A previous post on this website provided evidence on the extent of crime in Latin America (LAC) using data from Enterprise Surveys. Evidence revealed that losses due to crime borne by the firms and the expenses they incurred on security (as % of firms’ annual sales) equaled 2.7% per annum. This was more than what firms spent on R&D, reported levels of bribery and losses due to power outages.
Findings from the Business Environment and Enterprise Performance Survey (Enterprise Surveys – BEEPS, 2009) for 29 countries in Eastern Europe and Central Asia (ECA) reveal a similar picture although the level of crime in ECA is lower. Figure 1 shows that the crime related losses (losses due to crime and expenses on security incurred by firms during 2008-09) as % of firms’ annuals sales equal 1.9% when averages over all firms in the region (compared with 2.7% in LAC). This is about 8 times what firms spend on R&D, 1.8 times the reported levels of bribe and 1.3 times losses due to power outages.
In short, crime may not be as big a problem in ECA as in LAC, but it cannot be neglected either.
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