The Economics of Crime and Its Implementation in Ecuador Using External Instrumental Variables

ABSTRACT Rising crime rates in Ecuador pose a significant challenge for the design of effective public policies. This study examines the socio‐economic determinants of two key offenses, homicides and vehicle thefts, using national time‐series data from 1990 to 2022. Applying an instrumental variables (IV) approach and the two‐stage least squares (2SLS) estimator, the analysis considers factors such as illiteracy, income inequality, urban growth, and public security expenditure. The results show that income inequality and urban growth are positively associated with homicides, while poverty is strongly linked to vehicle thefts. In contrast, access to employment and public security expenditure demonstrate significant deterrent effects. This study provides new empirical insights and policy recommendations tailored to crime determinants in Ecuador.