In the year 2000 Colombia was the world’s largest producer of coca cultivation. Colombia had more than 125,000 hectares of coca cultivation, which was 67% of the total area of coca crops in the world. In 1990 the area planted with coca was merely 20% of the world total, so it increased rapidly. It was the exact opposite situation in the rest of the Andean region. For example in Bolivia the army manually eradicated 30,000 hectares of coca in the Chapare region. The country then had a policy of reducing its offer of coca leaf to the amount that was required to meet internal demand. In Peru aerial controls, higher costs and a diminished quantity obtained from Peruvian traders led to the reduction of areas dedicated to export products in the Alto Huallaga region. The increase of crops in Colombia, combined with the factors from Peru, led to a drop in the price of coca paste as well (García, The Phase of Restructuring, 2003).
Colombia covered more than 50% of total amount of cocaine in the Andean Region and the world in the beginning of the 21st century. In the last decade the profits of cocaine were between 7.000 and 10.000 billion US dollars per year for Colombia. The United States still is the biggest consumer of Latin American cocaine, of all drug consumers 30,8% uses cocaine. Followed by Europe, where 25.7% of all drug users use cocaine, Africa (17,1%) and South America (11,4%) (Pontón C., La economía del narcotráfico y su dinámica en América Latina, 2013). In the last mentioned continent, South America, the consuming market is increasing. Brazil occupies 33% of the total market in the region, followed by Argentina with 25% (Onudd, 2011).
Although Colombia is still the main producer of cocaine, there have been some changes in the 21st century in the dynamics of cocaine trade. The criminal scene renewed for a few reasons:
1) The cultivation of the coca leaf reduced. In 2000 there were around 221.000 hectares to cultivate the coca, in 2010 there were “only” 149.100 hectares left. The worldmarket of cocaine stepped into a process of reduction with great effects on the criminal organizations of these countries.
2) The sharpening of the antidrug policies in the region led to the so-called “balloon effect”. This is an often used criticism on the US drug policy, the one that led to sharpening of antidrug policies in the region. It can be compared to the air in a balloon: the air is moved, but does not disappear. Pressure applied in one area pushes the air into another area of less resistance (Mora, 1996). This is also what happened in the Latin American region. There was an increase in the cultivation of the coca leaf in Peru and Bolivia and they started to have the biggest percentage of the worldmarket of cocaine. Colombia got “replaced” by those two countries. Before, Colombia had more than 72% of the crops, in 2010 this was only 38%. Also the balance in hectares changed. In 2000, Peru and Bolivia had 58.000 hectares of crops together, which was 26% of the total. In 2010 they had 80.000 hectares together (Oficina de Naciones Unidas Contra la Droga y el Delito, 2012). There was a shift from one country to the other what can be seen as the “balloon effect”.
This did cause a few problems for for example Peru. Peasants started getting involved in the illicit activity of drug trade, local maffia came up and foreigners were having control over the plantations. In Panamá and Ecuador the confiscation of drugs multiplied by five from 2004 to 2009. This is evidence that there were new routes in the drug trade. Especially the route through the Caribbean was the most common way for the Colombian drug traders to get to the US market. It also meant an increase in the power of drug dealers in other countries.
There was a potential for local drug networks to eventually get more power and also the economic reproduction capacity that this type of market has in different countries through corruption and money laundering, was a way of increasement of power of drug traders.
3) Mexican and Colombian cartels started to work together. In this way they would gain more power over the region and it was an easier way to get to the US market. The Mexican cartels became very important for the Colombian cartels and from the last decade the Mexican cartels participate in the biggest part of transactions: more than 50% of the total. This way of organization guaranteed the delivery of drugs from other “cartelitos” (small cartels) to the US.
Drug trafficking has not produced systematic effects on a regional or sectoral basis. It is frequently argued that drug trade does affect the composition of products both by sectors and regions, its relationship to the construction industry’s participation in the GDP, or to that of the financial and commercial sectors of the economy, do not show that there are important links.
Illegal crops have had negative effects on certain regional economies, especially where the planting of primary products had formerly predominated. This is the case in frontier areas that have had few institutional benefits and suffer from low levels of social capital as well as a high rate of violence.
Because the production part of the trade had a low share in Colombia’s GDP (5%) and employment in the agriculture sector (69.000 people), the effects of drug trade were barely felt, neither in regions where export organizatinos operate nor in regions where traffickers prefer to invest. The reason for this appears to be that money laundering has been used to finance capital flight. Also one-fourth of drug earnings remained outside the country, circulating within the international financial system (Rocha-García, 2014). The only effect that has been felt is the correlation between illicit cultivation and social instability. The regions of illicit cultivation are poorer and more unequal than other regions, and also less well served in terms of health and education facilities.
The repatriation of earnings has not affected agriculture or grazing, due to the fact that investments had more to do with real estate speculation than with agricultural production. Repatriations were made difficult because of the small financial market and the ownership of the industrial sector is concentrated among very few people.
To conclude, the income that is gained with drug trafficking has had fairly limited effects on the economy of the regions or cities of origen of the cartels. The long-term effects seem to be mainly negative: the escalation of violence coincidences with the increase in drug trafficking. Drug cartels finance the armed conflict by financing guerilla and paramilitaries. They are engaged in large scale corruption to protect their interests, which leads to a decline in people’s faith in legal institutions.
The social effects of drug trafficking are more noticable than the economic ones. It does have a small impact on economy, but the money laundering make this less visible. The human lives that are being lost every day due to the cartels, the kidnapping and the constant search for peace are effects that are most important for the Colombian society. Reduction of income should lead to a reduction in the crime rate.
Colombian society faces the challenge of breaking the vicious circle that links drug traffic to the country’s ongoing armed conflict.