Business costs of crime and violence

scale 1-7, 2007–2016

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A fundamental role of the state is guaranteeing the security of its citizens, which is a minimal requirement for incentivizing economic activity. Violence, racketeering, organized crime, and terrorism all constitute substantial disincentives to private investment and economic transactions. Empirical research provides evidence that homicides, robbery, extortion, and kidnapping can crowd out investment; and organized crime can generate misallocation of capital and labor and act as a barrier to enter a market. This is based on the average score on a 1 – 7 scale of a large sample group in a particular country responding to the question of to what extent does the incidence of crime and violence impose costs on businesses (1 = to a great extent, 7 = not at all).

Source: World Economic Forum