Globalization and Narcos

• Author: Melissa Dell
• Position: Professor of economics at Harvard University
• Pages: 40-41

Globalization

and Narcos

Manufacturing job loss resulting from international competition can carry large

social costs

Melissa Dell

IN A SENSATIONAL interview published by Rolling

Stone, actor and filmmaker Sea n Penn asked Joaquín

“El Chapo” Guzmán—na med the world’s most pow-

erful dru g trafficker by the US government—how

he became involved in the drug bu siness. El Chapo

responded: “In my [geographic] area...there are no job

opportunities.” On this much, the late Nobel laureate

Gary Becker —who pioneered the economic study

of criminal behavior—and El Chapo cou ld agree:

economic opportunities matter for crimi nal behavior.

e point is also borne out in recent research.

My study with Benjamin Feigenberg (University of

Illinois, Chicago) and Kensu ke Teshima (Hitotsubashi

University) shows that Mexican ma nufactur ing job

loss—resulting from increasin g trade competition

with China in the US ma rket—has played an import-

ant role in the explosion of drug violence in Mexico

in recent years.

Conflicts over drug tr afficking during the past

decade have transformed Mex ico into an epicen-

ter of global violence, claiming over 100,000 l ives

(Beittel 2017). Whether weak economic perfor-

mance promotes urban violence is a major policy

issue, with newly elected President André s Manuel

López-Obrador argu ing for job creation as one of the

pillars of his platform to reduce dr ug-related violence.

More generally, much of the violence in the world

today is concentrated in urban a reas of developing

economies involved in the cocaine trade (Igarapé

Institute 2017).

While international t rade has brought enormous

benefits to developing economies, our research on

Mexico highli ghts that manufacturi ng job loss result-

ing from international competition ca n also carr y

large social costs. Sustainable economic integrat ion

on an international level requires coll aboration on

developing a nd implementing innova tive approaches

for navigating the socia l and distributional chal lenges

that accompany such integration.

Job loss and crime

ere has been scant resea rch on the link betwe en

job opportunity and violent crime in urba n areas of

developing economies. Much of the literature on the

link between opportu nity and crime focuses either

on industrialize d countries with strong institutions or

on rural conflict s in developing economies. Studies

from these two sett ings tend to produce contradictory

results: those done in rich countries t ypically find no

such link (Draca a nd Machin 2015), whereas studies

of rural insurg ency identify a strong causal relation-

ship between economic opportunit y and conflict

and crime (Dube, García-Ponce, and om 2016).

ere is good reason to expect t he link between

job loss and violent crime to be stronger in poorer

economies with weaker inst itutions, even in places

like Mexico with well-developed urban labor mar-

kets, than in adva nced economies. In lower-income

settings, the soc ial safety net is often wea k. Criminal

justice institutions ty pically lack resources and st rug-

gle to prevent corruption. Sign ific ant ly, cr imi nal

organizations may provide exten sive employment

40 FINANCE & DEVELOPMENT | June 2019