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LatinNews Daily - 02 July 2018

Violence costs Brazil 5.5% of GDP

Development: On 1 July, a study by Brazil’s national industry confederation (CNI) estimated that insecurity costs the country R$365bn (US$93.32bn) a year, equivalent to 5.5% of GDP or R$1,800 per Brazilian.

Significance: To put that figure in perspective, the cost of criminality to the country is higher than the contribution made by either the construction sector (5.2% of GDP) or the agricultural sector (5.3% of GDP), the leading lights of the Brazilian economy. Insecurity is likely to feature prominently in the 7 October general election, and in part explains the success of the presidential pre-campaign of far-right former army captain Jair Bolsonaro, who promises a hardline approach to law and order by granting Brazilians access to guns and lowering the age of criminal responsibility.

  • The study was based on official data from 2012-2016, compiled by the institute of applied economics (Ipea), a local think-tank, and the Brazilian forum on public security. It examined how violence led to increased costs in freight, higher prices, reduced exports, lost investment opportunities, lower productivity, and traumatized employees. The experts who analyse the data said that it was hard to figure out the exact cost of the impact and that the R$365bn was a conservative estimate. The real cost may be considerably higher.
  • Public security, such as policing and prisons, costs the state around R$101bn. Private security costs businesses around R$264bn. The impact on public health and education are “intangible” according to the CNI report, but it highlights how the violence that impacts schools in low income communities – which are often caught in the crossfire between police and drug traffickers – will have long-term effects on the students’ ability to enter the work force.
  • Greater spending on public security appears to have had little effect. Between 2007 and 2016, municipal, state, and federal governments have increased spending on security by 27.5% in real terms, only to see levels of crime continue to rise. In 2005 there were 297,000 people in prison; by 2016 this number was close to 700,000. Cargo theft has also risen considerably during this period.

Looking Ahead: The government recently created a single system of public security which aims to integrate better state and federal crime-fighting capacities. While the authors of the CNI report welcomed this development, they argued it did not go far enough and that what Brazilian police need most is better training.