Organized crime stifles Latin America's economic development

Miami Herald

4 hours ago

June 27 (UPI) -- Latin America and the Caribbean rank among the regions with the highest rates of criminal activity worldwide, marked by a strong presence of illicit markets and limited institutional capacity to combat them.
Organized crime has become one of the biggest obstacles to economic development in the region, according to a World Bank report. The report points to four main drivers: territorial control, criminal governance, institutional capture and systemic violence.
In addition to producing and consuming large quantities of cocaine, Latin American criminal groups play a central role in trafficking the drug to the United States and the European Union. These networks are tightly linked to criminal organizations around the world and have a significant impact on the region's economy, according to the Global Initiative Against Transnational Organized Crime, or GI-TOC.
Although the region makes up just 9% of the world's population, it accounts for about one-third of global homicides, with rates up to eight times higher than the global average. Twelve Latin American countries are among the 50 most affected by organized crime, according to GI-TOC.
A study by the Inter-American Development Bank, led by Argentine researcher Santiago Pérez-Vicent, estimates that criminal organizations cause economic losses equal to 3.5% of the region's gross domestic product. That figure represents 78% of the regional education budget, twice the amount spent on social assistance and 12 times the investment in research and development.
Colombia, Peru and Bolivia dominate global cocaine production, while Mexico, Brazil and several Central American countries serve as key transit and distribution routes to major consumer markets in North America and Europe.
Cocaine's impact in Latin America goes beyond the global illicit economy, fueling violent clashes among rival cartels across the region.
In Mexico, about 30,000 teenagers are involved in organized crime, according to the Legal Research Institute at the National Autonomous University of Mexico. They engage in 22 types of criminal activity, including drug trafficking and kidnapping, with many recruited as hitmen due to their age and vulnerability.
Alongside major cartels in Colombia and Mexico, new groups have emerged, including Venezuela's Tren de Aragua and Brazil's Primeiro Comando da Capital, or PCC. These organizations have developed new strategies to traffic drugs -- including substances beyond cocaine -- into the United States and the European Union.
Experts and international organizations say organized crime in the region has evolved significantly. Fragmented and diversified networks are expanding through alliances with foreign groups, including Albanian and Italian mafias.
While most governments in the region focus on combating drug trafficking, cocaine production is only one part of a broader criminal economy. According to The Evolution of Organized Crime in Latin America, a report by researchers Lucía Dammert and Carolina Sampó, organized crime also drives illegal mining, migrant smuggling and human trafficking -- activities that severely impact communities and threaten regional and global security.
Illicit activities have expanded into markets with direct human impact, including logging, livestock operations, the cultivation of prohibited plant species and large-scale illegal and unregulated fishing, according to the report.
"Human and arms trafficking, prostitution, the spread of synthetic drugs, counterfeit pharmaceuticals, contract killings and illegal mining -- which in countries like Peru and Colombia generate as much or more revenue than drug trafficking -- are among the criminal enterprises that have taken hold," said Pablo Zeballos, a former intelligence officer and international organized crime consultant, in an interview with the BBC.
In recent years, several Latin American countries that were once relatively free of gang-led violence have experienced growing insecurity, violence and lawlessness.
Organized crime has shaped life in places like Mexico, Colombia and Brazil for decades, said Jeremy McDermott, co-director of InSight Crime, in a podcast for Americas Quarterly. "Now, historically more peaceful countries such as Chile, Costa Rica and Uruguay are starting to experience rising levels of violence," he added.
The expansion of organized crime in Latin America has been driven by a lack of effective coordination among regional governments, limiting joint responses to transnational threats such as drug trafficking, arms smuggling and human trafficking, according to reports from GI-TOC and InSight Crime.
This structural weakness is compounded by the steady erosion of institutions in several countries, marked by high levels of corruption, impunity and limited operational capacity within law enforcement.
Together, these conditions have created power vacuums that criminal groups exploit to establish sophisticated networks of territorial control, infiltrate legal economies and overwhelm national response systems.
Copyright 2025 UPI News Corporation. All Rights Reserved.