Security is a necessary condition for businesses to operate successfully. To promote economic growth, governments have to provide a safe environment to the business community. If not, security and crime concerns will have a negative impact on the business climate. Crime like theft, robbery, vandalism, and arson “act like a tax on the entire economy”. It serves as an entry barrier to new business, discouraging both domestic and foreign direct investments. Because of the threat of crime, firms may need to protect their assets by hiring security services and installing alarm systems. Such allocation of resources undermines profit maximization by adding to operating costs. Although local governments do not have authority over local police forces, they are involved in making decisions related to combating crime and maintaining law and order in their districts. Therefore, crime and security are important indicators of local governance.
The Crime & Security Sub-index aims to measure the amount of financial loss due to crime and the need to hire security services for protection.
The higher overall index score along with the individual scores for sub-indices always refer to a better performance within the context of the BEI.