According to the report “Indicators to understand the impact of illegal economies in Peru” by the University of the Pacific, the three activities that generate the most money are illegal mining, human trafficking and drug trafficking.
In a context of growing insecurity and perceived lack of trust in institutions, the impact of illegal economies in Peru is reaching alarming levels.
According to the Global Organized Crime Index, Peru ranks sixth among South American countries with the highest crime rate, tenth in Latin America and the Caribbean, and 32nd worldwide. In addition, of the 15 existing criminal markets, Peru has a greater development in 10 of them compared to the rest of South America.
“Our country shows above-average crime rates and lower resilience. Crime is measured in two dimensions: criminal markets and the role of criminal actors, a rating in which we stand out negatively due to the mafia groups that operate in these illegal economies, established criminal networks and actors linked to the State or integrated into it ,” said Gisella Aragón, Head of the UP Observatory of Public Policies and Management on the occasion of the presentation of the report “Indicators to understand the impact of illegal economies in Peru . ”
Impact of illegal economies
In the economic dimension, the three activities that move the largest amount of money are illegal mining, human trafficking and drug trafficking. As Gisella Aragón pointed out: “The effort to quantify illegal economies is arduous and complex. Criminal organizations strive to diversify and combine their activities; for example, human trafficking is an activity that is linked to other illegal economies such as illegal mining, drug trafficking and logging ,” she said. In this sense, the volume moved by these illegal economies is estimated to be equivalent to between 3% and 4% of GDP.
She also indicated that, in addition to their economic impacts, these illegal activities generate environmental, social and institutional consequences. Continuing with the example of illegal mining, the specialist highlighted that it causes damage to biodiversity, rivers, and to the communities of indigenous peoples who subsist on the basis of the natural heritage of these areas.
Finally, the report addresses indicators on the resources allocated to combating insecurity. According to Aragón, the infrastructure and equipment conditions of police units and the resources available to the public ministry and other actors linked to combating illegal economies are insufficient. Given this, a drastic change is required so that we can expect successful or effective results in combating illegal economies.
As part of Public Management Day, the keynote lecture was given by Victor Guerra, Global Head of the Compliance Group of the Business Institute of the International Chamber of Commerce in Paris. He emphasized that combating illegal economies required the joint work of the public sector, the private sector and civil society. Gisella Aragón agreed, stating that in Peru there is a high tolerance for informality, which facilitates the transition to illegality.
“Today we are accustomed to living on alert, so much so that businesses incorporate the costs of extortion into their projections and piracy is a common practice, which has evolved at the pace of technology, ” he said. He also added that not only is it necessary to sanction this informality, but drastic actions are also required to reduce the costs of being formal. On the other hand, it must be remembered that at the base of the pyramid of criminal organizations there are people who choose this path due to the lack of opportunities in the formal economy. The private sector, with the collaboration of the State, must be able to generate these opportunities so that illegal economies can be definitively defeated.
The report was presented within the framework of the ninth edition of the “Public Management Day 2024” , an event organized by the School of Public Management of the Universidad del Pacífico. This year, the topic addressed was “Illegal economies: from the problem to public policy” and included the participation of renowned figures from the public and private sectors.
