Modernization Theory Revised: Testing the Relationship between Inward Foreign Direct Investment and Homicide

Philip J.  Levchak

doi:10.6000/1929-4409.2024.13.09

Authors

Philip J. Levchak Department of Sociology and Criminal Justice, University of Hartford, 200 Bloomfield Avenue, West Hartford, CT 06117, USA https://orcid.org/0000-0001-5036-9007

DOI:

https://doi.org/10.6000/1929-4409.2024.13.09

Keywords:

Homicide, cross-national, globalization, modernization, violence, trade

Abstract

Purpose: Modernization theory suggests that economic development is temporarily disruptive to social life and can lead to crimes of violence such as homicide. However, few studies have considered how the modernization process works. Specifically, they neglected the role of globalization. Previous research has suggested that certain measures of globalization may be theoretically linked to homicide. This study examines how inward Foreign Direct Investment (FDI), a key component of globalization and economic development, is associated with cross-national homicide rates.

Methods: Data from 101 countries were collected and analyzed to examine the relationship between inward FDI and homicide. Indirect effects of inward FDI on homicide through urbanization and economic growth were also examined.

Results: The results show that inward foreign direct investment increases cross-national homicide rates, both directly and indirectly through increased urbanization.

Conclusion: While economic development benefits society, the concomitant, deleterious effects should be considered by policymakers, especially those seeking inward foreign direct investment in their countries. Future researchers will want to consider examining other measures of globalization.

References

Alfaro, Laura, Arrendam Chanda, Sebnem Kalemli–Ozcan, and Selin Sayek. 2004. “FDI and Economic Growth: The Role of Local Financial Markets.” Journal of International Economics 64(1):89–112. https://doi.org/10.1016/S0022-1996(03)00081-3 DOI: https://doi.org/10.1016/S0022-1996(03)00081-3

Altheimer, Irshad. 2008. “Social Support, Ethnic Heterogeneity, and Homicide: A Cross-National Approach.” Journal of Criminal Justice 36(2):103–14. https://doi.org/10.1016/j.jcrimjus.2008.02.002 DOI: https://doi.org/10.1016/j.jcrimjus.2008.02.002

Arthur, John. 1991. “Development and Crime in Africa: A Test of Modernization Theory.” Journal of Criminal Justice 19(6):499-513. https://doi.org/10.1016/0047-2352(91)90062-Z DOI: https://doi.org/10.1016/0047-2352(91)90062-Z

Blomström, Magnus, Robert E. Lipsey, and Mario Zejan. 1994. “What Explains the Growth of Developing Countries?” Pp. 243–59 in Convergence of Productivity: Cross-National Studies and Historical Evidence, edited by W. J. Baumol, R. R. Nelson, and E. N. Wolff. New York, NY: Oxford University Press.

Balasubramanyam, Vudayagiri N., M. Salisu, and David Sapsford. 1996. “Foreign Direct Investment and Growth in EP and IS Countries.” Economic Journal 106(434):92–105. https://doi.org/10.2307/2234933 DOI: https://doi.org/10.2307/2234933

Barro, Robert J. and Jong-Wha Lee. 1993. “International Comparisons of Educational Attainment.” Journal of Monetary Economics 32(3):363-394. https://doi.org/10.1016/0304-3932(93)90023-9 DOI: https://doi.org/10.1016/0304-3932(93)90023-9

Barro, Robert J. and Jong-Wha Lee. 1994. “Sources of Economic Growth.” Carnegie-Rochester Conference Series on Public Policy 40:1-46. https://doi.org/10.1016/0167-2231(94)90002-7 DOI: https://doi.org/10.1016/0167-2231(94)90002-7

Baumer, Eric P. and Regan Gustafson. 2007. “Social Organization and Instrumental Crime: Assessing the Empirical Validity of Classic and Contemporary Anomie Theories.” Criminology 45(3):617-663. https://doi.org/10.1111/j.1745-9125.2007.00090.x DOI: https://doi.org/10.1111/j.1745-9125.2007.00090.x

Beck, Nathaniel and Jonathan N. Katz. 1995. “What to do (and not to do) with Time-Series Cross-Section Data.” American Political Science Review 89(3):634-647. https://doi.org/10.2307/2082979 DOI: https://doi.org/10.2307/2082979

Bengoa, Marta and Blanca Sanchez–Robles. 2003. “Foreign Direct Investment, Economic Freedom and Growth: New Evidence from Latin America.” European Journal of Political Economy 19(3):529–45. https://doi.org/10.1016/S0176-2680(03)00011-9 DOI: https://doi.org/10.1016/S0176-2680(03)00011-9

Bennett, Richard R. 1991. “Development and Crime: A Cross-National Time Series Analysis of Competing Models.” The Sociological Quarterly 32(3):343–63. https://doi.org/10.1111/j.1533-8525.1991.tb00163.x DOI: https://doi.org/10.1111/j.1533-8525.1991.tb00163.x

Bhagwati, Jagdish N. 1978. “Export Performance and Other Effects.” In Foreign Trade Regimes and Economic Development: Anatomy and Consequences of Exchange Control Regimes (pp. 182-204). NBER.

Bhagwati, Jagdish N. and T. N. Srinivasan. 1975. “Export Policy and Performance, 1951-66.” In Foreign Trade Regimes and Economic Development: India (pp. 53-75). NBER.

Bjerregaard, Beth and John K. Cochran. 2008. “A Cross–National Test of Institutional Anomie Theory: Do the Strength of Other Social Institutions Mediate or Moderate the Effects of the Economy on the Rate of Crime.” Western Criminology Review 9 (1):31–48.

Blomström, Magnus, Robert E. Lipsey, and Mario Zejan. 1994. “What Explains the Growth of Developing Countries?” Pp. 243–59 in Convergence of Productivity: Cross-National Studies and Historical Evidence, edited by W. J. Baumol, R. R. Nelson, and E. N. Wolff. New York, NY: Oxford University Press. DOI: https://doi.org/10.1093/oso/9780195083903.003.0009

Borensztein, Eduardo, Jose De Gregorio, and Jong–Wha Lee. 1998. “How Does Foreign Direct Investment Affect Economic Growth?” Journal of International Economics 45(1):115–35. https://doi.org/10.1016/S0022-1996(97)00033-0 DOI: https://doi.org/10.1016/S0022-1996(97)00033-0

Brady, David and Ryan Denniston. 2006. “Economic Globalization, Industrialization, and Deindustrialization in Affluent Democracies.” Social Forces 85:297–329. https://doi.org/10.1353/sof.2006.0117 DOI: https://doi.org/10.1353/sof.2006.0117

Brady, David, Yunus Kaya, and Jason Beckfield. 2007. “Reassessing the Effect of Economic Growth on Well-Being in Less-Developed Countries, 1980–2003.” Studies in Comparative International Development 42(1):1–35. https://doi.org/10.1007/s12116-007-9003-7 DOI: https://doi.org/10.1007/s12116-007-9003-7

Campos, Nauro F. and Yuko Kinoshita. 2002. “Foreign Direct Investment as Technology Transferred: Some Panel Evidence from the Transition Economies.” The Manchester School 70(3):398–419. https://doi.org/10.1111/1467-9957.00309 DOI: https://doi.org/10.1111/1467-9957.00309

Carkovic, Maria and Ross Levine. 2005. “Does Foreign Direct Investment Accelerate Economic Growth?” Pp. 195–220 in Does Foreign Direct Investment Promote Development? edited by T.H. Moran, E.M. Graham, and M. Blomström. Washington, DC: Institute for International Economics and Center for Global Development.

Clement, Matthew Thomas, Nathan, W. Pino, and Jarrett Blaustein. 2023. “The Persistent Countervailing Consequences of Urbanization: A Longitudinal Study of Homicide Rates.” European Journal of Criminology 20(6):1829-1851. https://doi.org/10.1177/14773708221098990 DOI: https://doi.org/10.1177/14773708221098990

Cochran, John K. and Beth Bjerregaard. 2012. “Structural Anomie and Crime: A Cross-National Test.” International Journal of Offender Therapy and Comparative Criminology 56(2):201-217. https://doi.org/10.1177/0306624X10396071 DOI: https://doi.org/10.1177/0306624X10396071

Cohen, Lawrence E. and Marcus Felson. 1979. “Social Change and Crime Rate Trends: A Routine Activity Approach.” American Sociological Review 44:588-608. DOI: https://doi.org/10.2307/2094589

Cole, Julio H. and Andres Marroquin Gramajo. 2009. “Homicide Rates in a Cross-Section of Countries: Evidence and Interpretations.” Population and Development Review 35(4):749–76. https://doi.org/10.1111/j.1728-4457.2009.00307.x DOI: https://doi.org/10.1111/j.1728-4457.2009.00307.x

Currie, Elliott. 1997. “Market, Crime and Community: Toward a Mid-Range Theory of Post-Industrial Violence.” Theoretical Criminology 1:147–72. https://doi.org/10.1177/1362480697001002001 DOI: https://doi.org/10.1177/1362480697001002001

De Gregorio, Jose. 1992. “Economic Growth in Latin America.” Journal of Development Economics 39(1):58–84. https://doi.org/10.1016/0304-3878(92)90057-G DOI: https://doi.org/10.1016/0304-3878(92)90057-G

Durkheim, Emile. 1951 [1897]. Suicide. London: Routledge.

Durkheim, Emile. 1984 [1902]. Professional Ethics and Civil Morals. New York, NY: Routledge.

Durkheim, Emile. 1997 [1893]. The Division of Labor in Society. New York, NY: The Free Press.

Fajnzylber, Pablo, Daniel Lederman, and Norman Loayza. 2002. “Inequality and Violent Crime.” The Journal of Law and Economics 45(1):1–40. https://doi.org/10.1086/338347 DOI: https://doi.org/10.1086/338347

Firebaugh, Glenn and Frank D. Beck. 1994. “Does Economic Growth Benefit the Masses? Growth, Dependence, and Welfare in the Third World.” American Sociological Review 59(5):631–53. https://doi.org/10.2307/2096441 DOI: https://doi.org/10.2307/2096441

Frey, R. Scott and Carolyn Field. 2000. “The Determinants of Infant Mortality in the Less Developed Countries: A Cross-National Test of Five Theories.” Social Indicators Research 52(3):215-234. https://doi.org/10.1023/A:1007093631977 DOI: https://doi.org/10.1023/A:1007093631977

Greenaway, David and Chong Hyun Nam. 1988. “Industrialisation and Macroeconomic Performance in Developing Countries under Alternative Trade Strategies.” Kyklos 41(3):419-435. https://doi.org/10.1111/j.1467-6435.1988.tb01263.x DOI: https://doi.org/10.1111/j.1467-6435.1988.tb01263.x

Groves, Walter B., Richard McCleary, and Graeme R. Newman. 1985. “Religion, Modernization, and World Crime.” Comparative Social Research 8(1):59–78.

Guillén, Mauro. F. 2001. “Is Globalization Civilizing, Destructive, or Feeble? A Critique of Five Key Debates in the Social Science Literature.” Annual Review of Sociology 27(1):235–60. https://doi.org/10.1146/annurev.soc.27.1.235 DOI: https://doi.org/10.1146/annurev.soc.27.1.235

Hermes, Niels and Robert Lensink. 2003. “Foreign Direct Investment, Financial Development and Economic Growth.” Journal of Development Studies 40(1):142–63. https://doi.org/10.1080/00220380412331293707 DOI: https://doi.org/10.1080/00220380412331293707

Hoselitz, Bert. F. 1960. Theories of Stages of Economic Growth. New York, NY: The Free Press.

Huang, W. S. Wilson. 1995. “A Cross-National Analysis on the Effect of Moral Individualism on Murder Rates.” International Journal of Offender Therapy and Comparative Criminology 39(1):63–75. https://doi.org/10.1177/0306624X9503900108 DOI: https://doi.org/10.1177/0306624X9503900108

Huang, W. S. Wilson. 2001. “A Research Note on Reporting Discrepancies in International Homicide Data.” International Journal of Comparative and Applied Criminal Justice 25(2):167–81. https://doi.org/10.1080/01924036.2001.9678672 DOI: https://doi.org/10.1080/01924036.2001.9678672

International IDEA. (2023). Global State of Democracy Indicators. Stockholm, Sweden.

Kilic, Cuneyt. 2015. “Effects of Globalization on Economic Growth: Panel Data Analysis for Developing Countries.” Petroleum-Gas University of Ploiesti Bulletin, Technical Series 67(1):1-15.

Krahn, Harvey, Timothy F. Hartnagel, and John W. Gartrell. 1986. “Income Inequality and Homicide Rates: Cross-National Data and Criminological Theories.” Criminology 24:269–294. https://doi.org/10.1111/j.1745-9125.1986.tb01496.x DOI: https://doi.org/10.1111/j.1745-9125.1986.tb01496.x

LaFree, Gary and Bo Jiang. 2023. “Does Globalization Reduce Personal Violence? The Impact of International Trade on Cross-National Homicide Rates.” Social Forces 102(1):353-376. https://doi.org/10.1093/sf/soac123 DOI: https://doi.org/10.1093/sf/soac123

Levchak, Philip J. 2015. “Extending the Anomie Tradition: An Assessment of the Impact of Trade Measures on Cross-National Homicide Rates.” Homicide Studies 19(4):384-400. https://doi.org/10.1177/1088767914551169 DOI: https://doi.org/10.1177/1088767914551169

Levchak, Philip J. 2016. “The Relationship between Urbanisation and Cross-National Homicide Rates: Robustness across Multiple Estimation Methods.” International Journal of Comparative and Applied Criminal Justice 40(3):225-243. https://doi.org/10.1080/01924036.2016.1153492 DOI: https://doi.org/10.1080/01924036.2016.1153492

Levchak, Philip J. 2019. “Clarification and Refinement of Modernization Theory: How the Global Economy Impacts Homicide Rates.” Sociological Focus 52(4):309-323. https://doi.org/10.1080/00380237.2019.1668319 DOI: https://doi.org/10.1080/00380237.2019.1668319

Li, De. 1995. “Economic Development, Social Control, and Murder Rates: A Cross-National Approach.” Cross-Cultural Research 29(4):361–82. https://doi.org/10.1177/106939719502900403 DOI: https://doi.org/10.1177/106939719502900403

Li, Xiaoying and Xiaming Liu. 2005. “Foreign Direct Investment and Economic Growth: An Increasingly Endogenous Relationship.” World Development 33(3):393–407. https://doi.org/10.1016/j.worlddev.2004.11.001 DOI: https://doi.org/10.1016/j.worlddev.2004.11.001

Lin, Ming-Jen. 2007. “Does Democracy Increase Crime? the Evidence from International Data.” Journal of Comparative Economics 35(3):467–83. https://doi.org/10.1016/j.jce.2007.06.001 DOI: https://doi.org/10.1016/j.jce.2007.06.001

London, Bruce. 1987. “Structural Determinants of Third World Urban Change: An Ecological and Political Analysis.” American Sociological Review 52(1):28–43. https://doi.org/10.2307/2095390 DOI: https://doi.org/10.2307/2095390

London, Bruce and David A. Smith. 1988. “Urban Bias, Dependence, and Economic Stagnation in Noncore Nations.” American Sociological Review 53(3):454–63. https://doi.org/10.2307/2095652 DOI: https://doi.org/10.2307/2095652

Marx, Karl. 1992 [1867]. Capital: A Critique of Political Economy. New York, NY: Penguin Books.

Maume, Michael. O. and Matthew R. Lee. 2003. “Social Institutions and Violence: A Sub‐National Test of Institutional Anomie Theory.” Criminology 41(4):1137-1172. https://doi.org/10.1111/j.1745-9125.2003.tb01016.x DOI: https://doi.org/10.1111/j.1745-9125.2003.tb01016.x

Messner, Steven F. 1980. “Income Inequality and Murder Rates: Some Cross-National Findings.” Comparative Social Research 3(1):185–98.

Messner, Steven F. 1982. “Societal Development, Social Equality, and Homicide: A Cross-National Test of A Durkheimian Model.” Social Forces 61(1):225–40. https://doi.org/10.1093/sf/61.1.225 DOI: https://doi.org/10.1093/sf/61.1.225

Messner, Steven F. 1989. “Economic Discrimination and Societal Homicide Rates: Further Evidence on the Cost of Inequality.” American Sociological Review 54(4):597–611. https://doi.org/10.2307/2095881 DOI: https://doi.org/10.2307/2095881

Messner, Steven. F. and Richard Rosenfeld. 1997. “Political Restraint of the Market and Levels of Criminal Homicide: A Cross-National Application of Institutional-Anomie Theory.” Social Forces 75(4):1393-1416. https://doi.org/10.1093/sf/75.4.1393 DOI: https://doi.org/10.1093/sf/75.4.1393

Messner, Steven F., Lawrence E. Raffalovich, and Peter Shrock. 2002. “Reassessing the Cross-National Relationship bet-ween Income Inequality and Homicide Rates: Implications of Data Quality Control in the Measurement of Income Dis-tribution.” Journal of Quantitative Criminology 18(4):377–95. https://doi.org/10.1023/A:1021169610837 DOI: https://doi.org/10.1023/A:1021169610837

Messner, Steven F., Lawrence E. Raffalovich, and Gretchen M. Sutton. 2010. “Poverty, Infant Mortality, and Homicide Rates in Cross-National Perspective: Assessments of Criterion and Construct Validity.” Criminology 48:509-537. https://doi.org/10.1111/j.1745-9125.2010.00194.x DOI: https://doi.org/10.1111/j.1745-9125.2010.00194.x

Neapolitan, Jerome L. 1994. “Cross-National Variation in Homicides: The Case of Latin America.” International Criminal Justice Review 4(1):4–22. https://doi.org/10.1177/105756779400400102 DOI: https://doi.org/10.1177/105756779400400102

Neapolitan, Jerome L. 1997. “Homicides in Developing Nations: Results of Research Using a Large and Representative Sample.” International Journal of Offender Therapy and Comparative Criminology 41(4):358–74. https://doi.org/10.1177/0306624X97414006 DOI: https://doi.org/10.1177/0306624X97414006

Neapolitan, Jerome L. 1998. “Cross-National Variation in Homicides: Is Race a Factor?” Criminology 36(1):139–56. https://doi.org/10.1111/j.1745-9125.1998.tb01243.x DOI: https://doi.org/10.1111/j.1745-9125.1998.tb01243.x

Neuman, W. Lawrence and Ronald J. Berger. 1988. “Competing Perspectives on Cross-National Crime: An Evaluation of Theory and Evidence.” The Sociological Quarterly 29(2):281–313. https://doi.org/10.1111/j.1533-8525.1988.tb01255.x DOI: https://doi.org/10.1111/j.1533-8525.1988.tb01255.x

Neumayer, Eric. 2003. “Good Policy Can Lower Violent Crime: Evidence from a Cross-National Panel of Homicide Rates, 1980–1997.” Journal of Peace Research 40(6):619–40. https://doi.org/10.1177/00223433030406001 DOI: https://doi.org/10.1177/00223433030406001

Nivette, Amy. 2011. “Cross-National Predictors of Crime: A Meta-Analysis.” Homicide Studies 15:103-131. https://doi.org/10.1177/1088767911406397 DOI: https://doi.org/10.1177/1088767911406397

Ortega, Suzanne T., Jay Corzone, Cathleen Burnett, and Tracey Poyer. 1992. “Modernization, Age Structure, and Regional Context: A Cross-National Study of Crime.” Sociological Spectrum 12(3):257–77. https://doi.org/10.1080/02732173.1992.9982000 DOI: https://doi.org/10.1080/02732173.1992.9982000

Pratt, Travis C. and Timothy W. Godsey. 2003. “Social Support, Inequality, and Homicide: A Cross-National Test of an Integrated Theoretical Model.” Criminology 41(3):611–43. https://doi.org/10.1111/j.1745-9125.2003.tb00999.x DOI: https://doi.org/10.1111/j.1745-9125.2003.tb00999.x

Pridemore, William Alex. 2008. “A Methodological Addition to the Cross-National Empirical Literature on Social Structure and Homicide: A First Test of the Poverty-Homicide Thesis.” Criminology 46:133-154. https://doi.org/10.1111/j.1745-9125.2008.00106.x DOI: https://doi.org/10.1111/j.1745-9125.2008.00106.x

Rennó Santos, Mateus, Douglass B. Weiss, and Alexander Testa. 2022. “International Migration and Cross-National Homicide: Considering the Role of Economic Development.” International Journal of Comparative and Applied Criminal Justice 46(2):119-139. https://doi.org/10.1080/01924036.2020.1844250 DOI: https://doi.org/10.1080/01924036.2020.1844250

Rogers, Meghan L. and William Alex Pridemore. 2023. “Not Just Another Test of Institutional Anomie Theory: Assessing Relative Institutional Imbalances.” Justice Quarterly 40(4):559-586. https://doi.org/10.1080/07418825.2022.2102535 DOI: https://doi.org/10.1080/07418825.2022.2102535

Romer, Paul M. 1993. “Idea Gaps and Object Gaps in Economic Development.” Journal of Monetary Economics 32:543–73. https://doi.org/10.1016/0304-3932(93)90029-F DOI: https://doi.org/10.1016/0304-3932(93)90029-F

Samimi, Parisa and Hashem Salarzadeh Jenatabadi. 2014. “Globalization and Economic Growth: Empirical Evidence on the Role of Complementarities.” PLOS One 9(4):e87824. https://doi.org/10.1371/journal.pone.0087824 DOI: https://doi.org/10.1371/journal.pone.0087824

Savolainen, Jukka. 2000. “Inequality, Welfare State, and Homicide: Further Support for the Institutional Anomie Theory.” Criminology 38(4):1021–42. https://doi.org/10.1111/j.1745-9125.2000.tb01413.x DOI: https://doi.org/10.1111/j.1745-9125.2000.tb01413.x

Shelley, Louise. 1981. Crime and Modernization. Carbondale, IL: Southern Illinois University.

Sit, Victor F. S. 2001. “Globalization, Foreign Direct Investment, and Urbanization in Developing Countries.” Pp. 11–54 in Facets of Globalization: International and Local Dimensions of Development, World Bank Discussion Paper No. 415, edited by S. Yusuf, S. Evenett, and W. Wu. Washington, DC: World Bank.

Sit, Victor F. S. and Chun Yang. 1997. “Foreign Investment Induced Exo-Urbanization in the Pearl River Delta, China.” Urban Studies 34(4):647–77. https://doi.org/10.1080/0042098975961 DOI: https://doi.org/10.1080/0042098975961

Waters, Malcolm. 2001. Globalization (2nd ed.). London: Routledge.

World Bank. 2023. World Development Indicators. Washington DC: World Bank.

World Health Organization. 2023. World Health Statistics. Geneva, Switzerland: World Health Organization.

Zhu, Nong, Xubei Luo, and Heng–fu Zou. 2012. “Regional Differences in China’s Urbanization and Its Determinants." CEMA Working Papers 535. China Economics and Management Academy. Beijing, China: Central University of Finance and Economics.