The economics of the illicit drugs-for-guns trade and growth

King Yoong Lim*, Diego Morris

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)


Ever since US president Richard Nixon declared a war on drugs in 1971, different drug control policies have been implemented in both consumer and producer countries. These include policies ranging from crop eradication to an interdiction of drug shipments to outright legalization of drug possession. In this paper we develop a novel endogenous growth framework that unifies international trade, drugs control and accounts for consumers’ rational addiction and optimizing choice of drug consumption. Our results emphatically show that a one size-fits-all approach to drug control is ineffective. We show that there exists a production - consumption growth trade-off around the policy priority not previously documented in the literature. Moreover, we show that in the absence of a fundamental change to drug demand, drug control policies are unlikely to reduce illicit trades for drugs and guns in the long run.

Original languageEnglish
Pages (from-to)218-232
Number of pages15
JournalEconomic Modelling
Publication statusPublished - Sept 2020
Externally publishedYes


  • Central America
  • Drugs
  • Economic growth
  • Illicit trade
  • Organized crime


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