Policies to address organized crime should pay more attention to the economic effects of illicit activities and seek to attack crime from a financial front, experts argued in a recent conference.
The Economic Commission for Latin America and the Caribbean (Comisión Económica para América Latina y el Caribe – CEPAL) gathered its own experts as well as those from other organizations such as the United Nations Office on Drugs and Crime (UNODC), the World Bank, and regional governments at an event in late September.
Participants discussed the impacts of criminal activities on economies across Latin America and the Caribbean. They argued that while governments frequently invest in security-focused strategies that generate short-term gains, they should also concentrate on long-term economic policies and outcomes to fight gangs.
Criminal Activity as Economic Production
Illicit economies such as arms and drug trafficking and illegal mining create jobs, move money, and generate revenue. As such, the seminar’s participants argued that they are part of a country’s economy and should be analyzed as such.
The economic aspect of organized crime is particularly evident in illegal mining areas, where criminal operations sustain legitimate businesses and spawn new illicit economies. Mine bosses use their illicit earnings to buy tools and machines, as well as fuel to power their equipment – some of which may be stolen or smuggled. They also pay workers who spend their wages in local stores and restaurants. Sex trafficking networks often step in to fill a demand created by young men with an influx of cash.
Strengthening local institutions, improving governance, and private sector job creation programs could help reduce the dependence of local populations on illegal mining by addressing the roots of the issue. Data-driven impact analyses and intelligence reports to monitor policy effects could help to fine-tune programs for more effective results. Especially in the Amazon region, multilateral cooperation focusing on economic outcomes could also help reduce criminality.
But economic policies are not a silver bullet. They can be misdirected or have unintended consequences. This happened with programs in Colombia that aimed to convince farmers to grow legal crops instead of coca plants used to produce cocaine by providing them with economic subsidies and technical assistance.
The initiative was implemented in the Colombian department of Putumayo in 2017 and had positive effects at first. Coca cultivation declined, as did violence. But the programs fell short of their goals, as criminal networks violently threatened community leaders who promoted crop substitution. The initiative was also beset by funding difficulties, corruption, and a lack of political will.
Prevention Over Security?
While countries spend huge percentages of their gross domestic product (GDP) on security-focused efforts in response to gang activity, the CEPAL seminar heard arguments in favor of increasing investments for programs that address the underlying social and economic issues driving crime.
Many governments around the region have adopted policies that make it easy to keep suspected and convicted criminals behind bars for long periods. This not only removes large numbers of people from participating in the formal economy, it also often leads to overcrowding in prisons, which can fuel the growth of gangs and make it difficult for authorities to maintain control. Several countries have built or are building new facilities to try to reduce overcrowding. But it may be more efficient for governments to focus on preventing incarceration in the first place, rather than investing limited resources into accommodating an ever-growing inmate population.
Drug prohibition also has significant economic impacts. Government efforts to reduce the supply of drugs can actually make the illicit products more valuable by creating scarcity without reducing demand. The profitability of the trade allows gangs to continue to recruit new members and improve methods to keep operating. Rather than investing so heavily in punitive and repressive anti-drug policies, participants argued in favor of greater investment in healthcare and education to offer alternative, legitimate economic pathways for citizens to achieve a decent standard of living.
Political Challenges, Delayed Results
One of the biggest challenges in using an economic lens to address crime is that change and results will be slow. This presents a political problem for elected officials, who often serve limited terms and face pressure to show quick results.
Seizing drugs and arresting criminal suspects generate visible results in the short term and allow politicians to campaign on concrete successes. Investments in preventative socioeconomic programs may not pay off in time for the next election cycle.
Additionally, proposals to reduce spending on policing and incarceration are open to being attacked as being “soft” on crime. The only alternative to shifting existing resources is to raise new revenue by increasing taxes, which implies greater out-of-pocket costs for voters.
What’s more, policies that address the socioeconomic roots of crime may focus on the most vulnerable social groups and areas most impacted by organized crime, which may be unpopular with the general public. Parts of the electorate tend to be opposed to policies they think may help communities they see as responsible for organized crime.
Featured image: Analysts gather to discuss the economic impacts of crime in Latin America and the Caribbean in a recent CEPAL seminar. Credit: CEPAL.
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