Thursday, April 25, 2013

Economic Impact Of Usage Of Cocaine

Cocaine is obtained from the coca plant.

The United Nations Office on Drugs & Crime (UNODC) links cocaine usage with rising health care and social welfare costs, low workforce productivity and high unemployment, in both developing and wealthy countries.

Cocaine is particularly destabilizing for poor countries that produce or traffic the drug. Attracted to its high-sale value, organized criminal groups have made cocaine trade a core activity, reaping for themselves profits so huge they rival some poor countries' GDP--allowing them to threaten local economic development, rule of law and even state authority.

Higher Unemployment Rate

Regardless of country, the UNODC says there is a strong correlation between unemployment and drug abuse. Cocaine disrupts thinking processes, yet is so addictive. Afflicted individuals will prioritize their cocaine habit no matter how disruptive it is to their job, leading to job loss. Given employers' vigilance against hiring people with drug problems, the cocaine addict's chances of finding adequate employment are limited.

The problem, UNODC says, is that drug abuse occurs most often in the 18 to 25 age group, or those who are just about to enter the workforce. Prevalent cocaine usage thus affects society's ability to renew its workforce and exacerbates the overall unemployment rate.

Rising Health-Care Costs

Health problems from cocaine abuse are suffered by addicts, but they impose a considerable health-care burden on their families and society. Monetary resources that could have been spent on education and other health-care concerns are spent on drugs and rehab instead.

For instance, in 2000 the U.K. Research Development and Statistics office made a study on the total "reactive expenditure" or cost of health care and rehabilitation of high-economic class drug users in England and Wales. They estimate the amount to be a whopping f3.5 billion.

Crime and Real Estate Losses

Cocaine brings crime and lower real estate values. The U.S. Urban Institute Justice Policy Center notes that violent crime rose dramatically in U.S. inner cities during the mid-1980s and early 90s with the introduction of crack cocaine.

In turn, a crime-ridden neighborhood nurtured by cocaine loses real-estate value. Entrepreneur magazine notes that violent crime areas, like those caused by a drug culture, garner less real-estate-purchase demand or retail development. As a result, the real-estate property values in these areas are significantly lower than in other areas by as much as 40 percent.

Poor Macro-Management

Washington, D.C.'s Cosmos Club Journal once pointed out that cocaine's poison is most visible in Mexico and in the Andean states, where it is produced or trafficked. Here, drug cartels have enough money and arms to control private armies, legitimate businesses and powerful politicians in national government.

But more than just compromising justice systems and governments, the presence of cocaine money in any economy also negates national fiscal and monetary policies. United Nations-funded studies (UNRISD) show that drug money in these countries competes with funds from their normal economy, beyond the control of their central banks. Awash with uncontrolled cash, legitimate industries might suffer local price inflation or competition from cheaper imported goods.

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