ON JULY 14, Guatemalan state prosecutor Juan Carlos Martinez was murdered in
a suburb of Guatemala City. Suspicion immediately fell on the narcotics gangs
that continue to fuel violence in Guatemala and throughout the region. As
Reuters reported, Martinez had been "investigating the murder of three
Salvadoran deputies to the Central American parliament." The Salvadoran
politicians, members of the ruling center-right ARENA party, were assassinated
17 months ago in Guatemala. After Martinez was killed, Reuters quoted El
Salvador's president, Antonio Saca, as saying, "We are talking about the
big league, powerful drug cartels that are doing everything possible to keep
people from knowing the truth."
The Martinez murder offers a grisly reminder of Latin America's crime
problem, which is especially bad in Central American countries like Guatemala,
El Salvador, and Honduras. That problem must be addressed if the region is to
fulfill its economic potential.
To be sure, Latin America has experienced several years of strong growth,
thanks to high commodity prices and prudent economic management. The region's
recent progress is worth celebrating. "Thanks to a newfound economic
stability and vitality," the New York Times reported in late May,
"Latin America is looking less chained to the fortunes of the United
States." That is good news at a time when the U.S. economy has slowed and
may be entering a recession.
However, crime and violence constrain Latin American growth and continue to
cloud the business climate. In an October 2006 paper, the World Bank's
Alessandra Heinemann and Dorte Verner estimated that the economic toll associated
with crime and violence in Latin America is "14.2 percent of the regional
GDP. In terms of human capital, 1.9 percent of GDP is lost annually, which is
equivalent to the region's spending on primary education. Over the past 15
years, the net accumulation of human capital has been cut in half due to the
increase in crime and violence."
That same month, the New York Times publicized a separate World Bank
study that had been issued to the Brazilian government. As the Times
summarized, if Brazil's "homicide rate in the early 1990s had been as low
as Costa Rica's, which has one of the lowest in the region at one-sixth
Brazil's rate, per capita income would have been about $200 higher and the
gross domestic product 3.2 to 8.4 percent higher in the late 1990s."
As Lorraine Orlandi wrote in the Fall 2007 issue of the journal Americas
Quarterly, "Across Latin America, steep security budgets are now part
of the cost of doing business. Estimates provided by private security advisors
in Mexico alone range from 3 to 6 percent of a company's total spending."
Orlandi observed that crime has taken a particularly harsh toll on Guatemala
and El Salvador. "In Guatemala," she wrote, "the cost of
violence in 2005 reached about $2.4 billion, or 7.3 percent of GDP,"
according to a 2006 United Nations Development Program report. "That was
more than double the cost of damage caused by Hurricane Stan that year and
twice the 2006 budget for health, education and agriculture combined. A 2000
World Bank study found violent deaths in El Salvador had reached the same level
as at the height of that country's civil war."
There are no simple answers to the crime problem.
Politicians on the left tend to blame economic and social inequality, while
politicians on the right tend to focus on inadequate policing and call for a
more muscular law-and-order agenda. There seems little doubt that successful
anti-poverty initiatives can help dissuade Latin America's urban poor from
pursuing a life of crime. However, the importance of innovative policing and
improved security--not to mention broader legal and judicial reforms--cannot be
Just look at Colombia. In the late 1990s and early 2000s, its economy was
devastated by rampant violence. Drug traffickers, paramilitaries, and
guerrillas were running wild. But under the administration of President Alvaro
Uribe (who was first elected in 2002), Colombian security forces have cleaned
up the cities and reestablished a presence in every single town across the
country. This has led to robust economic growth and increased foreign
As Colombia demonstrates, Latin America's battle
against violent criminal activity is not hopeless. Solving the problem won't be
easy. But it must be a top priority of governments across the region.