World Bank Report Warns Central American Violence Harms Economies

World Bank: Central America's Rising Crime and Violence Puts Region's Development at Risk

CPI Financial: Crime and Violence: A Staggering Toll on Central American Development

World Bank Report: Crime and Violence in Central America

The World Bank released a report commenting on the damage Central American violence has on the countries’ economies. It estimates that violence costs Central American economies 8 percent of GDP due to law enforcement, citizen security and health care costs alone. This is significant when considering that, in 2010, Central America’s GDP growth rate in was only 2 percent compared to the rest of Latin America’s GDP, which grew about 6 percent.

Crime and violence are commonplace in Central America. The countries of Central America estimated that an average of 40 homicides occur per day. An estimated 71 percent of Central Americans identify crime as the main threat to their wellbeing. Violence rates have been much higher in El Salvador, Guatemala, and Honduras than in the more southern countries of Costa Rica, Nicaragua, and Panama. However, the latter countries have recently experienced an increase in violence.

The report says that Central America’s high rate of crime and violence also hinders economic growth. Business owners in Central American countries, other than Costa Rica, place crime in the top five obstacles to business growth and productivity. This hindrance stems not only from the loss of victims’ wages and labor time, but also from discouraging investment and diverting government resources to law enforcement instead of promoting the economy.

Central American crime and violence stem from easy access to firearms (due to years of civil wars), weak judicial systems, and drug trafficking. Drug trafficking is the main cause of the increase in violence. In fact, 90 percent of drugs bound for the United States flow through Central America. Drug cartels and gangs are a significant cause of the region’s high murder rates. The members of the cartels and gangs are rarely prosecuted, which contributes to the weakness of the judicial system. Because of this, many victims do not report crimes for fear of retribution and also due to a lack of faith in law enforcement and in the judiciary. For example, in 2006 in Honduras, over 63,000 criminal complaints were made, but only 1,015 ended in a conviction.

Although the report suggests that Central American governments have a long way to go to improve their situations, it offers possible steps and goals for the governments to take in the future. It recommends strategies that combine violence prevention with criminal justice reform to fight the increase in crime. It also suggests childhood development programs to steer children away from drug cartel and gang violence. On the bright side, the report estimates that even a 10 percent reduction in murder rates could increase the region’s economic growth by one percent of GDP. Because Central American countries are small and it is easy for individual (and therefore violence) to move among them, these countries must work together to decease crime and violence and their negative effect on their economies.