Crime and Violence in Latin America and the Caribbean: A Significant Burden on Social and Economic Development
Latin America and the Caribbean social and economic development remains heavily burdened by crime and violence, a new Inter-American Development Bank (IDB) study shows.
The Direct Costs of Crime and Violence in Latin America
The direct costs of crime and violence in Latin America reached 3.44% of the region’s Gross Domestic Product (GDP) in 2022, mostly unchanged from a previous IDB study published in 2017.
IDB President’s View
"Our study shows that crime is a significant burden on our societies and economic development. It limits growth, drives inequality, and diverts private and public investment. We must join and redouble efforts to change that reality," said Ilan Goldfajn, IDB President.
Key Findings
The study, "The Costs of Crime and Violence: Expansion and Update of Estimates for Latin America and the Caribbean", calculates the direct cost of crime in three areas: loss of human capital, spending on crime mitigation by businesses, and public spending on crime prevention and criminal justice.
Breakdown of Direct Costs
In 2022, security expenses by private businesses accounted for 47% of the total cost of crime, while state spending on crime prevention represented 31% and the loss of human capital made up 22%.
Comparison with European Countries
The research also compares the direct cost of crime in Latin America and the Caribbean with six European countries – Poland, Ireland, Czech Republic, Portugal, Netherlands, and Sweden – where costs average 2% of GDP (42% less than Latin America and the Caribbean).
Reducing the Cost of Crime
Reducing the cost of crime to these levels would give Latin American and the Caribbean the equivalent of nearly 1% of GDP to invest in social welfare programs.
Indirect Costs of Crime
The study presents an analysis of the indirect costs of crime such as reduced investment, lower business productivity and increased emigration. This analysis highlights why addressing crime requires restoring a sense of security and stability in addition to reducing the number of violent crimes.
Public Policy Recommendations
The study offers key public policy recommendations for the region, including:
- Strengthening public institutions to improve spending efficiency
- Focusing on evidence-based interventions
- Strengthening justice systems while investing in education and social services to address the root causes of crime, especially in high-risk areas
- Emphasizing the importance of improving data collection and research to better understand crime and violence
IDB’s Alliance for Security, Justice and Development
The IDB seeks to promote these policies through the Alliance for Security, Justice and Development, an initiative that aims to facilitate regional coordination for the implementation of public policies and promote resource mobilization to address the challenges to economic and social development posed by organized crime.
Case Studies
The study includes three case studies showing the impact of crime on tourism, migration, and business productivity in the region. It also presents the results for the year 2020 to analyze the dynamics during the COVID-19 pandemic, noting a slight increase of 0.09% compared to 2019 and 2021.
Conclusion
Crime and violence in Latin America and the Caribbean pose a significant burden on social and economic development, limiting growth, driving inequality, and diverting private and public investment. The IDB’s study highlights the importance of targeted prevention and effective security and justice systems to address this issue, and offers key public policy recommendations for the region.
Frequently Asked Questions
Q: What is the direct cost of crime and violence in Latin America and the Caribbean?
A: 3.44% of the region’s Gross Domestic Product (GDP) in 2022.
Q: How does the cost of crime in Latin America and the Caribbean compare to European countries?
A: The cost of crime in Latin America and the Caribbean is significantly higher than in European countries, with an average of 2% of GDP.
Q: What are the key public policy recommendations for addressing crime and violence in the region?
A: Strengthening public institutions, focusing on evidence-based interventions, strengthening justice systems, and investing in education and social services to address the root causes of crime, especially in high-risk areas.
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