Latin American Seminar: Impact of Crime on the Economy of Latin America and the Caribbean

According to CEPAL, average growth between 2014 and 2023 was 0.9%, less than half of the 2% observed in the 1980s. The combination of low productivity, high inequality, and limited institutional capacity creates an environment conducive to the expansion of criminal economies.

This context serves as the backdrop for the First Latin American Seminar on the Impact of Crime on the Economy of Latin America and the Caribbean, held on September 23 and 24, 2025, by the Economic Commission for Latin America and the Caribbean (CEPAL), the United Nations Office on Drugs and Crime (UNODC), and the Friedrich Ebert Stiftung Foundation. This seminar sought to analyze the impact of the criminal economy in Latin America and the Caribbean, as well as to identify the main challenges and existing efforts, in order to guide the design of public policies.

During the opening session, it was emphasized that crimes such as extortion, violence against women, youth homicides, and property crimes not only generate human costs, but also distort markets, reduce tax revenues, and erode institutional trust. It was emphasized that security should be understood as an economic and development issue, and that the region faces the challenge of accurately characterizing the impact of illicit economies, which include digital extortion, human trafficking, illegal mining, and labor exploitation.

Regional progress in measuring illicit financial flows was also highlighted, with pilot experiences in Ecuador, Peru, Mexico, and Colombia developed by the Center of Excellence, and interest was expressed in conducting a broader regional study. Likewise, a call was made to resume multilateral measures and link public security and economic policies.

The discussions highlighted that illegal economies in Latin America and the Caribbean are determined by market dynamics, regulatory systems, and territorial governance conditions, which means that economic policies alone are not enough to address them.

It was noted that their impact is not limited to visible violence but also generates less visible and lasting effects on communities and territories. The relationship between local income generation and distortions in certain markets, inequality, exploitation of natural and human resources, institutional weakening, and territorial concentration of illicit markets was mentioned.

The need to strengthen economic, social, and security statistics to measure these dynamics more accurately was emphasized. Other contributions highlighted the growth in the use of cash linked to crime, the practice of parallel collections such as "protection money," and the evolution of violence, which is shifting from interpersonal to economic violence, consolidating the criminal economy as the main regional challenge.

On this first day, the power structure and modes of operation of criminal economies were analyzed. The concept of "illegal power" was discussed, along with its capacity to control territories and influence the daily life of communities and local governments, and the dynamics, economic value, and territorial implications of coca production, as well as the relationship between violent deaths and institutional weakness.

A methodological replication exercise was also presented to measure illicit financial flows related to drugs and migrant smuggling. The Center of Excellence UNODC-INEGI presented an innovative initiative that uses 911 emergency service records combined with artificial intelligence techniques to identify and characterize emerging criminal phenomena, such as informal "payday" loans. This innovative approach makes it possible to highlight practices that occur at the intersection between the formal and informal sectors, generate evidence of incidents that the population perceives as emergencies, including cases involving weapons or minors and, at the same time, provide valuable inputs to strengthen public services, design preventive policies, and begin to highlight the characterization of informal and illicit economies in the region.

Initial results show that these practices, associated with rapid access financing, are linked to emergencies related to possible suicides, fights, weapons, or minors, and generate key inputs for strengthening specific public services in the territory. These initial exchanges will enable progress to be made on a regional roadmap to strengthen the measurement of crime and its economic effects, integrating the contributions of national institutions, international organizations, and academia.