Crime hits foreign investment in Latam
The wave of murders, kidnappings and other crime sweeping Latin America is seriously hurting foreign investment, says a report by a lobby group for big business.
Crime has forced up costs of doing business in the region and made executives reluctant to work there. Investment is growing more speculative and Latin America is fast losing ground to Asia in attracting foreign money, the Council of the Americas report said.
"Personal (in)security increasingly weighs heavily on the minds of foreign investors and has depressed their willingness to maximize foreign direct investment at a level they otherwise would," it said.
"Unless Latin America and the Caribbean turn the tide on the violence and corruption that plague their societies, they will continue to underperform economically."
The Washington-based Council of the Americas prepared the report for the Pentagon before a meeting of defense ministers in Ecuador last week.Big cities that have long been business centers are the worst hit by crime, with executives rating Bogota, Caracas, Sao Paulo, Mexico City and Buenos Aires as the most dangerous.
In Brazil, Latin America's largest economy, 40 percent of homicides occur in Rio de Janeiro and Sao Paulo. In Argentina, 35 percent of people polled had been a crime victim in 2003.World homicide rates in 2000 were about 8 per 100,000 but in Latin America the rate was 17 per 100,000 -- 10 times that of its economic competitor Asia. Kidnapping followed a similar pattern, it said.
With abductions changing from a political action to extortion for profit, targets tend to be families or companies who could pay large ransoms."Hence the business community has become a more likely target and the impact on investors is significant," it said.As the private sector has to hire and equip security guards and investigators due to weak national policing, costs soar.
(From Reuters, November 26, 2004)
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