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EconoQuantum
On-line version ISSN 2007-9869Print version ISSN 1870-6622
Abstract
CHAPA CANTU, Joana Cecilia; AYALA GAYTAN, Edgardo Arturo and MEDELLIN MENDOZA, Sandra Edith. The economic costs of insecurity on businesses in Mexico: A general equilibrium perspective. EconoQuantum [online]. 2023, vol.20, n.1, pp.83-99. Epub June 09, 2023. ISSN 2007-9869. https://doi.org/10.18381/eq.v20i1.7300.
Objective:
To assess the economic losses for households and firms produced by crime to business in Mexico.
Methodology:
A general equilibrium model of Mexico is built. The costs of business insecurity are introduced as a combination of sales and capital taxes. The rates were calibrated with the Enterprise Survey of the World Bank.
Results:
The loss for insecurity on business in Mexico is in the order of 4 to 5 percent of the GDP.
Limitations:
The modeling does not consider the dynamics of the process nor the cost of insecurity in the primary sector.
Originality:
It is found that if firms can shift the crime tax forward, the household losses become equivalent to a proportional tax. To the extent that firms shift the tax backwards, especially to capital, crime functions as a progressive tax.
Conclusions:
Business insecurity has significant consequences on the Mexican economy.
Keywords : Crime; Insecurity costs; General equilibrium models; México; D58; C68; D74.