draining development.pdf - Khazar University

Policy and Research Implications of Illicit Flows 493the smuggling to Afghanistan’s neighbors and possible involvement inother transactions entirely outside Afghanistan (Paoli, Greenfield, andReuter 2009). There may be some financial outflows as richer drug traffickersseek to find more liquid and secure locations for wealth generatedby wholly domestic transactions. However, it is more likely that some ofthe foreign earnings are brought back to Afghanistan. Those earningshave not been generated in the country and never enter the nationalincome accounts even theoretically. The net flow may well be inward.Thus, it is not surprising that Thoumi and Anzola, in chapter 5, findthat the fiscal problem for Colombia related to drug earnings has beenprecisely the effects of the inflow of dollars on its financial system andexchange rate. The demand for pesos has been so great that the peso,rather than the dollar, has commanded premiums in the illicit exchangemarket that arose in response to currency controls. Drug trafficking andproduction have many adverse consequences on Colombia, but outflowsof domestic earnings is not one of them.A few developing nations have substantial international monetaryflows related to drug markets; Afghanistan, Bolivia, Colombia, Mexico,Myanmar, Peru, Tajikistan, and (in percentage terms) a number of microstatesin the Caribbean may exhaust the list of jurisdictions with 5 percentor more of GDP originating in drug production or trafficking. Thenewer human trafficking markets, analyzed by Pierre Kopp in chapter 6,are much more widely spread across the developing world; the KyrgyzRepublic, Moldova, Paraguay, and Thailand are a few of the countriesmentioned. The flows have a different dynamic relative to the flows associatedwith drugs. They are often highly dispersed. Instead of a 100 kilogramshipment of cocaine, which may have a value for the smuggler ofUS$1.5 million, there are many coyotes at the Mexican border that earnUS$1,000–US$10,000 for each crossing with a few illegal immigrants. 13There may also be large payments for more complex human traffickingventures such as the smuggling of a large number of Central Asianwomen to brothels in Western Europe (Shelley 2010). The extent towhich this traffic is in the hands of residents of the sending countries hasnot been determined. Whether there are equivalents in human traffickingto Pablo Escobar and Khun Sa in drug trafficking is also unknown.Keefe (2009) describes in detail the workings of Chinese human traffickersin the United States. The central figure in his account is a Chinese