The effect of insecurity on economic growth in Mexico Research Paper

The effect of insecurity on economic growth in Mexico - Research Paper Example This reduces the GDP of the country since employees are less productive when they are under stress and trauma when they are in their working stations. Violence and insecurity in Mexico is a cause of a number of mental illnesses among the citizens of Mexico. This reduces the productivity of the Mexican population and since mentally ill people who would offer personnel are under strain. The cost of insecurity in Mexico turns detrimental with the effect it has on the levels of sales. Business hours are short in societies where there is high insecurity. The Mexican business sector thrives under strenuous conditions with intense insecurity in the country. This reduces the level of sales and profits and, consequently, the GDP. According to the World Bank Group, 2011, heightened insecurity in Mexico, there is a most likely high expenditure in internal security. The high expenditure on the internal security reduces the level of investments that the country has on infrastructure and developme nt projects. Investment in human capital equally reduces with increased expenditure on security in Mexico. The cost of health care in Mexico increases with intense insecurity situations. The cost of policing is most likely to increase with high instances of insecurity in Mexico. All these costs have detrimental effects on the economy of Mexico. ... According to Rodgers, Beall and Kanbur, 2012, the violence-insecurity nexus poses detrimental effects to the local economy of most Latin American societies, Mexico included. Crime in cities of Latin American countries is among the greatest challenges to growth of businesses. The investment confidence of most investors in Latin American societies is low because of the high level of insecurity. Domestic investors in Mexico are reluctant to take risks involved in putting up businesses. Foreign firms are cautious to put up investment in insecure societies because of the high potential impacts of insecurity. Losses to business from the high incidences of burglary in Mexico are among the most detrimental challenges to investors. The cost of paying internal security officials to protect the Mexican society from violence continues affect the economy. The cost of compensation by insurance firms is high because of spreading incidences of robbery and burglary to businesses in Mexico. The net ef fect of insecurity to the Mexican economy is the loss of the potential revenues that accrue from domestic and foreign investments in the country. Sohnen, 2012, addresses the detrimental consequences that the high rate of crime, violence and insecurity has in Mexico and most of Central American society’s economic prosperity. The consequence of insecurity on the health of Mexicans is high and has related effect on the cost of health care expenditure. According to Sohnen, cooperation among different institutions in Mexico is under great challenge from the escalating insecurity conditions. Insecurity in the country compromises the efficiency of different government institutions to coordinate and promote economic growth in the country. The economy, therefore, experiences retardation