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From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector

Author

Listed:
  • Oeindrila Dube
  • Omar García-Ponce
  • Kevin Thom

Abstract

Understanding how economic incentives affect illegal drug production is essential for crafting policies in response to the international drug trade. Policymakers typically face a choice between two strategies: targeting criminal groups via law enforcement, and offering producers incentives to engage in alternate activities. Yet, little is known about how the returns to alternate legal activities affect drug supply. We contribute to this literature by examining how shocks to legal commodity prices affect the drug trade in Mexico. Our analysis exploits exogenous movements in the Mexican maize price stemming from weather conditions in US maize-growing regions, as well as exports of other major maize producers. Using data on over 2200 municipios spanning 1990–2010, we show that lower prices differentially increased the cultivation of both marijuana and opium poppies in municipios more climatically suited to growing maize. We also find impacts on downstream drug-trade outcomes, including drug cartel operations and killings perpetrated by these groups. Our findings demonstrate that maize price changes contributed to the burgeoning drug trade in Mexico, and point to the violent consequences of an expanding drug sector.

Suggested Citation

  • Oeindrila Dube & Omar García-Ponce & Kevin Thom, 2016. "From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector," Journal of the European Economic Association, European Economic Association, vol. 14(5), pages 1181-1224.
  • Handle: RePEc:oup:jeurec:v:14:y:2016:i:5:p:1181-1224.
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    File URL: http://hdl.handle.net/10.1111/jeea.12172
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    Cited by:

    1. Maria Micaela Sviatschi, 2022. "Making a NARCO: Childhood Exposure to Illegal Labor Markets and Criminal Life Paths," Econometrica, Econometric Society, vol. 90(4), pages 1835-1878, July.
    2. Juan Camilo Castillo & Daniel Mejía & Pascual Restrepo, 2020. "Scarcity without Leviathan: The Violent Effects of Cocaine Supply Shortages in the Mexican Drug War," The Review of Economics and Statistics, MIT Press, vol. 102(2), pages 269-286, May.
    3. Kammas, Pantelis & Sakalis, Argyris & Sarantides, Vassilis, 2021. "Pudding, plague and education: trade and human capital formation in an agrarian economy," LSE Research Online Documents on Economics 112206, London School of Economics and Political Science, LSE Library.
    4. Hidalgo, Eduardo & Hornung, Erik & Selaya, Pablo, 2022. "NAFTA and drug-related violence in Mexico," CAGE Online Working Paper Series 640, Competitive Advantage in the Global Economy (CAGE).
    5. Eduardo Ferraz & Rodrigo Soares & Juan Vargas, 2022. "Unbundling the relationship between economic shocks and crime," Chapters, in: Paolo Buonanno & Paolo Vanin & Juan Vargas (ed.), A Modern Guide to the Economics of Crime, chapter 8, pages 184-204, Edward Elgar Publishing.
    6. Zambiasi, Diego, 2022. "Drugs on the Web, Crime in the Streets. The Impact of Shutdowns of Dark Net Marketplaces on Street Crime," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 274-306.
    7. Blattman, Christopher & Lessing, Benjamin & Tobon, Santiago & Duncan, Gustavo, 2021. "Gang rule: Understanding and Countering Criminal Governance," SocArXiv 5nyqs, Center for Open Science.
    8. Nicola Limodio, 2022. "Terrorism Financing, Recruitment, and Attacks," Econometrica, Econometric Society, vol. 90(4), pages 1711-1742, July.
    9. Melissa Dell & Benjamin Feigenberg & Kensuke Teshima, 2019. "The Violent Consequences of Trade-Induced Worker Displacement in Mexico," American Economic Review: Insights, American Economic Association, vol. 1(1), pages 43-58, June.
    10. Ceren Baysan & Marshall Burke & Felipe González & Solomon Hsiang & Edward Miguel, 2018. "Economic and Non-Economic Factors in Violence: Evidence from Organized Crime, Suicides and Climate in Mexico," NBER Working Papers 24897, National Bureau of Economic Research, Inc.
    11. Limodio, Nicola, 2019. "Terrorism Financing, Recruitment and Attacks: Evidence from a Natural Experiment," Working Papers 287, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    12. Baysan, Ceren & Burke, Marshall & González, Felipe & Hsiang, Solomon & Miguel, Edward, 2019. "Non-economic factors in violence: Evidence from organized crime, suicides and climate in Mexico," Journal of Economic Behavior & Organization, Elsevier, vol. 168(C), pages 434-452.
    13. Murphy, Tommy E. & Rossi, Martín A., 2020. "Following the poppy trail: Origins and consequences of Mexican drug cartels," Journal of Development Economics, Elsevier, vol. 143(C).
    14. Manian, Shanthi, 2021. "Conflict and risky health behavior: Evidence from Mexico's drug war," Journal of Development Economics, Elsevier, vol. 148(C).
    15. Millán-Quijano, Jaime & Pulgarín, Sebastián, 2023. "Oiling up the field. Forced internal displacement and the expansion of palm oil in Colombia," World Development, Elsevier, vol. 162(C).
    16. Blume, Laura Ross, 2021. "Narco Robin Hoods: Community support for illicit economies and violence in rural Central America," World Development, Elsevier, vol. 143(C).
    17. Mascarúa Lara Miguel A., 2022. "Imperfect Law Enforcement, Informality, and Organized Crime," Working Papers 2022-16, Banco de México.
    18. Daniele, Gianmarco & Le Moglie, Marco & Masera, Federico, 2023. "Pains, guns and moves: The effect of the U.S. opioid epidemic on Mexican migration," Journal of Development Economics, Elsevier, vol. 160(C).
    19. Eva Olimpia Arceo Gomez, 2022. "Costo economico de la impunidad," Sobre México. Revista de Economía, Sobre México. Temas en economía, vol. 3(5), pages 5-41.
    20. McCully, Brett, 2021. "Immigrants, Legal Status, and Illegal Trade," MPRA Paper 109610, University Library of Munich, Germany.
    21. Heesun Yoo, 2022. "Does “green gold” breed bloody violence? The effect of export shocks on criminal violence in Mexico," Social Science Quarterly, Southwestern Social Science Association, vol. 103(5), pages 1048-1060, September.

    More about this item

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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