 COLOMBIA AND THE WAR ON DRUGS, HOW SHORT IS THE SHORT RUN?No 2133, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE Abstract: In the nineties, Colombia became the main supplier of cocaine to the world markets. Estimations of total production and net revenues indicate that for 2001 this illegal business might have been responsible for 2% to 4% of the country´s GDP, depending on the number of hectares of coca leaf planted and productivity per hectare contemplated by different analysts. The war on drugs, specially its supply side for which Colombia is held responsible, consists of obstructing all the steps of this traffic, from curtailing the inflow of inputs, destroying crops and processing units, until transportation interdiction and dismantling domestic money laundering. This war has cost dearly to Colombia, both economically and institutionally. The direct effect of the war on drugs is an increase of cocaine prices. Therefore, its efficacy lies on a variable that measures consumers´ responsiveness to price increases, i.e. the price elasticity of demand in the U.S. The empirical evidence in this respect indicates a troubling result: it is inelastic (insensitive) in the short run, but elastic in the long run. The war on drugs makes sense only in the second scenario. Therefore, the question is: how short is the short run? The jury is still out in this respect. Keywords: War; on; drugs (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:col:000089:002133 Access Statistics for this paper More papers in Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.