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From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector - Working Paper 355

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  • Oeindrila Dube, Omar Garcia-Ponce, and Kevin Thom

Abstract

We examine how commodity price shocks experienced by rural producers affect the drug trade in Mexico. Our analysis exploits exogenous movements in the Mexican maize price stemming from weather conditions in U.S. maize-growing regions, as well as export flows of other major maize producers. Using data on over 2,200 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. This increase was accompanied by differentially lower rural wages, suggesting that households planted more drug crops in response to the decreased income generating potential of maize farming. We also found impacts on downstream drug-trade outcomes, including the operations of drug cartels and killings perpetrated by these criminal 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.

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  • Oeindrila Dube, Omar Garcia-Ponce, and Kevin Thom, 2014. "From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector - Working Paper 355," Working Papers 355, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:355
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    Cited by:

    1. Donald J. Lacombe & Miguel Flores, 2017. "A hierarchical SLX model application to violent crime in Mexico," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(1), pages 119-134, January.
    2. Flückiger, Matthias & Ludwig, Markus, 2015. "Economic shocks in the fisheries sector and maritime piracy," Journal of Development Economics, Elsevier, vol. 114(C), pages 107-125.
    3. repec:spr:izamig:v:7:y:2017:i:1:d:10.1186_s40176-017-0102-6 is not listed on IDEAS
    4. Christopher Blattman & Jeannie Annan, 2015. "Can Employment Reduce Lawlessness and Rebellion? A Field Experiment with High-Risk Men in a Fragile State," NBER Working Papers 21289, National Bureau of Economic Research, Inc.

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    Keywords

    agriculture; mexico; drug trade;

    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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