This paper examines the relationshipbetween narcotics trafficking and violence in CentralAmerica. The first part of the paper addresses particularquestions posed for the 2011 World Development Report andexamines several competing hypothesis on the drivers ofcrime in Central America. A key finding is that areasexposed to intense narcotics trafficking in Central Americasuffer from higher homicide rates. Drug trafficking hascorrupted state institutions, which have been overwhelmed bythe resources deployed by trafficking organizations. Thesecond part of the paper reviews the reasons drugtrafficking and anti trafficking enforcement are associatedwith violence in general and consider policy options.