Macroeconomics of crime

MACROECONOMICS OF CRIME

SurEconomics staff, August 2026

Imagine a country that levies an extra 15% tax on anyone who tries to open a bakery, drive a delivery truck or sell avocados.

That “tax” exists, does not appear in any constitution and is paid in cash under threat of death: it is organized crime’s “cobro de piso,” or protection payment, also known as “vacuna.”

The World Bank and the IMF estimate that crime costs Latin America up to 3.8% of its GDP every year, a colossal drain of more than $200 billion. That is equivalent to burning the entire annual GDP of Ecuador and Uruguay combined.

The impact on entrepreneurs is devastating: 1 in 4 microenterprises in Central America and Ecuador closes its doors before reaching 18 months of operation because it cannot pay the extortion demanded by organized crime.

For large corporations, the problem is one of the balance sheet: they devote up to 12% of their operating expenses to hiring bodyguards, satellite trackers and armoring.

Every dollar spent defending against crime is a dollar not invested in new machinery or in raising wages, which represents a significant opportunity cost.

Sources

·       IMF. The Economic Impact of Crime in Latin America, Working Paper Series, 2025.

·       World Bank. The Costs of Violence for the Private Sector in Latin America, 2025.

·       InSight Crime. Mapping Protection Rackets and Corporate Extortion in the Region, 2026.