Estimating the socio-economic costs of Mexican narco-violence
Research question: Does Mexican narco-violence affect poverty, investment and job opportunities?
The general prohibition of the production, distribution and consumption of drugs has largely aimed to reduce the socio-economic costs associated with drug-dependency. As such, governments have spent considerable resources on the prohibition of drugs.
The efforts and strict policies, commonly referred to as “war on drugs” have nonetheless also produced large social costs, including the loss of thousands of human lives and contributed to extensive violent conflicts, with Mexico being a clear recent example.
It is estimated that over 50,000 people have died since the Mexican Government launched an aggressive strategy to dismantle drug cartels in 2006. The efforts put in arresting senior cartel leaders have not stopped the increase in drug consumption and trade.
Despite the importance of the debate about how to regulate drugs, there is scant evidence as to what are the socio-economic costs of the current “war on drugs”. The aim of this project is to assess what are the triggers of the narco-violence that Mexico has witnessed and measure its impact on investment, jobs opportunities and other socio-economic costs in the areas affected by the violence.
In this paper we find that on the one hand, inequality declined to a large extent in areas where cartels were active without incidents of drug related homicides. On the other, poverty increased in areas that had both the lowest and the highest rates of drug related homicides. Two reasons could explain this increase in poverty. In the most violent areas the number of employers and remunerations declined in key industries, such as manufacturing. In the least violent areas poverty increased possibly due to people migrating from the more violent places.
Output: Gutiérrez-Romero, R. and Oviedo, M. 2014. The good, the bad and the ugly: The socio-economic impact of drug cartels and their violence in Mexico. Equalitas working paper 26.
Gutiérrez-Romero, Roxana. (2014) Mexican drug violence endangers development by increasing poverty and disrupting economic activity, VOX LACEA, 23 December 2014.
Keywords: Impact evaluation, narco-violence, poverty, investment, Latin America.