Forms of violence and its relation to departmental manufacturing investment in Colombia: 2000-2013

Abstract

For decades, violence has affected the economic, political, and social development of Colombia. The objective of this paper is to evaluate the effects of violent crimes against people and private property on the behaviour of the manufacturing sector´s net investment in the departments of Colombia during the period 2000 - 2013. This work is based on the models proposed by Acevedo and Mora (2009) and Acevedo and García (2015) and uses statistical information from the Annual Manufacturing Survey and various forms of violence (kidnappings, robberies, and homicides) obtained from the database of the Journal Criminalidad for the 32 departments and Bogota, D. C. We use a panel data model and the goodness of fit to select the models that best fit the data. The empirical evidence shows that violence measured by the number of kidnappings, rather than homicides and robberies, is the phenomenon that has affected investment the most. Specifically, a 1% increase in the number of kidnappings reduces net investment by 0.04%. These results showed that Bolívar, Caquetá, Cesar, Meta, and Tolima were the departments most affected by violence in Colombia during the period.