics: looking for an interesting data set with which to test a certain hypothesis, and indeed the basic approach is similar. The ambition, however, is rather grander.
(Tim Worstall The Daily Telegraph )

This book deserves wide readership. Some readers will come for the clever title and the cover's provocative silhouette of a machine-gun-wielding gangster. More, hopefully, will be drawn to the book by reviews like this one and the authors' important message. Economic Gangsters is topical and lively, as its cover suggests, but it is also deadly serious and deeply engrossing. Fisman and Miguel study perhaps the most important question of our day--why some countries grow and prosper while others are trapped in self-reinforcing cycles of violence, corruption, and poverty.
(Choice )

This is sparkling stuff, and the story is enjoyably retold in Fisman and Miguel's slim new volume, Economic Gangsters. I recommend the book wholeheartedly; it is engaging and confidently written, and it describes research of genuine interest. . . . Economic Gangsters tackles two big 'institutional' problems of development economics--corruption and violence--through a series of vignettes based on research studying the value of political connections, smuggling between China and Hong Kong, the links between rainfall and civil war, witch killings in Africa, and rebuilding Vietnam after 'the American War.'
(Tim Harford Reason )

Analyses of crime and corruption tend, not surprisingly, to be long on description and short on empirical analysis. Statistics on amounts embezzled or number of people killed in a genocide lack precision, where they exist at all. [Economic Gangsters] sets out the clever use of the rare reliable statistics that are available to shed light on particular episodes of corruption or violence, and in particular on whether it is possible to design policies which change the incentives of those behaving in undesirable ways. . . . All in all, this is a very readable book which makes a fascinating contribution to the renaissance of careful empirical microeconomics applied to development.
(Diane Coyle The Business Economist )

Fisman and Miguel have turned out another economics tome, written in a friendly and engaging way, yet this one reeks of practicality.
(Sacremento Book Review )

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Product Details

• Hardcover: 250 pages
• Publisher: Princeton University Press (September 2, 2008)
• Language: English
• ISBN-10: 0691134545
• ISBN-13: 978-0691134543
• Product Dimensions: 8.5 x 5.8 x 0.9 inches
• Shipping Weight: 14.1 ounces (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (6 customer reviews)
• Amazon.com Sales Rank: #73,038 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

7 of 7 people found the following review helpful:

5.0 out of 5 stars witty, clever, upbeat, all while tackling some of international development's most difficult issues, November 1, 2008

By	Magic Man (Brigadoon) - See all my reviews

Eight years ago, as I crossed the Uganda-Kenya border, I was sequestered in a shack, interrogated, threatened with prison, and ultimately required to pay a bribe by border guards. After that harrowing experience, I returned to my hotel and recounted the story to the first friendly face I saw: my sympathetic colleague Ted Miguel. Ted and his colleague Ray spent the succeeding years studying violence and corruption in poor countries; and this sweet book is the latest fruit of those labors.

What can economics tell us about corruption and violence around the world? More, perhaps, than you'd expect. Ray and Ted use surprise changes in a dictator's health to measure the value of political connections in Indonesia, rainfall to capture the effect of recessions on violence in Africa, and tricks in the trade data to reveal smuggling. (That's not to mention the parking tickets - Chapter Four.) They present their clever research in surprisingly clear English, and they draw on the related research of other economists as well. They really know how to tell a story: I was captivated by the opening recounting of Kenyan author Ngugi's woes and delighted by the creative policy making of Antanas Mockus, mayor of Bogota.

It's hard not to compare popular economics books today to Freakonomics: Gangsters has the advantages of Ted and Ray's witty, pleasant voice, more of a thematic focus, and none of the self-adulation that took away some Freakonomics' shine.

Despite the focus on corruption and violence, ultimately the book is presenting a miscellany of work that is related but isn't (and perhaps cannot be) circumscribed into a larger theory. Occasionally I found myself wishing a central theory like you find in Malcolm Gladwell's books. But then again, those theories usually aren't convincing for exactly the reason that Ted and Ray don't have one: they are careful and big, broad theories are not. I really enjoyed the clear policy recommendation of Rapid Conflict Prevention Support in Chapter 6, and I look forward to more clear recommendations in the next book. Again, Ted and Ray are careful and tend not to recommend policies that don't have clear evidence to stand on. Not all scholars are comfortable laying out strong recommendations on limited evidence; two books by scholars who are more comfortable are The Bottom Billion and The End of Poverty. (As I recall, that's also the self-definition given by an economic hit man!) The main policy recommendation, ultimately, is more evidence-based policy making, particularly randomized trials of development programs (but with a healthy view of the realistic scope for these kinds of trials).

This book won't just show you that economists can be clever (although it will show you that): It shows that economics, cleverly applied, can illuminate some of the most intractable development problems of our time. I strongly recommend it. And if you don't trust me, Publishers Weekly said that in this "surprisingly spry" read, "fascinating insights abound" [1]. Take it from both of us and learn something.

[1] Publishers Weekly, 6 October 2008.

7 of 8 people found the following review helpful:

5.0 out of 5 stars Incentives matter--to gangsters too, October 6, 2008

By	Nicole (Chicago) - See all my reviews

As Raymond Fisman and Edward Miguel explain at the beginning of their book, there are two main currents of thinking among those who opine on the wisdom of foreign aid: the "poverty trap" view, which holds that aid must be injected to end a vicious cycle in which inability to save leads to disaster in lean years, and the view that more such aid is simply sending good money after bad, straight into the hands of corrupt officials to be funneled away or otherwise wasted. Fisman and Miguel aim to look at corruption and violence in developing countries to determine how prevalent such evils are, how they are caused, and how they can be prevented--and, therefore, what the best way, non-ideologically-speaking, of raising up poor nations might be.

The funny thing about corruption is that it tends to exist out of sight--at least, out of sight of official statistics and public measurements. No one reports the bribes he takes on his income tax returns. So Fisman and Miguel have to come up with creative means of measuring corruption of various types, and this is the most fun part of their book. Economic Gangsters is completely accessible to the general reader, with virtually no economic jargon or concepts more difficult than "incentives matter," but it perfectly captures the exciting, puzzle-solving nature of this kind of academic research.

Fisman and Miguel's biggest, and most important, suggestion is the basic one that foreign aid and other solutions to developing-nation poverty be studied and implemented in an evidence-based manner. Without experimental data it's very difficult to determine whether a particular program is actually effective or not (or cost-effective or not). Randomized trials, like those carried out for developing medicines, are rare in the field of poverty reduction. But sometimes they are carried out. For example, local democratic control of public works projects is often touted as an antidote to corruption and skimming of funds. But in Indonesia a test was conducted to compare road building under local control, the thread of a federal audit, and no corruption prevention. Local control did little better than the control group, while those projects that were audited involved significantly less stolen money.

The authors adhere to their intention to remain non-ideological, and their interest is clearly in going where the evidence leads them. Unfortunately, large-scale economic experiments are often impossible and unethical, so some things can never be tested. But those interested in solutions that actually work should use what information they can. Economic Gangsters provides some of that information, and an interesting look at how to find it. It also tells some great stories about the incentives economic gangsters respond to, the strange circumstances that sometimes create these incentives, and how governments and other groups can play with them to aim for better outcomes.

4 of 4 people found the following review helpful:

5.0 out of 5 stars Political Economy of Conflict Goes Mainstream, November 14, 2008

By	Kirby - See all my reviews

A few years back, economists Ray Fisman (Columbia University) and Edward Miguel (University of California, Berkeley) caught the attention of the global media and the United Nations with their study of diplomats' unpaid parking tickets. At the time, diplomatic immunity allowed representatives to the international body to park in violation of city traffic codes, racking up fines. Fisman and Miguel looked at the list of traffic violations for UN plates over several years. They found that diplomats from some nations such as Canada and Ireland behaved themselves, parking lawfully and paying any tickets, while others such as Kuwait and Chad exploited their power, sometimes in ostentatious ways. Why? The ticket behavior, the economists suggested, is a proxy indicator for the intersection of culture and corruption.

Now, in their recently published book, Economic Gangsters: Corruption, Violence, and the Poverty of Nations, Fisman and Miguel extend their corruption lens to the problems of conflict and development. They look for economic causes of conflict such as water scarcity or food crises to help explain everything from civil wars to witch trials. They ask whether more money or better governance is the key to economic growth for Africa, concluding that--although corruption and economic abuse is a key challenge to development--it won't really be possible to answer the big questions of the field until there is better quality, more scientific evaluation of the results of aid projects.

Economic Gangsters is a pleasurable and fast read, written for a popular audience who may or may not know the context of the work. For development specialists familiar with the writings of Jeffrey Sachs, William Easterly, and Paul Collier, the broad contents of the book will be familiar. As other reviewers pointed out, there is also a certain sense in which discussions of warlords and blood diamonds brush up against diplomats' parking tickets or randomized sampling without connections between the topics ever being delineated. On the whole, however, Fisman and Miguel's presentation feels fresh and dynamic. Even seasoned development practitioners are likely finish with a few new ideas inspired by the book's creative approach to cross-pollinating approaches and examples.

The book is available in print and in Amazon's Kindle e-reader format. The digital version suffers from occasional print type errors (for instance, writing budget as bud-get), but the charts and tables thankfully appear crisp and clear on the Kindle screen. I read in Kindle format and would be pleased to do so again.

Economic Gangsters deserves to be widely read. The authors' tone is friendly and simple, approachable even. This is important, given the complexity and high stakes of the issues at hand. Indeed, the economics of conflict and corruption need to be more widely understood if donor countries' policy making is going to be improved. Yet, one finishes reading this book on the topics of war, poverty, suffering, crime, and interventionist failure feeling not overwhelmed, but rather empowered--equipped with intellectual tools for making the world better, little by little.