Crime limits growth in Latin America, says the World Bank

A report by the World Bank places a new focus on the effects of organized crime on economic development in Latin America and in the Caribbean and shows the cyclical relationship between poverty and crime.

The youngest Latin America in the World Bank and the Caribbean auditing (Lacer) predict that the region will have the slowest economic growth in the world over the next two years and will grow by 2.1% in 2025 and 2.4% in 2026.

While continuing poverty and reduced international help continue to hinder progress, the report is argued that organized crime is a key force that tightens the economic problems of the region.

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In the report, four important options for criminal groups in Latin America are highlighted, and the Caribbean hinders the development: by monopolizing legal and illegal markets in their territories; Replacement of law enforcement authorities to replace the state and use taxes on basic services; Increase blackmail of legal companies and their costs; And state capture through the corruption and manipulation of state actors and politicians.

The organized crime in Latin America and the Caribbean is also more violent than elsewhere. While the region's victimization rate, which expresses the frequency of crime against individuals, was three times higher than the global standard, the average murse rates were 5.4 -higher than the global average between 2000 and 2009. In the following decades, this rate increased to the global average. This showed an “excess” murders in view of what would be predicted by the reported victimization, ”says the report, which means that the criminal actors in the region were more violent than anywhere else. However, not all murders for organized crime could be attributed.

“We are far above the level of violence, which is predicted in view of the poverty and inequality of the region. We then have to ask why the region has so much organized crime and why it is so much fatal,” said William Maloney, chief economist for Latin America and the Caribbean at the World Bank, said Insight Crime.

The World Bank study follows the analysis of Interamerican Development Bank (IDB), which recently was 3.5% of GDP the average direct price for crime and violence in Latin America and Caribbean. This would mean that Brazil, the leading economy of the region, lost 76 billion US dollars in 2023, while Mexico lost almost 63 billion US dollars.

The International Monetary Fund (IMF), on the other hand, reports that local economic activity at the local level decreases by 4%.

Criminal ceremony analysis

The World Bank's report contributes to growing research on how organized crime is severely restricted the economic development in Latin America and the Caribbean. However, this is only half of the story. The poor economic conditions in turn offer a fertile reason that organized crime thrives and creates a destructive cycle of poverty and uncertainty that is difficult to escape.

This was shown during the Covid 19 pandemic, which led to the United Nations Economic Commission for Latin America and the estimated Caribbean the “most serious contraction of business in the history of the region”. The economic devastation as well as the social and political instability they have produced made it possible for law enforcement throughout Latin America, while the organizations of drug trade took the opportunity to expand.

Perhaps the most stubborn and extreme examples of organized crimes that thrive in despair are Haiti and Venezuela.

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Haiti has declined in almost flawless failure, in which gangs, including 400 Moozo control 85% of the capital, Port-Au-Prince, and massacre of the civilian population and mass shifts are common. A non -supported security mission to support Haitis has not contributed to containing violence. Haiti, long the poorest nation in Latin America and the Caribbean, has been in a situation of political and social unrest since 2018, after the lack of fundamental goods caused mass protests against government regulation. The murder of President Jovenel Moïse in 2021 led the country into a deeper crisis. Haiti is the only country that predicts the World Bank Report for Recession in 2025.

Venezuela's path to the criminal hybrid state can be attributed to hyperinflation and recession after the collapse of oil prices and the imposition of international sanctions. The economic crisis not only influenced the population, but also pushed over 8 million people to flee the country, but also affected the patronage and corruption networks with which the Maduro regime supported political power, which no longer had access to the resources that they wanted to remain loyal to the government. This strengthened predatory gangs that offer dissatisfied young people a way out of extreme poverty. And it carried the development of hybrid criminal networks and armed groups that work with elements of the state to achieve illegal income. Today, Colectivos – – Paramilitary groups that support the Maduro regime – and the Colombian National Liberation Army (Ejército de Liberación Nacional -) work with the government to control the criminal economy and suppress political opposition. Venezuela evaluates among the most violent countries in Latin America.

The decision of the United States and other nations to reduce the development of development in overseas and the introduction of tariffs from the Trump government makes the future of the global economy uncertain. The organized crime in Latin America and in the Caribbean could thrive again and further restrict the region's prospects to free itself from this vicious circle.

Selected picture: A gang member passes a burning vehicle in Haiti. Credit: Goran Tomasevic, The Globe and Mail