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Following the Poppy Trail: Causes and Consequences of Mexican Drug Cartels

Author

Listed:
  • Tomás E. Murphy

    (Università Bocconi)

  • Martín Rossi

    (Department of Economics, Universidad de San Andres)

Abstract

We study the historical origins and consequences of Mexican cartels. We first trace the location of current cartels to the location of Chinese migration at the beginning of the XX century, and document that both events are strongly connected. We then use Chinese presence in 1930 as an instrument for cartel presence today. We find a positive link between cartel presence and good socioeconomic outcomes, such as lower marginalization rates, lower illiteracy rates, higher salaries, and better public services. We also report that municipalities with cartel presence have higher tax revenues and more political competition. Given that Chinese immigration at the end of the century was driven by elements largely exogenous to the drug trade, the link between cartel presence and good socioeconomic outcomes can be interpreted in a causal way. Previous research has shown that the presence of organized crime is associated with bad outcomes at the macro level (Pinotti, 2015) and has deep effects at individual level, making children more likely to be criminals in adulthood (Sviatschi, 2017a; 2017b). Our paper reconciles this previous literature with the fact that drug lords, the leaders of this particular form of organized crime, have great support in the local communities in which they operate.

Suggested Citation

  • Tomás E. Murphy & Martín Rossi, 2017. "Following the Poppy Trail: Causes and Consequences of Mexican Drug Cartels," Working Papers 130, Universidad de San Andres, Departamento de Economia, revised Dec 2017.
  • Handle: RePEc:sad:wpaper:130
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    File URL: https://webacademicos.udesa.edu.ar/pub/econ/doc130.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mascarúa Lara Miguel A., 2022. "Imperfect Law Enforcement, Informality, and Organized Crime," Working Papers 2022-16, Banco de México.

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    More about this item

    Keywords

    drug trade; Chinese migration; Mexico; illegal markets; organized crime;
    All these keywords.

    JEL classification:

    • N36 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Latin America; Caribbean
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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