Report Highlights Financial Cost of Insecurity in LatAm

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A new report on the financial cost of insecurity and criminality throughout the world highlights the vicious cycle of violence and economic trouble afflicting many countries, while also highlighting possible security trends in Latin America and the Caribbean.

The study by the Institute for Economics & Peace (IEP) based its estimates (pdf) on the likes of spending on public and private security forces, incarceration costs and lost GDP due to violence and murder.

Honduras topped the region with violence inflicting an estimated direct cost of 19.2 percent of GDP in 2013, ranking it sixth globally. Its Central American neighbors El Salvador and Guatemala also saw noteworthy yearly increases in the cost of violence between 2013 and the year prior. In contrast, Caribbean nations Haiti, Jamaica and Trinidad and Tobago saw meaningful decreases in the direct cost of violence.

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In the same period Mexico and Peru saw the regions’ biggest year-on-year increase in direct violence costs, resulting in Mexico rising 25 spots to 25th worldwide, while Peru jumped 43 rankings to 119th.

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Brazil, Ecuador, Panama and Venezuela saw only slight changes in the estimated costs of violence between 2013 and the previous year, while Colombia’s cost of violence compared to GDP dropped significantly, resulting in a five spot slide down the rankings.

InSight Crime Analysis

While the economic cost of violence and instability grabs fewer headlines than the gory aftermaths of gang shoots outs or the high profile arrests of crime bosses, it is a critical indicator of how the lives of those with no direct involvement or experience with organized crime are affected.

Violence can scare off foreign investment, while making business for local firms more expensive and harder to conduct. Such circumstances can drive unemployment, which itself often increases desperation and criminal activity, thus creating a vicious cycle.

The rising cost of violence in Honduras, El Salvador and Guatemala coincides with reports of bloodshed and instability caused by increasingly potent street gangs. During El Salvador’s failed 2012 to 2014 gang truce, social and employment projects were a significant element of attempts to get gang members to leave their criminal lifestyles.

SEE ALSO:Honduras News and Profiles

Meanwhile the huge jump in economic damage caused by violence in Mexico reflects the ongoing security crisis created by drug cartel rivalries as well as confrontations with security forces. A central bank survey of economists revealed security issues are expected to be the single biggest detriment to Mexico’s economy in 2015, indicating this trend is likely to continue.  

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