Violence and crime absorb almost 3.5% of the Gross Domestic Product (GDP) of Latin America and the Caribbean (LAC), depleting funds that could be allocated to education and assistance to vulnerable people, a Bank report showed. Inter-American Development.
Beyond the human, the cost of crime amounts to almost 80% of the region’s public budgets for education, double what is spent on social assistance and 12 times the budget for research and development, the study showed. from the IDB, which uses data from 2022 and was published on Monday.
Crime “limits growth, drives inequality and diverts private and public investment. We must join together and redouble our efforts to change that reality,” said IDB President Ilan Goldfajn in a statement.
The study calculates the direct cost of crime in three areas: the loss of human capital in the form of productive time, spending on crime mitigation by companies, and public spending on crime prevention and criminal justice.
In 2022, security expenditures by private companies accounted for 47% of the total cost of crime, while public spending on crime prevention accounted for 31% and loss of human capital for 22%.
For comparison, a data set from Poland, Ireland, the Czech Republic, Portugal, the Netherlands and Sweden showed their costs are 42% lower than the region.
If the levels of its European counterparts were reached, the region would have about 1% of GDP to invest in social welfare and other programs, according to the IDB.
A parallel study by the International Monetary Fund cites Latin America as responsible for a third of homicides worldwide despite having less than 10% of the planet’s population, with organized crime being especially costly.
“The presence of gangs and drug trafficking amplifies the costs of doing business,” says the IMF report. “A novel analysis of Mexican companies suggests that the costs of damage from crime are four times higher for companies that report the presence of gangs in their vicinity.”
The fiscal cost for governments is also considerable, according to the IMF, which says spending on public order and security in the region averages around 1.9% of GDP.
“While spending more on security and deploying more police appears to help reduce crime, other factors are likely to be more important in the region, with spending efficiency playing a key role.”
“For example, despite the high proportion of spending on the judiciary, the capacity of the courts to punish crimes remains weak.”
Among policy proposals, the IMF says the region should establish a “regional knowledge platform” to collect, share and analyze data, along with disseminating best practices on effective economic and security policy responses.
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