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    This document discusses estimates of revenues for Mexican drug trafficking organizations (DTOs) and presents evidence regarding the potential economic impacts of DTO money flows. It estimates DTO gross export revenues from 2011 for marijuana, cocaine, meth, and heroin, with a best estimate of $6.2 billion total. Charts show trends in Mexico's current account balance, currency value, bank deposits, housing prices, and stock markets that could relate to DTO money. The document concludes that concerns about DTOs as highly vertically integrated transnational criminal threats are likely misplaced, that most criminal groups in Mexico are locally or regionally focused, and responses are needed at the local level while leveraging federal and US resources.

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    This document discusses estimates of revenues for Mexican drug trafficking organizations (DTOs) and presents evidence regarding the potential economic impacts of DTO money flows. It estimates DTO gross export revenues from 2011 for marijuana, cocaine, meth, and heroin, with a best estimate of $6.2 billion total. Charts show trends in Mexico's current account balance, currency value, bank deposits, housing prices, and stock markets that could relate to DTO money. The document concludes that concerns about DTOs as highly vertically integrated transnational criminal threats are likely misplaced, that most criminal groups in Mexico are locally or regionally focused, and responses are needed at the local level while leveraging federal and US resources.

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    24 views14 pages

    Alejandro Hope 0

    Uploaded by

    S. M. Hasan Zidny
    This document discusses estimates of revenues for Mexican drug trafficking organizations (DTOs) and presents evidence regarding the potential economic impacts of DTO money flows. It estimates DTO gross export revenues from 2011 for marijuana, cocaine, meth, and heroin, with a best estimate of $6.2 billion total. Charts show trends in Mexico's current account balance, currency value, bank deposits, housing prices, and stock markets that could relate to DTO money. The document concludes that concerns about DTOs as highly vertically integrated transnational criminal threats are likely misplaced, that most criminal groups in Mexico are locally or regionally focused, and responses are needed at the local level while leveraging federal and US resources.

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    of 14

    TRANSNATIONAL CRIME, LOCAL CRIMINALS

    Rethinking the size and shape of Mexican organized crime


    December 2011

    DTO revenues: USG estimates


    USG estimates of Mexican DTO revenues (USD bn)
    Agency ONDCP NDIC */ ICE Date 2006 2009 2010 Low 13.8 18 19 High 13.8 39 29

    Source: ONDCP, NDIC, ICE */ Includes revenues accruing to Colombian DTOs

    DTO export revenues: RAND estimate (2010)


    Mexican DTOs: Best estimate of gross export revenues, 2010 (USD bn)
    0.6 1.1

    3.4

    1.5

    Cocaine Source: Kilmer et al 2010

    Marijuana

    Heroin

    Meth

    DTO export revenues: Our estimate (2011)


    Mexican DTOs: Estimates of gross export revenues, 2011 (USD bn)

    Drug Marijuana Cocaine Meth Heroine Total

    Low 1.4 2.1 0.5 0.7 4.7

    Best 1.9 2.8 0.6 0.9 6.2

    High 2.5 3.6 0.8 1.2 8.1

    Source: IMCO / Mxico Evala (2011, unpublished) Note: estimates within 90% confidence interval

    DTO income: missing pieces


    GROSS EXPORT REVENUES - COST OF DRUGS = NET DRUG EXPORT REVENUES + NET DOMESTIC DRUG REVENUES + US DOMESTIC DISTRIBUTION REVENUES = TOTAL DRUG INCOME + NON-DRUG INCOME = TOTAL INCOME

    Evidence from BOP?


    Mexico: Errors and omisssions account , 2000-2010 (USD bn)
    -14.0 -12.0 -10.0
    (USD bn, inverted scale)

    -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

    Source: INEGI

    100.0

    110.0

    120.0

    130.0

    Jan-00 May-00 Sep-00 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11

    60.0

    70.0

    80.0

    90.0

    Source: Banxico

    Evidence of Dutch disease?


    MX Peso: Trade-weighted exchange index, 2000-2011
    (100=Jan. 2000)

    Evidence in banking system?


    Mexico: Commercial bank deposits, 2000-2010 (% GDP)
    18 16.1 16.4 16 16.1 15.9 15.9 15.2 16 19 18.9

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    2008

    2009

    2010

    Source: CNBV, BBVA-Bancomer

    -1.0 0.0 1.0 2.0 3.0 4.0 5.0

    Source: SHF, Banxico

    Evidence in housing market?


    Mexico: Real housing price index by state, 2005-2010
    ( average annual real growth)

    Tabasco Campeche Puebla Veracruz Hidalgo SLP Distrito Federal Moralos Chiapas Oaxaca Guerrero Mxico Quintana Roo Yucatn Nayarit Tlaxcala Colima Nacional Sinaloa Michoacn Quertaro Coahuila Tamaulipas Durango Nuevo Len Sonora Aguascalientes Chihuahua Guanajuato Baja California Sur Jalisco Baja California Zacatecas

    Evidence in stock market?


    Selected LATAM stock markets, 2000-2011

    Source: Bloomberg

    Vertical integration?
    Drug-related state and federal inmates by self-specified role and national/ethnic origin, 2004 (%)
    Unspecified Possession Mule Retailer Wholesaler Money laundering Producer Importer
    0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

    US, Non-Mexican

    Mexican-American

    Mexican

    Other nationals

    Source: Caulkins/Sevigny 2010, with data from Survey of Inmates in State and Federal Correctional Facilities (2004)

    A taxonomy of criminal groups


    Domestic traders
    Local drug distributors Piracy rings

    Illicit traffic
    Human traffickers

    Traditional smugglers
    Gulf

    Sinaloa BLO

    AFO Jurez / BA
    Migrant kidnappers

    Local

    Acapulco gangs

    Fuel thiefs

    Templarios

    Zetas

    Transnational

    Local kidnappers Fakers

    Prison gangs

    Muscle men

    Rent extraction

    Border extortionists

    Three conclusions and some implications


    Conclusions
    CW about size, most likely wrong Network, not vertically-integrated structure Highly diversified criminal forms: TCO denomination obscures the issue!

    Implications

    No long-term threat to Mexican national security Key issue: law and order Need for local responses (while leveraging federal + US resources)

    Thank you

    Alejandro Hope Proyecto MC2 (Menos Crimen, Menos Castigo) Blog: http://www.animalpolitico.com/blogueros-plata-o-plomo Twitter: @ahope71

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