Publication: The Development Impact of the Illegality of Drug Trade
Date
2008-02
ISSN
Published
2008-02
Author(s)
Keefer, Philip
Loayza, Norman V.
Soares, Rodrigo R.
Abstract
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.
Citation
“Keefer, Philip; Loayza, Norman V.; Soares, Rodrigo R.. 2008. The Development Impact of the Illegality of Drug Trade. Policy Research Working Paper; No. 4543. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/092708e0-60c7-5e71-ae45-a7df71049d29 License: CC BY 3.0 IGO.”
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