IDEAS home Printed from https://ideas.repec.org/a/bpj/pepspp/v22y2016i3p213-246n3.html
   My bibliography  Save this article

The Economic Consequences of the Mexican Drug War

Author

Listed:
  • Balmori de la Miyar Jose Roberto

    (Universidad Anahuac Mexico – Business School, Av. de las Torres No. 131 Olivar de los Padres, Mexico City 01780, Mexico)

Abstract

Military crackdowns often disrupt economic development by exacerbating violence. This paper examines the case of the Mexican Drug War, employing synthetic control methods. To prove causality, I use variation on statewide military operations, as well as the rollout of the war. Findings indicate a decrease in GDP per capita equal to 0.5%, in states with military operations. Determinants by which the Mexican Drug War hampered economic development include a proportional reduction in consumption per capita, and a decline in productive investment of at least 0.3%, driven by a drop of 3.2% in commercial credit granted to businesses.

Suggested Citation

  • Balmori de la Miyar Jose Roberto, 2016. "The Economic Consequences of the Mexican Drug War," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 22(3), pages 213-246, August.
    • Handle: RePEc:bpj:pepspp:v:22:y:2016:i:3:p:213-246:n:3
    DOI: 10.1515/peps-2016-0014
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/peps-2016-0014
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/peps-2016-0014?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bassil Charbel, 2013. "Macroeconomic Consequences of War and Terrorism in Lebanon," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 19(3), pages 415-429, December.
    2. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    3. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    4. Soares, Rodrigo R., 2006. "The welfare cost of violence across countries," Journal of Health Economics, Elsevier, vol. 25(5), pages 821-846, September.
    5. Enamorado, Ted & López-Calva, Luis F. & Rodríguez-Castelán, Carlos, 2014. "Crime and growth convergence: Evidence from Mexico," Economics Letters, Elsevier, vol. 125(1), pages 9-13.
    6. Melissa Dell, 2015. "Trafficking Networks and the Mexican Drug War," American Economic Review, American Economic Association, vol. 105(6), pages 1738-1779, June.
    7. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    8. Gabriela Calderón & Gustavo Robles & Alberto Díaz-Cayeros & Beatriz Magaloni, 2015. "The Beheading of Criminal Organizations and the Dynamics of Violence in Mexico," Journal of Conflict Resolution, Peace Science Society (International), vol. 59(8), pages 1455-1485, December.
    9. Miguel D Ramirez, 2010. "Are Foreign and Public Capital Productive in the Mexican Case? A Panel Unit Root and Panel Cointegration Analysis," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 36(1), pages 70-87.
    10. Emilia Bonaccorsi di Patti, 2009. "Weak institutions and credit availability: the impact of crime on bank loans," Questioni di Economia e Finanza (Occasional Papers) 52, Bank of Italy, Economic Research and International Relations Area.
    11. David Shirk & Joel Wallman, 2015. "Understanding Mexico’s Drug Violence," Journal of Conflict Resolution, Peace Science Society (International), vol. 59(8), pages 1348-1376, December.
    12. Juan Camilo Castillo, Daniel Mejia, and Pascual Restrepo, 2014. "Scarcity without Leviathan: The Violent Effects of Cocaine Supply Shortages in the Mexican Drug War - Working Paper 356," Working Papers 356, Center for Global Development.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jose Roberto Balmori de la Miyar, 2020. "Breaking sad: drug-related homicides and mental well-being in Mexico," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(4), pages 513-531, December.
    2. René Cabral & André Varella Mollick & Eduardo Saucedo, 2019. "Foreign Direct Investment In Mexico, Crime, And Economic Forces," Contemporary Economic Policy, Western Economic Association International, vol. 37(1), pages 68-85, January.
    3. Mascarúa Lara Miguel A., 2022. "Imperfect Law Enforcement, Informality, and Organized Crime," Working Papers 2022-16, Banco de México.
    4. Cabral Torres René & Mollick André V. & Saucedo Eduardo, 2018. "The Impact of Crime and Other Economic Forces on Mexico's Foreign Direct Investment Inflows," Working Papers 2018-24, Banco de México.
    5. Verteramo Chiu, Leslie J. & Turvey, Calum G., 2015. "Perception and Action in a Conflict Zone: a Study of Rural Economy and Rural Life amidst Narcos in Northeastern Mexico," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205447, Agricultural and Applied Economics Association.
    6. Francesco Calderoni & Elisa Superchi & Tommaso Comunale & Gian Maria Campedelli & Martina Marchesi & Niccolò Frualdo, 2019. "PROTOCOL: Organised crime groups: A systematic review of individual‐level risk factors related to recruitment," Campbell Systematic Reviews, John Wiley & Sons, vol. 15(1-2), June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mascarúa Lara Miguel A., 2022. "Imperfect Law Enforcement, Informality, and Organized Crime," Working Papers 2022-16, Banco de México.
    2. Germà Bel & Maximilian Holst, 2018. "Assessing the effects of the Mexican Drug War on economic growth: An empirical analysis," Southern Economic Journal, John Wiley & Sons, vol. 85(1), pages 276-303, July.
    3. Germá-Bel & Maximilian Holst, 2016. "“A two-Sided coin: Disentangling the economic effects of the 'War on drugs' in Mexico”," IREA Working Papers 201611, University of Barcelona, Research Institute of Applied Economics, revised Apr 2016.
    4. Stefano Costalli & Luigi Moretti & Costantino Pischedda, 2014. "The Economic Costs of Civil War: Synthetic Counterfactual Evidence and the Effects of Ethnic Fractionalization," HiCN Working Papers 184, Households in Conflict Network.
    5. Paolo Pinotti, 2012. "The economic costs of organized crime: evidence from southern Italy," Temi di discussione (Economic working papers) 868, Bank of Italy, Economic Research and International Relations Area.
    6. Johanna Catherine Maclean & Brendan Saloner, 2018. "Substance Use Treatment Provider Behavior and Healthcare Reform: Evidence from Massachusetts," Health Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 76-101, January.
    7. Alexander S. Skorobogatov, 2021. "The effect of alcohol sales restrictions on alcohol poisoning mortality: Evidence from Russia," Health Economics, John Wiley & Sons, Ltd., vol. 30(6), pages 1417-1442, June.
    8. Peter Hull & Michal Kolesár & Christopher Walters, 2022. "Labor by design: contributions of David Card, Joshua Angrist, and Guido Imbens," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(3), pages 603-645, July.
    9. Enamorado, Ted & López-Calva, Luis F. & Rodríguez-Castelán, Carlos & Winkler, Hernán, 2016. "Income inequality and violent crime: Evidence from Mexico's drug war," Journal of Development Economics, Elsevier, vol. 120(C), pages 128-143.
    10. Bibek Adhikari & James Alm, 2016. "Evaluating the Economic Effects of Flat Tax Reforms Using Synthetic Control Methods," Southern Economic Journal, John Wiley & Sons, vol. 83(2), pages 437-463, October.
    11. Bruno Ferman & Cristine Pinto, 2019. "Inference in Differences-in-Differences with Few Treated Groups and Heteroskedasticity," The Review of Economics and Statistics, MIT Press, vol. 101(3), pages 452-467, July.
    12. Florian F Gunsilius, 2025. "A primer on optimal transport for causal inference with observational data," Papers 2503.07811, arXiv.org, revised Mar 2025.
    13. Nicolas R. Ziebarth, 2018. "Social Insurance and Health," Contributions to Economic Analysis, in: Health Econometrics, volume 127, pages 57-84, Emerald Group Publishing Limited.
    14. Felipe González & Mounu Prem, 2020. "Losing your dictator: firms during political transition," Journal of Economic Growth, Springer, vol. 25(2), pages 227-257, June.
    15. Taylor K. Odle, 2022. "Free to Spend? Institutional Autonomy and Expenditures on Executive Compensation, Faculty Salaries, and Research Activities," Research in Higher Education, Springer;Association for Institutional Research, vol. 63(1), pages 1-32, February.
    16. Francesca Caselli, 2017. "Did the Exchange Rate Floor Prevent Deflation in the Czech Republic?," Review of Economics and Institutions, Università di Perugia, vol. 8(2).
    17. Hernæs, Øystein, 2018. "Activation against absenteeism – Evidence from a sickness insurance reform in Norway," Journal of Health Economics, Elsevier, vol. 62(C), pages 60-68.
    18. Fredriksen, Kaja & Runst, Petrik, 2018. "Are estimates of the "natural experiment" in the German crafts sector causal?," ifh Working Papers 16/2018, Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh).
    19. Blouri, Yashar & Ehrlich, Maximilian V., 2020. "On the optimal design of place-based policies: A structural evaluation of EU regional transfers," Journal of International Economics, Elsevier, vol. 125(C).
    20. Fink, Johanna, 2024. "Do separate bidding zones within countries create imbalances in PV uptake? Evidence from Sweden," Applied Energy, Elsevier, vol. 374(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:pepspp:v:22:y:2016:i:3:p:213-246:n:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.