The tentacles of organized crime reach across the globe, strengthened by growing armed conflicts, various crises and a worldwide panorama that has put democracies under pressure. No country is immune; in fact, according to the Global Initiative against Transnational Organized Crime (GI-TOC) research center, nearly 83% of the planet’s population lives in countries with high levels of violence. Its presence can be felt from the dense forests of the Amazon and the cyberspaces of Eastern Europe to the bustling ports and free trade zones of the Persian Gulf and hidden tax havens of the Mekong Golden Triangle. Human traffickers, counterfeiters, drug traffickers and cybercriminals are acting as new financial players and venture capitalists, shaping illicit economies — and their impact is growing in the global economy.
That’s how David Luna, executive director of the Washington-based International Coalition Against Illicit Economies, sees it. “It’s a dark world that has enormous consequences for our lives,” says the former U.S. diplomat and national security official. “Crime and violence are embedded in society and weigh down growth, slow investment and cause more inequality,” he says.
There’s hard data to back him up. Last year, the International Monetary Fund published a Latin American report showing that homicides had risen by 10% in the region, while local economic activity has fallen by 4%. Concrete facts aren’t the only things that can impact the economy — perceptions can also make a big difference, particularly when it comes to the stock market. If news items related to crime increase by 10%, industrial production contracts by 2.5%. Fear comes with a price, and it heavily influences financial decisions.
Studies that track the global economic cost of crime are few and far between. The illegal economy is incredibly difficult to measure, given that it is hidden nearly by definition. But some estimates do exist, and those that do are staggering. The United Nations ventured that the annual costs generated by corruption totaled $3.6 trillion in 2018. The Global Financial Integrity think tanks quantified organized crime’s 2017 revenue at somewhere between $1.6 trillion and $2.2 trillion. And the U.N. has concluded that money laundered every year exceeds $2 trillion — a figure that dwarfs the total amount of goods and services produced last year in the countries of Spain and Portugal combined. The figure represented 2.7% of global GDP in 2021, and the IMF similarly estimated its percentage at between 2% and 5% a few years earlier.
Such numbers are jaw-dropping, and though they are a little dated, do serve to highlight the magnitude of the problem that organized crime presents. Even so, sources say they underestimate the issue, largely due to difficulties presented by attempting to measure a phenomenon for which not all countries provide the data needed to adequately map the problem. In many cases, the data that is provided is unreliable or does not evaluate the same categories of crime.
“There’s no country in the world that accurately measures crime. There is official crime, which is what we quantify, and then there is another aspect that no one knows about: the hidden total. What is represented is the tip of the iceberg,” says José Becerra, professor of criminal law and criminology at the University of Malaga. Such estimates will never be conclusive, he adds.
Surprising increase
In addition, “the growing wars that are ravaging the world and the increase in policies that heighten social inequality resulting from the rise of populist parties are leading to an increase in crime,” says Riccardo Ciacci, professor at the Pontifical University of Comillas. Such factors have continued to grow at an alarming rate, as indicated by the latest report from GI-TOC.
Last year, the Inter-American Development Bank (IDB) updated its 2017 report on the impact of economic crime on Latin America — the most violent region in the world based on number of homicides (which is often used as a reliable metric) — and surveys on political trust and citizen’s values. The study’s coordinator, Santiago Pérez-Vicent, explained by video call to EL PAÍS that the organization concluded that the effect of illegal networks on the economy had reached 3.4% of the region’s GDP, equivalent to 78% of its budget for education, double that which it spends on social welfare and 12 times its budget for research and development.
The IDB measures direct impacts of crime, which is to say, the costs related to its prevention, containment and consequences (including costs to health, judicial and security systems). Security spending by private companies is growing steadily. Increasing public spending on crime prevention and the loss of human capital (production time lost due to crime) must also be taken into account. However, these concepts only represent “part of the burden that crime and violence impose on the wellbeing of countries in the region. (…) The indirect costs of crime can greatly exceed direct costs,” states the IDB report.
In its Global Peace Index 2024, the Institute for Economics and Peace does calculate such indirect costs — long-term impacts such as lost productivity resulting from physical and psychological effects of crime and its influence on citizens’ perception of safety, and related effects — as well as the benefits that could be generated by diverting spend from prisons (for example) to more productive alternatives. The Sydney-based think tank quantified the impact of violence on the global economy in 2023 at $19.1 trillion, a figure that far exceeds the current GDP of the Eurozone and even that of China, the second-largest economy on the planet. It’s the equivalent of 13.5% of all global wealth, $2,380 for every person on the planet.
That amount has grown from the $17.2 trillion that was estimated in 2008, largely due to losses occasioned by armed conflicts and a rise in military spending. The impacts of violence in real terms are 7.4% higher than in 2008, according to the IEP report, which found that between 2010 and 2012, substantial improvements took place, after which the impact of violence has constantly risen.
The number of armed conflicts has grown considerably. In 2022, there were 92 countries involved in conflicts outside their borders, the highest number since 2008. That increased most sharply in sub-Saharan Africa, the Middle East, northern Africa and South America. Meanwhile, interpersonal and self-inflicted violence like homicides, sexual and violent aggression, suicide and incarceration — have grown moderately, according to the analysis.
In the 10 countries where crime had the biggest impact on the economy — Ukraine, Afghanistan, North Korea, Somalia, Colombia, Central African Republic, Sudan, Cyprus, Burkina Faso and Palestine — the average effect totaled 37.4% of GDP in 2023. In contrast, among the 10 most peaceful countries, which include Madagascar, Indonesia, Ireland and Tanzania, the average stood at 3%.
No one is safe from illegal networks. And though they mainly target the most vulnerable countries, those with a less developed rule of law and where the relationship between criminal and political power is tighter, the truth is that organized crime operates freely throughout the world.
In fact, a recent Europol report indicates that only a miniscule 2% of illicit assets are recovered by authorities. In the EU, almost 70% of criminal networks use money laundering and 60% rely on corruption as a key facilitating factor. In the end, crime is interconnected and often transnational in natures, says Claudia Helms, director for Latin American and the Caribbean at the Washington-based think tank Global Financial Integrity (GFI), in a video call with EL PAÍS.
Cybercrime
Financial crime has become a leading arena for criminal activity, according to the 2023 index from Global Initiative. It is the most the most common kind of crime in the world, and has grown considerably over a very short amount of time, thanks to technology that enables offenses with the click of a mouse, and which offers an extra layer of anonymity, according to Helms. She says that virtual currency like crypto coin and tokens has become a popular way to fund terrorism. This kind of crime — which includes everything from financial evasion to embezzlement — can also encompass more complex forms of misappropriation and fraud. It is highly globalized and has had a significant impact on 70% of U.N. member states.
Such offenses have become so prevalent that financial crime has overtaken human trafficking as the world’s largest criminal market, though the latter does continue to grow at a rate of 0.39% per year. Like cannabis and arms trafficking — the third and fourth largest criminal markets in the world (ahead of synthetic drugs, cocaine, counterfeiting and environmental and wildlife crimes) — the financial crime sector is also growing rapidly.
“Organized crime does not operate alone. Human trafficking is linked to drug trafficking and corruption, which enables the flow of finances,” says Marcela Hernández, program director at GFI.
These three factors have a major impact on crime in Spain, where recent homicides appear to come straight from a scene in a movie, like that of Ukrainian former politician Andrii Portnov, who was shot to death by gang members in an affluent Madrid neighborhood. The most recent data published by the country’s Ministry of the Interior identify a nearly 10% rise in violent deaths between 2022 and 2023.
Spain and drug trafficking
“Spain is a country in which a lot of drug trafficking enters via international trade, through the Barcelona and Valencia ports, also by routes between Africa and the coasts of Andalucia. There is also a considerable amount of human trafficking, given that it is a bridge territory, as well as money laundering, due to an infinite number of restaurants and casinos,” says Laura Zúñiga, professor of criminal law at the University of Salamanca.
However, since 2014, a large proportion of such crimes have not appeared in official state measurements of illegal activities due to a recommendation that was made by Eurostat, the statistical office of the European Union. “The direct impact of crime on the GDP in 2023 was around 0.91%, a very small amount,” says Omar Rachedi, a professor at Esade, a business and law school in Madrid.
In Italy (where Rachedi is originally from), the figure is estimated at around 2%, though some experts like writer Roberto Saviano place it closer to 10% of the country’s total wealth. “The criminal economy is very underestimated,” says Rachedi, who argues that “illegal organizations distort business dynamism, competition, which is key to productivity, and at the same time, is fundamental for the growth of the country.”
To combat the issue of organized crime, it is not enough to have an adequate regulatory framework; institutions must also take an active role in drafting and enforcing laws, as well as in international preventive efforts, says Helms. Institutions must be interconnected, and Public-private partnerships are also needed, as they act as force multipliers in the fight against illicit markets and the convergence of related crimes, promote legal trade, and help strengthen an international rules-based system, adds Luna.
Allocating more resources to public policies focused on prevention and civic education, as well as strengthening institutions, are the main recommendations from multilateral organizations to contain the shadow economy. These are not easy steps to take.
Depending on how money is moved by such illicit networks, says Ciacci, action can be taken that targets either supply or demand. For example, toughening maximum penalties for crimes such as drug trafficking has less impact than acting on demand — by increasing public education so people become aware of the effects of fentanyl, which helps reduce consumption, lower prices, and, as a result, make drug trafficking less attractive.
On the other hand, when it comes to human trafficking and sexual exploitation (which are closely linked), a more restrictive law that favors gender equality has reduced sex work by 6% in the United States. A similar drop took place when the country legalized divorce, resulting in a decrease between 5% and 10%, according to Ciacci.
MEXICO
Homicide and extortion, the monsters of the economy
Carmen Moran Breña
Mexico has been ranked by several organizations as the most violent and unsafe country in the world that is not currently at war. While the conflict in Gaza has claimed more than 61,000 lives, every year Mexico registers around 26,000 homicides due in large part, if not entirely, to organized crime. Gender-based violence also claims an average of 11 victims every day.
All this has an immediate impact on the economy, through costs related to prevention and control of violence and lost earnings. The Institute for Economics and Peace estimates that it costs the country around $235 billion — the equivalent of 18% of its national GDP, a figure that has risen over the last decade by 32%. Local economic activity is greatly impacted by organized crime and foreign investors face difficulties in doing business in the country.
The kind of extorsion that is practiced against businesses has a name in Mexico: pagar el piso (literally, “pay for the floor”), which takes a page from the Italian mafia’s playbook in demanding a fee that can drastically reduce profits. The offense ranks third among the country’s most common crimes after fraud and theft, and is the least reported due to fear of reprisal by its perpetrators — but also, enormous distrust of the police and justice system, in a nation where impunity rates hover close to 90%.
No one has accurately calculated the billions lost in government revenue due to this criminal tax collected by illegal networks. Half of the Mexican economy is informal, based on millions of street stalls that sell everything from shoelaces to fish, sunglasses, fruit, clothing, perfume and handicrafts. Many of these vendors pay dues to criminal organizations. Collectors ride by on motorcycles or stop in on foot, collecting payments. And those who don’t pay up are threatened with violence. Guns are widespread in the country, and are often put into use. Formal establishments like bars, restaurants and taquerias are not spared from paying bribes, which can financially suffocate a business to the point that it has to close.
All this has as many impacts on the Mexican economy as there are forms of violence, and such blackmailing can wind up increasing inflation, due to its direct effects on basic products like limes, avocado and chicken. Drug trafficking, which takes place throughout much of the country’s rural areas, has created such a state of terror that many towns have experienced population loss, with people fleeing to the United States to look for a more peaceful and sustainable existence. One consequence of this movement on the Mexican countryside has been millions of abandoned acres of land. Here, climate change is not the only driving force of agricultural decline.
Livestock has also suffered. In some states with high rates of violence, the sale of chicken or pigs is limited to markets run by criminal organizations and is subject to their price-fixing. Occasionally, those who refuse to play ball end up dead on the doorstep of their own business, a crime that has become so common that it no longer make the news, particularly in a part of the world where the media is also subject to significant threats. To prevent the money spent on everyday household goods from ending up in criminal hands, people would practically have to go out to sea with a fishing rod to catch their daily food, says leading crime scholar from the National Autonomous University of Mexico Luis Astorga.
Violence permeates everday life in Mexico, and the economy is suffering as a result. Some studies measure crime rates based on electricity consumption: during a war between cartels, electricity use in some municipalities falls between 4% and 7% per capita on average. Although precise figures regarding its impacts are unknown, Mexico is well-aware of the cost of terror on both its peace and economic well-being.
ITALY
The invisible cost of the mafia
LORENA PACHO
From the hill of Naples to the suburbs of Palermo, through the mountain ranges of Calabria and the coast of Apulia, even in Milan’s financial district, organized crime in Italy is not just a historical legacy, but a parallel modern-day economy with its hands in many important sectors. Mafias like the Calabrian ‘Ndrangheta, the Sicilian Cosa Nostra, the Neapolitan Camorra and the Sacra Corona Unita in Puglia not only extort money, mainly from local businesses, but also make investments, launder funds and disrupt markets though their well-established parallel economy. Calculating the cost of this criminal activity is as difficult as eradicating it is.
Various studies by the Bank of Italy, the National Anti-Mafia Directorate, the Demoskopika Institute, and the Association of Artisans and Small and Medium-Sized Enterprises of Mestre agree that the economic impact of organized crime in Italy exceeds $40 billion every year. That amount encompasses illegal earnings (through drug trafficking, extorsion and contraband) as well as indirect effects on the global economy via the mafia’s infiltrations of the country’s key sectors, such as tourism, in which it is believed the mafia moves some $3.8 billion each year, as well as public tenders manipulated by the groups.
Organized crime accounts for 2% of Italy’s GDP, making the mafia the fourth-most powerful industry in the country. “If we consider the earnings of organized crime as we do those of a company, it would rank fourth among Italy’s largest earners. It would only be surpassed by corporations like energy companies Eni ($108.5 billion), Enel ($107.5 billion), and the Gesotre dei Servizi Energetici ($108.5 billion), at $63.8 billion,” states the Association of Artisans and Small and Medium-Sized Enterprises of Mestre.
Researchers believe that there are around 150,000 companies in the country involved in organized crime that, in many ways, are controlled by or linked to mafia-type criminal groups. Extortion remains one of their most profitable and stable sources of income. In the south, many small businesses are still forced to pay the pizzo — money in exchange for alleged protection — which can reach up to 20% of their income, quite a significant overhead. In the north, the mafia is less visible, but is completely embedded in the region’s economic fabric. For example, the ‘Ndrangheta has shifted part of its business to money laundering, construction and the food industry.
The ResPublica Foundation estimates that in regions most affected by mafia infiltration, per capita GDP could be between 10% and 20% higher if the groups did not have such a high degree of influence.
RUSSIA
A nest of corruption
JAVIER G. CUESTA
It’s impossible to measure the impact of crime on the Russian economy, for several reasons. The Kremlin keeps a large part of its statistics and defense budgets private. Furthermore, to dodge sanctions, the government legalized contraband in 2022 under the euphemism of “parallel importations.” From outside, such actions comprise a violation of copyright law, but within the country, they’re not just legal — they’re a key piece of the economy.
President Vladimir Putin has said that corruption is one of the most serious problems impeding the country’s growth. “Corruption blocks the development of our economy, of our social sphere, and of our workforce, and it negatively effects the business and investment climate. Special attention must be paid to preventing theft of budgetary funds during the execution of state defense orders and other national projects,” said the Russian leader in March.
Corruption is widespread in the country’s system. In recruitment centers, people pay over $1,800 to be listed with an injury or illness that disqualifies them from military service, and not a week goes by in which a public official isn’t detained for corruption. One mayor of a major city, Krasnoyarsk, was apprehended after supposedly receiving around $2.3 million in illegal funds to approve the construction of public bathrooms.
But corruption is also a weapon in a regime as arbitrary as Russia’s. Putin purged the entire high command of his army, and arrested politicians critical of the Kremlin on the pretext of receiving bribes, without showing proof of these charges. Aides to former Defense Minister Sergei Shoigu were arrested after the failed Wagner Group rebellion in 2023, as were some very popular generals like commander Ivan Popov, who was sentenced to five years in prison for allegedly profiting off of misappropriated construction materials meant to have been used during the 2023 Ukrainian offensive.
In fact, some of the organizations that have come under Putin’s scrutiny, such as Alexei Navalny’s Anti-Corruption Foundation and publications like The Insider, have exposed multi-million projects that have benefited state officials — for example, Putin’s controversial palace on the shores of the Black Sea.
Official data on corruption is not reliable. The Investigative Committee of the Russian Federation, an entity that combines the functions of both the public prosecutor’s office and the police, registered more than 9,000 criminal cases involving corruption in the first nine months of 2024, 14.4% more than during the same period the previous year. Half of them were bribery cases, and the amount of their damage was valued at just $181 million. By comparison, that same body estimated the impact of telephone scams and bank data theft among Russians to be 10 times higher, around $1.9 billion.
The return of combatants from the harsh front lines is another serious economic problem. The number of crimes committed by military personnel has skyrocketed from an average of 1,400 per year in the five years prior to the war to 4,409 in 2023, including murders and rapes, according to the Supreme Court. The longer the war lasts, the worse the situation becomes, and Bloomberg economist Alexander Isakov estimates that crimes committed by military personnel could have an impact of 0.6% of GDP. According to his calculations, some three million Russians will have fought in Ukraine if the war ends in the next few years.
ASIA
The epicenter of cyberattacks
INMA BONET
Growing sophistication of cyberattacks in Asia has turned the continent into the epicenter of a global crime industry that undermines economies, erodes institutional trust, and leaves a number of victims in its wake that goes far beyond those who lose their money. Cybercrime will cost the world $10.5 trillion by 2025, according to estimates by Cybersecurity Ventures. That amount, if it were a country’s GDP, would make it the third-largest economy in the world, behind only the United States and China.
Asia is home to more than half of the planet’s internauts (2.6 billion people) and 460 million of those digital users are located in southeast Asia. Organizations like the United Nations Office on Drugs and Crime and Global Initiative say that the combination of widespread connectivity, vulnerable digital infrastructures, lax legal frameworks and authorities’ limited oversight capacity has facilitated the expansion of criminal networks in Southeast Asia. Here, mafias have found an ideal environment for diversifying methods, reducing costs and multiplying the damage they can inflict.
Digital fraud already represents a structural threat to Asian economies. In 2024 alone, the continent’s consumers lost $688 billion in all kinds of digital scams, according to the latest report on fraud in Asia authored by the Global Anti-Scam Alliance. That number is the equivalent of two-thirds of the world’s total, and gives an idea of the immense cost that such scams represent for individuals.
A large part of the scams — which typically are activated with a simple clink on a malicious link — are carried out from operations centers that have been established in special economic zones or border areas. Cambodia, Myanmar, Laos, and the Philippines host facilities controlled by transnational criminal networks that organize global campaigns of digital fraud and money laundering. The U.N. Office of Human Rights estimates that more than 220,000 people are being forced to work against their will in these centers, many of them were kidnapped under the pretense of a false job offer and coerced into scamming victims worldwide.
This is not just a problem linked to digital crime, but also a humanitarian crisis. Recent police raids have dramatically revealed this troubling dimension. In the first few months of the year, more than 7,000 people of different nationalities (most of them Chinese citizens) were transferred from Myanmar to Thailand, where they are awaiting repatriation. Managing the crisis has put pressure on the host countries’ resources and revealed the transnational scope of the phenomenon, as well as its capacity to overwhelm the assistance and protection systems of the states involved. According to UNODC data, each repatriation operation can cost between $300 and $800 per person.
AFRICA
Illicit trafficking and institutional weakness
JOSE NARANJO
Africa is, after Asia, the continent with the highest crime rates in the world, according to GI-TOC’s Global Organized Crime Index. Contributing factors include inequality and poverty, fast-moving and oftentimes chaotic urbanization, staggering numbers of young people, with a sky-high rate of unemployment, not to mention the weakness of states that are dealing with corruption. Additionally, longstanding conflicts like those in the Congo and more recent ones in Sudan and the Sahel create an environment that is ideal for criminal groups. In fact, according to the Institute for Economics and Peace, the epicenter of terrorism has moved from the Middle East and northern Africa to sub-Saharan Africa, particularly the central region of the Sahel. Experts agree that all of this negatively impacts business, investment, and development.
South Africa is a good example. It is among the countries with the top 10 highest crime rates in the world, with an annual rate of 42 homicides for every 100,000 inhabitants, according to the November 2023 World Bank report Safety First: The Economic Cost of Crime in South Africa. That study estimates said cost at approximately 10% of the country’s GDP (including losses in tourism, investor fear, health costs and private security, business theft, among other factors). Meanwhile, in Nigeria — the region’s other economic powerhouse — insecurity has become a serious headache. Kidnappings of entrepreneurs and businessmen have turned into a thriving criminal industry, cyber scams have become widespread, and criminal gangs terrorize citizens in the northern states, stalling development in these areas.
Throughout western African and the Sahel, illicit trade has grown on the margins of these conflicts, according to annual evaluations by the UNODC. “Transnational criminal networks take advantage of institutional weakness to anchor illegal markets in western Africa and the Sahel, from massive cocaine transshipment hubs and fledgling methamphetamine laboratories to arms diversion and fuel piracy. These illicit economies reinforce each other, undermine state authority and erode regional security and development,” says Amado Philip de Andrés, UNODC representative for west and central Africa.
Legal uncertainty stemming from corruption doesn’t help business, either. According to the global index compiled by Transparency International last February, half of the 20 most corrupt countries in the world are in Africa. The African Development Bank estimates that these illicit practices account for losses worth 25% of the continent’s GDP and asserts that corruption “undermines Africa’s growth and development prospects and governance, slows investment and increases inequality.”
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