Organised crime infiltration in the legitimate private economy - An empirical network analysis approach

It is estimated that Italian Mafias registered 135 billion euros in profits only in 2010. Part of this huge amount of money, coming mostly from the drugs, prostitution and arms illicit markets, is often used to invest into legitimate private economies. As a consequence, the affected economies destabilise, become entrenched with violent forms of competition and are bound to stagnation. Nonetheless, few are the attempts to uncover the patterns followed by criminal organisations in their business ventures. The reason lays mostly in the poor availability of data on criminal activity, or in the highly risky task of gather it. This paper partially fills this gap thanks to access to information about the Sicilian Mafia in a city. More specifically, it tries to analyse the nature and extent of criminal infiltration into the legitimate private economy of the case-study using network techniques. The research demonstrates that sectors with a high degree of centrality and comprising fewer firms are the most vulnerable to this kind of security threat. It also shows that centrality is also the key criterion that makes a firm sensitive to infiltration, provided it belongs to a susceptible economic sector.

💡 Research Summary

This paper investigates how organized crime, specifically the Sicilian Mafia, infiltrates the legitimate private economy of a small Sicilian city, using network analysis to identify the structural conditions that make certain sectors and firms vulnerable. The authors begin by noting the massive profit generation of Italian mafias—€135 billion in 2010—and the subsequent investment of illicit earnings into legal businesses, which destabilizes local economies, fuels violent competition, and leads to stagnation. Despite the global relevance of such infiltration, empirical studies are scarce due to data scarcity and the high risk of collecting criminal information.

The research question is: “In which economic sectors and firms does organized crime tend to infiltrate?” Two testable hypotheses are formulated: (1) sectors that exhibit high network centrality and a low number of firms (i.e., high monopoly power) are the most susceptible to Mafia infiltration; (2) within those vulnerable sectors, firms that themselves have high centrality are the most likely to be linked to the criminal organization.

A theoretical framework is built on a refined definition of organized crime (Gurciullo 2011) that emphasizes prolonged, structured groups, serious crimes, material benefits, and political/economic infiltration, distinguishing it from broader UN definitions. The legitimate private economy is defined as the subset of economic activities that are legal, formally recorded, and privately owned. The authors propose a behavioral model of Mafia infiltration grounded in bounded rationality, a deductive‑tinkering decision process, and path‑dependency. Over‑accumulated illicit profits act as a catalyst, prompting the Mafia to seek legal investment opportunities where returns are maximized with limited information processing capacity.

Methodologically, the study uses confidential anti‑Mafia police data for the year 2002, covering all private firms operating in the city. First, a one‑mode, undirected sector‑level network is constructed: nodes represent economic sectors, and an edge indicates the existence of at least one transaction between firms of the two sectors. Degree centrality is calculated for each sector, and to capture monopoly power the authors weight centrality by the inverse of the number of firms in the sector, creating a “centrality‑monopoly index.” This index identifies sectors that are both highly connected and concentrated.

The empirical test of Hypothesis 1 reveals that only one sector shows evidence of Mafia infiltration (five firms are linked to the criminal group). This sector’s centrality‑monopoly index is substantially higher than the average across all sectors, supporting the claim that highly central, low‑competition sectors are prime targets.

For Hypothesis 2, a sub‑network consisting solely of the firms within the infiltrated sector is built. Degree centrality is computed for each firm, and four of the five Mafia‑linked firms rank in the top 20 % of centrality within that sub‑network. This finding confirms that, conditional on sector vulnerability, firms occupying central positions in the transaction network are more likely to be co‑opted by organized crime.

To assess robustness, the authors apply bootstrap resampling to generate confidence intervals for the centrality‑monopoly index and the infiltration degree metric. They also discuss limitations: the analysis is confined to a single city and a single year, the transaction data lack weight (e.g., volume or monetary value), and hidden or informal relationships may be omitted. The paper suggests future work should incorporate multi‑year panel data, weighted edges, and broader geographic scopes to validate the generalizability of the results.

In conclusion, both hypotheses receive empirical support, indicating that network structure—specifically high sectoral centrality combined with market concentration—creates fertile ground for Mafia investment, and that within such sectors, firms with high centrality become the preferred conduits for illicit capital. The study contributes a novel quantitative approach to the criminology of economic infiltration and offers concrete policy recommendations: authorities should prioritize monitoring of highly central, low‑competition sectors and implement enhanced surveillance of central firms within those sectors to disrupt money‑laundering pathways and curb the economic influence of organized crime.