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The Business of… Illegal Drugs

No one knows its exact scale, but it’s thought to be one of the biggest industries on the planet, amounting to almost 1 percent of global GDP. Kipp takes a look.

November 29, 2010 3:48 by


The permanently stoned twenty something with a special lamp and a tray of grass is not a serious producer. Though cannabis is the world’s most popular illicit drug, the UN says “it is increasingly produced within the country of consumption and often dealt informally through social channels.” In other words, the economic and social impact is not considered, at this point, a major problem, comparatively speaking.

The producers that count are mass manufacturers of heroin, cocaine and amphetamines; they operate out of self-interest and according to macro and micro economic factors. Just as globalization has opened up markets for legitimate businesses, so it has turned the drugs trade into a worldwide enterprise. As a result the bigger players have accumulated yet more market share and more production power.

To produce illegal drugs at scale means operating in a relatively lawless environment, so it’s no surprise that the largest producers of illegal drugs can be found in the more troubled and less regulated areas of the world. On the American continent, that means South American countries like Columbia and Mexico. But leading the world are countries of central Asia – one area in particular, the Golden Crescent (Afghanistan, Iran, Pakistan).

According to the UN, global production of opium declined by 13 percent between 2007 and 2009 (to 7,754 metric tonnes) and potential heroin production declined to 657 metric tonnes from 757 metric tonnes. Cocaine production also fell by around 16 percent. Sounds good, right? Wrong, Since 1998, production of opium is up 78 percent. Curiously, the UN says that demand has not corresponded – a surplus now exists that could supply the world market for two years even if production stopped tomorrow.


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