The economic costs of insecurity on businesses in Mexico: A general equilibrium perspective

Authors

  • Joana Cecilia Chapa Cantú Universidad Autónoma de Nuevo León
  • Edgardo Arturo Ayala Gaytán Tecnologico de Monterrey
  • Sandra Edith Medellín Mendoza Tecnologico de Monterrey

DOI:

https://doi.org/10.18381/eq.v20i1.7300

Abstract

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.

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Author Biographies

Joana Cecilia Chapa Cantú, Universidad Autónoma de Nuevo León

Joana Cecilia Chapa Cantú: (Born in Mexico, 1975) Ph.D in Economics (Universitat de Barcelona, 2003). Professor in Economics (Universidad Autónoma de Nuevo León, UANL) and Director of the Economic Research Center at the UANL. She has publications in International Journal of Technological Learning, Innovation and Development, Applied Economics, Telecommunications Policy, Environmental Research Letters, between others. She was awarded with the UANL Research Prize in Social Science Area, in 2004, 2006, 2009, 2010 and 2020 and second place in the National Prize of Public Finance 2016. Her areas of specialization are general equilibrium models, economic growth and public finance.

Edgardo Arturo Ayala Gaytán, Tecnologico de Monterrey

Edgardo Arturo Ayala Gaytán: (Born in Mexico, 1962) Ph.D in Economics (Tulane University, 2006). M.Sc. in Economics (Colegio de México, 1985). Associate Professor in Economics (Escuela de Ciencias Sociales y Gobierno del Tecnológico de Monterrey). He has publications in Global Public Health, Telecommunications Policy, The Journal of Psychology: Interdisciplinary and Applied, between others.  He was awarded with the UANL Research Prize in Social Science Area, in 2009 and 2020 and second place in the National Prize of Public Finance 2016. His areas of specialization are regional general equilibrium models, development economics and behavioral economics.

Sandra Edith Medellín Mendoza, Tecnologico de Monterrey

Sandra Edith Medellín Mendoza es Licenciada en Economía por la Facultad de Economía de la Universidad Autónoma de Nuevo León, posee una Maestría en Economía con especialidad en Economía Industrial de la misma Facultad de Economía de UANL. Realizó sus estudios de doctorado en Ciencias Económicas en la Facultad de Economía de la misma Universidad, siendo sus principales áreas de investigación en Desarrollo Económico y Economía Laboral. Actualmente además de ser consultora en la Escuela de Gobierno y Transformación Pública, es profesora asociada en LegalTec Lab en la misma EGOByTP.

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Published

2022-12-27

How to Cite

Chapa Cantú, J. C., Ayala Gaytán, E. A., & Medellín Mendoza, S. E. (2022). The economic costs of insecurity on businesses in Mexico: A general equilibrium perspective. EconoQuantum, 20(1), 83–99. https://doi.org/10.18381/eq.v20i1.7300

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Artículos