The economic impact of violence in Mexico increased by 10% last year to 5.16 trillion pesos (US $268 billion), according to a global think tank.

The Institute for Economics and Peace (IEP) said in its report Mexico Peace Index 2019 (MPI) that the cost of violence is equivalent to 24% of the country’s GDP.

Homicide was the largest contributor to the economic impact of violence, the IEP said, accounting for 51%, or 2.63 trillion pesos, of the overall cost, a 15% increase from 2017.

There were more than 33,000 murders last year, making 2018 the most violent year on record.

The IEP said that on a per-person basis the economic impact of violence was 41,181 pesos (US $2,200), or more than five times the average monthly salary of a Mexican worker.

The per-capita economic impact was highest in Colima, at 83,167 pesos, and lowest in Yucatán at 10,808 pesos.

If violence and its consequential economic impact were reduced to the level of the five most peaceful states in Mexico, the resulting peace dividend would amount to 10 trillion pesos over a four-year period, the IEP said.

“Violence and the fear of violence create significant economic disruptions,” the report said.

“While violent incidents incur costs in the form of property damage, physical injury or psychological trauma, fear of violence alters economic behavior. It does this primarily by changing investment and consumption patterns as well as diverting public and private resources away from productive activities and towards protective measures.”

The MPI also said that violence decreases productivity and affects the price of goods and services.

In addition to the economic impact findings, the IEP determined that “peacefulness” in Mexico deteriorated by 4.9% last year, the third consecutive year of declines.

The per-capita homicide rate increased by 14%, incidents of gun violence rose to 28.6 per 100,000 people – double the 2015 rate – and there were 850 acts of political violence during the 2018 electoral period. At least 175 candidates or elected officials were murdered.

One in every three adults Mexicans is a victim of crime each year, the MPI said.

Organized crime-related offenses, extortion and retail drug dealing all increased last year but kidnappings and human trafficking declined.

The IEP determined that the least peaceful state in Mexico last year was Baja California followed by Guerrero, Colima, Quintana Roo and Chihuahua. The most peaceful were Yucatán, Campeche, Tlaxcala, Chiapas and Hidalgo.

Baja California Sur, Sinaloa and Sonora made the biggest improvements in terms of security, the report said, noting that the governments in all three states used programs specifically designed to target local challenges.

Guanajuato, where much of the violence is linked to pipeline petroleum theft, saw the worst deterioration of its security situation.

The most violent states in the country don’t necessarily receive higher per-capita funds for domestic security than more peaceful ones, the IEP said.

The think tank said the main finding of its report is that the government is underinvested in the justice system, considering the high level of violence.

“Currently, government spending on police and the justice system is just half of the average for other members of the Organization for Economic Co-operation and Development (OECD), as a percentage of gross domestic product,” the MPI said, adding that the impunity rate in Mexico was 97% in 2017.

The IEP also said that Mexico continues to struggle with high levels of corruption, noting that almost 70% of people believe that judges are corrupt and over 65% of Mexicans think the same about state and federal prosecutors’ offices.

On a more positive note, the report said that Mexico shows strengths in sound business environment, high levels of human capital, acceptance of the rights of others, and good relations with neighbors.

Community cooperation is also improving, with the proportion of Mexicans reporting that their communities organize to solve problems increasing 10% since 2012.

The Institute for Economics and Peace describes itself as the world’s leading think tank dedicated to developing metrics to analyze peace and to quantify its economic value. The 2019 Mexico Peace Index can be downloaded here as a PDF.

Mexico News Daily