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[What industry - roughly the size of the pharmaceutical trade - has so
much integrity that - at least according to public and media records -
it never donates the political campaigns, has no lobbyists in
Washington, has no politicians or other government officials in its
pocket and never proposes new, self-serving legislation? The illegal
drug trade. . . Here is a rare look at the business from an economic
perspective]
ECONOMIST - Estimates are hard to confirm, not least because enterprises
have been reluctant to open their accounts to public scrutiny, but the
industry was thought to claim global annual sales of some $320 billion
in 2005 (tax free). And although some better-known trade bodies (the
Medellin and Cali cocaine cartels, for example) have been forced to
close shop, largely as a result of tough state regulation, the industry
as a whole remains in rude health.
But are the heady days coming to an end? A UN report released on Tuesday
June 26th suggests that prospects for expansion in parts of the industry
are dim. Although 5% of adults are thought to have taken illicit drugs
of some sort over the past year, the use of softer brands such as
cannabis and amphetamines has apparently reached a peak. In America, for
example, cannabis use was highest in 1979 when more than 16% of the
general population took it. By 2005 that had declined to just 10.4% of
the population.
As troubling for the industry, many consumers in the extremely important
American market are turning up their noses at cocaine. By 2005 cocaine
use in America was down to 2.3% of the general population, more than 50%
lower than the rate two decades ago. Compounding woes in that sector
producers of coca (the raw material for cocaine) have seen cultivation
decline in recent years. At its peak in 2000 some 221,300 hectares were
under coca cultivation in Latin America. Last year that had dropped to
just 159,600 hectares. . .
One part of the industry, however, seems to be blossoming as never
before. The heroin sector is enjoying a consumer boom in many countries,
coinciding with record production in Afghanistan. In 2006 the global
output of opium which is used to make heroin, the hardest of drugs,
reached an all-time-high, with producers in Afghanistan dominating the
market. In the 1980s the country produced just 30% of the world's opium
supply, but it has since-despite years of war-boosted output
significantly and now accounts for 92% of world supply. A single
province, Helmand, is said to have 70,000 hectares of opium under
cultivation. . . .
But heroin producers and traders aside, enterprises within the illegal
industry may now seek alternative ways to keep profits up. If the drugs
business is indeed slowing, then the gangs, such as the Mafia, may have
to compete more fiercely, perhaps engaging in hostile takeovers. Crime
bosses battling for a bigger share of a slow-growing market is likely to
mean much blood on the carpet. An alternative approach could be to
diversify, with enterprises using their talents and infrastructure to
peddle other forms of contraband such as cigarettes, pharmaceutical
drugs, endangered animals, or human slaves. The UN report suggests such
diversification is already underway.
http://www.economist.com/displayStory.cfm?story_id=9394616&fsrc=RSS
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[What industry - roughly the size of the pharmaceutical trade - has so
much integrity that - at least according to public and media records -
it never donates the political campaigns, has no lobbyists in
Washington, has no politicians or other government officials in its
pocket and never proposes new, self-serving legislation? The illegal
drug trade. . . Here is a rare look at the business from an economic
perspective]
ECONOMIST - Estimates are hard to confirm, not least because enterprises
have been reluctant to open their accounts to public scrutiny, but the
industry was thought to claim global annual sales of some $320 billion
in 2005 (tax free). And although some better-known trade bodies (the
Medellin and Cali cocaine cartels, for example) have been forced to
close shop, largely as a result of tough state regulation, the industry
as a whole remains in rude health.
But are the heady days coming to an end? A UN report released on Tuesday
June 26th suggests that prospects for expansion in parts of the industry
are dim. Although 5% of adults are thought to have taken illicit drugs
of some sort over the past year, the use of softer brands such as
cannabis and amphetamines has apparently reached a peak. In America, for
example, cannabis use was highest in 1979 when more than 16% of the
general population took it. By 2005 that had declined to just 10.4% of
the population.
As troubling for the industry, many consumers in the extremely important
American market are turning up their noses at cocaine. By 2005 cocaine
use in America was down to 2.3% of the general population, more than 50%
lower than the rate two decades ago. Compounding woes in that sector
producers of coca (the raw material for cocaine) have seen cultivation
decline in recent years. At its peak in 2000 some 221,300 hectares were
under coca cultivation in Latin America. Last year that had dropped to
just 159,600 hectares. . .
One part of the industry, however, seems to be blossoming as never
before. The heroin sector is enjoying a consumer boom in many countries,
coinciding with record production in Afghanistan. In 2006 the global
output of opium which is used to make heroin, the hardest of drugs,
reached an all-time-high, with producers in Afghanistan dominating the
market. In the 1980s the country produced just 30% of the world's opium
supply, but it has since-despite years of war-boosted output
significantly and now accounts for 92% of world supply. A single
province, Helmand, is said to have 70,000 hectares of opium under
cultivation. . . .
But heroin producers and traders aside, enterprises within the illegal
industry may now seek alternative ways to keep profits up. If the drugs
business is indeed slowing, then the gangs, such as the Mafia, may have
to compete more fiercely, perhaps engaging in hostile takeovers. Crime
bosses battling for a bigger share of a slow-growing market is likely to
mean much blood on the carpet. An alternative approach could be to
diversify, with enterprises using their talents and infrastructure to
peddle other forms of contraband such as cigarettes, pharmaceutical
drugs, endangered animals, or human slaves. The UN report suggests such
diversification is already underway.
http://www.economist.com/displayStory.cfm?story_id=9394616&fsrc=RSS
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