Police and Crime Against Firms in Developing Economies

Economic theory predicts that a rise in police presence will reduce criminal activity. However several studies in the literature have found mixed results. This study adds to the literature by exploring the relationship between the size of police and crime against firms, an important issue especially for developing economies. Using data for about 12,000 firms in 27 developing countries we find that increasing the police force has a negative effect on crime against firms. We also find that several macro-economic factors can weaken or strengthen this negative effect. The results are robust to various sensitivity checks.