Who Defines the Illegal? The Governance of Illegal Markets in Contested Territories: A Systematic Review

Illegal markets encompass a wide range of business activities carried out outside or against legal and regulatory institutions, including smuggling, resource extraction, counterfeiting, and trafficking in drugs, arms, and human beings. This paper attempts to provide a literature review of governance, normalization, and persistence of illegal markets in contested territories based on the recently produced scholarly literature. To achieve the stated purpose, a structured review of 75 scholarly articles retrieved from the Web of Science is undertaken, focusing on contested territories such as Transnistria, South Ossetia, Abkhazia, Donbas, and selected territories in the Horn and Great Lakes of Africa. Based on the structured literature review, it has been revealed how hybrid governance systems – which consist of de facto authorities, local elites, organized crime groups, and state accomplices – contribute towards legitimizing illegal markets in these territories. Not only have illegal market activities been tolerated by the local communities, but they become an integral part of local economies and survival techniques in the form of social adaptation, with their links to transnational illegal networks further reinforcing contested territories within global illegal market dynamics.