Criminal Violence and Corruption Curbs Business

The phenomenon affects much of Latin America, whose countries spend on average 8% of their GDP on security costs.

Monday, June 3, 2013

That was the conclusion reached during the forum "Connecting businesses as partners for prosperity with security in the Americas", organized by the Organization of American States (OAS) and the private sector, under the framework of the Guatemala Investment Summit.

Oscar Avalle, World Bank country director in Guatemala, said that according to research by the agency, 8% of gross domestic product (GDP) is destined for security costs in the countries of the region.

In addition, the report notes that the economic costs of violence reaches 7.7% of GDP in Central America. In Honduras the rate is 9%, El Salvador 7.7%, 7.3% in Guatemala and Costa Rica it is 3.6%.

Santiago Molina and Guillermo González, president and director of the Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations (Cacif), demonstrated that the structuring of security costs for a company can reach up to 12%, which impacts on their competitiveness and makes it unprofitable. "We realized that the costs have increased in recent months and it has expanded across the whole country," said Gonzalez.



More on this topic

How Much Does the Region Lose in Crime?

January 2020

Because of factors such as business closures and lack of opportunities, it is estimated that criminal activity costs Honduras and El Salvador 16% of GDP, and in the case of Guatemala, its losses could amount to 7% of its production.

In Central America, the human costs of crime remain one of the highest in the world.

Central America: Highest Homicide Rate in the World

April 2014

Drug trafficking and gangs are the main factors responsible for intentional murders in the most violent countries in the world: Honduras, Belize, El Salvador and Guatemala.

According to a report by the United Nations Office on Drugs and Crime at the United Nations (UNODC), in 2012 Honduras recorded 90.4 killings per 100,000 inhabitants.

Crime Affects Salvadoran Economy

May 2011

The costs generated by crime are equivalent to 11% of gross domestic product (GDP).

According to a recent World Bank report, crime and violence have an impact on economic growth not only in terms of loss of wages but it also affects the investment climate and diverts scarce government resources to strengthen the application of justice rather than promoting economic activity."

Guatemala Drops 11 Positions in Enabling Trade Ranking

May 2010

High costs related to insecurity and violence place Guatemala at position 124 of 125 when measuring security.

FUNDESA, the foundation for Developing Guatemala, analyzed the World Economic Forum’s Global Enabling Trade Report 2010, in which most of the Latin American countries dropped several positions.

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