Effect of Crime on Business and the Investment Climate in Jamaica January 22, 2004

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Review of Presentation. Inspiration for studyBusiness exploitation surveyQuantifying financial expenses of crimePolicy choices. Why Estimate the Impact of Crime? . Most successive issue in business and individual discourseThird most astounding crime rate in world (33 for every 100,000)Negative effect on speculation climate:Security expenses, occupies venture, not exactly ideal working strategyLosses from plundering

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Slide 1

Effect of Crime on Business and the Investment Climate in Jamaica January 22, 2004

Slide 2

Overview of Presentation Motivation for study Business exploitation review Quantifying monetary expenses of wrongdoing Policy alternatives

Slide 3

Why Estimate the Impact of Crime? Most successive issue in business and individual talk Third most noteworthy manslaughter rate in world (33 for each 100,000) Negative effect on venture atmosphere: Security costs, redirects speculation, not as much as ideal working system Losses from plundering, incendiarism, burglary, blackmail and misrepresentation

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Why Estimate the Impact of Crime? (cont.) Negative effect on speculation atmosphere (cont.): loss of yield (nightshifts, workdays lost) loss of yield from damage/murder of work close down or movement of firms Also, disintegrates improvement of human and social capital, and occupies open assets far from gainful uses

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High Crime– a Drag on Development

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Selected Dimensions of Crime Young guys (14-24 yrs) doubtlessly casualties and also culprits of rough wrongdoing In 2001, of those captured for real violations, 98% were guys, and 53% were 16-25 years of age Parish of Kingston and St. Andrew represented 57% of aggregate murders more than 1984-2001, yet framed just 27% of aggregate populace

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Selected Dimensions of Crime (cont.) High and expanding level of manslaughters, particularly more than 1990s, driven by expanding drug trans-shipment and dispersion of medications, prompting to "posse wars" Contrasting advancement with NY of murder rate (per 100,000) Jamaica NY Ratio 1970 8.2 7.9 1.0 2000 33.7 5.0 6.7

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Estimating the Impact of Crime Approach: Business Victimization Survey of 400 firms Quantifying the monetary expenses of wrongdoing Econometric investigation (determinants of wrongdoing) Case investigations of firms

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Business Victimization Survey Methodology: Face-to-face meets with 400 Jamaican firms (2002) Firms picked by financial movement (12 sorts) and size, in view of amount test Survival inclination in test 92 things in poll, some in light of UN Inter-territorial Crime Research Institute

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Business Victimization Survey (cont.) Patterns of Victimization 65% of firms in test experienced criminal exploitation in 2001 27% face burglary on quarterly premise, 9% week by week 22% experience misrepresentation and 9% vicious exploitation on quarterly premise 5% of firms paid blackmailers, 8% paid for insurance in 2001 (under-revealing)

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Business Victimization Survey (cont.) Sectoral designs: Tourism: 72% of inns announced robbery in 2001 Agriculture: 81% of ranches experienced robbery Financial administrations: 65% detailed extortion Size: little firms seem, by all accounts, to be more powerless – boundary to passage for potential contestants?

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Business Victimization Survey (cont.) Perceptions of Risk 42% of chiefs saw a danger of being killed at the work environment 66% saw that their organizations were probably going to be ransacked Coping Strategies Protective measures; conforming the association of business action to decrease open doors for wrongdoing; and hitting a settlement with criminal systems

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Business Victimization Survey (cont.) Coping Strategies (cont.) 37% of firms studied picked to close before dull, in this way lessening powerful beneficial limit and capital efficiency 20% would expand hours of operation if wrongdoing was lower; all things considered these organizations would stay open an extra 3.6 hours for every days if situated in more secure territory

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Some key methodological issues in the estimation of the cost of wrongdoing Estimate of cost of wrongdoing is lower bound Value of human life is more than its commitment to the economy Ignores estimation of property harmed or annihilated amid brutality Static examination, does exclude: affect on structure of financial action potential speculation predestined

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Some key methodological issues in the estimation of the cost of wrongdoing (cont.) Static investigation, does exclude (cont.): loss of potential future income of those killed/crippled high exchanges cost of supplanting talented and experienced laborers Value of stolen products is viewed as social misfortune in our approach

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Annual Economic Impact of Crime Cost of wrongdoing as % of GDP: Medical costs on wrongdoing related wounds by government and people Loss of yield emerging from death and damage Public use on security

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Annual Economic Impact of Crime (cont.) Additional expenses of wrongdoing: Private use on security Direct business misfortunes of firms e.g. blackmail, misrepresentation, burglary and plundering Impact on speculation, development, life-traverse of firms

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Cost of Crime as % of GDP, 2001 Healthcare costs J$ 1.3bn (0.4% of GDP) Public wellbeing system J$ 996mn Private Citizens J$ 255mn Lost Production J$ 0.5bn (0.2% of GDP) Mortality J$ 194mn Injury J$ 337mn Public consumption on security J$10.5bn (3.1% of GDP) Total 1+2+3 J$12.4bn (3.7% of GDP)

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Additional Costs of Crime Private use on security, % of yearly income: Micro firms (< J$5mn revenue) 17% Medium firms (J$10-20mn rev.) 7.6% V.large firms (> J$100mn revenue) 0.7% Average 2%

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Additional Costs of Crime (cont.) Extortion, misrepresentation, theft/robbery, illegal conflagration Micro firms/firms rev. J$20-50mn = 9% of income Other classes = not exactly or equivalent to 2% of income

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Additional Costs of Crime (cont.) Losses from plundering (70 firms) 57% of firms <J$100,000 19% of firms J$100,000-500,000 4% of firms J$1mn – 5mn Avg. misfortunes because of brief firm terminations 2001 J$ 1 mn 2000 J$400,000

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Impact of Crime on Business Planning and Prospects 51% of firms expressed that expanded expenses of security fundamentally affected business rehearse 39% of firms showed that arrangements for business development were antagonistically influenced

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Impact of Crime on Business Planning and Prospects (cont.) 37% of firms announced that arrangements to put resources into profitability change were adversely affected 6% of firms anticipated that would shut down in the following three years (packed in divisions essential in GDP), 19% dubious of prospects, if current level of wrongdoing endured

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Policy Options Survey: just 12% of supervisors bolster expanded corporate assessments to reserve wrongdoing control, yet are more strong to give budgetary support to particular aggregate arrangements that specifically influence them and over which there is some immediate responsibility

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Policy Options (cont.) Identifying and measuring the wrongdoing issue Strengthen official information gathering on wrongdoing Conduct visit exploitation overviews Improving law authorization for wrongdoing prevention Upgrade investigative limit of police

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Policy Options (cont.) Improving social and aggregate activity Improve the nature of the school encounter Form compelling associations between police, business and neighborhood groups Build Social Capital Applying centered intercessions Target high wrongdoing urban ranges Target youth at hazard