Crime and punishment: Mexico suffers the cost of lawlessness

The pressure on President Enrique Peña Nieto to do something is rising.
The pressure on President Enrique Peña Nieto to do something is rising.

By Dan Bogler / Financial Times

Security, or rather the lack of it, is the number one issue for Mexican voters. They consistently rank it higher than economic growth, unemployment or the state of public services that generally concern their peers in other middle-income nations. In fact, midterm elections held this month were marred by more than 70 violent attacks on candidates or their staff.

Electoral intimidation is just the start of “rule of law” issues that span kidnappings, drug trafficking, gang warfare, corruption and weak institutions. Last autumn, for example, 43 students in the state of Guerrero, who were trying to stage a peaceful protest, were handed over by local police to a narcotics cartel which subsequently killed them.

Medley Global Advisors, a macro research service owned by the Financial Times, has put together a security index that shows how these problems are distributed across the country — affecting the more developed north just as much as the poorer south (see map). The high-risk states alone account for almost a fifth of national output.

Separately, surveys conducted by Mexico’s national statistical agency suggest that dealing with crime and violence may be costing the country a substantial 2-3 per cent of GDP a year, with most of that from direct losses and perhaps one-third from the expense of prevention. The bulk of that burden falls on the private sector and disproportionately on smaller companies that find it harder to bear the additional costs of security.

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