Between 1996 and 2006, there have been almost half a million victims of homicide in Brazil. Last week’s widely reported “Map of Violence” reveals an increase in the crime for Brazilian cities with relatively low incidences of violence before the mid 1990s, such as Florianópolis. For cities with higher incidences of violence, a small fall occurred in the rate of homicides after 1999.
Even in São Paulo, where the rate of this particular crime fell significantly, there is still little to celebrate. Its current rate of 31 homicides per 100,000 inhabitants remains higher than that of Bogotá – a city notorious for the violence stemming from the drugs trade and, especially, guerrilla groups financed by cocaine. Bogotá’s homicide rate reached 80 per 100,000 in 1993, but by 2004, it had fallen to 21 per 100,000. Today, it is safer to walk the streets of Bogotá than those of São Paulo.
The homicide rates of Recife and Vitória, 90 and 87 per 100,000 respectively, are among the highest in the world and are comparable to those of countries devastated by civil war. In addition to the lives lost and the public’s safety fears, this criminal activity has an economic cost resulting from expenditure on security guards and protective walls surrounding factories, shops and condominiums.
The cost of safety multiplies because, by shunting investment from roads and tractors into prisons and armored cars, economic activity is transferred from productive works to non-productive ones. Consequently, productivity and sustained growth plummet. This history is documented in the work of Maurício Cárdenas and Sandra Rozo regarding crime in Colombia (http://www.fedesarrollo.org.co/).
Between 1950 and 1980, Colombia (like Brazil) enjoyed high rates of growth. In the 1980s and 1990s, this growth disappeared. The increase in violence, linked with the growth of the drugs trade, explains the collapse in productivity growth. The evidence collected by Cárdenas and Rozo shows the preceding increase in violence and resulting fall in productivity. This reduction in growth then incurs a further increase in violence. The country enters a vicious circle of violence with low growth. Social pressures and discontent then become prevalent.
In Colombia, as in Brazil, the answer was a new Constitution that tied revenues to expenditure and left fiscal policy strict and procyclic. Inefficient taxes were created, whilst the lack of investment in infrastructure helped to shake the foundations of sustained growth.
Colombia’s society, unlike Brazil’s, managed to halt the escalation of violence. Brazil regained its rate of growth in 2004 thanks to a favorable international context. But its inflexible budgeting and political interests prevented it from taking advantage of these circumstances to reduce violence, which continues to harm potential growth.