When Rapacity Pacifies: Natural Resource Booms, Economic Diversification, and Criminal Violence

Abstract

Natural resource price shocks intensify competition for control of windfall sites. They also prompt criminal organizations to redeploy fighters toward those windfalls, thinning their presence in other resource regions that do not share the price surge. I test this in Mexico, focusing on drug cultivation and the extortion of mining operations. Exploiting exogenous variation in global gold prices (2001–2018) in a panel of 2,444 municipalities, I find that the gold boom led to a 15 percent decrease in homicides, a 19 percent drop in cartel-related executions, and a 19 percent reduction in active cartel cells in the average heroin-producing municipality. Conversely, when U.S.-bound heroin trafficking surged, violence in gold-mining areas fell. Together, the results reveal two linked mechanisms: rapacity in windfall zones and a peace dividend in resource areas bypassed by the boom. I further show that the decline is driven chiefly by reduced inter-cartel competition, with cartel–state clashes essentially unchanged.