The distribution of cartel activities in Mexico is, of course, the result of many different factors, some which are better understood than others. Here we document the particular claim made by some authors... that one of these factors is the Chinese immigration to Mexico at the turn of the 19th century, and provide evidence that its influence seems to persists until today. A series of events justifies this connection. Drug prohibition (mainly in the U.S.) created the market that illicit organizations eventually filled. Yet the time in which this took place (the 1910s) made Chinese migration relevant, particularly the one that settled in Mexico around the turn of the 20th century. During the 19th century many Chinese emigrated and sought refuge in the Americas. For the most part, this flow directed towards the U.S., but in the early 1880s the U.S. introduced restrictions on immigration aimed at Chinese people, many of which end up settling in Mexico. This event is important to understand the onset of drug trade in the region, as there are good reasons to believe the Chinese had a comparative advantage in that trade. One of them is that, outside alcohol and tobacco, the main ‘recreational’ drug consumed at the time was opium... But, along with an advantage in the production of a good whose market remained largely unregulated until the 1920s, Chinese arguably also had developed an advantage on the distribution of illegal goods across the border. With the restriction on Chinese immigration by the U.S., many Chinese south of the border began to gather specialized knowledge on an activity that will prove useful with the introduction of drugs prohibition: smuggling Chinese into the U.S...So, the areas where Chinese migrants settled were more likely to be areas where opium was cultivated, because Chinese migrants brought opium seeds with them. Chinese migrants had a comparative advantage in producing opium, and then developed a comparative advantage in smuggling into the U.S. as well. This knowledge would eventually filter to the locals in the areas where the Chinese were located, who wanted to take over the business. Murphy and Rossi note that:
...part of the well-recorded sinophobia that eventually lead to the expulsion of most Chinese from Mexico was influenced by criminals wanting to gain control of this lucrative business.So, after the Chinese were expelled, the Mexicans had control of the opium growing and smuggling operations. Importantly, Murphy and Rossi then go on to show that:
...places where more Chinese migrated at the turn of the 20th century, nowadays are more likely to show cartel activity.Specifically, they find that municipalities where the Chinese were present in 1930 are 12.8 percentage points more likely to have cartel activity in the 21st Century, than municipalities without Chinese present in 1930. That's after controlling for a lot of population and geographical variables, including the presence of German migrants (which would pick up any areas that are on average more attractive to migrants), and distance to the U.S. border. Drug cultivation and supply are reasonably persistent activities, particularly when they are highly profitable.
Murphy and Rossi then use their initial results (Chinese presence in 1930 is associated with cartel activity in more modern times) to investigate the socio-economic effects of cartel activity (in an instrumental variables analysis). They find that:
...cartel presence ...is strongly associated with good socioeconomic outcomes, such as lower marginalization rates, lower illiteracy rates, higher salaries, and better public services. We also report that cartel presence is associated with higher tax revenues and more political competition, in line with what is reported in Mexican literature.This result is a surprise, since we typically think about the cartels as being overwhelmingly negative. However, Murphy and Rossi explain that:
...the counterfactual are Mexican municipalities without cartel presence. It is then entirely possible that all municipalities in Mexico are worse off compared to a situation without cartels, even if within Mexico those with cartels are doing relatively better.Everything is relative, including the impact of drug cartels it seems. They also argue that:
...since their main business is not –in principle– intrinsically based upon violence (as mafia), but on producing and distributing a tradable good, they have local positive effect in the areas where their activities are concentrated.This point is a little bit harder to believe. We know from lots of media reports that there is extreme violence associated with cartel activity. Perhaps areas that have more cartel activity have more government resources devoted to them? Perhaps the data are subject to some selection bias in those areas? I think we need more investigation on this before we can conclude that cartel activity is positive.
[HT: Marginal Revolution]
Read more:
- Book review - Narconomics
- Why your anti-drug policies just might annoy your neighbours
- What do Mexican maize farmers do when maize prices are low?
No comments:
Post a Comment