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Insecurity and corruption reduce economic growth of the state and the country: Díaz Bautista

By: Dr. Alejandro Diaz-Bautista, Economist (PhD)

“Insecurity and corruption reduce the economic growth of the state and the country,” said Dr. Alejandro Díaz Bautista, economist, a national researcher at Conacyt as well as a research professor at El Colegio de la Frontera Norte (El Colef).

It is important to highlight that insecurity is one of the causes for which businesses close, as well as affect the direction of the economy at the municipal, state and national levels in 2019 and 2020.

In Mexico, insecurity is one of the main concerns of companies, businesses and it is a problem that not only businessmen experience, but also citizens.

If insecurity is not controlled in the medium and long term, its negative effects on economic growth can be increased by creating an environment that is not conducive to investment, business creation and job creation.

The so tangible situation at the state and national level is a worrying situation in terms of regional economic growth and development for the state and for the whole country.

Corruption reduces the regional economic growth of Baja California and Mexico and causes a high social cost since it has reached alarming levels.

The effects generated by insecurity are the increase in transaction costs and uncertainty in an economy, discouraging productive investments and favoring speculative investments.

For economists, corruption and insecurity distort the incentives with which an economic agent operates and reduces economic efficiency.

Empirical studies show that there is a relationship between levels of perception of corruption and some economic indicators, this means that in countries where higher levels of corruption are perceived, per capita income is much lower and income distribution is more unfair.

Similarly, there are lower levels of foreign investment that lead to lower levels of regional economic growth.

The degree of growth and economic development of a region is negatively related to the levels of perception of corruption and insecurity, so it can be mentioned that this is one of the usual characteristics of economic underdevelopment in Mexico.

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