THE POLITICS OF ILLICIT ECONOMIES

2nd Annual Institute of African Studies Undergraduate Research

Conference

Carleton University

Tofunmi Odugbemi

October 15, 2016

Research Question

■ Jay Z: 'The War on Drugs Is an Epic Fail

How does the illicit drug sector affect

economic development?

• Interested in exploring the now popular

narratives on the failure of the War on

Drugs

• Drug literature not as extensive when

looking at how the War on Drugs further

affected African economic growth

• Using Latin America drug literature as

foundation, resulted in a comparative

case study

Informal Sector

■ “Organizing the informal sector and recognizing its role as a profitable activity may contribute to economic development” (AfricanDevelopment Bank Group, 2013)

■ Umbrella term; illicit economies falls under it

■ How can we create an economy that works insymbiosis with illicit realities

■ Illicit = “activities taken to exploit illegal and illegitimate opportunities” (Webb et al., 2009)

■ Reformulation of informal economic sector is required Source: OECD Development Centre “Is Informal Normal? (2009), based on

ILO LABORSTA database and ILO Global Employment Trends, 2009

Changing the Discourse

■ Moving away from discourse that attests fragile states as being fertile ground for illicit trade to blossom (Grant, 2007)

■ Counteracting the understanding that illicit activities have a “detrimental” effect on the power and authority of states

■ Results in new theories on economic development of African states by-way-of illicit economic activities

And So…

■ The illicit economic activity of the drug trade doesnot exacerbate and reinforce negative patterns of

development in the case of Nigeria

ILLICIT DRUG ENFORCEMENT AND THE

ECONOMYWhy drug enforcement is more detrimental than beneficial to economic

development

How the War on Drugs Came to Be

■ Discourse on drugs there is a fixation on the idea of drug “control” and the effects of drugs on the transgressions of social and behavioral boundaries (Gootenberg, 2009)

■ Plays into the deep-seated social anxieties of self-control

■ Addiction to drugs is a form of modern enslavement that society has to fight in order to repress and eradicate it

Markers of the Drug War Inefficacy

NDLEA busts Mexican-Nigerian drug cartel

■ Drug enforcement in Nigeria has had a negligible effect on the curtailing of the drug trade (Klantschnig, 2009)

■ A marker of successful drug enforcement has to do with the fact that as a result of enforcement mechanisms the retail price of drugs goes up because the risk of punishment (i.e., long prison sentences, costly fines)

Markers of the Drug War Inefficacy 2

Through legalization drug use is nearly cut in half.

■ The money spent by government bureaucracies to combat the drug trade can be better used for other aspects of state-keeping

■ By demonizing this trade the state closes itself off to potential surplus and economic activity that could aid in their economic development

■ Consumers pay more for drugs, they become poorer

■ Drug market entrepreneurs earn more, they become richer

■ Cartelization occurs

Economic Benefits

■ Estimate in 2002 that approximately forty percent of the GDP in developing economies came from informal economic activities (Schneider; ILO)

■ According to the 1982 National Narcotics Intelligence Consumers Committee estimate, about eighty billion was generated in gross sales by illicit drugs

■ In 2008, the National Drug Law Enforcement Agency (NDLEA) in Nigeria seized twenty-seven million naira in drug shares from drug barons and billions more in assets

ILLICIT DRUGS AND DOMESTIC ECONOMIC

POLICIESHow drug trafficking is not the affliction of Nigeria’s economy

Economic Planning?

■ Multitudes of economic policies which deeply affected the course of Nigeria’s economy due to:

– Constant turnover of government

– Various ideologies that fueled each leader’s economic goals the manner in which they were implemented.

FROM THE ILLICIT TO THE LICIT ECONOMY

Peru shows us a “shining path” towards institutionalization of the informal

Legitimacy vs. Legality

■ Legitimacy is defined as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate with some socially constructed system of norms, values, beliefs, and definitions” (Webb et al., 2009)

■ Legality on the other hand is based on “socially constructed reflections of laws, regulations, norms, values and beliefs [that create] institutions which constrain actions, define opportunity, and facilitate patterns of interactions” (Webb et al., 2009)

Moving Into Formality

■ Peru has taken the steps in formalizing the informal by legalizing coca leaf growth which they have become heavily dependent on

■ The economic benefits of the drug trade resulted in the creation of a small middle class (Morales, 1990)

■ A level of formalized control has shown that consumption will not necessarily increase (i.e., legalization of tobacco and alcohol)

Bibliography

■ African Development Bank Group. 2013. "Recognizing Africa's Informal Sector." Accessed March 13. http://www.afdb.org/en/blogs/afdb-championing-inclusive-growth-across-africa/post/recognizing-africas-informal-sector-11645/.

■ "Africa’s New Number One." 2014. The Economist, April 12. Accessed April 16, 2016. http://www.economist.com/news/leaders/21600685-nigerias-suddenly-supersized-economy-indeed-wonder-so-are-its-still-huge.

■ Alli, Warris. 2010. “Nigeria’s Foreign Policy of Democratic Transition and Economic Reforms.” In Governance and Politics in Post-Military Nigeria: Changes and Challenges, edited by Said Adejumobi, 146-72. New York: Palgrave Macmillan.

■ Alvarez, Elena H. 1995. "Economic Development, Restructuring and the Illicit Drug Sector in Bolivia and Peru: Current Policies." Journal of InteramericanStudies and World Affairs 37:125-49. Accessed April 2, 2016. doi:10.2307/166335.

■ Ambler, Charles. 2014. “The Drug Empire: Control of Drugs in Africa, a Global Perspective.” In Drugs in Africa: Histories and Ethnographies of Use, Trade and Control, edited by Gernot Klantschnig, Neil Carrier, and Charles Ambler, 26-49. New York: Palgrave Macmillan.

■ Andreas, Peter. 2011. "Illicit Globalization: Myths, Misconceptions, and Historical Lessons." Political Science Quarterly 126: 403-25. Accessed March 13, 2016. doi:10.1002/j.1538-165X.2011.tb00706.x.

■ Anugwara, Boldwin. 2014. "NDLEA Destroys Indian Hemp Farm in Ekiti.". Newswatch Times, March 8. Accessed April 16, 2016. https://www.mynewswatchtimesng.com/ndlea-destroys-indian-hemp-farm-ekiti/.

■ Balbierz, Patrick. 2015. "Peru: The New King of Cocaine." World Policy Blog, February 3. Accessed April 4, 2016. http://www.worldpolicy.org/blog/2015/02/03/peru-new-king-cocaine.

■ Bayart, Jean-François. 1999. “The ‘Social Capital’ of the Felonious State.” In The Criminalization of the State in Africa, edited by Jean-François Bayart, Stephen Ellis, and Béatrice Hibou, 32-48. Indianapolis: Indiana University Press.

■ Carrier, Neil and Gernot Klantschnig 2012. “Drugs and Development: A New Threat or Opportunity.” In Africa and the War on Drugs, by Neil Carrier and Gernot Klantschnig, 50-77. New York: Zed Books.

■ Chang, Ha-Joon. 1999. “The Economic Theory of the Developmental State.” In The Developmental State, edited by Meredith Woo-Cumings, 182-99. Ithaca: Cornell University Press.

■ Chen, Martha Alter. 2007. "Rethinking the Informal Economy: Linkages with the Formal Economy and the Formal Regulatory Environment." DESA Working Paper No. 46. Economic and Social Affairs: 1-12. Accessed March 13, 2016.

■ "Cocaine Is Winning the Drug War in Peru." 2015. New York Post, October 14. Accessed April 2, 2016. http://nypost.com/2015/10/14/cocaine-is-winning-the-drug-war-in-peru/.

■ Ellis, Stephen. 2009. "West Africa’s International Drug Trade." African Affairs 108: 171-96. Accessed April 16, 2016. doi:10.1093/afraf/adp017.

■ Falola, Toyin. 1999. “The Military, Economy, and Politics, 1983 – 1993.” In The History of Nigeria, edited by Toyin Falola, 179-93. Westport: Greenwood Press.

Bibliography Continued…

■ Gootenberg, Paul. 2009. “Talking About the Flow: Drugs, Borders, and the Discourse of Drug Control.” Cultural Critique 71: 13-46. Accessed March 13, 2016. doi:10.1353/cul.0.0023

■ Grant, Audra K. 2007. “Smuggling and Trafficking in Africa.” In Transnational Threats, edited by Kimberely L. Thachuk, 113-30. Westport: Praeger Security International.

■ International Labour Office-Geneva. 2013. “Transitioning from the Informal to the Formal Economy.” Paper presented at the 103rd session of the International Labour Conference in Geneva, Switzerland, July 23.

■ Jasper, Miranda Louise, and Clare Ribando Seelke. 2008. "Peru: Political Situation, Economic Conditions and U.S. Relations." Paper presented to Members and Committees of the U.S. Congress, January 15.

■ Klantschnig, Gernot. 2014. “Histories of Cannabis Use and Control in Nigeria, 1927 – 1967.” In Drugs in Africa: Histories and Ethnographies of Use, Trade and Control, edited by Gernot Klantschnig, Neil Carrier, and Charles Ambler, 26-49. New York: Palgrave Macmillan.

■ Klantschnig, Gernot. 2009. “The Politics of Law Enforcement in Nigeria: Lessons from the War on Drugs.” Journal of Modern African Studies 47: 529-549. Accessed September 5, 2016. doi:10.1017/S0022278X09990036

■ Miron, Jeffrey A., and Jeffrey Zwiebel. 1995. "The Economic Case Against Drug Prohibition." The Journal of Economic Perspectives 9:175-92. Accessed April 2, 2016. doi:10.1257/jep.9.4.175.

■ Morales, Edmundo. 1990. "The Political Economy of Cocaine Production: An Analysis of the Peruvian Case." Latin American Perspectives 17: 91-109. Accessed April 2, 2016. doi:10.1177/0094582X9001700406.

■ Muggah, Robert, and Jeremy McDermott. 2013. "A Massive Drug Trade, and No Violence." The Atlantic, April 24. Accessed April 2, 2016. http://www.theatlantic.com/international/archive/2013/04/a-massive-drug-trade-and-no-violence/275258/.

■ "No Let-Up on Anti-Drug War." 2008. Newswatch Magazine, October 7. Accessed September 2009. No online access.

■

■ Okpanachi, Eyene. 2011. "Confronting the Governance Challenges of Developing Nigeria’s Extractive Industry: Policy and Performance in the Oil and Gas Sector." Review of Policy Research 28: 25-47. Accessed April 16, 2016. doi:10.1111/j.1541-1338.2010.00477.x

■ Palmer, David Scott. 1992. "Peru, the Drug Business and Shining Path: Between Scylla and Charybdis?" Journal of Interamerican Studies and World Affairs 34: 65-88. Accessed April 2, 2016. doi:10.2307/165925.

■ "Peru." N.d. Accessed April 2, 2016. http://www.insightcrime.org/peru-organized-crime-news/peru.

■ "Peru Trade Promotion Agreement." N.d. Accessed April 2, 2016. https://ustr.gov/trade-agreements/free-trade-agreements/peru-tpa.

■ Pyper, Neil. 2015. "How Peru's Drug Trade Is Threatening Its Economic Growth." The Conversation, July 28. Accessed April 2, 2016. http://theconversation.com/how-perus-drug-trade-is-threatening-its-economic-growth-45018.

■ Reuter, Peter, and Mark A.R. Kleiman. 1986. "Risks and Prices: An Economic Analysis of Drug Enforcement." Crime and Justice 7: 289-340. Accessed April 2, 2016. http://www.jstor.org.proxy3.library.mcgill.ca/stable/1147520.

Bibliography Continued…

■ Stewart, Francis and Graham Brown. 2009. "Fragile States." CRISE Working Paper No. 51. Accessed April 16, 2016. http://archives.cerium.ca/IMG/pdf/workingpaper51_-_Stewart_Brown-2.pdf.

■ Thachuk, Kimberley L. 2007. “An Introduction to Transnational Threats.” In Transnational Threats, edited by Kimberely L. Thachuk, 3-20. Westport: Praeger Security International.

■ United States Institute of Peace. 2003. "Truth Commission: Peru 01." Accessed April 2, 2016. http://www.usip.org/publications/truth-commission-peru-01.

■ Webb, Justine W., Laszlo Tihanyi, R. Duane Ireland, and David G. Sirmon. 2009. "You Say Illegal, I Say Legitimate: Entrepreneurship in the Informal Economy." Academy of Management Review 34: 492-510. Accessed April 2, 2016. doi:10.5465/AMR.2009.40632826

■ If you would like to read my entire paper, please email me at jesutofunmi.odugbemi@mail.mcgill.ca and I will be glad to send it to you.

■ Thank you!