The Effects of Illicit Drug Trafficking on Economic Growth in America (PDF)

Seminar paper from the year 2020 in the subject Economics - Macro-economics, general, Carl von Ossietzky University of Oldenburg, course: Economic Growth, language: English, abstract: Drug crime is a serious problem worldwide. The use, but also the abuse of legal and illegal psychoactive substances, is an integral part of our societies. Correspondingly lucrative, but also damaging, is the business that is done with legal and illegal drugs. In this essay, I will address the effects of illicit drug trafficking on economic performance. Since a global view would go far beyond the scope of this work, I will limit myself to the American continent, especially on Mexico's drug trafficking with the USA. Furthermore, I will mainly focus on the cocaine trade, as this drug has the greatest economic, evidence-based effects for the individual countries studied.

First of all I will briefly explain the reasons why drug crime, but also drug prohibition in general, is an economic problem. In the second part of this essay, I will introduce the US demand market and the associated supply markets (Mexico and other Central and South American countries). In this context I will use the analysis of two papers (one written by Robles et al. and one written by Holst et al.) to explain to what extent the activities of drug cartels have an effect on economic growth in Mexico. Finally, I will counter-examine the findings of these two studies and formulate my own conclusion from the results obtained.