Crime and Economic Development in South Africa: A Panel Data Analysis

Leward Jeke, Tafadzwa Chitenderu, Clement Moyo
International Journal of Economics and Business Administration, Volume IX, Issue 2, 424-438, 2021
DOI: 10.35808/ijeba/712


Purpose: This study aims to determine the effects and impact of crime in South Africa. As economies seek to develop through eliminating inequalities, alleviating poverty, and ensuring economic growth, crime often stands in the way, discouraging investments, fuelling migration, increasing transaction costs, to mention just a few, thereby creating economic development disparities. Design/Methodology/Approach: To evaluate the economic effects of crime, selected forms of crime are assessed on economic development as measured by economic growth, investments, and property value, among others between the years 1994-2019. To determine the effects and impact of crime, multiple panel regression analysis techniques were employed. Findings: The Pooled Mean Group technique was utilized in this study, and the results obtained from the econometric modelling indicate that crime has an overall detrimental effect on development. Property crime was found to hurt human development and investment, while contact crime only negatively impacts investments. Practical Implications: Economic effects of crime have been established using South African data. It is imperative to understand that safety and security is everyone’s responsibility to preserve property values, reduce transaction costs, attract investment and economic opportunities for local economic development. Originality/Value: Limited empirical works exist on evaluating the economic effects of crime. Crime is pertinacious to human nature and society, with variations in the extent and types. Even though education is argued to produce positive externalities through reducing crime, statistics have shown the increasing number of sophisticated crimes that involve well-educated individuals.

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