The Political Economy of Colombia's Cocaine Industry

This study provides up-to-date scientific estimates of annual revenues generated by Colombia's illicit cocaine industry (1991-2007), imputed from data on coca production collected by the United Nations Office on Drugs and Crime. While Colombian producers appropriate only a fraction of global revenues from cocaine trafficking and sales, control over production and appropriation of revenues is highly concentrated, suggesting a great capacity for illegal drug-firms to impact Colombian economy and society. We compare narco-capital accumulation within the wider context of the Colombian economy in terms of productivity, employment patterns, growth and concentration of wealth and power and find that narco-production ranks among the most productive and lucrative sectors of the economy. But while the potential for profits is high, the illegal nature of the industry means firms are prone to sabotage and violence from competitors and vulnerable to attempts at suppression of production by the state, making the industry highly volatile and risky. If illegally accumulated drug-money can serve as a source of financing for legal economic activities, thus propping up economic growth in the formal sector, it must also be said that illegally accumulated narco-dollars are used to finance illegal armed groups and contribute to violence and insecurity, particularly for rural peasants.