Extractive Institutions in a Failed Nation

"The crime wave of the past few years has only exacerbated the problem, he added. Extortionists tend to prefer small businesses over large companies because family-run operations are more likely to pay. In Mr. García’s case, the demands for money began in 2010. Without enumerating the cost, he said he paid for a year. He was robbed four times. His family endured repeated threats. Then he retreated, closing his two retail stores in Neza and shrinking his business to just family members.

“It affected us economically, mentally and physically,” he said. “It really damaged us.”

Many other small-business owners have responded in the same way. Mr. García said he knew of 30 to 40 small businesses in Neza, mostly textile companies, that had closed or disappeared over the past two years. “We’re all afraid to do better because we are afraid of what comes with it,” he said."

NYT