Cocaine era of the 1980s

Economics of Cocaine

During the eighties, Colombia became the largest producer and exporter of cocaine in the world. Although exports of cocaine fell from a level of hundred tons to the early to mid sixty tons of this, the NNICC (the National Narcotics Intelligence Consumers Committee USA) estimates that Colombia has a major source representing 75% of the drug supply in America. It is estimated that in the period between 1982-1985, the total revenue for the country generated by drug trafficking was not more than U.S. $ 1290 million per year, or up to 3.3% of GDP. Although the processing and coca cultivation occurs mainly in the south and in the jungles of southeast where the economic base is relatively small, a good portion of the profits seem to go to the famous city of Colombia known as Medellín and its surrounding area (Cook, 64).

The city known as Medellín filed a growing share of total deposits in the financial sector since the beginning of the decade, from 12% to levels above 15% in 1986, coinciding with the boom of cocaine. Medellin's participation in the national total square meters of building licenses increased from 15% on average in periodo1973-1979 to 23% on average in the period 1980-1987. This phenomenon coincides with the rise of cocaine trafficking in Colombia. Finally, the unemployment rate in Medellin at the end of the decades of the 70s was 65% higher than the national level. However, in the course of the 80s, it recorded an equalizing trend of unemployment rates in the city with the national average. As shown by the indicators proposed, the income from the drug trade generated an additional aggregate demand in Medellin and its area of influence, significantly altering its economic development and the price level. However, since a ...