Drug War Has Hurt the Mexican Economy Just Like It Has Hurt It's People Jesse Ferreras - The Huffington Post Canada
go to original May 17, 2016

New research by the Institute for Economics and Peace reports on how much that war has cost the country. (CCTV America)

The Mexican drug war has killed as many as 160,000 people. But there's an economic cost to drug violence, too. And though it's dropped over the past five years, it's still an immense one.

The "Mexico Peace Index," released by the Institute for Economics and Peace (IEP), calculates the economic impact of violence in Mexico at around $2.12 trillion pesos in 2015.



That figure is equivalent to 19 per cent of Mexico's Gross Domestic Product (GDP) — though it is down 38 per cent from 2011, when drug-fueled violence was at its height, and the cost of violence was calculated at $2.92 trillion pesos.

The IEP calculated these numbers by estimating the cost of crimes such as homicide, violent crime such as assault and robbery, as well as organized crime, and violence containment by the government.

It then included "direct costs" such as medical treatment; "indirect costs" such as lost productivity; and the "multiplier effect," which describes "flow-on effects" of violence on an economy.

Homicide, for example, had a total economic impact of $52 billion (727.4 billion pesos) in 2015. The direct costs of homicide were estimated at $63.1 billion pesos, indirect costs at $601.2 billion pesos and the multiplier effect at $126.3 billion pesos.



The highest costs are those associated with violent crime, going from $1.238 trillion pesos in 2003 to $61.5 billion (845.2 billion pesos) last year.

The latest violent crime figure represents a drop of about $96 billion pesos from the previous year, as the level of violent crime fell by 9.5 per cent in 2015.

But government spending on areas such as the justice system and the military have grown in the same period, from 182 billion pesos in 2003 to $440.2 billion pesos) in 2015.



But even the fear of violence alone has a cost. The report pegged it at $49.1 billion pesos in 2003, growing to $54.1 billion pesos in 2015.

This is money that could otherwise have been spent on business transactions, increasing people's well-being and on going out and being social, the report said.

Read the rest at The Huffington Post Canada

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