Post on 23-Mar-2016
description
The Economics of Cocaine: Bolivia as a Case Study
• Introduction to Bolivia– One of the poorest countries in South America –
Haiti is considered the poorest– 9.77 million people– Landlocked– Very unstable politically – new leaders very often
Bolivia$4,600 (2009 est.)
Rank 145Brazil $10,200 (2009 est.)
Rank 104
Afghanistan $800 (2009 est.) Rank 219
Norway $59,300 (2009 est.) Rank 5
USA $46,400 (2009 est.) Rank 11
GDP - per capita (PPP): note: data are in 2009 US dollars
Other data:
Population below poverty - 60%
Household income distribution:
-Lowest 10% - 0.5%
-Highest 10% - 44.1%
Coca leaf
• Around since 3,000 BC• Increases productivity• Used for medicine – tea for altitude
sickness• Ceremonies – coca offerings/readings• After Peru – Bolivia is the largest
producer
Economists’ advice for Less Developing Countries:
• Crops that are labor intensive• Decentralized – infrastructure is very poor• Cottage Industry promoting• Earn foreign exchange
Coca is it!
Cocaine market
Demand for cokeDemand for Coke keeps increasing
http://www.youtube.com/watch?v=LvPCrywyTQAhttp://www.youtube.com/watch?v=E0HKSYEPwV8&feature=related
Supply is stopped at the border ;)Supply stopped at the border
A Demand Schedule and Curve
LO-2
The Market Supply Curve
LO-2
Supply
Demand
Quantity
Price
$100
2 grams1 gram
$140
New Supply
New Demand
$160
Problems created by cocaine:
• Cocaine Republic• Deforestation• Corruption – high and low levels of
government• Communities are uprooted• Import chemicals – dump them in nature
Other cash crops for Bolivia
• Coffee• Rice• Citrus• Corn