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The Effects of Macroeconomic Evils on Property and Violent Crimes in Malaysia

In: Social Issues

Submitted By hani3122
Words 6868
Pages 28
International Journal of Business and Society, Vol. 11 No. 2, 2010, 35 - 50

THE EFFECTS OF MACROECONOMIC EVILS ON
PROPERTY AND VIOLENT CRIMES IN MALAYSIA
Chor Foon Tang♣
University of Malaya

ABSTRACT
The main objective of this study is to investigate the effects of macroeconomic evils – unemployment and inflation on different categories of crime rates – property and violent crimes in Malaysia via the multivariate Johansen-Juselius and Granger causality techniques. This study used annual data from 1970 to 2006. Johansen-Juselius cointegration tests revealed that property and violent crimes are cointegrated with unemployment and inflation. Furthermore, the empirical evidence exhibit that unemployment and inflation are the driving factors for crimes in Malaysia.
Therefore, supply-side economy may be an ideal choice of policy to reduce crime rates in
Malaysia.
Keywords: Crime, Inflation, Unemployment, Malaysia

1. INTRODUCTION
Recent deliberation on whether “Malaysia is a safe haven for travel and investment?” was frequently asked by the international tourists and foreign investors owing to the increasing trend of crime rates in Malaysia. From the visual inspection in Figure 1, both property and violent crime rates in Malaysia has increased quite significantly between 1970 and 2006. Over a decade from 1970 to 1980, both property and violent crime rates in Malaysia increased more than two folds. The property crime rate increased drastically from 25 thousand cases in 1970 to 66 thousand cases in 1980. In the similar vein, violent crime rates increased from approximately 3 thousand cases in 1970 to approximately 8 thousand cases in 1980. During the period of economic recession in the 80s (see Figure 1), the property crime rate dropped about 36 per cent and the violent crime rate reduced about 8 per cent over the period of 1980 to 1989.…...

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