Saturday, October 21, 2006

Crime Affecting Growth Prospects of Latin America

High Crimes Stifle Latin Economies
Jens Erik Gould
New York Times

World bank officials recently stated that high incidence of crime in Latin American countries could be curtailing growth rates of individual countries by as much as 8 percent. Widespread insecurity about crime has forced companies to expend resources on preventing violence, protecting employees and property, as opposed to producing their products.

Widespread crime has also dampened growth by lowering productivity and high school and college graduation rates. According to World Bank economist Andrew Morrison, who authored a report on crime for the Brazil government, crime often scares off potential domestic and foreign investors. At a time when most developing countries are trying to attract foreign investment, high crime rates can be especially deleterious from an economic standpoint. However, Latin American economies have been aided by the fact that many corporations have continued to invest because of the region’s vast potential.


Questions

1. What is the best way for Latin American countries to try and eradicate crime? What can the developed world or multilateral institutions such as the World Bank and the International Monetary Fund do to help in this regard?

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