In the APSA Public Scholarship Program, graduate students in political science produce summaries of new research in the American Political Science Review. This piece, written by Ximena Caló, covers the new article by Bruno Pantaleão, Fundação Getulio Vargas, “Peace Dividends: Criminal Governance, Rational Violence, and Economic Development”.
Crime is typically bad for business. Violence drives away investment, disrupts daily commerce, and traps communities in poverty. But what happens when a criminal organization imposes order in neighborhoods the state has abandoned? Bruno Pantaleão finds that in São Paulo, the rise of a powerful prison gang called the Primeiro Comando da Capital (PCC) paradoxically fueled local economic growth. By establishing rules that curbed violence and created predictability, the PCC transformed some of the city’s most dangerous neighborhoods into places where businesses could operate and jobs could grow.
São Paulo’s urban peripheries have long suffered from chronic violence. Throughout the 1990s, rival gangs fought for control of drug markets, producing some of the highest homicide rates in the Americas. Police forces offered little protection and sometimes made matters worse, siding with one gang over another or engaging in extrajudicial violence. For residents and small business owners in these neighborhoods, daily life was shaped by unpredictability and fear.
The PCC changed this dynamic. Originally formed inside São Paulo’s prisons, the organization gradually extended its reach into the city’s favelas and peripheries beginning in the early 2000s. Unlike many criminal groups, the PCC did not govern through overt armed intimidation. Instead, it established a rule-based system: unauthorized killings were prohibited, firearms were kept out of sight, drug markets were regulated to prevent competitive violence, and disputes were resolved through internal forums rather than gunfights. Theft, robbery, and extortion against local residents were forbidden. The result was a dramatic drop in homicides in neighborhoods where the PCC established control.
“The policy takeaway is the urgent need for states to invest in security and governance in the neighborhoods they have neglected for too long.”To test whether this reduction in violence translated into economic gains, Pantaleão compares neighborhoods that came under PCC control at different times between 2003 and 2013. Because the PCC did not expand everywhere at once, he can track what happened to local economies before and after the organization arrived. He measures economic activity using government employment records, business registrations, and satellite images of nighttime light.
Nighttime light measures allow the author to capture economic activity, including informal commerce, that does not appear in official statistics.
The results show that PCC presence increased the number of formal jobs by about 15.5 percent and the number of registered businesses by about 23.7 percent. These effects were concentrated in commerce rather than industry, suggesting that reduced violence allowed small retail businesses to open and previously informal economic activity to formalize. Nighttime luminosity data confirm the pattern, showing increased economic activity in favelas after PCC entry.
Pantaleão supports these findings with interviews with São Paulo police officers and with extensive on-the-ground research by scholars who have spent years studying the PCC from the inside. Together, these sources paint a picture of neighborhoods where residents, for the first time in decades, could walk to a store without fearing robbery, where shop owners could keep their doors open past dark, and where outside investors saw opportunities rather than threats.
The implications are important, but require careful interpretation. Pantaleão does not argue that criminal governance is desirable. The conditions that allowed the PCC to generate these benefits are rare: a single dominant organization with the capacity and willingness to enforce rules, suppress internal violence, and refrain from extorting the communities it controls. In most settings, criminal organizations are extractive and destabilizing. The broader lesson is not that crime can be good for development, but that the economic costs of state absence in marginalized communities are so severe that even informal, illegitimate providers of order can unlock growth. The policy takeaway is the urgent need for states to invest in security and governance in the neighborhoods they have neglected for too long.
- Ximena Caló is a PhD student in the Department of Social and Political Sciences and the AXA Research Lab on Gender Equality at Bocconi University. Her research interests include political economy, political behavior and representation, comparative politics, and gender and politics. Before starting her PhD, she was a Pre-Doctoral Fellow at the AXA Research Lab on Gender Equality at Bocconi University. She holds an MSc(Res) in European Studies from the London School of Economics (LSE, 2020) and a BA in Political Science and Latin American Studies from Boston University (2018). In Spring 2026, she will be a visiting researcher at Stockholm University and the SNF Agora Academy at Johns Hopkins University.
- PANTALEÃO, BRUNO. 2025. “Peace Dividends: Criminal Governance, Rational Violence, and Economic Development.”, American Political Science Review, 1–13
- About the APSA Public Scholarship Program.
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