Gangs, Labour Mobility, and Development by Dr. Sviatschi
12 Aug 2019
Crime and violence are considered to be key development issues for Central American countries. According to a World Bank report: Crime and Violence in Central America, El Salvador, Guatemala and Honduras are the three nations in Central America with crime rates among the top five in Latin America.
In a recent talk held at CERP, Dr. Maria Micaela Sviatschi, Assistant Professor of Economics at Princeton University, presented her research on Gangs, Labour Mobility and Development in Central America’s state of El Salvador. The research focuses on the affect of gangs and criminal organisations on the development of a country such as El Salvador: a state where 50% of its population live in territories under gang control.
Latin America and Caribbean (LAC) are the world’s most violent regions with 23.9 homicides per 100,000 inhabitants in 2012, compared to 9.7, 4.4, 2.7, and 2.9 for Africa, North America, Asia, and Europe, respectively. According to Dr. Sviatschi, “43 out of 50 cities with the highest homicide rate are located in Latin America”.
Dr. Sviatschi’s research analyses the impact of the two most powerful gangs in Latin America - MS-13 and 18th Street - formed in the 1980s by the immigrants from Central America in Los Angeles. According to Dr. Sviatschi, the United States’ Illegal Immigration Reform and Immigration Responsibility Act resulted in the deportation of 500 gang leaders from Los Angeles to El Salvador where they re-established the gangs.
The deportation resulted in the worst development outcomes - lower earnings, less consumption of durable goods, and worse dwelling conditions - inside the gang-controlled neighbourhoods. One of the key finding of the research highlighted, gang-controlled states not only reduce an individual’s mobility but also constraint their labour choices as well.
Dr. Sviatschi’s research also underlined that exposure to organised crime significantly affect the level of urban development in developing countries. Moreover, research showed that gang-controlled neighbourhoods earn $350 USD less per month as compared to individuals living 50 meters away in areas not controlled by gangs.
Crime and violence have economic costs associated with it as it drags down economic growth, not only by the loss of wages and labour for victims but also by polluting the investment climate and diverting scarce government resources to strengthen law enforcement rather than promoting economic activity.