Despite such costs, extreme policies could be worthwhile if their benefits were significantly higher than those of more moderate, less costly policies. The authors review the evidence on the benefits of current policies and find that they are clouded in uncertainty: eradication appears to have no permanent effect on supply; the evidence on criminalization does not exclude either the possibility that its effects on drug consumption are low, or that they are high. Uncertainty over benefits and the high costs of current policies relative to alternatives justifies greater emphasis on lower cost policies and more conscientious and better-funded efforts to assess the benefits of all policies.
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About the Author
PHILIP KEEFER is a Lead Research Economist in the Development Research Group of the World Bank. Since receiving his PhD in Economics from Washington University at St. Louis, he has worked continuously on the interaction of institutions, political economy and economic development. His research has included investigations of the impact of insecure property rights on economic growth; the effect of political credibility on the policy choices of governments; and the sources of political credibility in democracies and autocracies. It has appeared in journals that span economics and political science, ranging from the Quarterly Journal of Economics to the American Review of Political Science, and has been influenced by his work in a wide range of countries, including Bangladesh, Brazil, the Dominican Republic, Indonesia, Mxico, Per, Pakistan and the Philippines.
NORMAN LOAYZA is currently lead economist in the research department of the World Bank. He was born in Arequipa, Peru, and studied high school and general university studies in Lima. He obtained a Bachelor of Arts degree from Brigham Young University, in the specialties of economics and sociology. Norman continued his studies at Harvard University, from which he received a Ph.D. degree in economics in 1994. Since then, he has worked at the research group of the World Bank, with an interruption of two years (1999-2000) when he worked as senior economist at the Central Bank of Chile. Norman has taught post-graduate courses and seminars at the University of the Pacific in Lima, the Catholic University of Chile, and the University of Sao Paulo. He has presented seminars and conferences in places as diverse as Nairobi, Buenos Aires, Helsinki, Mexico City, El Cairo, Rio de Janeiro, and Madrid. Throughout his professional life, Norman has studied several areas related to economic and social development, including economic growth, private saving, financial depth, monetary policy, trade openness, poverty alleviation, and crime prevention. As result from this research, he has edited five books and published more than thirty articles in professional journals.
Table of ContentsIntroduction Drug Prohibition and Developing Countries: Uncertain Benefits, Certain Costs The Historical Foundations of the Narcotic Drug Control Regime Can Production and Trafficking of Illicit Drugs Be Reduced or Merely Shifted Evaluating Plan Columbia General Equilibrium Analysis of the Market for Illegal Drugs Competitive Advantages in the Production and Trafficking of Coca-Cocaine and Opium-Heroine in Afghanistan and the Andean Countries Cocaine Production and Trafficking: What Do We Know? Responding to Afghanistan's Opium Economy Challenge: Lessons and Policy Implications form a Development Perspectiva