How to Measure the Costs of Crime in Latin America

Measuring the economic costs of crime is important for crafting strategies to improve the resilience of businesses and industries that operate in spaces where organized crime is prevalent.?

In Latin America, the issue is garnering increased attention after Ecuador hosted the first edition of the Latin American Security Summit on August 19, motivated by concerns around security issues in the region. Violence has been weakening Latin American states and costing them around 3.5% of their GDP, according to the Inter-American Development Bank (IDB), while also increasing the costs of doing business in the region.?

Latin American states spend big on security, prison systems, and property damage, while trying to mitigate the damage caused by organized crime. Meanwhile, they seek to cooperate with their regional neighbors on security issues as criminal groups become more organized and interconnected, and the costs of fighting them increase.

During the summit, the president of the IDB, Ilan Goldfajn, proposed the creation of a new regional alliance to target organized crime, with the goal of limiting the influence of gangs on vulnerable populations, strengthening state institutions, and suppressing their financial flows. Ten states have already agreed to become part of the alliance, and Ecuador has committed to assuming its first presidency.

The IDB will offer support to countries in the alliance by providing resources to help governments manage the costs of crime. The bank proposed the use of evidence-based analysis and intelligence tools and made an agreement with the World Bank and the Development Bank of Latin America and the Caribbean (CAF) to support public policies related to organized crime in the region.

The focus on the costs of crime highlights its continued impact on Latin American countries and the challenges they face in addressing it. The main problem is that states use their limited resources in areas that would not require as much if crime were lower. These resources could then be allocated in other areas, which could benefit society.?

InSight Crime has written about this issue, analyzing the cases of Brazil and Guatemala. In Brazil's case, we cover a 2018 study that measured the costs of crime for the Brazilian government through the direct and indirect impact it has on spending in security, the judiciary and prison systems, property damage, lost productivity, and medical treatments. The main problem in tackling organized crime in Brazil was the low productivity of resources. The country had the tools to bear the costs of crime, but it did not employ them efficiently.

In Guatemala, we look at how violence places a lot of economic pressure on the country via the analysis of a 2013 study. The report found that insecurity cost the state $455 per citizen in 2012.

To explore our full coverage on the impacts of crime on Latin American societies visit insightcrime.org