The IDB said the figure is roughly what the region invests on infrastructure and double the average cost for developed countries.
It is also the equivalent income for 30 per cent of the poorest population, underscoring the grave development impact violence has on the region.
The IDB said the “Costs of Crime and Violence: New Evidence, New Revelations in Latin America and the Caribbean” study is a landmark effort to provide comparable crime costs numbers for 17 countries in the region, benchmarking them against 6 developed countries.
“Crime and violence are at near crisis levels in Latin America and the Caribbean. The region accounts for nine per cent of the world’s population but contributes nearly one-third of its homicide victims, making it the most violent region outside of war zones. Six out of ten robberies in the region involve violence and 90 percent of murders go unresolved. Its prisons are the most overcrowded in the world,” the IDB said.
“Crime has reached alarming levels in many countries,” said Ana María Rodríguez, the manager of the IDB’s Institutions for Development Department.
“By providing estimates of the costs of violence at the regional, sub-regional, and national levels, the study will help governments and international cooperation agencies better allocate resources, as well as design better policies to control and prevent crime.”
Crime-related costs are on average 3.55 per cent of GDP in Latin America, compared with 2.75 per cent in the US, 2.55 per cent in the UK and 1.34 per cent in Germany. If the region brings its crime costs down to the level of developed nations, it could increase its infrastructure investment by 50 per cent.
The study breaks down the costs of crime into three parts.
The social costs include lethal and non-lethal victimization and foregone income of prison populations: 0.64 per cent of GDP. Private spending on security by business and households: 1.37 per cent of GDP and public spending, including the costs to the justice system, spending on police services and spending on prisons: 1.51 per cent of GDP
The estimates are conservative as they include mainly direct costs of crime: public and private spending on security and the social costs. They do not include indirect costs such as changes in behaviour due to fear of crime, or the impacts of crime on the health of persons, the IDB noted.
It said as a percentage of GDP, public spending on crime-related areas in Latin America and the Caribbean is similar to the level in developed economies such as the U.S. and the United Kingdom. However, spending is a much bigger portion of public budgets, and private spending on crime prevention is vastly superior to that in more developed nations, the study shows.
The study provides a greater level of detail on how uneven the crime phenomenon is in the region – and within countries. High-crime states in Brazil such as Alagoas y Ceará have costs and rates that mirror more those of Northern Triangle countries (Guatemala, El Salvador and Honduras). Safer areas such as Bello Horizonte and Sao Paolo have numbers closer to Chile and Uruguay.
The study has chapters that analyze crime costs in Brazil, the Northern Triangle and the Caribbean and breaks new ground in calculating the direct costs of homicides as well as the foregone income of the victims of homicides (0.36 percent of GDP, or an annual average of U$10.5 billion for the 2014-2015 period).
The study also notes that countries that spend more on prisons do not necessarily reap the benefits of less violence.
The Bahamas and El Salvador, for instance, spend large sums (in terms of GDP) on their penitentiary systems but suffer from high crime rates. Argentina and Uruguay, on the other hand, have much lower incarceration costs and lower crime rates.
Costs of violence against women in Latin America and the Caribbean double the world average, and the study points to future avenues for more research on gender violence. The book includes chapters on cybercrime and organized crime, the IDB added.
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