Cartels, Violence and the Economy

How drug cartels and violence impose costs on Mexico's economy through extortion, lost investment and security spending, and what research estimates.

Organised crime is a major economic problem in Mexico.

Violence

Homicides rose sharply after the 2006 government crackdown on cartels.
Mexico has recorded around 30,000 homicides a year in recent years.

Economic costs

Extortion of businesses, from small shops to farmers.
Lost investment in violent regions.
Security spending by firms and government.
Tourism losses in some areas.

Estimates

The Institute for Economics and Peace has estimated the economic impact of violence in Mexico at around 20 percent of GDP, including direct and indirect costs.

Cartels in the legal economy

Cartels have moved into avocados, limes, fuel theft and mining, extorting producers.

Fuel theft

Huachicol, stealing fuel from Pemex pipelines, cost billions; a crackdown in 2019 caused temporary fuel shortages.

Institutions

Weak police and courts allow impunity, a key reason violence persists.

The avocado tax

Avocado farmers in Michoacán pay regular fees to a cartel to avoid attacks, raising their costs and cutting profits.

Thinking cartels only affect drug markets

They extort legal industries and deter investment.

Key takeaways

Mexico records around 30,000 homicides a year.
Extortion and lost investment impose big costs.
Violence's impact is estimated at about 20 percent of GDP.
Cartels extort avocado, lime and fuel industries.