Weekly Chart: The Costs of Crime in Latin America

By Holly K. Sonneland

Crime and violence cost the region some $261 billion annually, or more than 3.5 percent of GDP.

Crime and violence take a toll on Latin America and the Caribbean, and the cost adds up to $261 billion annually, or 3.5 percent of GDP, according to an Inter-American Development Bank report out this month. The study surveyed 17 countries in the region and estimated costs based on not just public- and private-security spending, but also the social costs: diminished quality of life for victims and lost income of the countries’ imprisoned populations.

One issue that aggravates social costs in Latin America is the fact that it has the highest female homicide rate in the world at 4.3 per 100,000 women, more than double the region with the next highest rate. Within Latin America, overall victimization in the increasingly precarious Venezuela is by far the highest: almost 9 in 10 of those surveyed said they or a relative had been the victim of a crime in the last 12 months—more than double the regional average. In one troublesome trend, the murder rate is rising even as socioeconomic conditions improve. The report estimates that, if Latin America were able to lower its crime costs to those of a developed region, infrastructure investment could go up by 50 percent.

Overall crime costs are highest in Central America, where close to 4.2 percent of GDP is spent on security. Incidentally, Central American governments tend to spend the lowest percentage of GDP compared to other areas within Latin America and the Caribbean while private security spending in the region is markedly higher—about 2 percent of GDP—than it is elsewhere.

Latin America, along with Sub-Saharan Africa, also has the highest prison overcrowding rate in the world. The problem is particularly acute in Brazil, where a spate of prison riots have led to dozens of fatalities in the opening weeks of 2017. But while Brazil has the highest nominal costs of crime overall, topping out at $124 billion annually, the report found that public spending in Brazil on prison administration is the lowest of any other country in the survey.