Mexico's War on Drugs: A War on the Economy?
Mexican President Felipe Calderon's war on drugs targets the drug cartels that constitute a large portion of Mexico’s economy. Drug trafficking is an estimated US$50 billion a year business there. In fact, one study reported that the loss of the drug business would shrink Mexico's economy by 63 percent.
These statistics seem to beg the question: Can Mexico eliminate its drug trade without inflicting too much damage on its own economy?
The drug war's economic impact isn't necessarily positive, either. The Mexican government estimates that the jump in violence resulting from its crackdown on drugs has taken a percentage point off the country's economic growth. Costs for Mexican businesses, who need increased security, have increased by 5 to 10 percent.
But the cost in human lives is readily apparent. Earlier this year, for example, two children and a police officer's wife were murdered as Tijuana schools and neighborhoods were evacuated in the search of a drug-cartel official. The murders came in retaliation for the arrest of other cartel members days before. In August, gunmen killed 13 people — including a baby — when they opened fire in a dance hall. And kidnappings are now commonplace.
Mexico's drug war has resulted in over 4,000 drug-related deaths since 2006, including Mexico City’s federal police chief and 400 other police officers.
Last weekend tens of thousands of Mexicans gathered to protest the bloodshed. But despite the violence, residents of Badiraguato, considered the heart of the drug trade, told Newsweek they don't want trafficking to end.
"The drug traffickers do good things here. They employ people. There's no corn, no beans here — the people here are all about drugs," said 22-year-old José de Jesús Landell García, who co-owns a shoe shop with his father. He added that most of his friends took up employment with the drug cartels "because it was the only thing they could do."
Calderon's government faces a nasty predicament. How does Mexico dismantle a system so firmly entrenched in the state and the economy? For starters, at least, it will require steps to increase Mexicans' faith in their government — particularly in its ability to offer them good-paying jobs in licit trades.
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A drug-based economy?
The "leaked" figure of 63% economic loss if the drugs industry dried up seems way off, considering the amount of the economy that derives from tourism and non-drug agricultural exports alone... is it possible that the official who "leaked" the report was in fact attempting to create a belief that the drug cartels are intrinsic to the Mexican economy? At any rate, it's an interesting question and I'm glad to see it here. It also brings to mind the incredibly difficult task of convincing opium poppy growers in Afghanistan to change their crops. Afghanistan has no tourism infrastructure and the non-opium agriculture is pretty slim. What are the methods that the US and other countries have used to try to effect that change?
Long-term destruction of Mexico's human capital
As long as drug cartels at such a significant level exist in Mexico, violence will continue to erupt and impact innocent lives. More and more people will try and "escape" such an environment by trying to illegally cross into other lands or join the drug cartels to avoid the probable violence they would receive in response to opposition. Tourism and small businesses will decrease as well. Most importantly, the countless number of deaths from drug-use and engaging in the "business" is immeasurable. In the long-run, the lack of human capital in different sectors combined with social unrest will hurt the Mexican economy for years to come. It would be more efficient for the government to promote more jobs in the areas where drug cartels run rampant and tighten security. The international impact of Mexico's drug trade should also be examined as it is highly likely that the amount of people engaging in drug-use/business overseas is immeasurable as well, causing more destruction of human capital globally.
Politics vs. Power: Voices from the Mexican-American Community
While U.S. presidential candidates assert their foreign relations experience and political stumping is guaranteed to dominate the media limelight (at least in the U.S.) this fall, perhaps it's appropriate in light of the discussion on Mexico's social unrest to share the following article. It's an attempt to capture a few voices in Chicago's Latino (largely Mexican-American) community and determine whether they feel included in the current campaign.
http://news.bbc.co.uk/2/hi/americas/7620644.stm
I'd be interested to hear from other readers who echo or disagree with the sentiments shared.
Let's take a look at the numbers.
In response to Erin C.'s comment: Well, the fact that the leaked report as used as credible evidence from a fairly reputable source...so I'm inclined to embrace it even though it's a rather shocking statistic. I did a little bit of research and it turns out that Mexico's tourism industry only rakes in 83 billion dollars a year — about 6.2 percent of their total GDP. Not to mention that this number is currently on the decline due in-part to the U.S. financial crisis and drug violence in Mexico. On top of that, total exports from Mexico total 271.9 billion, or approximately 20.2 percent of their economy. Obviously usually official GDP figures don't account for black market activities but I think given the scope of violence and economic figures it's totally possible that drug activity accounts for anywhere from 50-60 percent of total economic activity.
I like your comparison to combating growing poppies in Afghanistan. I would also use the example of cocaine in Bolivia and Peru. The fact is if there aren't other economic opportunities people will sell drugs, grow drugs, etc. to feed their families. I did some searching online but couldn't find information on if the U.S. is promoting other industries in Mexico to fight the trafficking. Let me know if you find any.
Your numbers are waaaaay off
Oh for crying out loud. Mexico has a trillion dollar economy. So even if the $50 billion number was right (which I doubt) that would be only 5% of the total Mexican economy.
80% of Mexico's economy is internal. The 20% that comes from export, most of it comes from manufacturing exports, then oil exports, then tourism, and at the very last remittances. That's right, Mexico does not depend on remittances either.
And I'm an economist, so I, unlike "others", know what I'm talking about.
"This is a narco-recession."
According to the Los Angeles Times, in some parts of Mexico the dealers have moved out and state soldiers in, causing at least one citizen to remark, "At least the narcos gave us work."
Another interesting bit,
It's clear that the fight against drugs is doing something significant to the economy, with a lot of different numbers being offered as to exactly how significant.
In response to the comment from "Me" above, I urge you to teach us "others" something about the Mexican economy from your perspective. Please feel free to write a post about the issue from your perspective. We would be more than happy to take a look at it and perhaps publish it on the site.
Drug Lords Need Treatment
Drug treatment for drug lords will never emerge as long as they put money in the pockets of corrupted politicians that really don't care about the people... We should get rid of them first and then history will be on its right path.
Roots of Drug Problem in Mexico
Roots of Drug Problem in Mexico:
The varying statistics have yet to convince me one way
or the other how economically independent Mexico is on
paper; however, I am convinced that the increasing
drug problem in Mexico has a strong foundation in
people living in poverty, with little economic
opportunity.
As Leah addressed earlier, people will do what they
need to, in order to feed their families. Without
education or marketable job skills, many in rural
location are often left with little choice.
Newsweek reports, "NAFTA has not only made smuggling
drugs into the United States easier but has allowed
cartels to amass arsenals of weapons made north of the
border. By favoring large agro-businesses, NAFTA has
also made small farming economically unviable, pushing
hundreds of thousands of Mexicans to the cities, and
often into the drug trade."
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