Violence and smuggling markets Exploring the governance of illicit trade in Brazil
PhD Prospectus
Norman Paterson School of International Affairs, Carleton University
Philip Jones
PhD Supervisor: Dr. Jean Daudelin
“…men do not take risks except in the proportion to the profit they expect from a successful venture.”
- Cesare Beccaria (1738-1794) on smuggling
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Executive Summary
Brazil shares a largely porous border with 10 different countries stretching nearly 17,000
kilometers. For comparison the US-Mexico border is roughly one fifth of the length, at just under
3,200 kilometers. Brazil’s border has been a hotbed of smuggling activity since at least the
1970s, with goods moving illegally into Brazil via its neighbors (Manos and Dias: 2018). On
average, border violence in Brazil from 2000 to the present has been higher than in the rest of the
country and concentrated in municipalities with smuggling markets. However, in these markets
there have been large changes in the levels of violence over time and across municipalities
without obvious reasons for such variation. Using this region as a social laboratory, and Brazilian
municipalities where smuggling is prevalent as cases, the primary objective of this project is to
discern under what conditions and why smuggling markets become violent.
This research project contributes to the understanding of the mechanics of how illegal
markets function and the relationship between their governance and violence. Evidence on the
causal relationship between market illegality and violence remains limited, though quantitative
as well as qualitative studies exist (Beckert and Dewey 2017; Daudelin and Ratton 2018;
Garfinkel and Skaperdas 2007; Calderón et al. 2015). Although theories about the relationship
abound, there is an emerging consensus that much of the violence stems from a lack of formal
alternatives to peacefully resolve disputes and establish claims over resources (Goldstein 1985;
Reuter 2009; Skarbek 2014). Until now work on smuggling remains under-theorised and under-
studied apart from a few recent exceptions (Ahmad 2017; Rabossi 2018; Andreas 2014; Meagher
2015; Manso and Dias 2018; Chimeli and Soares 2017), without any study systematically
analysing the relationship between the governance of smuggling markets and violence.
The answers to my questions lie in the types of informal, and hybrid governance
arrangements established in border regions, involving both state and non-state actors –
introduced as a “smuggling regime”. My research project involves both quantitative and
qualitative methodologies. Quantitatively, I am using municipal-level geographic and social
development indicators to identify the main structural factors associated with violence. I will use
qualitative approaches to examine specific smuggling markets at the micro level. I intend to
analyse smuggling markets involving both illegal (e.g. drugs) and legal (e.g. electronics) to
determine how different markets operate and are governed. In order to carry out this analysis I
will conduct semi-structured interviews in different Brazilian border municipalities.
A detailed examination of the governance mechanisms used by groups to facilitate the very
large amount of illicit trade between Brazil and its neighbouring countries will help us
understand how and why smuggling markets experience different patterns of violence.
Improving our understanding of illicit economies and the factors that make some of them,
sometimes, violent can also help develop good public policy to reduce the negative economic
and social consequences of illicit markets. Considering estimates that over 60 percent of the
world’s workers, or 2 billion people, participate in the informal economy and that 90 percent of
these jobs are in emerging and developing countries (ILO 2018), this research has wide ranging
implications beyond Brazil and neighbouring countries.
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Table of Contents
A. Introductory Material ............................................................................................................. 3
1) Problem or Puzzle ......................................................................................................... 3
2) Motivation .................................................................................................................... 3
3) Research Question(s) .................................................................................................... 3
4) The Answer................................................................................................................... 4
5) Key Terms .................................................................................................................... 4
B. Identifying What We Know ................................................................................................... 4
6) Literature Review ......................................................................................................... 4
C. How I Will Make My Contribution........................................................................................ 8
7) Theoretical Framework ................................................................................................. 8
8) Hypotheses.................................................................................................................. 10
9) Methodology ............................................................................................................... 10
10) Outline of the Dissertation .......................................................................................... 15
11) Ethics Implications ..................................................................................................... 16
12) Feasibility and Timeline ............................................................................................. 16
Annex I: Maps........................................................................................................................... 20
Map of South America .......................................................................................................... 20
Homicide Rate Map of Brazil ............................................................................................... 21
Map of Brazil and Case Study States .................................................................................... 21
Homicide Rate Map of Case Study Municipalities............................................................... 22
Annex II: Preliminary Illustration of Foz do Iguaçu’s Smuggling Market .............................. 23
Annex III: Preliminary Bibliography ........................................................................................ 25
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A. Introductory Material
1) Problem or Puzzle
Different states' laws and law enforcement capacities meet in border areas. The legal and
regulatory differences, the distinct police and administrative capabilities involved, as well as the
degree of commitment of state authorities, create rent potentials that are central to border
dynamics and the frequent instability that prevails in border regions. Latin America's border
regions have long experienced high rates of violence, which has been traced to the smuggling of
legal and illegal goods and to the peculiarities of military and police enforcement of the
movement of people and goods (Chinchilla 2011). However, violence in border areas is neither
uniform over space nor stable over time. In Brazil, border violence from 2000 to the present is
concentrated in municipalities with smuggling markets, but those markets see substantial
variation in their levels of violence, both over time and across municipalities, without evident
reasons. This is the puzzle my research addresses.
2) Motivation
While illegal and a source of lost revenue for the state and legal firms alike, it is possible that
smuggling contributes to local economies by employing individuals in areas where formal
employment is either hard to come by or insufficient to provide an adequate standard of living. A
problem, however, is that when market activity is relegated to private actors outside the rule of
law, rights and the security of individuals are subject to little if any regulation or minimum
standard. As with so many other types other types of illicit activity, smuggling attracts the
presence of organised criminal groups. These groups have a rich history of using violence as a
means to an end. Thus, smuggling represents a public and human security issue, as well as an
economic challenge for states.
Examining the governance mechanisms used by organised criminal groups to facilitate the
very large amount of illicit trade between Brazil and neighbouring countries will help us
comprehend the relationship between smuggling markets and violence. This research can be used
to gain insights into the functioning of informality in areas traditionally located at the periphery
of states, helping policymakers understand local dynamics that as of yet, have not been explored.
The information derived from this project should help inform public policy towards illegal trade,
local economic development, and public security. Ultimately, the proposed research has the
potential to support efforts to identify the conditions that lead smuggling markets to become
violent and efficiently allocate resources to combat their negative externalities.
3) Research Question(s)
The primary objective of my research is to discern under what conditions and why smuggling
markets become violent?
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In addition to my primary questions, my research will address secondary questions including:
• What are the characteristics of the governance regimes of illicit international trade
(smuggling)?
• How do structural characteristics of municipalities affect violence in Brazilian smuggling
markets?
• Is there a gender-specificity to violence on smuggling markets?
4) The Answer
I propose that there is more violence when informal, hybrid governance arrangements in border
regions are unable to manage competing claims and resolve disputes amongst market
stakeholders through the provision of governance.
5) Key Terms
Smuggling and Smuggling Market:
The act of smuggling is “bringing in or taking out [a product] from one jurisdiction to
another without authorization” (Andreas 2013: x). Smuggling is deemed by states to be illegal,
because of the "good" traded, or because taxes or duties over it have not been paid. The exchange
of smuggled goods takes place in a smuggling market.
Smuggling Regime:
A smuggling regime designates the system of rules and institutional arrangements and
mechanisms that govern – more or less effectively – a particular smuggling market and deters –
more or less effectively – the use of violence among its participants. The regime can be
monopolistic – controlled by one gang – or not, and it can be hybrid – i.e. involve both state and
criminal agents
B. Identifying What We Know
6) Literature Review
Governance is a two-part process. First, governance involves the definition and enforcement
of property rights and contracts between parties. Second, governance is the provision of dispute
resolution mechanisms to resolve conflict between opposing parties. Property rights and
contracts are socially validated claims over a thing, "against the whole world"--i.e. for property
rights, and against a particular party, for a contract (Clarke and Koeler 2005). Claimants can
have the right to use the thing (usus), appropriate returns from said thing (usus fructus), and the
right to change its form, substance, location or other characteristics (Libecap 2003). Ownership
involves a single actor claiming the whole "bundle" of these rights (Ostrom 1990). Enforcement
of a claim is crucial to holding a property right. Enforcement refers to the way in which the claim
will be defended, generally through the use or threat of sanctions. Importantly, enforcement can
be undertaken by both formal and informal actors and can be carried out by three types of agents:
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first party (claimant - me --"us"-- defending my--our-- rights), second party coalitions of
claimants (such as several Indigenous tribes or gangs involved in smuggling), or third party, i.e.
outside authorities that are not directly involved in the market but can intervene in it (state or
organised crime group not directly involved in the trade) (Libecap 2003; Daudelin 2010).
In many of the works on violence in illegal markets (Chimeli and Soares 2017, Goldstein
1985, Reuter 2009, to name but a few), problems of violence and conflict are couched within a
property rights structure, with conflict emerging when property rights are poorly defined, poorly
enforced, or both (Garfinkel and Skaperdas 2007). However, these are necessary but not
sufficient conditions for conflict. Many claims can be poorly defined, poorly enforced, or both,
and still not result in conflict if the thing at stake is not highly valued. Instead, conflict occurs
when competing claims are made over things that are poorly defined, poorly enforced, or both,
and those claims cannot be settled (Daudelin 2010).
The evolutionary theory of property rights holds that as the value of things increase, property
rights definition and enforcement evolve in order to ensure conflict is prevented (Demsetz 1967).
Fitzpatrick (2006), however, shows that when the value of a good is high, a party will not
necessarily define or enforce property rights. This problem occurs when no party has the
capacity, or the incentives needed to undertake such roles (Alston et al. 1999). Understanding
the incidence of property rights conflict thus implies, first, identifying the determinants of the
changing value of a thing over which agents compete, and the conditions under which agents will
define and enforce property rights.
As mentioned, the second component of governance is the resolution of disputes. For
markets – illegal or otherwise – to operate efficiently, there must be an arena where actors can
peacefully resolve and adjudicate disputes (Skarbek 2014). Dispute resolution mechanisms are
critical to illegal markets as they have the potential to keep conflict to a minimum, which in turn
allows markets to operate smoothly. Disputes can arise for any number of reasons, such as non-
payments, late payments, late delivery of an item, disagreements or renegotiations of prices,
disputes over territory in which an actor can conduct business. Without adequate dispute
resolution mechanisms in place, conflict prevails, destabilising markets.
As pointed out by Daudelin and Ratton (2018) the undersupply of governance leads to
conflict but not necessarily to violent conflict. Instead, violent conflict is a product of inadequate
deterrence – a “deterrence gap” – towards the use of violence to resolve conflicts in a given
arena. Deterrence “is an attempt to influence another actor’s assessment of its interests”, with
one party seeking to convince the another that the cost of an action will exceed any possible gain
(Lebow 2016: 3). For deterrence to be effective, an actor must issue credible threats of
punishments that are swift, certain and, severe enough to dissuade an action (Kennedy 2012;
Kleiman 2009; Beccaria 1963). Effective deterrence results in a lesser need to apply the
punishment due to fewer transgressions (Kleiman and Kilmer 2009). When deterrence is applied
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appropriately– whether by first, second or third party, and either informally or formally – conflict
may still exist, but violence will be prevented or at least considerably reduced.
Institutions are “humanly devised constraints that structure political, economic and social
interaction” (North 1991: 97). Importantly, not all markets are governed by the same form of
institution. On one hand, legal markets are governed by formal institutions, structured and
formed by the official channels of states (e.g. laws, constitutions) and enforced by state entities
(i.e. police). On the other hand, illegal markets are governed by and large by informal institutions
operating outside of official channels and rely on private regulators (Ostrom 2009; North 1991).
While scholars such as De Soto (1990) have argued all markets need to be incorporated into
formal institutions in order to function properly, others (Beckert and Dewey 2017; Dewey 2014)
have shown that informal institutions, while sub-optimal, are capable of regulating informal
economies. Exploring the ability of societies to privately govern themselves, Peter Leeson makes
the case that self-governance “works better than you think” (2014: 5). Leeson shows that
governance can be provided by private parties, and on occasion be a strong alternative to formal
government structures. Observing that “numerous societies were stateless for most of their
histories,” Leeson argues that iterative interaction prompts good faith and trust between parties
when executing contractual agreements (2014: 155). While this mechanism sets the stage for
functional self-governance to be orchestrated by non-state actors, it does not consider that much
informal governance is in fact hybrid.
Despite being conceptualized as separate, informal institutions can, and have been, shown to
interact with formal ones regularly (Helmke and Levitsky 2004; Gallen 2019; Meagher 2014;
Galemba 2017). The interaction of informal actors with state institutions in the governance of
smuggling markets creates hybrid arrangements, composed of a mixture of formal state and
informal non-state actors. Jaffe (2013) considers hybridity as the entanglement of multiple
actors, both formal and informal, cutting across public-private boundaries to provide a system of
governance for those who under its sphere of influence. The scope of the hybridity can range
from the state having high to little involvement in smuggling markets, alongside illegal firms,
and everything in between. This research will seek to map out the entanglement of formal and
informal institutions in the governance of smuggling markets to understand the capacity of the
resulting regime to avoid or manage conflict, and when the latter happens, to prevent them from
turning violent.
Paul Goldstein (1985) mainstreamed the debate as to the causes of violence in illegal markets
when he introduced his tripartite “drugs/violence nexus” framework. In the framework, violence
in illegal markets tends to come down to three factors associated with drugs and violence that
can, or often do intertwine: psychopharmacological, the economically compulsive, and the
systemic, or market related problems (1985: 143). Studies have shown that violence in illegal
markets on the scale seen in Brazil and other South American countries tend not to be compatible
with the former two factors and are instead well-suited to the latter (Calderón et al. 2015; Idler
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2019; Felbab-Brown 2011; Arias 2009). However, causal evidence on the relation between
market illegality and violence remains rather limited. For instance, despite extremely violent
contexts, case studies have shown that illegal markets can function without much violence
(Daudelin and Ratton 2018; Owens 2014; Duran-Martinez 2017). Despite a relative scarcity of
research on the subject, theories about that relationship – largely stemming from Goldstein’s
(1985) tripartite framework – are in comprehensive agreement on the fact that illegality does not
cause violence in illegal markets, although an absence of formal institutions is a contributing
cause (Reuter 2009; Garfinkel and Skaperdas 2007; Skarbek 2014; Snyder and Duran-Martinez
2009).
Illegal markets have been characterised as inherently violent as illegal actors stem from the
“social strata in which violent self-help is relatively common” (Andreas and Wallman 2009,
226). However, Reuter (2009) points out that most illegal markets are generally peaceful despite
the absence of formal institutions to enforce contracts and facilitate transactions and only
occasionally exhibit high levels of violence. Illegality itself is insufficient to generate high levels
of violence in the market. Instead, violence is tied to a lack of institutions – informal and formal
– to deter actors from engaging in violent actions that result from competition and information
asymmetries within and between groups (Skarbek 2014). Overall, a lack of institutions to
dissuade violence are why some illegal markets may be predisposed to violence, yet are not
always violent and at times relatively peaceful.
Changes in the governance structure of illegal markets impacts violence levels (Owens 2011,
Snyder and Duran-Martinez 2009). Calderón et al. (2015) show that violence levels increase
following the neutralisation of a drug trafficking leader in Mexico by state authorities.1 The
study employs a combination of difference-in-differences and synthetic control groups and
operationalises municipal homicide rates as the dependent variable. Whether a drug cartel leader
and whether a subordinate ranking cartel member is apprehended or killed are operationalised as
main explanatory variables. The study finds that while “king-pin” capture or arrest play an
important role in the disruption of criminal organisations; it also leads to both inter- and intra-
cartel violence as organisations fragment. The neutralization of drug cartel leaders – actors who
tend to have a pivotal role in how illegal markets are governed – leads to short- and medium-
term increases in the level of homicides inflicted on both cartel members and the general
population. The study’s results estimate that the elimination or seizure of cartel leader results in a
165 percent increase in violence in the first six months following, and 126 percent for the
following 6 months (2015: 1480). The study helps identify under some of the conditions under
which illegal markets may become violence. However, as the study focuses on structural changes
to the governance of cartels there is little indication as to what channel(s) generates the violence.
Furthermore, little indication is made as to whether the governance structure of the drug markets
studied played a role in the variation observed in the level of violence.
1 Neutralization refers to both the killing and apprehension of drug trafficking leaders.
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Reuter (2009) argues that intensified enforcement and disruption may impact levels of
violence through two different channels stemming from the absence of formal institutions and a
reliance on personal ties. First, he proposes that when a leader is eliminated, working
relationships between gangs and corrupt officials break down, leading to violence. Second, he
suggests that the removal of corrupt officials from posts again disrupts the governing
arrangement, leading to uncertainty for criminal organisations who now require a new source of
protection and use violence to intimidate officials to do so. It is almost certain that other channels
exist such as; inter- and intra-criminal group agreements, or contracts, breaking down if a group
leader is neutralized, and ceteris paribus, given weak deterrence, governance breakdowns will
lead to violent conflict. However as of now these, and other channels are yet to be theoretically
and empirically tested leaving plenty of space to explore the relationship between market
governance and violence.
Studies specifically focusing on violence in smuggling markets are particularly sparse, with
Chimeli and Soares (2017) a notable exception. Investigating the prohibition of a formerly legal
practice (the cutting down and selling of mahogany trees), the authors look at municipal levels of
violence in the Brazilian state of Pará where the trade of mahogany was concentrated before
prohibition and is thought to be concentrated after. The authors show that an increase in violence
is associated with the emergence and presence of an illegal mahogany market, while violence
decreased in areas where authorities managed to prevent or shut down the functioning of the
illegal markets (2017: 31). However, the study assumes that the state can fully enforce
prohibition on a product, resulting in a decline in violence. While it may have worked in the case
of Pará and the illegal mahogany market, prohibition has a patchy record as a tool of peaceful
governance (see Owens 2014). The problem is, as in the case of other illegal markets, some
smuggling markets are well governed – rarely through state-enforced prohibition – and others are
not, with conflict and violence prevailing in the latter.
C. How I Will Make My Contribution
7) Theoretical Framework
As smuggling markets are by definition illegal, state authorities will not formally intervene to
provide property rights and will in fact, much of the time, work to disrupt such markets. In turn,
the definition and enforcement of property rights in smuggling markets is placed into the hands
of private actors and/or state actors acting informally, without access to formal dispute resolution
mechanisms, raising the costs of governance. If these informal actors can't define and enforce
property rights and contracts and can't resolve the disputes that emerge on smuggling markets,
conflict will result.
For conflict to become violent, however, there must also be a lack of effective deterrence
mechanisms – or a deterrence deficit – to keep individuals from using violence to accomplish a
goal. Therefore, given a deterrence deficit, violent conflict in smuggling markets should be
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influenced by a combination of 1) the intensity of competition over a given market, which should
influence the level of governance demanded, 2) the incentives and capacity of groups (informal
second or third parties) to supply governance – property rights, contract enforcement and dispute
resolution – in said smuggling markets, and 3) the interaction of informal parties with the state as
the latter disrupts criminal self-governance (Daudelin 2010) or as state agents acting illegally
engage in it, conforming hybrid arrangements.
Violent conflict is associated with an under-supply of governance relative to demand, which
may occur as a result of a governance breakdown (reduction in capacity or incentive relative to
demand), or during the establishment of a governance regime (before capacity or incentive to
establish governance reaches the demand). Conversely, if governance regimes are established
successfully, there will be fewer disputes, fewer conflict over property rights, and a reduction in
the need to define and enforce contracts, or manage competition, using violence.
The demand for and supply of governance are both tied to the value of a territory, or a good.
The demand for governance is a function of the net present value of the smuggled goods. When a
market’s net present value is high with a guarantee of high future rents and relatively low
opportunity costs, the demand for market governance will be high due to competition amongst
claimants to capture the economic rents generated by smuggling. Competition over border
municipalities in smuggling markets is expected to be intense, as the different regulatory regimes
created by international borders generate high rents. Higher competition is more challenging to
manage. Competition over border municipalities that act as gateways from one administrative
area to another should be highest, particularly for markets for high rent goods, as organised firms
will look to stem new competition that will decrease the rents yielded (Alston et al. 2009).
The supply of governance is indicated by the ability of informal and hybrid institutional
arrangements to define and enforce contracts and resolve disputes must be evaluated separately
from the dependent variable’s outcome. The governance supplied by informal and hybrid
institutional governance arrangements is tied to the stability and consistency of the rules applied,
their institutionalisation - i.e. the extent to which the rules are known and internalized (Berger
and Luckmann 1991) – the consistency of their application and the credibility of the enforcement
that accompanies them. The comprehensiveness of the governance regime - whether rules apply
to the enforcement and definition of contracts, or dispute resolution, or both – and the
mechanisms used to govern further impact the governance supply. Like governance, level of
deterrence supplied is tied to the stability, consistency, and institutionalisation of measures to
limit the use of violence. When supplied comprehensively, these factors help governance
regimes manage competition and mitigate violence in smuggling markets.
Logically, when a smuggling regime enforces claims over a market and manages the
intensity of competition over the claim, the supply of governance – property rights, contract
enforcement and dispute resolution – will adequately meet demand, ceteris paribus, resulting in
a more peaceful market. Therefore, if the capacity and incentive to provide governance in a
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certain smuggling market meets or exceeds demand, then a reduction in the frequency of
violence should follow.
8) Hypotheses
Given the theoretical framework and logic presented, I hypothesise that:2
H1: if expected returns from smuggling in a market are large, ceteris paribus, then there will be
competition between groups to claim control over a territory
H2: if a smuggling regime is unable to enforce its claim over a territory and a deterrence gap
exists, then high levels of competition will lead to violent conflict until a group possesses the
capacity and incentive to govern
H3: if a smuggling regime successfully enforces their claim over a market and manages the
competition over the claim through governance, then conflict decreases.
9) Methodology
My study falls between a plausibility probe and a theory testing exercise. A plausibility
probe helps determine whether a relatively interesting theory and accompanying hypotheses
developed for the study warrant further rigorous testing. While plausibility probes do not provide
rigorous tests of theories, they are not intended to “lower the standards of evidence and
inference” used when conducting formal theory testing (George and Bennett 2005: 75).
By using this study to assess “the validity and scope conditions” of my framework, I will
engage in theory testing (George and Bennett 2005: 75). Good theory testing includes testing as
many of the theory’s hypotheses and subsequent predictions as possible (Van Evera 1997). The
cases selected allow for multiple observations, and subsequent opportunities to test hypotheses
due to within- and across-case variation on the dependent and independent variables. Assessing
multiple hypotheses is in accordance with the objective of the study, which is to draw both
descriptive and causal inferences that set the initial building blocks for a more thorough research
agenda on the governance of illicit markets and its relationship with violent conflict.
My research project involves both quantitative and qualitative methodologies. For the
quantitative component, I am using municipal-level geographic and social development
indicators to identify the main structural factors associated with violence at the municipal level.
In an initial phase of this research project I have analysed a series of problems using a dataset
that includes information about homicide rates at the municipal level for the total, male, and
female populations. I use a cross-sectional analysis of Brazilian municipalities (N=5,550) to
2 The hypotheses are general, by necessity. They are "model hypotheses", not specific. I will have to
identify the characteristics of the regimes that makes them robust (i.e. able to deal with increased
competition) or weak.
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determine whether borders areas are significantly more violent than other interior municipalities,
operationalizing homicide rates at the municipal level over a five-year average from 2010-2014
inclusive as the dependent variable.3
The explanatory variables I used in the study are all geographic dummy variables
allowing me to identify and conduct a crude mapping exercise of the geographic determinants of
violence in Brazil. To resolve the issue of heteroskedasticity, I employ a multiplicative
heteroskedastic linear regression model using a two-step generalised least squares (GLS)
estimator that fits a multiplicative heteroskedastic linear regression by modelling the variance as
an exponential function of specified variables.4
A two-step GLS estimator is used rather than a maximum likelihood (ML) estimator
which more efficient because the two-step is more robust than the ML estimator if the variance
function is possibly incorrect or if the errors are non-normal. The estimating equation for a
multiplicative heteroskedastic linear regression model using a two-step GLS estimator’s
functional form is:
Yi = xiβ + єi ; σ 2i = exp(ziα), where i = municipality
Through a preliminary analysis, I can determine that violence affects municipalities
located on the Brazil’s border. Further analysis points specifically to violence affecting men in
border municipalities in the States of Paraná and Mato Grosso do Sul – a stretch of border from
the tip of Argentina to Bolivia encompassing the entirety of Brazil’s border with Paraguay. The
results indicate a statistically significant and robust relationship between violence and
municipalities that border Paraguay, and an even greater effect for urban areas that are
contiguously connected to another municipality (twin cities) in Paraguay. When controlling for
all other variables, the coefficient estimation for the dummy variable of twin cities results in
these municipalities experiencing homicide rates more than double the national average. These
municipalities are where several smuggling markets in Brazil are concentrated. Male and female
rates are introduced to better understand the extent to which determinants of violence may be
gender specific. Through an initial regression, I can determine that violence in suspected
smuggling markets on Brazil’s border disproportionally effects men.
The OLS regression’s adjusted R-squared indicates that nearly 12.5 percent of the
variance of the dependent variable is now explained when analysing total homicide rates, 8
3 A cross sectional analysis is employed because the independent variables to be analyzed are all
structural, and I am investigating phenomenon that focus on variance across units (municipalities).
Homicide rates are a useful proxy for violence as they tend to be recorded unlike assaults or other forms
of violence. The dependent variable is averaged in order to make sure that the homicide rate used reflects
the municipality’s violence levels over several years, thus reducing chance of using a single year that
might be unusually high or low. 4 Heteroskedasticity exists due to several municipalities with an average DV value of 0
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percent when simply analysing males, and 0 when analysing females alone.5 While at first glance
a R-squared of 12.5 may seem negligible, it offers extremely important insight for my research.
The low R-squared indicates that while being located on the border affects violence, and even
more so if the municipality is a twin city, it further points to dynamic changes – for instance,
changes in the governance of smuggling markets – being largely responsible for the variation in
the dependent variable, violence.
To delve into the factors that the quantitative analysis can't identify, much of the
dissertation will use qualitative methods. I use qualitative approaches to examine specific
smuggling markets at the micro level. I will construct a basic typology that differentiates
smuggling markets according to whether the good is illegal (e.g. drugs) or legal (e.g. electronics)
to determine how different markets operate and are governed. As noted by George and Bennet
(2005), typological theorising relies on both within- and across-case comparison. In order to
carry out this analysis I will conduct fieldwork in different Brazilian municipalities using semi-
structured interviews to collect primary qualitative data. I will ask questions including: what are
the characteristics of the governance regimes of illicit international trade (smuggling); how do
structural characteristics of municipalities affect violence in Brazilian smuggling markets; what
role does the state play in the dynamics of smuggling market governance; what are the main
products in each smuggling market, and; who are the main market stakeholders? I will employ
process tracing in order to control for equifinality, and false positives. When process tracing, I
will adhere to the best practice guidelines laid out by Bennet and Checkel (2015), including:
keeping an open eye for alternative explanations and being equally tough on their explanatory
power; considering the potential biases of sources; gathering diverse and relevant evidence; and
utilising both inductive and deductive reasoning.
It will be necessary for me to utilise multiple “snowballs” to gain as many independent
insertion points as possible to conduct my interviews and conduct rigorous process tracing. To
this end, I have already established contacts with several smuggling market stakeholders
including smugglers themselves, consumers of smuggled goods, members of the Federal Police
(investigative police force), civilian and uniformed military personnel, and civil servants. In
addition, I have also been in touch with lawyers, judges, and members of Brazil’s ‘elite’ society
with knowledge of smuggling markets and their governance.6
Through these connections, I will create further snowballs with smuggling market
stakeholders. I also have contacts with civilians living in my prospective case studies with first-
5 While the adjusted R-squared for the male only estimation is lower than for total averaged homicide
rates, the variance for the homicide rate increases from 246 for the average homicide rates overall to 1312
for male homicide rates indicating that the model may be explaining the same or more of the variation in
male violence than in the combined, averaged homicide rate, albeit only for one year, not five. 6 One of my informants is a Sertanejo singer (Brazilian country music) with access to elite members of
society in the region I intend to study.
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hand knowledge of smuggling market governance. The smuggling market municipalities on the
Brazil border chosen as potential cases are: Foz do Iguaçu in the state of Paraná, Ponta Porã in
the state of Mato Grosso do Sul, Guajará-Mirim in the state of Rondônia, and Tabatinga in the
state of Amazonas.7 The cases are widely acknowledged as lucrative smuggling markets, and fit
the criteria outlined by Van Evera (1997) of good cases to study due to multiple observations and
within- and between-case variation on the dependent variables. Moreover, the cases are a good
laboratory to explore the relationship between violence, types of good, and the governance of
smuggling markets due the different products traded in each market.
Figure 1. Homicide rates of proposed case studies 2004 – 2017*
7 Four cases are discussed. However, much relies on my insertion points and ability to gather informants.
Two cases are most likely to be chosen, three at most.
0
20
40
60
80
100
120
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Homicide Rate of Case Municipalities
Ponta Porã Foz do Iguaçu Guajará-Mirim Tabatinga
*Homicide rates from author’s personal data set, created using publicly available data from DATASUS and IBGE
14
Additional similarities and differences between the cases allow me to observe possible
intervening factors that may influence violence levels in each market. All municipalities selected
are municipalities with neighbouring cities on the other side of the border. Each case study is in a
different Brazilian state, introducing variation in structural factors between states such as
transportation infrastructure and state enforcement capacities. Further variation is introduced
through the examination of cases bordering different neighbouring countries.
Foz do Iguaçu is part of a “triple frontier”, possessing a water border with both Argentina
and Paraguay. Foz do Iguaçu is by far the largest municipality selected, both in terms of
population and size of the smuggling market (value and volume of goods). The municipality
itself is home to a “Free Commerce Zone” established in 2002 with Paraguay and Argentina. The
municipality’s smuggling markets include tobacco, electronics, drugs, weapons, agricultural
products, and household goods.8
Compared to Paraná, the modern and well-organized state where Foz do Iguaçu is
located, the state of Mato Grosso do Sul is more recently established, less wealthy and has a
much less well-developed administrative capability. Located on Mato Grosso do Sul’s frontier,
Ponta Porã’s has a land border with Paraguay and the market of goods moving through the
municipality is dominated by cocaine from Bolivia and Peru entering Brazil through Paraguay.
The municipality’s smuggling market recently experienced a change in governance in 2016 when
the then “King of the Frontier” Jorge Rafaat Toumani was killed by a rival faction – a Sao Paulo
based organization considered to be, by far, Brazil's largest and most powerful, the Primeiro
Comando da Capital (PCC).9
Moving away from the Paraguayan border, the remaining cases are in the remote North-
West of Brazil. Guajará-Mirim is another frontier municipality sharing a water border with
Bolivia and is in the frontier region of Brazil, roughly 350 kilometres from the state capital of
Rondônia, Porto Velho. The municipality’s smuggling market is largely made up of common
goods, drugs, and possibly oil. The municipality is another “Free Commerce Zone” with Bolivia,
established in 1993.
The final case of Tabatinga is another “triple frontier” bordering Peru and Colombia with
the municipality being a key transhipment point for goods (mostly narcotics) moving from the
neighbouring countries down the Amazon river to the state – and regional – capital, Manaus.
There is also likely a local drugs market and due Tabatinga’s Colombian neighbour, Leticia,
being a tourist, and backpacker destination. The municipality has recently experienced an
increase in Brazilian military presence but as to what extent this has impacted smuggling
operations through the municipality is yet unknown.
8 Goods listed in each case’s smuggling market are known but not definitive nor exclusive. 9 An initial plausibility probe applying the proposed theory and using Ponta Porã as a case study indicates
congruence between the breakdown and construction of governance regimes over smuggling markets, and
violence.
15
10) Outline of the Dissertation
The prospective outline of the proposed dissertation is as follows:
1) Introduction
2) Theory and methods (including typology)
3) Contextual information and overview
I. Smuggling markets and their products
II. Brazil's smuggling markets and violence in general
III. Brief overview of smuggling markets, domestic institutions and interest groups or
relevant actors in other countries included in study
i. For example: Argentina, Paraguay, Bolívia, Peru, Colombia
IV. Quantitative analysis including analysis of
i. Brazil
ii. Brazil’s Borders (in general)
4) Cases conducted as follows (largely qualitative with quantitative indicators)
I. Border with Argentina and Paraguay
i. Paraná
1. Foz do Iguaçu
a. Market
b. Governance
c. Violence
ii. Mato Grosso do Sul
1. Ponta Porã
a. Market
b. Governance
c. Violence
Possible jump to 5) here, see footnote 6
II. Additional Case: Border with Bolivia
i. Rondônia
1. Guajará-Mirim
a. Market
b. Governance
c. Violence
III. Additional Case: Border with Colombia and Peru
i. Amazonas
1. Tabatinga
a. Market
b. Governance
c. Violence
5) Conclusions and policy recommendations
16
11) Ethics Implications
While some of the groups involved in this research are not considered vulnerable (e.g. police,
military, civil servants that do not participate in smuggling markets), individuals directly
involved in smuggling are, especially considering they are acting outside the law, involved in
illegal activities. Therefore, every effort must be made to abide by the ‘do no harm’ principle,
whereby researchers must minimize the harm they may inadvertently cause through their actions
(Wood 2006). Given that the proposed research involves vulnerable groups, my project will
undergo ethics reviews by Carleton University’s Ethics Board before I conduct fieldwork.
Every precaution will be undertaken not to increase the vulnerability of research participants,
including the use of anonymous coding of names and locations with the key to the code located
in a different DataVerse account than the recorded research; only conducting audio recording of
interviewees after respondents formally agree to take part, and; erasing all recordings from
storage device once uploaded and encrypted in a secured location. Once uploaded, interviews
will be transcribed and then deleted permanently. All interviews will take place in locations
agreed upon with respondents and where they will be confident that their safety and privacy is
protected. Due to family members of smuggling market stakeholders and other and individuals
not directly connected to illegal markets possibly being impacted by the research, the same
precautions will be undertaken with these individuals as the interviewees.
12) Feasibility and Timeline
Feasibility
As previously stated, I established personal and professional working relationships with
smuggling market stakeholders in the course of a scoping field trip to Brazil in 2018, during
which I visited all four of my potential case study sites. Furthermore, I speak, read and write
Portuguese, and I intend to become fluent in the “slang” that is commonly used on the local
smuggling markets.
In Rio I will partner with the Pontifical Catholic University of Rio de Janeiro (PUC-Rio). At
the PUC-Rio, I will work closely with Dr. Celina D'Araujo whom I met in February 2019 and
use the PUC-Rio’s campus as an initial base of operations. My research project research
coincides with Dr. D'Araujo’s research project "Interfaces of the police and the Armed Forces in
the defense and security of Latin America" and I will be able to accompany her on visits to
security and defence institutions in Brazil, as well as technical visits with institutions and
organisations dealing with national and international drug policies.
In addition to the partnership with the PUC-Rio, I will visit and spend time at the Igarape
Institute based in Rio de Janeiro, a think tank that working on Latin American drug policy and
violence reduction. I have already met and discussed my research with the Director of the
Institute, Dr. Robert Muggah, to assess the plausibility of my project and future collaboration,
receiving positive feedback. Further I intend to collaborate with researchers and disseminate my
17
research at the renowned Center for the Study of Violence (NEV) at the University of São Paulo
(USP). At the NEV I will work with Dr. Bruno Paes Manso and Dr. Camila Caldeira Nunes
Dias, two researchers that have written a book on the expansion and entrenchment of Brazilian
organised criminal groups on the Paraguayan border. Finally, I will also spend time in Dourados,
200 kilometres east of Ponta Porã, where both the Brazilian Military’s Integrated Border
Monitoring System (SISFRON), and the Federal University of Grande Dourados are located.
While the PUC-Rio will serve as my base of operation in Rio, I will spend most of my time in
my potential case study locations (Foz do Iguazu, Ponta Porã, Guajará-Mirim, and Tabatinga). I
will spend upwards of two-plus months at a time in municipalities in order to conduct interviews
and establish relations with stakeholders in smuggling markets. I will split my time between the
municipalities on the Brazilian side of the border while visiting their sister cities in their
opposing countries (Ciudad del Este, Pedro Juan Caballero, Guayaramerín, and Leticia
respectively) to better understand the dynamics of smuggling markets from both sides of the
border. In Foz do Iguaçu I have met with the director of the Instituto de Desenvolvimento
Econômico e Social de Fronteiras (IDESF), and academics at the Universidade Federal da
Integração Latino-Americana (UNILA) – both based in the border municipality of Foz do
Iguaçu, Brazil – being invited to join a research group on informal markets between Brazil and
Paraguay.10
I believe, considering my already established insertion points and preliminary understanding
of local smuggling dynamics, coupled with my knowledge of Portuguese, I will be able to
conduct upwards of 80 semi-structured interviews in the 12 months I intend to spend in the
region. These interviews will provide me with the necessary primary source material to complete
the first ever comprehensive study on the governance of smuggling markets and violence
Once I have defended my prospectus, I will move forward with gaining ethics approval and
securing a Visa from the Brazilian authorities. I will be using a Type I Research Visa,11
permitting me to stay for a minimum of 12 months in Brazil before renewing my stay.
Timeline
My tentative timeline is as follows:
Phase I: (Late) January 2019 – March 2020
In the initial phase, I will establish my base of operation at the Pontifical Catholic University of
Rio de Janeiro (PUC-Rio). I will use this phase to conduct interviews with legal experts, NGOs,
politicians, and academics in Rio de Janeiro, São Paulo, and Brasilia before departing to my case
study locales.
Phase II: March 2020 – April 2020
10 Institute for Economic and Social Development of Borders and the Federal University of Latin
American Integration 11 Visto Temporário I: pesquisa, ensino ou extensão acadêmica
18
In the second phase I will conduct a “border trip” to potential case study locations, visit
stakeholders and attempt to contact informants.
Phase III: April 2020 – June 2020
I will relocate to Foz do Iguaçu for three months. In Foz do Iguaçu, I will conduct interviews
with identified smuggling market stakeholders, while observing border dynamics. During this
phase, I will work out of IDESF and UNILA, while seeking to establish more connections and
insertion points in the smuggling market in Foz do Iguaçu as well as my other cases to further
my research objectives.
Phase IV: June 2020 – August 2020
During the fourth phase of my field activities I will relocate to my second case, likely Ponta
Porã, north of Foz do Iguaçu, for two months. The activities I will undertake are the same as in
Phase III.
Phase V: August 2020 – October 2020
In the penultimate phase of my field activities I will move to my third case locale, for two and a
half months. Again, the activities undertaken will be the same as in Phases III & IV.
Phase VI: November 2020 – December 2020
In the final phase of my field activities I will re-visit case study smuggling markets, academics,
and legal experts.
Contingency Plan
Of course, very little runs as smoothly as planned and I am preparing contingency plans as
to how I will be able to accomplish this research in case my access to information leads down an
alternative path. To this extent, I will keep my eyes and ears open to other dynamics of the
governance of smuggling markets and violence – the crux of this PhD dissertation.
For example, it is possible that I may encounter individuals that will be able to show me how
the “Rota Caipira” is managed.12 The “Rota Caipira” is part of a large smuggling route starting in
Peru, moving through Bolivia and Paraguay into Brazil. From Brazil’s border, goods are
transported to large consumer markets in Brazil (i.e. Sao Paulo, Rio, Brasilia, Salvador) and
ports of export, such as Santos, where they are then distributed across the globe. In addition to
illegal drugs, smuggled products include electronics, counterfeit pharmaceuticals, cigarettes and
arms (Ramos 2009; Aguiar 2015; Adorno and Dias 2019; Manso and Dias 2018; De Abreu
2017). Studying the governance of this value chain along its whole course would not be out of
tune with the research agenda I am following to pursue a line of inquiry regarding the “Rota
Caipira” including why violent conflict sometimes occurs.
12 “Caipira” is a term for rural inhabitants of the south-central region of Brazil. Ponta Porã is located on,
and considered important to the “Rota Caipira”
19
Next Steps
The obvious next steps for the PhD dissertation revolve around data collection. One issue I
need to address are gendered – or sex-specific – homicide rates operationalised to indicate
gendered violence levels. As of now, the homicide rates I use (apart from 2010 data gained from
the national census) are representative of the total population, male and female. Knowing that the
violence linked to smuggling markets is almost exclusively male, my results most likely
underrepresent just how volatile and extreme the violence is in smuggling markets. Other issues I
need to address include ascertaining just how much of the recorded violence is linked to
organised crime, how much goes unreported, how much is linked to police operations, and how
much violence occurs on the other side of the border in the opposing countries.13
13 A recent U.S. Department of State report on Paraguay claims that much of the violence is linked to
organised crime and levels of violence are almost symmetrical on both sides of the border (United States
2016).
20
Annex I: Maps
Map of South America
21
Homicide Rate Map of Brazil*
Map of Brazil and Case Study States
*Mapping data from author’s dataset;
maps created using QGIS software
22
Homicide Rate Map of Case Study Municipalities
23
Annex II: Preliminary Illustration of Foz do Iguaçu’s Smuggling Market
Market: Foz do Iguacu - complimentary market with comparative advantages for each country Paraguay: Large illicit market | Brazil: Designer shopping, tourists |Argentina: Casino, tourists
Special Economic Zone: International duty-free zone with neighbouring countries
Known Goods: Electronics, Tobacco, Agricultural Products, Drugs, Weapons, Household items
Borders: Argentina and Paraguay - areas characterised by poverty, inequality, and crime
Possible main governance actors: Ethnic Groups, Gangs, Landowners
Informal Actors “Interest” Groups State Actors Traders
• See: Ethnic Groups
• Organised on ethnic and
national lines – supply
products and set up new
businesses
• Importers / Shop Owners
• Not expected to integrate,
but make money – set up
institutions
• Charged 10% of
wholesale price, possible
to bribe customs officials
to avoid – possible link
with Tax Police (?)
Tobacco Industry
• Production of both licit
and illicit tobacco
• Possible links with traders
(?)
Military Police (State)
• Deterrent against crime, does not
carry out investigations
• Heavily Armed
Couriers
• (almost) No border
control if not travelling in
bus (see: Tax Police,
Highway Police)
• Mobilise merchandise
from one country to the
other
• Taking advantage of
allowance: Sacaleiros,
laranjas, camelos (females
only)
• Target high value, low
volume goods (ie.
Electronics, Tobacco)
Indigenous Groups
• See: Money Exchangers
• Guarani; Mbya, Nhandéva
• Assisting couriers, linking
supply to demand
Civil Police (State)
• State level investigative police
Money Exchangers
• See: Indigenous Groups;
Unions
• Fixed Rate
• Operated by locals –
Guarani
• Link flows of cash from
abroad into local market
Ethnic Groups
• See: Traders
• International migrants
make up ≈ 40% of area’s
population
• Own land on both sides of
the border
National Force (State)
• Selected units of Military Police
members from over the country;
work to assist efforts between
Federal and Military Police
24
• Important for money
laundering due to parallel
tax structure
• Chinese and Taiwanese
traders formed the
“Chinese Association of
Ciudad Este” - takes care
of public spaces
• Lebanese and Syrian
traders formed the
“Chamber for Electronics”
– active in local elections
Gangs
• Possible links with
farmers, ethnic groups (?)
• “Balseros” - Operate on
water between Paraguay
and Brazil
• Move drugs, weapons,
agricultural products
Farmers
• Soy, Cattle
• Paraguayan land owned by
Brazilian farmers
• Own land on both sides of
the border
• Demand for agricultural
products
Police (Federal)
• Investigative Unit
• Focus: organised criminal activity
beyond tariff/tax control; drugs,
weapons, gang activity, money
laundering
Unions
• See: Money Exchangers
• Union of Money
Exchangers
• Ambiguously
“officialises” informal
work
• Creates a parallel tax
structure
Tax Police (Federal)
• See: Couriers
• Along with Federal Highway
Police, inspects all buses entering
Brazil from Paraguay inspected
Highway Police (Federal)
• See: Couriers
• Along with Federal Tax Police,
inspects all buses entering Brazil
from Paraguay inspected Questionable Political Groups
• Al Qaeda (?)
• Hamas (?)
Politicians (Local)
• See Ethnic Groups
• Link with landowners (?)
Source Material: First-hand Knowledge, Aguiar (2010), Various News Reports
25
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