Violence in Mexico cost the country hundreds of billions of dollars in 2024 despite the country becoming moderately more peaceful, according to a recent study that underscored the continued high cost of crime in one of Latin America’s biggest economies. 

The economic impact of violence amounted to $245 billion, as much as 18% of Mexico’s gross domestic product (GDP) in 2024, according to the report by the Institute for Economics and Peace, a think tank that studies the link between peace and prosperity. 

SEE ALSO: Criminal Groups Are Ramping Up Explosives in Mexico

An index created by the institute based on five categories of violent crime recorded a 0.7% improvement in peace in Mexico last year. But a record 39% bump in military spending led to an increase in the costs associated with violence overall. 

The main driver of crime costs was the country’s homicide rate, which remained high despite falling slightly to 19.3 murders per 100,000 in 2024. The drop in murders was countered by a sharp rise in disappearances, which spiked to record levels. There were 13,117 people reported missing and not found in 2024, up 36% from 2023, according to data from the National Search Commission (Comisión Nacional de Búsqueda). 

The Institute for Economics and Peace followed a methodology similar to that of other previous studies that have estimated the economic damage from crime. The report calculated direct costs of homicides, such as the cost of a funeral, and indirect costs, such as the lost wages for the deceased. The researchers added these to the estimated costs created by other criminal activities, including drug trafficking, extortion, and gun crime, added government spending on the security forces and the justice sector, and the cost of private security measures contracted by citizens. They also estimated the losses from diverting resources towards combating crime from alternate more productive uses. 

Carlos Juárez, the Mexico director of the Institute for Economics and Peace, described the 0.7% improvement in peace in Mexico as “marginal” and emphasized the human cost of the country’s ongoing security crisis. 

“We have an accumulation of disappeared people, of murdered people that has no precedent in the history of our country,” he said. 

Varying Regional Impacts

Violence continues to limit the Mexican economy by reducing productivity and diverting resources from potentially beneficial uses, and the drivers of the high cost of crime are likely to persist on a national level despite shifts in criminal dynamics between Mexican states. 

The economic impact of violence is highly unequal between regions in Mexico, and states on borders or on key drug trafficking routes tend to incur higher levels of violence and economic impact. 

Costs were highest in Colima, for example, where violence wiped an estimated 89,916 pesos ($4,670) from average income per person, equivalent to 40.8% of the region’s GDP. The state recorded a murder rate of 101 people per 100,000 in 2024, making it the most homicidal region in the country for three consecutive years. 

Colima is a strategic drug trafficking corridor and home to the port of Manzanillo, a transportation hub for drug traffickers looking to bring in precursor chemicals for synthetic drugs from Asia. The port is a stronghold of the Jalisco Cartel New Generation (Cartel Jalisco Nueva Generación – CJNG), and conflict between the criminal group, their rivals, and the security forces has transformed the city into one of the most violent in Mexico.

A long-term shift away from the consumption of plant-based drugs in favor of synthetic highs in the United States could continue to fuel conflict in the state. Fentanyl, a powerful synthetic opioid that killed over 79,000 people in the United States in 2024, according to provisional statistics from the Centers for Disease Control and Prevention (CDC), and is sold for as much as 2,700 times the cost of the raw materials used in its production. The drug has long been a motor for criminal violence in Mexico.

Sharp declines in peace were also recorded in the state of Tabasco, where the economic impact of violence ratcheted up 68% from 2023. Violence there now costs people more than a month of average wages a year, according to the researchers. A fracturing criminal alliance between CJNG cells and a rival group known as the Barredora generated more violent conflict and left a trail of killings in the state in 2024, many accompanied by threatening notes from warring criminal factions. 

Fissures within large criminal groups have long been a significant source of conflict in Mexico. The 2024 arrest of Sinaloa Cartel kingpin Ismael Zambada Garcia, alias “El Mayo,” continues to cause intense violence in Sinaloa as rival factions lock horns in a violent power struggle that has contributed to a spiral in homicides and disappearances, in addition to leaving far-reaching economic carnage.

What’s more, the report’s authors credit the fall in violence in more peaceful states such as Zacatecas as partly linked to the intensification of violence elsewhere, emphasizing the role of organized crime dynamics rather than specific actions taken by the security forces as a major influence over the incidence of state-level crime. 

Increased Security Spending

The report also noted a growing lopsidedness in Mexico’s security funding, which also contributed to the cost of violence. Military expenditures ballooned to record levels in 2024 as the government doubled down on a failed militarized response to contain organized crime. At the same time, inflation-adjusted expenditure on the justice system and civilian law enforcement over the last decade fell by 30% and 12%, respectively. 

“We cannot overcome violence in the country if we do not address all three of the factors that imply security and peace: the justice system, the police system, and the military,” Juarez said.

The Mexican government now spends just 0.7% of GDP on civilian policing and justice, according to the report, less than half the expenditure of other countries in the Organization for Economic Co-operation and Development (OECD), a group of developed countries that counts Mexico as a member. Mexico also has a severe shortage of judges, creating a large backlog of cases, eroding public trust, and contributing to high rates of impunity, a dynamic unlikely to be addressed by sweeping judicial reforms currently being enacted by the government.

SEE ALSO: Why One of Mexico’s Smallest States Is Also Its Most Violent

Even including military expenditures, the budget of the Mexican state to counter crime is dwarfed by the economic impacts of violence. For every dollar of economic impact linked to violence in 2024, government efforts to counter crime amounted to just 17 cents.

Some 93% of crimes went unreported to authorities, according to research from Cero Impunidad, a civil society group that measures the effectiveness of Mexico’s justice sector, and less than 0.9% of crimes are solved.

Featured Image: A Mexican soldier guards the burning of 858 kilos of seized illegal drugs in Monterrey, Mexico, June 28, 2024. Credit: Julio Cesar Aguilar / AFP.

#border #crime #latinamerica #news