COUNTRY PROFILE: COLOMBIA
As a third world country, classified in the low-middle income group,
Colombia has developed common features with the rest of its group in
political, economic, and social terms, since historical issues have shaped
their uneven condition in the relationship with the first and second world.
Globalization, as an economic model that has been structured and adjusted
within the capitalist world of industrialized countries in different ways,
should be absorbed by the third world in order to reach a high level of
development. However, there is not a global model among the Japanese, the
German, the Anglo-American, or the French, which fits perfectly in the
developing world. The adjustment depends on a series of historical,
political, economic, and social variables that are unique in each country
and have already comprised its own model of development. Considering the
economic and political dynamics of Colombia, there is a special tendency to
imitate the Anglo-American model of liberalization of the markets.
Nevertheless, in the financial system, Colombia is turning to a German
model based on conglomerates and state regulation. Neither the Anglo model,
nor the German has succeeded in Colombia so far. The crisis is evident, and
Colombia has obviously begun to pay for the high cost of the adjusting
process to global trends. A paradox among international pressures and
domestic needs, including the State's capacity to face violence and drug
trafficking, raises the question of whether or not Colombia is prepared to
continue in this process.
The proximity of Colombia to the US could be considered a factor of
influence in the process of globalization that has been taking place during
the 80's and 90's in Latin America and in the rest of the third world.
Indeed, economic dependency on the United States shapes the role of
Colombia in the global arena, since the US constitutes the major Colombian
partner in trade. "The US holds by far the largest share of foreign direct
investment in Colombia: US$ 3.5 billion or 60.2% of total DFI of US$ 5.8
billion", and finally and most importantly, "the US companies operate in
Colombia under the same rules as Colombian companies [do]", so they receive
national treatment. (Economist Intelligence Unit [EIU], 3rd quarter 1998,
p30).
Moreover, Colombia has followed the US pattern in certain global processes
such as privatization, liberalization of the markets, telecommunications
advances, and openness to foreign investment, and it has implied some
restrictions to the intervention of the government in the economy.
By liberalizing their trade policies, by deregulating their
economies, and by privatizing their enterprises, national governments have
much less control over what goes on in their own territory or what their
own multinational do elsewhere, and they no longer have the resources they
had in the past to solve social problems (Schmidt, Spring 1997, p76).
In fact, Colombia has improved its macroeconomic level since 1990 when the
government of Cesar Gaviria established the "neoliberal" model. Then, a new
constitution permitted its consolidation in 1991. However, the worries for
transnational markets have undermined the State's concern about social
issues because the adjustment to global trends has been conditioned by the
behavior of institutions and individuals within specific political,
economic, and social structures. The overview of political aspects, the
current economic situation, the complexity of financial system, and
finally, the micro and macro organization of the industry of illegal drugs
reflect the effects of globalization in Colombia during the last two decades.
Political System and Neoliberal Trends
Colombia has been a "democratically elected representative system with a
strong executive" (EIU, 1998, p2) since the late 1950's. It is
characterized by two parties, the Conservative (PC) and the Liberal (PL).
The system does not allow for re-elections and governments perform for a
four-year period. The Colombian democratic system did not emerge as a
result of "high degree of elite consensus on the appropriate economic model
and a weakly mobilized or controlled left" (Haggard, Kaufman,, 1995, p
356). Rather, it has been a predominant regime, and its short-temporary
transitions from military to democratic systems have not been a consequence
of economic crisis. Also, the political system has maintained democracy
although leftist groups have gained a lot of power during the last fifty
years.
In fact, as Haggard and Kaufman refer to another scholars' argument,
"acute economic problems played at least some role in all but two of the
democratic breakdowns _Venezuela in 1948 and Colombia in 1949"(1995, p
327). Conversely, if there is a relationship between economic crisis and
democratic crisis in Colombia, it has been in the opposite way in which the
illegitimacy of a democratic government has caused an economic slowdown
during 1994-1998.
Whereas scholars imply that globalization permits less clientelist
business-government relationships (Maxfield, 1997, p 24), even with
liberalization and transparency of the markets, clientelism has still been
a main feature of the Colombian governments. Therefore, the subsequent
effects of clientelism such as corruption and mismanagement are already
embedded in the Colombian State. They are extended through out the
executive and the legislative powers in which many members work under
permanent rent-seeking and bribery.
The ideas of liberalization began in the 80's, but the political
establishment based on an old constitution hindered the idea of openness
and creation of macroeconomic policies during this period. "Recent
Colombian presidents, beginning with Betancur [President 1982-86], have
been increasingly aware of the need to open the regime to change and have
made efforts in that direction"(Thoumi, 1995, p 6). During 1982-86, the
conservative government of Belisario Betancur faced many economic problems,
including the financial crisis. As a solution, Betancur developed a program
called Development with Equity _ Desarrollo con Equidad, promoting
incentives to agriculture, transportation, and capital goods _ especially
textiles (Thoumi, 1995, p 52). Also, in the 80's¸ "Betancur's government
took over many banks and finance companies and took legal action against
the managers of financial conglomerates that had defaulted" (Thoumi,
1995,55).
Later, from 1986 to 1990, the liberal government of Virgilo Barco was
characterized by reaching the stability of growth and creating the
appropriate atmosphere for a referendum, which became the basis of the 90's
economic reform. Thus, the transition between Virgilio Barco to the
"neoliberal" leader Cesar Gaviria in 1990 was supported by great
expectations of the society on the liberalization of the economy. At that
time, according to economists, the economic problems were attributed to the
lack of competition, to a highly regulated government, and to the low level
of international trade (Thoumi, 1995,p 57).
The triumph of Cesar Gaviria brought the "neoliberal" reform with the idea
that globalization meant development. However, his achievement was not the
result of economic crisis. Rather, the changing political and economic
schema was motivated by social and political factors such as the
assassination of the candidate, Luis Carlos Galan, who had the major option
in the running period of elections for 1990. Thus, Gaviria was elected
because he represented the Galan's ideology as non-clientelist candidate,
aside of two traditional political parties.
The new "neoliberal" government began with "the loosening of import and
other controls and the privatization of many state-owned enterprises"
(Executive summary, 1996, p 1). This privatization program involved
infrastructure, seaports _ which became free-trade zones, airports,
highways, telecommunications, and the entrance of foreign investment in
energy and oil projects and financial institutions.
"Early in 1990 the government began a comprehensive market liberalization
program aimed at modernizing the economy, in what is likely to be the most
radical policy change of the last fifty years" (Thoumi, 1995, p57). In
addition, the new constitution of 1991 empowered the "neoliberal idea",
decentralizing the state functions through interdependent institutions,
giving autonomy to the Central Bank, lowering barriers of exchange, and
establishing new international agreements.
Due to the opening of the economy to foreign competition, the great
majority of capital goods, raw materials, and consumer goods can be freely
imported into the country, In accordance with Andean Pact Decision 291,
foreign investors now have the same access to Andean markets as domestic
investors. ... Foreign investors are permitted to participate in the
privatization process now underway, including the financial institutions….
(Executive summary, 1996 p 10).
As a result of these very low entries, foreign investment continues to add
a significant portion to the Colombian economic growth. The annual growth
of GDP increased gradually, and in 1994, it reached 5.8%. Thus, Gaviria led
to the most prospective global atmosphere: increasing the DFI _ Direct
Foreign Investment, and giving stability to a competitive and healthy
financial system. However, the reduction of social welfare to 1.1% of GDP
during Gaviria's period and the lack of a domestic program, which could
assist the small scale industry and agriculture in the hazard of a
predatory global system, reflected the State's incapacity in facing
internal issues when it becomes involved in the globalization process
(Evans, 1997, p, 84).
This issue encouraged the lower class to elect a more "socialist-planner"
president who promised a counterpart reform in the agrarian sector, new
employment, more social welfare, and new controls and regulations in the
economic system that could balance the devastating period of Gaviria's
government (Executive summary, 1997, p 1). Samper politically meant a step
back since he belonged to the political machinery of the liberal party,
more clientelist and populist. In addition, Samper's government has been
one of the worst administrations of the second half of the century as a
result of his link with drug traffickers.
The legitimacy of the outgoing administration [Samper's] was
undermined almost from the start of its term in 1994 because of a
drug-related corruption scandal involving allegations that President
Ernesto Samper's campaign was partly funded by massive contributions from
the Cali drug-trafficking cartel. The low standing and poor performance of
the Samper government galvanized leftist guerrillas, damaged business
confidence, strained relations with the US and dented Colombia's reputation
for sound economic management. (EIU report, 3rd quarter,1998, p 6).
The lack of credibility of Samper's government hindered the implementation
of any policy and the development of any program. International pressures
obligated him to continue with the predatory globalization, and social
policies barely succeeded due to the hazard of his resigning. Indeed, the
relationships with United States were threatened when the US government
determined the "decertification" of Colombia because of the poor
performance of Samper's government in the drug war. However, despite the
constant threats, the US government did not effective severe economic
policies against Colombia. Finally, after four years of illegitimacy, the
new Government of Andres Pastrana, which began in August 1998, implies a
favorable turn in Colombian future.
Widespread discontent with the government of Mr. Samper was the
principal reason for Mr. Pastranas' victory…. The extent of the reaction
against Mr. Samper is emphasized by the fact that Mr. Pastrana narrowly
lost to Mr. Samper in the second round in 1994. (EIU report, 3rd Quarter
1998, p 11).
Economic Situation
Now, a proposal of a "serious and rapid" economic reform is the prospective
goal of the new government in order to rescue the Colombian economy, in
both levels macro and micro, from the deepest crisis ever. The 5.8% annual
growth of GDP in 1995 has become less than 2.0% in 1998, and even with an
accelerated reform, the GDP in 1999 will be just 2.5% (Revista Dinero, Sep,
1998, p 25). Therefore, economically, a tax reform, cut backs in
expenditure, and a new role of the Central bank, are main points in the new
government action (p 26). Also, socially, peace talks are already shaping a
different atmosphere, and even though there is not yet a mentioned policy
against the drug problem, stronger policies would be in the way.
The financing government deficit is the result of the imbalance between
imports and exports, which induce an increasing deficit of the current
account balance. Even though the exports grew 10.5% in 1997, the imports
increased 12.7% in the same period. "Central bank data shows the 1997
current-account deficit of 5.7m at 5.9% of GDP. . . " (EIU report, 3rd
Quarter 1998,p 27).
At the same time, the excessive domestic borrowing needs increase the
deficit although the government has obtained some revenues through higher
taxes, and privatization processes. In addition, difficulties of cash flows
in the short-run and the inconsistencies in monetary policy have made the
government unable to keep the exchange-rate band, increasing devaluation of
the peso. It reached 13% during June 1997-January-1998
Furthermore, in the domestic side, the panorama is dramatic since one of
the most serious problems in Colombia is the high level of unemployment. It
reached 15.8% in June 1998 due to the economic recession that has obligated
many companies to close their doors. Moreover, low income, which has been
always a problem in most Latin American problems, worsened the situation.
In the agricultural sector, the estimated growth per year is almost zero
(0.1%). Problems such as frequent violent attacks, eradication of illegal
plantations, land's appropriation by guerilla groups, poor infrastructure,
and the decline in prices of Coffee _the number one product of export, do
not provide a profitable future. In addition, the flower sector does not
represent significant profits since US companies owns most of it. The US
banana import regime and the WTO rules unequally regulate the banana
exports. In the industrial sector, a temporary growth has been positive
but not for a long period, growing 12,9% in the 1st quarter of 1998,
falling 5.7% in the 2nd quarter of this year (Economic Intelligence Unite,
3rd quarter, 1998, p 19-21). Also, Colombia is suffering the stagnation of
construction since it is no longer an attractive way of money laundering by
drug traffickers. The mining sector is affected by the guerrilla's attacks,
and the oil output has not been as high as was expected in order to reach a
significant domestic growth. In addition to that, the British Petroleum
Company owns the most productive oil field, Cusiana. (EIU, 3rd quarter,
1998, p 23).
Financial System: From Competition to Consolidation.
Although the first winds of liberalization in the financial system began in
the late 70's, "the State in Colombia, as elsewhere in the region, has
tended towards paternalism and heavy regulation, especially in financial
matters" (Economist, 1993, p3). The financial system, which "has been
poorly developed"(p 2), operates around the Central Bank with financial
intermediaries, which conform a segmented structure based on specialized
lending and some borrowing operations (Frenkel, 1994,p13). It consists of
commercial banks, CAV (Savings and housing corporations), CF (financial
corporations), CFC (commercial financing corporations) others financial
services (leasing, deposits and insurance).
The earlier phase of liberalization in the 70's caused a financial boom, in
which many private firms wanted to take advantage of the tendency. It
weakened the existing financial institutions and conglomerates at that time
(Thoumi,1995, p50). Hence, as a solution of that financial crisis in the
80's, many of the commercial banks were nationalized _State-owned. Later in
1990,this began to change with the boom of a "neoliberal" government. It
led to the financial reform, and the liberalization process started to
speed up. This liberalization consisted of a gradual re-privatization of
State's banks and of a high increase in direct foreign investment in this
sector. In fact, an executive summary produced by the US&FCS in 1996 listed
the main changes and results of the global process within the Colombian
financial system:
At the end of 1994, the deposits in all financial system entities
were equivalent to 63% of the nation's GDP. The 30 commercial banks
operating in Colombia at the end of 1994 accounted for 58 % of total
financial system assets, and they operated more than 3,100 offices
throughout the country. [On the other hand], the Central Bank prints money,
controls currency circulation, monitors credit and exchange rates and
oversees international reserves. It is also the lender of last resort to
Colombian financial institutions. Aside from being the regulatory
authority for the monetary, currency exchange, and credit policies of the
central government, it also acts as the fiscal agent for the Colombian
government. It has the authority to set, if necessary, maximum limits on
the interest rates that commercial banks and other financial institutions
charge on loans (Executive summary, 1996, p 60).
Moreover, the law 35 in 1993 allowed the transformation of leasing
companies into commercial finance companies engaged in leasing activities
and permitted saving and housings institutions to lend funds. In fact, the
Constitution reform in 1991 determined a new State structure in which the
State's capacity was diminished over the economy including financial
system. However, the State's participation increased with the changing
process especially during 1990, unlike other Latin American countries. In
1993, the share of the state in Colombia was higher that the average share
in Latin America _Colombia:140 / Latin America: 65-70 (Carrasquilla, 1996,
p2). In addition, the Government has decentralized its power through many
organizations that function apparently aside but depend on the government
decisions.
The Bank of the Republic _Banco de la Republica, became autonomous and
"independent" from the government, and it now operates under the authority
of a board of directors of five members, including the bank's general
manager and the Minister of Treasury and Debt Public, Minister of Finance
(Frenkel, 1994). The banks are the core of the financial system. They have
acted as short-term financial intermediaries and for current accounts, and
they are the only ones that have a diversified structure for deposits. The
other financial corporations work on more specialized areas but do not
achieved the same level of assets and profitability (Frenkel 1994, p 157).
In the regulatory part, liberalization has been less evident, since through
the Banking Superintendency, the government regulates, and through the
Guarantees Fund, the government operates as a Guarantor does. Financial
institutions must obtain the authorization of the Superintendency of
Banking before they open their doors for business. This organization
imposes administrative sanctions on violators of the established
regulations or financial institution by laws. The financial intermediaries
have to work under a policy of reserves and require forced investments in
order to accomplish the imposed monetary control and expeditious channel of
the Bank of the Republic. In addition, the economic authorities that belong
to the Government set the interest rate policy, lending and borrowing
rates, and the policies of access to liquidity.
With the global trends, the financial system recuperated an important
participation in the GDP during the early 90's, and it succeeded in
privatizing and establishing competitive markets. However, "the financial
sector has been deeply affected by the slowdown in economic activity and by
rising interest rates in the first half of 1998" (EIU, 3rd quarter 1998, p
23). The insolvency is devastating a significant number of institutions,
and they have to be absorbed by bigger financial corporations.
The State-owned financial institutions are closely to bankruptcy as a
result of mismanagement and the exploitation of politicians who used it as
a patronage source. Besides the poor health of Colombian economy, the
uncertain international arena added more problems since the terms of trade
are declining as well as the confidence in emerging markets. Then, the
economic imbalance with current account deficits and fiscal deficits
worsened the situation. It has been reflected in higher interest rates
because the central bank rationed credit to financial system.
Also, "with financial institutions lacking sufficient admissible paper to
conduct reverse repurchase (repo) operations with the central bank, the
interbank interest rate also rose" (EIU report, 1998, p15).
The current phenomenon of consolidation, in which bigger financial
institutions are taking over the smaller ones, is happening rapidly and
strongly. The doubt is whether the competitive markets in the financial
system in Colombia are approaching the end by switching to a system of
private and structured conglomerates. In 1994, there were eleven national
privates, five privates with foreign capital (mixed), three foreign, and
five officials. An almost in the same proportion were distributed the CAV,
and CF, and CFC. However, in the last two years fifty brands of financial
institutions have disappeared from the financial market through
consolidations or liquidation processes, and it is possible than other 45
of the existing 118 corporations will disappear during the next two years
(Revista Dinero, Sep 1998, p 35)
The incursion of foreign investment partial or completely in the financial
system has determined the purchase of several banks in the last five years.
Even though the number of foreign owned banks has increased, especially,
with the new acquisitions of the Spanish bank, the majority of financial
institutions are owned by the four most powerful economic groups in
Colombia. (Revista Dinero, Feb 1996, p 26).
Last, Colombia has changed the rules in terms of debts, credits, and
payments. Currently, general trade finance is freely available in
Colombia. Bancoldes is especially a bank that facilitates Export finance
through both private and multinational lenders, and through domestic
sources. Imports and Exports to the US are facilitated by the Export-Import
Bank (Eximbank), which has available short term, medium term,and long term
programs. On the other hand, the government and the Bank of the Republic
are important sources of funding for financial system since savings are
insufficient to sustain the development process. Furthermore, several
organizations have involved in project financing such as the World BanK,
the Interamerican Development Bank, the Andean Development Corporation, the
Export-Import Bank of Japan, the Agency for International Development of
the U.S. (and also those of Japan and Canada) and the U.S. Overseas Private
Investment Corporation. (Executive summary, 1996, p71).
The Micro and Macro Industry of Illegal Drugs in Colombia
The industry of illegal drugs has affected not only the Colombian economy,
but also the social, and most importantly, political structures of the
country. Even thought many factors have influenced the current Colombian
crisis, it has been a process in which the drug trafficking is to blame. In
fact, the illegal industry of drugs (IDI) has transformed the way of living
of Colombians and has hindered a transparent and correct performance of the
State in an important extent. Moreover, it has contributed to the raise of
violence as a consequence of many terrorist attacks that drug-traffickers
have used to threaten not only the institutions, but also the Colombian
population. "Colombian's image in the early 1990's is of a country with a
large powerful illegal psychoactive drugs (PSAD) industry that is
responsible for high levels of violence" (Thoumi, 1995, p1). However, the
effects of this problem on the economy and the society are much deeper and
more complex.
Since this work is basically an economic country profile, the economic
aspects of the drug problem will be developed in the following points.
However, it does not pretend to undermine the importance of the social and
political aspects of this problem.
Although Colombia has been considered one of the most stables economies
within its region _with some periods of crisis explained above_ and one of
the earliest in the implementation of liberal economic policies, an
underground economy or black market grew parallel to the apparently stable
development of Colombia.
The industry of illegal drugs grew "covered" by other types of illegal
economies, contraband of legal goods (Kalmanovitz, 1994, p17). Even though
Colombia has always been a natural resource of psychoactive drugs (PSAD),
the consolidation of the industry of these drugs in Colombia began in the
70's when the demand of Marihuana increased, and the production in Mexico
was affected by the eradication of many marihuana plantations (Thoumi,
1995, p.126). Then, as a result of eradication programs supported by
American government and the import-substituting program within the US, the
Marihuana boom began to decline. Thus, the industry of illegal drugs
started to replace marihuana with more profitable drugs that could
establish a price-volume balance such as cocaine and heroine (Rocha, 1997,
p 143).
Those products derived the raise of coca plantations, constituting a
peasant's economy due to the dimension of the plantations and the organized
commercial structure around the product. By 1994, more than seventy
thousand hectares of coca plantations existed in Colombia. In addition, in
the late 80's, the "amapola", poppy, plantations began to spread up in the
South of the country. Poppy is the natural component of heroine (Rocha,
1997, p 147).
This increasing "agricultural" production was the basis of a drug trade
that consisted of imports of cocaine's ingredients _chemicals, exports of
refined cocaine, and money laundering. In the same way, it induced the
formation of organized corporations, well known as "cartels", which managed
the bussiness. They became involved with the society and institutions
through commercial transactions and fictitious enterprises (Rocha,
1997p.162). In addition, the characterized weakness of the State, which
always has been target of bribery and rent-seeking and has played a role of
accommodation in accordance with its "particular" interests, and the
informality of the Colombian market facilitated the relationships among
drug-traffickers and commercial institutions. "The economic assimilation of
the illegal PSAD industry has also been influenced by economic institutions
and government policies" (Thoumi, 1994 p.161).
Therefore, the process of money laundering have taken place through
investments in other activities such as contraband _before the "neoliberal"
reform, consumption purposes, professional soccer league, construction, and
new industrial corporations that have worked with formal and informal
economies at the same time. (Thoumi, 1994, p162)
In the local economy, drug industry has mainly distorted agriculture and
construction. In 1994, 10% of the agricultural production corresponded to
illegal plantations: 879,000 million dollars: $667,000 coca, $113,000
marihuana, and $109,000 poppy (Rocha, 1997, p 214). The effects of the
PSAD's industry in the construction are related with high demand of luxury
urban properties. Although the availability of data is restrained, the
flows of drug-trafficking money in the construction sector are reflected in
the increasing demand in construction of hotels, housing, commercial
stores, and storage in the late 80's. Later, in 1995, the decline in the
construction was attributed to the beginning of the repression to drug
trafficking.
In the macroeconomic stage, the diversity of production and the informality
_illegality_ of the industry of illegal drugs hinder an exact and clear
dimension of the macroeconomic effects. Scholars designate the illegal
industry of drugs as flows of difficult explanation or non-explained
capital flows _flujos de díficil explicación (Rocha, 1997, p 194).
However, in 1990, the impact of the "apertura" process on this endemic
economic was substantial. The formalization and legalization of many
informal transactions, lower entry barriers, and the deregulation of the
markets generated countable information and obligated transparency and more
control over the capital flows. Obviously, these new processes were
inconvenient to the industry of illegal drugs, and the superavit that the
informality offered with tax evasion and defaults in imports and exports
was at risk (Rocha, 1997 p. 173). Indeed, the liberalization of the markets
apparently reduced the revenues of the industry of illegal drugs
(kalmanovitz, 1994 p24).
Scholars assure that the macroeconomic dimension of this industry depends
on shifts in the supply of currency, credits, and the demand of assets
associated with the repatriation of illegal drug's capitals. The capacity
of absorbing this kind of capitals determines the extent in which the
economy is expose (Rocha, 1997, p 174). As a result, huge capital flows of
this industry in Colombia are based on the permeability of the state and
its serviceableness to money laundering, non-controlled production, and the
demand of currency and credits by the other parts of the economy.
Colombian's governments have followed ambiguous policies toward the
illegal PSAD industry. On one hand, they have been well aware of their
limitations to act against the industry and have been tempted to welcome
the influx of foreign exchange and capital generated by it. On the other
hand, they have been reluctant and fearful to legitimize illegal PSAD
capital and especially its entrepreneurs because of the violence, possible
international retaliation, and disruptive impact on social and political
structures such a move might cause. (Thoumi, 1995, p 6).
On the other hand, even though, the deregulation and liberalization of the
markets in Colombia was in a certain extent inconvenient to the drug
sector, and its profits were reduced, the absorption of currencies
generated by the industry of illegal drugs is now boundless through the
diversification of the economy. Therefore, as other ways of money
laundering, the industry of PSAD now uses international savings and private
investments. In fact, the stock and financial market facilitates these
processes under specific risks. (Rocha, 1997,p 197).
In the financial sector, although the size of the financial system in
Colombia limits the absorption of illegal profits, drug-traffickers have
found easier and different ways to launder money in the new global arena.
Currently, drug assets could be laundered through deposits, market
operations and lending activities under the established limits of interest
rates. Indeed, the international scenario of financial markets has the
capacity to absorb relatively easy illegal capital flows through the
offshore bank. (Rocha, 1997, p 198).
In conclusion, as globalization diminishes the state's power, and in
Colombia, an even weaker government exists, adding its clientelist and
corrupt features, the illegal industry of drugs could find a clearer space
and more "legal" arena in the transnational markets. As a result, the
process of shaping globalization embodies a concern about the dimensions of
this liberalization in enhancing drug-trade and legalizing drug money
through different types of investments in the free market. Moreover, the
threat that drug trafficking could become the dominant economic group
(Thoumi, 1995, pa 200) is not exaggerated, especially in Colombia where the
State has facilitated the performance of this industry.
The illegal drug business is now a huge transnational industry. The main
source countries, for either producing or trafficking, are Afghanistan,
Bolivia, Colombia, Iran, Myanmar, Pakistan, Peru and Thailand. All
industrial countries are major consumers, although on a per capita basis
the heaviest users are the United States and Canada. The producing
countries can see substantial financial benefits from the drug business.
The farmers in Colombia are obtaining a ready and reliable income from
drug's plantations when there are few alternative crops. Also, at the
national level, drugs make a substantial contribution to the economy. But
there are also heavy social costs, both for local communities and for
national institutions, as traffickers infiltrate bureaucracies, bribe
decision makers, and create a kind of "systemic violence".
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