Drugs Trade, Drugs Trafficking

June 29, 2010Pharmaceutical Industryby EconomyWatch


Drugs trade includes the farming, manufacturing and distribution of addictive drugs. It is prohibited across the world. Drug trafficking involves the sale of drugs, including crack, cocaine, heroin and marijuana. According to the World Drug Report by the UN, around 5% of the adult population consumes some form of illegal drugs.

History of Drugs Trade

The use of drugs can be dated back to 5000 BC, when the Sumerians indulged in opium consumption. However, drugs such as marijuana and morphine were generally used for curing ailments. Historical examples of the medicinal use of drugs include China (during 2737 BC) and America (during the 1861 civil war).

However, the problem of drug addiction was gradually recognized across the world. Legal action against substance abuse was taken in the US in 1875. All opium dens in San Francisco were outlawed. Drug trade was restricted in the latter half of the twentieth century with increased military involvement. Border patrols and other security measures were adopted to curb it.

Demand and Supply Drivers of Drugs Trade

The demand for drugs is fairly inelastic as addicts are willing to purchase drugs irrespective of prices. The major demand drivers of drug trade include:

  • Income levels
  • Access to substitutes (other dealers)
  • Special occasions (like New year’s eve) and parties

The supply of drugs is comparatively elastic. A rise in the price of drugs is generally a result of the shortage of raw materials, such as opium and coca leaf. Higher prices result in an increase in the supply of drugs. The important supply drivers are:

  • Government restrictions
  • Seasonal conditions
  • Availability/prices of substitutes

Drugs Trade: Major Players

Columbia is the world’s biggest producer of coca (cocaine), followed by Peru and Bolivia. Afghanistan is the largest cultivator of opium, earning over $4 billion in sales in 2007. Significant transshipment nations of drugs include Mexico, South Africa, the UAE and Argentina. The largest consumer of illegal drugs is the US, with an annual consumption of over $65 billion. Other major drug consumers include Brazil, Australia and Chile.

According to the World Drug Report, the global trade industry generates over $320 billion annually. This revenue is equal to 0.9% of the world’s GDP. The drug trafficking business creates large scale employment opportunities legally and illegally.

Effective drug rehab programs and treatment facilities help substance abusers beat substance addiction.

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