Organized Crime in Michoacán: Rent‐Seeking Activities in the Avocado Export Market

The aim of this article is to contribute to the existing measurements on extortions by organized crime and assess the impact of this predatory activity on economic growth. Extortions should be evaluated beyond the number of reported crimes to understand how much money is drained away from the legal economy. To set the stage I first analyze the illegal activities carried out by organized crime groups in the Mexican state of Michoacán during 2001‐14. Within this context this article presents a case study of extortions in the avocado legal export market. Specifically, this article shows how the criminal organization, the Knights Templar (KT), extracted rents from this legal market, what was the estimated magnitude of that rent, how tangential was this source of revenue to organized crime, and what was the adverse impact of these extortions of the KT on the economy of Michoacán by looking at the performance of the main macroeconomic variables.