Organized crime and violence are presenting significant challenges to development in Latin America and the Caribbean, according to the World Bank’s latest Latin America and the Caribbean Economic Review (LACER). The review, titled “Organized Crime and Violence in Latin America and the Caribbean,” highlights how these issues are worsening the region's already vulnerable economic situation.
Projected growth for Latin America and the Caribbean is 2.1 percent in 2025 and 2.4 percent in 2026, making it the lowest-growing region worldwide. The report points out high levels of lethal violence related to organized crime with victimization rates three times higher and homicide rates eight times the global average.
Several factors are contributing to the increase in organized crime. These include a growing global demand for illegal goods, government crackdowns which have altered criminal networks, and the COVID-19 pandemic that allowed criminal groups to strengthen their hold in areas with weak state presence.
Carlos Felipe Jaramillo, Vice President for Latin America and the Caribbean at the World Bank, stated, “Organized crime is rapidly proliferating across the region, transcending domestic borders and becoming a pervasive threat. This is no longer an isolated issue; it demands a regional and global dialogue to elevate solutions and mobilize our collective expertise and resources.”
The report discusses the effects of organized crime on development, noting its impact on public safety, economic growth, and the integrity of public institutions. Issues such as uncertainty surrounding property rights, rampant extortion, and pervasive insecurity increase transaction costs for businesses and affect competitiveness. Additionally, the diversion of public security resources away from essential services like health and education adds to the burden on countries already dealing with high debt and fiscal challenges.
William Maloney, Chief Economist for Latin America and the Caribbean at the World Bank, explained, “Fighting organized crime is not merely a law enforcement issue; it’s a development priority. It undermines governance, distorts investment, and exacerbates inequality. We must address this issue head-on to prevent it from becoming a permanent drag on growth.”
To tackle these issues, the report suggests a comprehensive agenda to strengthen state capacity against organized crime. This includes police reform, improved prison systems, and better judicial processes. Strong institutions are essential for achieving growth and development.
Economic policies are also important in the fight against organized crime. Promoting growth and job-creating reforms, while improving education and training for youth, can raise the opportunity cost of crime and decrease its workforce.
Lastly, the report emphasizes the importance of long-term research to guide government actions. The lack of regular, comparable surveys hinders the formulation of effective policies.
The full report is currently available online.