06/10/11 – Eduardo Cepeda, President and General Director of JP Morgan, stated on Thursday that “violence as a product of drug trafficking and insecurity in Mexico is costing the country as much as 1 to 1.5% of its GDP,” which adds up to 210 billion pesos. He added that because of the violence and insecurity that exists in the country, it has come to be one of the principal strains on the economic growth for the country. Another factor affecting the Mexican economy is the opportunity cost that both foreign and domestic investors take into account, which is often trumped by the insecurity that exists in the country.
Cepeda noted that the Mexican economy has taken such a large hit from the violence and insecurity because the brutality of the conflict has risen in recent years. According to Milenio, Luis Olivé, the Head of the Investment Promotion Unit of International Business Proméxico, also stated that while there is indeed a lot of criminal activity in Mexico, the real problem is actually the perception people have of the violence. He went on to say that people often elevate the levels of insecurity, without respect for the reality, noting that Mexico is not much more violent than other countries. Cepeda agreed by saying that levels of violence in Mexico City are less than that of Sao Paolo, Brazil.
Sources:
“Cuesta la inseguridad hasta 1.5% del PIB.” La Crónica de Hoy. June 10, 2011.
So how much of their Mexican GDP loss is money that the US gives right back Mexico via foreign aide and Merida Drug War funding?
Do the profits from the Mexican drug cartels keep Mexico financially afloat? Do you know how many normal citizens are employed in Mexico working for the cartels? Would Mexico collapse if the war on drugs was actually won?
What about the 40,000 lives lost since this hightened drug war started in 2006?
Have US banks profited from laundering illicit drug money from Mexico (Wachovia)?
Just how dependant is the US upon Mexican oil, trade, and investments?
What has been the real affect of NAFTA upon Mexian small business and corn growers?
There is so much more to this than meets the eye.
http://twopesos-protestfortheundocumented.blogspot.com/2011/04/imagine-two-countries-saying-estamos.html
Some of these are fairly open ended questions, so I’ll focus on a couple of the more precise ones.
Mexico’s annual GDP is around US$1.4 trillion, so the US$1.4 billion we’ve provided via Merida and the roughly $25 million (yes, million) we provided for USAID’s aid work in Mexico in 2010 are quite a small drop in the bucket.
The same is true for profits from drug cartels, since even the highest U.S. government estimates ($39 billion) would constitute a relatively small percentage (around 2-3%) of GDP. More likely, drug profits sent back to Mexico amount to less than $10 billion, and therefore a very small component of their total economy.
For more on the drug war, please take a look at some of these recent publications:
http://justiceinmexico.files.wordpress.com/2011/03/2011-tbi-drugviolence.pdf
http://i.cfr.org/content/publications/attachments/Mexico_CSR60.pdf