By: Staff Writer
November 15, 2024
The Inter-American Development Bank in a recent report said that direct costs of crime and violence in Latin America reached 3.44% of the region’s Gross Domestic Product (GDP) in 2022.
“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. “Evidence shows that targeted prevention and effective security and justice systems are key to lasting change. The IDB practical experience working with countries shows that we can mitigate the impact of crime. We are scaling our impact in this area by establishing a Regional Alliance for Security, Justice and Development,” he concluded.
The report, “The costs of crime and violence: expanded and updated estimates for Latin America and the Caribbean,” which is an updated report from its initial 2017 report, also said that it “calculates the direct cost of crime in three areas: loss of human capital (costs of productive time lost as a result of non-lethal crimes, homicides and incarcerations), spending on crime mitigation by businesses, and public spending on crime prevention and criminal justice. In 2022, security expenses by private businesses accounted for 47 percent of the total cost of crime, while state spending on crime prevention represented 31 percent and the loss of human capital made up 22 percent.”
The report also said: “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 two percent of GDP (42 percent less than Latin America and the Caribbean). Reducing the cost of crime to these levels would give Latin American and the Caribbean the equivalent of nearly one percent of GDP to invest in social welfare programs.”
It continued: “The report expands, updates, and refines the estimates presented in 2017. It uses a new methodology to estimate the cost in human capital based on local information about victim demographics for the calculation of the present value of economic losses from the premature death of homicide victims.
“Additionally, the study presents an analysis of the indirect costs of crime such as reduced investment, lower business productivity and increased emigration. This analysis of indirect costs highlights why addressing crime requires restoring a sense of security and stability in addition to reducing the number of violent crimes.
“The study offers key public policy recommendations for the region. These include strengthening public institutions to improve spending efficiency, focusing on evidence-based interventions, and strengthening justice systems while investing in education and social services to address the root causes of crime, especially in high-risk areas. And it emphasizes the importance of improving data collection and research to better understand crime and violence.”