From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector

54 Pages Posted: 25 Jun 2014

See all articles by Oeindrila Dube

Oeindrila Dube

University of Chicago - Harris School of Public Policy

Omar Garcia Ponce

New York University (NYU)

Kevin Thom

New York University, Dept of Economics

Date Written: February 24, 2014

Abstract

We examine how commodity price shocks experienced by rural producers affect the drug trade in Mexico. Our analysis exploits exogenous movements in the Mexican maize price stemming from weather conditions in U.S. maize-growing regions, as well as export flows of other major maize producers. Using data on over 2,200 municipios spanning 1990-2010, we show that lower prices differentially increased the cultivation of both marijuana and opium poppies in municipios more climatically suited to growing maize. This increase was accompanied by differentially lower rural wages, suggesting that households planted more drug crops in response to the decreased income generating potential of maize farming. We also found impacts on downstream drug-trade outcomes, including the operations of drug cartels and killings perpetrated by these criminal groups. Our findings demonstrate that maize price changes contributed to the burgeoning drug trade in Mexico, and point to the violent consequences of an expanding drug sector.

Keywords: agriculture, Mexico, drug trade

JEL Classification: K420, O13, Q17

Suggested Citation

Dube, Oeindrila and Garcia Ponce, Omar and Thom, Kevin, From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector (February 24, 2014). Center for Global Development Working Paper No. 355, Available at SSRN: https://ssrn.com/abstract=2457186 or http://dx.doi.org/10.2139/ssrn.2457186

Oeindrila Dube (Contact Author)

University of Chicago - Harris School of Public Policy ( email )

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Omar Garcia Ponce

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
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Kevin Thom

New York University, Dept of Economics ( email )

NYU Economics
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New York, NY 10012
United States

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