Latin America has taken big steps in the last 15 years in terms of financial stability. Since 1998, the average frequency of crises in Latin America has fallen from 0.7 crises per year to 0.29 crises per year. Economists attribute this to better fiscal management, with gross domestic product becoming less reliant of government spending and outside help. The economies are starting to run with less assistance, generating a more stable financial situation with fewer crises. Latin American economies are on an upward trend nowadays, but there is still one major setback: Crime.
“Citizen Security with a Human Face”, a study by the United Nations Development Program, presented the cost of violence in Latin America. The study showed that 10.5% of Honduras’ GDP was taken by violence, 3.3% from Chile’s GDP, 3% from Uruguay’s GDP, and 2.52% from Costa Rica’s GDP. These numbers reflect the expenses from crime anticipation, consequences of a crime, and response to a crime. People in Latin America have changed their consumer habits to adapt to the violence in their country. Some people will not leave their homes at night, and there has been growing insecurity and inequality in the region.
In order to slow down the crime, governments need to reform security policies to adapt to today’s society. Poverty and drugs are no longer as big of problems as they once were, but crime and inequality are the roots of the problems arising in Latin American countries. In order to slow down the crime and inequality, it will take more than just a reform or police involvement. It is something that will take time and major development. What are the steps that must be taken in these countries to ensure that GDP and growth in the future will not be affected by the crime and inequality taking place today?