Here’s an idea to speed up Latin America’s development, reduce poverty and make everybody happier: redirect some of the foreign aid to the region into programs that fight street crime.

While international financial institutions keep worrying about exports, inflation, tax collection and other traditional economic indicators, one of the main reasons behind the region’s dwindling foreign investment, domestic business and tourism is its unprecedented wave of violent crime.

Latin America is the world’s most violent region, according to the Switzerland-based World Health Organization. There are 27.5 homicides per 100,000 people in Latin America, compared with 22 in Africa, 15 in Eastern Europe and one in Western Europe’s wealthiest countries, the agency says.

In the past decade, homicide rates have risen by 380 percent in Peru, 330 percent in Colombia and 300 percent in Argentina.

That doesn’t include the kidnappings for ransom of business people, relatives of athletes, entertainers or average citizens. Kidnapping has become a thriving criminal industry throughout the region.

Colombia tops the world in the number of kidnappings with about 3,000 reported cases a year. In Mexico, the 360 reported kidnappings a year are widely regarded as a small fraction of the much larger number of cases that go unreported because of lack of trust in police departments rife with corruption.

In Argentina, a country that until recently prided itself for being one of the few in which people could walk late at night without fear, the talk of the town in recent weeks has been the 43-day kidnapping of a 22-year-old man. His abductors cut off the young man’s right index finger, and released him only after relatives paid a $35,000 ransom.

What does all of this have to do with Latin America’s economy?

A lot. A recent study, “Crime, Democracy and Development in Latin America,” by the Center for Strategic and International Studies, a center-right Washington, D.C., think tank, cites some of the many ways in which violent crime is crippling the region’s economic development.

Kidnappings and other forms of violent crime are not only discouraging much-needed foreign investment and tourism, but cost countries billions in capital flight — much of it going to those luxury condos under construction in Miami — additional hospital bills, reduced worker productivity, sky-high insurance costs and growing protection expenditures, the study shows.

The Brazilian private sector spends $20 billion a year on theft insurance and health insurance for employees, plus an additional $3 billion on private guards, bullet-proof cars and electronic alarm systems, according to the Brazilian daily Gazeta Mercantil.

In Sao Paulo, businesses employ 400,000 private security guards, or three times the number of the state’s civilian police force. This is money that could be spent on new investments, worker training or other productive endeavors.

The World Bank estimated in 1998 that Latin America’s per capita income would be 25 percent higher if its crime rates were similar to those of the rest of the world. And the Inter-American Development Bank estimated a year earlier that crime costs the region about 14 percent of its gross domestic product every year.

But since these two studies were published almost five years ago, international financial institutions have virtually forgotten about the problem, while crime rates have soared.

What should be done? First, combating violent crime should become a top economic priority. It’s time to add crime statistics to Latin America’s leading economic indicators, alongside inflation and unemployment.

“It is clear that the international donor community needs to move strategies for crime reduction and prevention to center stage,” said William C. Prillaman, the author of the CSIS study. “Of the $4.4 billion in development assistance the World Bank devoted to Latin America and the Caribbean, less than 1 percent was allocated for rule of law programs.”

And, I would add, international lending agencies such as the International Monetary Fund should condition future loans on effective crime-reduction programs in countries where governments lack the political will to crack down on corrupt police forces.

Traditional economists may find these ideas off the wall. But common sense tells me that even if Latin American nations followed these economists’ recipes religiously, few people will invest, keep their savings or visit countries where one runs a high risk of being kidnapped for ransom or killed in a robbery.

Andres Oppenheimer is a Latin America correspondent for the Miami Herald. His e-mail address is

aoppenheimer@herald.com.