Does Crime Lower Growth? : Evidence from Colombia

Many analysts consider that lack of security is a major obstacle to growth in Colombia. This paper identifies a structural downturn in economic growth-of nearly two percentage points per year-as a result of the increase in illicit crops and crime r...

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Bibliographic Details
Main Authors: Cárdenas, Mauricio, Rozo, Sandra
Format: Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2017
Subjects:
GDP
TAX
TFP
WAR
WTO
Online Access:http://documents.worldbank.org/curated/en/752741468163462405/Does-crime-lower-growth-Evidence-from-Colombia
http://hdl.handle.net/10986/28005
Description
Summary:Many analysts consider that lack of security is a major obstacle to growth in Colombia. This paper identifies a structural downturn in economic growth-of nearly two percentage points per year-as a result of the increase in illicit crops and crime rates after 1980. A decline in total factor productivity has been the key channel linking crime and economic growth. Political upheavals and high levels of inequality and poverty motivated the adoption of a new constitution in 1991. The constitution mandated additional fiscal expenditures to curb social tensions. Major progress has been made in terms of public safety and, to a lesser extent, in the provision of health and education. However, long?run growth will continue to be constrained by inadequate transport infrastructure and low international trade volumes.