Introduction
Narcotics are mainly produced in Bolivia, South America. The coca crop is used in the production of cocaine. In Bolivia, the trade of narcotics has led to the improvement of the economy. The paper discusses about the contributions of narcotics in the economy of Bolivia. In addition, the research paper looks into details on how the cocaine is produced and traded in the international market. According to the Bolivia Coca Survey carried out in 2004, 17% of the land in Bolivia is used for the cultivation of cocaine. The report was released by the Government of Bolivia. Cocaine export contributes significantly to the economy of the country .
The Bolivia economy is ranked as number 95 in terms of size across the world. It Is ranked according to the purchasing power parity is 85 in the world. The Bolivian economy relies on a single commodity. The economy depended on the production of silver and tin. However, there has been a shift to cocaine. The economy mainly relies on the production and export of coca. The presence of difficulty topography and political instability in the country has led to the disintegration of the agricultural sector. The supply of labor in Bolivia is low due to low life expectancy and low population growth. The export economy of Bolivia is mainly dominated by the mining sector. The mining sector involves the extraction of natural gas and zinc.
In 2011, the gross domestic product of Bolivia was $51.41 billion. The standard of living in terms of gross domestic product was $4800. Economic growth was at the rate of 5% while the inflation rate was 10.1%. In 2004, the country had a budget deficit of US$500 million. The deficit had been cleared by 2011. Agriculture sector contributes 14% of the gross domestic product. 44% of the work force in Bolivia are employed in the agricultural sector. Coca is the main agricultural product in Bolivia. It is estimated that 29,500 hectares of land in Bolivia are used for the cultivation of coca. The contribution of cocaine in the economy was difficult to measure. Cases of cocaine trafficking are frequent in Bolivia. The income received from such illegal activities would be difficult to quantify it into monetary terms. Bolivian government introduced laws which lead to the eradication of the coca plant. This led to the materialization of unlawful activities such as drug trafficking and corruption .
Cocaine is obtained from the leaves of the coca plant. The coca plant is a tea-like shrub. The cultivation of coca is carried out by small scale farmers in Bolivia. The main producing regions of coca are Chapare and Yugas. The cultivation of coca in Bolivia started in 1980s. At that time, the price of coca had gone up, and the economy of the country had collapsed. The high unemployment rate in Bolivia also contributed to the high demand for coca cultivation. Coca cultivation led to an improvement in the economy of Bolivia after the collapse of the economy. The Bolivian government began an eradication of expansion of coca cultivation in 1983. The eradication process was not successful. The destruction of coca led to an increase in the price. This led to high demand for coca cultivation.
The United Nations Office on Drugs and Crime carried the first study on the coca yield in 2004. Samples of coca fields from the Yugas region were randomly selected. Coca yield was obtained despite the tense situation in the coca growing areas, in the country. After the analysis of the data, it was found that the average annual coca leaf yield was 1,832 kilograms per hectare per year. The same survey was carried out in 2008. The results indicated that approximately 27,558 metric tons of coca were produced.
The National Directorate of Coco Leaf Commercialization and Industrialization (DIGCOIN) controls the amount of cocaine produced and the prices of cocaine in Bolivia. The body indicated that a total of 19,302 metric tons was produced in 2008. The trading process of cocaine was carried out in different ways. The coca produced in Bolivia traded through two main offices which were established by the authorizing body. La Paz City and the Sacaba market are the two main offices where trade takes place. The table below shows the various ways of trade and the amount of cocaine sold. The data was collected in 2008.
There was a rise in the amount of coca produced. The average annual price for coca amounted to 45 Bolivians per kilogram. The prices of the coca plant for 2008 have been summarized in the following table. The price shows the amount of cash that was acknowledged from the sale of one kilogram of the cocaine.
The cocaine trade in Bolivia has led to economic benefits. It is estimated that there are 35,000 producers of cocaine in Bolivia. Each producer can produce an amount of $9,000. The production is carried out in 2.2 acres. Cocaine contributes $9,000 towards the economy of the country. Citrus contributes only $500 from the same size of the plot. Cocaine grows on poor soils and is associated with few problems regarding blight and pests. It is non-perishable.
Cocaine trading in Bolivia has created a source of proceeds for the farmers in the country. The small scale farmers in Bolivia have increased their production of cocaine significantly. The small scale farmers in the Chapare region engage in coca production at the expense of the production of other food crops such as rice, maize, bananas and pineapples. The most recent data on the price of cocaine in the market were collected in 2008 by the United Nations Office on Drugs and Crime alongside the Bolivian government. The actual amounts of income received by the farmers have been explained in the previous table. The amount received is the product of yield and the respective price of the month in which the cocaine was sold. However, the shift of the farmers in cocaine production has created a negative impact on the economy. The residents of the country depend on purchased foodstuffs. This creates high demand for the food prices. The high demand leads to increases in the price of the cocaine. The high production of cocaine was stimulated by the economic depression in Bolivia, in 1983-1983.
The cocaine sector in Bolivia has led to negative effects in the country. The high demand for cocaine in the international market has led to the destruction of the environment. This makes it unfavorable to carry out other agricultural activities on the piece of land. According to the recent reports, a large number of farmers use harmful chemicals in order to hasten the growth of the coca plant. The chemicals are dumped in the river streams and irrigation channels. The agricultural land and livestock is destroyed. The water used for irrigation purposes is contaminated. This hinders agricultural activities from being carried out. Agriculture plays a crucial role in the economy of Bolivia. The economy would be affected as a result of destruction of the environment. There was an increase in deforestation which leads to soil erosion. Large tracts of forests were cleared in order to obtain land for the cultivation of cocaine.
The cocaine sector in Bolivia has also led to increased cases of corruption and violence. Cocaine trade has increased in the recent years, in Bolivia. Corruption and violence started when the government tried to eradicate the cultivation of coca. Bolivians had become sensitive to the impact of cocaine in the society. However, cocaine trade was a source of income and wealth for those who carried out the business. The trading process had to be carried out secretly without the knowledge of the government. Illegal factories were set up. The smuggling of cocaine into other countries emerged. The peasants lack economic and political power. They are prone to arrest by the police. The large trafficking groups are rarely arrested due to their ability to pay off the Bolivian judges, prison guards and police. This affects the economy of the country in a negative way. It is difficult to quantify the amount of income received from the export of the cocaine. This is because the exportation process is carried out illegally .
The high demand of cocaine in the worldwide market has led to a rise in the price significantly. The Bolivian government allows only 12,000 hectares of cocaine to be cultivated. Farmers in Bolivia are compensated for substituting their farms from cocaine production to other crops. In 1988, the government passed various laws, which were meant to control and eradicate cocaine plantations. The use of chemicals, biological agents and herbicides in the production of cocaine was banned. The aim of the laws was to help improve the environment. A good environment would be used for other agricultural activities.
Conclusion
The analysis of cocaine sector in Bolivia is useful in explaining the impact of the sector on the economy of the country. Cocaine sector has led to the emergence of illegal activities such as drug trafficking, violence among the peasants and destruction of the environment. Use of chemicals, to facilitate the growth process of the coca plant, leads to contamination of water. The measurement of the income received from the cocaine sector is difficult. This is because of the illegal activities. The participants in the illegal activities do not disclose the exact amount of income they receive from the illegal activities. The cocaine sector contributed significantly to the economy of Bolivia .
References
Gootenberg, P. (2009). Andean Cocaine: The Making of a Global Drug. Durahm: University of North Carolina Press.
United Nations. Office on Drugs and Crime. (2003). Global illicit drug trends. London: United Nations. Office on Drugs and Crime.
Yepes, C. V. (2011). Relationship Between Illicit Coca Production and Formal Economic Activity in Peru. Washington: International Monetary Fund.
