The Development Impact of the Illegality of Drug Trade
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World Bank, Washington, DC
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This paper reviews the unintended
consequences of the war on drugs, particularly for
developing countries, and weighs them against the evidence
regarding the efficacy of prohibition to curb drug use and
trade. It reviews the available evidence and presents new
results that indicate that prohibition has limited effects
on drug prevalence and prices, most likely indicating a
combination of inelastic drug demand (due to its addictive
properties) and elastic supply responses (due to black
markets). This should turn the focus to the unintended
consequences of drug prohibition. First, the large demand
for drugs, particularly in developed countries, generates
the possibility of massive profits to potential drug
providers. This leads to the formation of organized crime
groups, which use violence and corruption as their means of
survival and expansion and which, in severe cases, challenge
the state and seriously compromise public stability and
safety. Second, prohibition and its derived illegal market
impose greater costs on farmers than on drug traffickers. In
many instances, this entails the transfer of wealth from
poor peasants to rich (and ruthless) traders. Third,
criminalization can exacerbate the net health effects of
drug use. These consequences are so pernicious that they
call for a fundamental review of drug policy around the world.
Palabras clave
ABUSES, ADDICTION, ADDICTIVE SUBSTANCES, ADVERSE SELECTION, ADVERTISING, AGED, AGGRESSIVE, ALCOHOL, ALCOHOL CONSUMPTION, AMBASSADOR, ARMED FORCES, ASSAULT, BARRIERS TO ENTRY, BLACK MARKETS, CAFFEINE, CANNABIS, CARTEL, CENTRAL AMERICA, CENTRAL ASIAN, COCAINE, COMPARATIVE ADVANTAGE, CONFLICT, CONFLICT PREVENTION, CONSTRAINT, CONSUMER PRICE, CONSUMER PRICE INDEX, CONSUMERS, CONSUMPTION INCREASES, CONTAGIOUS DISEASES, CONTAINMENT, CORRUPTION, CRACK, CRIME, CRIME RATES, CRIMES, CRIMINAL, CRIMINAL ACTIVITIES, CRIMINAL ACTIVITY, CRIMINAL BEHAVIOR, CRIMINAL JUSTICE, CRIMINAL JUSTICE SYSTEMS, CRIMINALITY, CRIMINALS, DAMAGES, DEATHS, DELINQUENCY, DEMAND ELASTICITY, DEMAND FUNCTION, DEMAND FUNCTIONS, DISTRIBUTION OF WEALTH, DRUG, DRUG ABUSE, DRUG CONSUMPTION, DRUG CONTROL PROGRAM, DRUG DEPENDENCY, DRUG SEIZURE, DRUG SEIZURES, DRUG TRADE, DRUG TRAFFICKERS, DRUG TRAFFICKING, DRUG USERS, DRUGS, ECONOMIC THEORIES, ECONOMIC THEORY, ECSTASY, ELASTICITY, ELASTICITY OF DEMAND, EMBASSY, EXPENDITURE, EXPENDITURES, EXPORTS, EXTERNALITY, FAMILIES, FINISHED PRODUCT, FOREIGN POLICY, FREE TRADE, GANG, GANGS, GDP, GDP PER CAPITA, GOVERNMENT REGULATION, GUERRILLA, GUERRILLAS, HARM REDUCTION, HEALTH EFFECTS, HEALTH SERVICES, HEROIN, HIGH CRIME, ILLICIT DRUG, ILLICIT DRUG TRADE, ILLICIT DRUGS, IMF, INCOME, INCOME EFFECTS, INELASTIC DEMAND, INTERMEDIARIES, INTERNATIONAL BANK, INTERNATIONAL SANCTIONS, INTERNATIONAL SECURITY, INTERVENTION, LATIN AMERICAN, LAW ENFORCEMENT, LAWLESSNESS, LAWS, LIFE EXPECTANCY, MACROECONOMICS, MARGINAL COSTS, MARIJUANA, MARKET FORCES, MARKET POWER, MARKET SHARE, MARKETING, MEMBER STATES, MENTAL HEALTH, MIDDLE EAST, MIDDLEMEN, MILITARY PERSONNEL, MONOPOLY, MORTALITY, MURDER, NARCOTIC, NARCOTIC DRUG, NARCOTIC DRUGS, NARCOTICS, NARCOTICS CONTROL, NATIONS, NEEDLE EXCHANGE, NEGATIVE EXTERNALITIES, OBSERVERS, OFFENDERS, OFFENSE, OFFENSES, OFFICIAL CORRUPTION, OPPORTUNITY COST, OPPORTUNITY COSTS, ORGANIZED CRIME, PATIENTS, PER CAPITA INCOME, PERSONALITY, POLICE, POLITICAL ECONOMY, PRICE CHANGE, PRICE CHANGES, PRICE ELASTICITY, PRICE INCREASES, PRICE STRUCTURE, PRISON, PRISONERS, PRISONS, PRODUCTION INPUTS, PROPERTY CRIME, PROPERTY CRIMES, PSYCHOTROPIC SUBSTANCES, PUBLIC HEALTH, PURCHASING, PURCHASING POWER, REAL GDP, RECONSTRUCTION, RETAIL, RETAIL PRICE, RETAIL PRICES, RETAILING, ROAD, SECURITY FORCES, SLUMS, SMOKING, SOCIAL DEVELOPMENT, SOCIAL NORMS, SOUTH AMERICA, SPREAD, SUBSTANCE ABUSE, SUBSTITUTE, SUBSTITUTES, SUPPLIER, SUPPLIERS, SUPPLY CHAIN, SUPPLY COSTS, SURPLUSES, TACTICS, TAXATION, TERRORISM, TOBACCO, TOBACCO CONSUMPTION, TOTAL COSTS, VIOLENCE, VIOLENT CRIME, WAR, WARS, WEALTH, WEAPONS, WELFARE ECONOMICS, WORLD DEVELOPMENT