THE EFFECT OF CRIME RATE ON THE ECONOMIC DEVELOPMENT OF UZBEKISTAN

Abstract

The present study aims to analyze the effect of crime rate on economic development of Uzbekistan. Crime rates have a significantly negative influence on economic growth since it slow-downs economic activity by shattering business confidence, alleviating investment in the area and resulting in government spending being redirected to law enforcement. Using data for a 32-year period starting from 1992, a log-linear model was developed to measure the relationship between crime and GDP growth. The study findings align with existing literature. In Uzbekistan, a 1% rise in criminal activity results in approximately 0.46% decrease in Nominal GDP, suggesting that there is two-to-one negative relationship between the variables of interest. The estimates of the coefficients of crime and unemployment rates turned out to be highly statistically significant, unlike those of other independent variables. The results of the study highlight the importance of policies implemented to reduce criminal activity. However, it is important to achieve it through rising employment opportunities and investment in education, especially in rural areas, to increase the cost-to-benefit ratio of committing crime. These approaches will eventually result in long-term sustainable economic growth.