The Political Economy of Plunder: Economic Opportunity and Modern Piracy more

Maritime piracy is a growing scourge on the international community—imposing large costs on maritime states and industries, as well as potentially undermining state capacity and funding terrorism. Using original data on over three thousand pirate attacks, we argue that these attacks are, in part, a response to poor labor market opportunities. To establish this, we take advantage of the strong effect of commodity prices on labor market opportunities in piracy-prone states. Consistent with our theory, we show that changes in the price of labor and capital-intensive commodities have consistent and strong effects on the number of pirate attacks in a country’s territorial waters each month. We confirm these results by instrumenting for commodity prices using monthly precipitation levels.