the economics of cocaine: bolivia as a case study introduction to bolivia – one of the poorest...
TRANSCRIPT
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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
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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
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Other data:
Population below poverty - 60%
Household income distribution:
-Lowest 10% - 0.5%
-Highest 10% - 44.1%
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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
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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!
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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
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A Demand Schedule and Curve
LO-2
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The Market Supply Curve
LO-2
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Supply
Demand
Quantity
Price
$100
2 grams1 gram
$140
New Supply
New Demand
$160
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Problems created by cocaine:
• Cocaine Republic• Deforestation• Corruption – high and low levels of
government• Communities are uprooted• Import chemicals – dump them in nature
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Other cash crops for Bolivia
• Coffee• Rice• Citrus• Corn