Economic Impacts of the Illegal Drug Trade

This article, Dimensions of the South American Cocaine Industry, by Rensselaer Lee III covers many different aspects of the cocaine trade out of South America.  It looks into the economic impacts, trafficking, social impact, and the political impact.  For this post I have chosen to focus primarily on the economic impact.  The amount of money that flows through the underground economy or spent by governments against the drug trade is amazingly high even when this article was published in 1988.  At the time this article was published Americans alone spent $20-$25 million dollars on cocaine each year.  That is roughly equivalent to the gross national product of Israel when this article was published.  However, the income from the US is not the only way that drug trafficking contributes to the economy of each nation.  In Bolivia drug trade employs between 350,000 to 400,000 people.  Traffickers also contribute to the economy by investing heavily in the legal businesses in the country they live in.  In Colombia the Medellin Cartel invested in high-rise office buildings and condominiums that gave them a legitimate business front.  Drug traffickers effect the economies of the world in other ways, that are not covered in detail in this article.  As I said, I chose this article after being surprised just how high the yield was from this business even in the 1980s.