Crime is draining the potential of Brazil’s economy as well as much of Latin America’s. As organized criminal groups expand, insecurity rises and governments ramp up spending on law enforcement, the region faces lost productivity, reduced investor confidence, and slower growth.
Latin America – home to just 8% of the world’s population – accounts for a staggering one-third of all homicides worldwide. Colombia, which is known to be deeply affected by drug trafficking, ranks fifth in the world with 33.7%, while the top spots on the list include countries that are in active conflict – Ukraine (68.5%), Afghanistan (53.1%), and North Korea (41.5%).
In Brazil, the homicide rate reached 22.8 per 100,000 inhabitants in 2023 which is higher than the regional average of 20/100,000 and more than three times the global average of 6. However, in some Caribbean nations, the rate exceeds 30.
Despite a 24.9% drop in homicides over the last decade, according to the Brazilian Forum on Public Safety (FBSP), other forms of crime are on the rise, including fraud, digital scams, abuse against children and teenagers, and the synthetic drug trade. A strong sense of insecurity persists, particularly among entrepreneurs, investors, and employees.
See also: Development struggle: How organized crime affects Central American progress
This growing insecurity is directly impacting economic activity. According to the 2024 Global Peace Index, Brazil ranks among the top 30 countries with the highest costs related to the control and prevention of violence. In 2023 alone, those costs reached US$474 billion, the equivalent of 11.08% of Brazil’s GDP and one of the highest rates globally.
Slower growth, higher risk
Crime is now one of the most significant structural barriers to sustainable growth in Brazil and throughout the region. According to OECD projections, while the global economy is expected to grow by 3.1% in 2025, Brazil’s GDP may expand by just 2.1%. Mexico, where organized crime and protectionist policies weigh heavily, could even see a 1.3% contraction.
“There’s a vicious cycle between crime and low growth,” warned Rodrigo Valdés, Director of the IMF’s Western Hemisphere Department, during a talk at Georgetown University in February.
The data backs this up. In 2023, Brazil recorded its lowest number of violent deaths since 2011, but fraud cases surged by 8.2%, with digital fraud jumping by 13.6%. For the first time, scams outnumbered robberies by more than two to one whereas just five years ago, robberies were 3.5 times more common.
Attempts at financial fraud have also increased. According to the credit bureau, Serasa Experian, scams rose by 10% in 2023, and could have caused up to R$51.6 billion (US$10 billion) in losses if they had not been intercepted.
When crime becomes business
The rise of organized crime, particularly in Brazil’s North and Northeast, has become one of the country’s greatest economic threats. While drug trafficking remains dominant, criminal groups have diversified their operations into extortion, illegal trade, and taking control over local territories and services.
A groundbreaking study released by the FBSP in early 2024 measured the economic impact of these organizations and found that illegal markets for gold, alcohol, fuel, lubricants, and tobacco have generated R$146.8 billion (US$32 billion) annually since 2022.
Cybercrime has also become a major revenue stream. Between July 2023 and July 2024, mobile phone theft and online scams netted R$186 billion (US$37.2) for organized crime groups. Cocaine trafficking alone accounted for about R$15 billion.
“Brazil occupies a strategic position in the global drug trade and has a large domestic consumer market,” explained David Marques, Project Coordinator at FBSP. “With growing capital, these groups expand operations and launder money in more sophisticated ways – corrupting even legal markets.”
The price paid by society
Crime imposes both direct and indirect costs on the economy. According to the Inter-American Development Bank (IDB), private expenditure on security in Latin America and the Caribbean averages 1.6% of GDP, while the total costs of violence account for 3.4% of GDP – resources that could otherwise fund education, healthcare, or innovation.
To put this into perspective:
- Violence costs the region 78% of its entire education budget
- This amount is double the spending on social assistance
- And 12 times higher than investments in research and development
In Brazil, state governments have increased public safety budgets at the expense of other vital sectors. Between 2018 and 2024, public security spending rose by 14.2% in real terms, jumping from 8.7% to 9.1% of total state expenditure. In Rio de Janeiro, more is now spent on policing than on education and healthcare combined.
Experts warn that over-prioritizing law enforcement without investing in social inclusion and reducing inequality will fuel a cycle of poverty and violence.
“Insecurity limits access to quality education, discourages investment, and perpetuates poverty. Lack of opportunity drives young people into crime, which in turn deepens social exclusion,” Joana Monteiro, a Professor at FGV, told DevelopmentAid.”
Studies by the IDB show that high rates of homicide reduce foreign investment, particularly in high-tech and capital-intensive sectors. Paul Bisca, a World Bank consultant, commented that perceived violence can slash company productivity by up to 9%.
Violence also drives migration, particularly of young, educated workers, which leads to a loss of human capital and damages long-term development. In parts of Central America, the exodus is already underway.
For Renato Sérgio de Lima, Director of FBSP, the militarized, repressive model adopted by many Latin American countries has reached its limit.
“Regional security strategies often borrow from wealthy nations with completely different contexts and resources. That creates an illusion of effectiveness,” he explained in an interview with DevelopmentAid.
He also pointed out that international metrics based on U.S. or European standards distort the region’s position.
“Even when we make progress, the comparisons are always skewed. And since Latin America faces fewer military conflicts or terrorist threats, our scores in other categories stay artificially low.”
