Latin America violence carries economic cost

Outlook

According to Mexico’s Citizen Council for Public Security and Penal Justice, in 2016 Latin America and the Caribbean accounted for the world’s ten most violent cities, and 43 of the top 50, including 19 in Brazil, eight in Mexico and seven in Venezuela. South Africa and the United States account for the rest.

In an effort to calculate the economic cost of violent crime, the InterAmerican Development Bank (IDB) estimates that the region loses 261 billion dollars annually, or 3.55% of GDP -- compared with 2.75% in the United States. This includes 1.51% in fiscal costs, 1.37% in private security spending and 0.64% in the cost of lost income.

While no figures are available for Venezuela, violence burdens an already contracting economy -- according to the Venezuelan Violence Observatory, the national murder rate reached 90 per 100,000 in 2015.

Impacts

• GDP losses range from 1.92% in Mexico to 6.51% in Honduras, hitting 3.78% in Brazil, 3.12% in Colombia and 2.97% in Argentina.
• Brazil accounts for 52% of total homicide costs for the region, followed by Mexico (19%), Colombia (12%) and Honduras (4%).
• Drug and gang violence are key drivers in Mexico and Central America -- and increasingly elsewhere.
• The vast majority of victims (and inmates) are young men of working age.