Illicit Trade and the Global Economy

As international trade has expanded dramatically in the postwar period--an expansionaccelerated by the opening of China, Russia, India, and Eastern Europe--illicit international tradehas grown in tandem with it. This volume uses the economist's toolkit to examine the economic,political, and social problems resulting from such illicit activities as illegal drug trade,smuggling, and organized crime. The contributors consider several aspects of the illegal drugmarket, including the sometimes puzzling relationships among purity, price, and risk; the effect ofglobalization on the heroin and cocaine markets, examined both through mathematical models and withempirical data from the U.K; the spread of khat, a psychoactive drug imported legally to the U.K. asa vegetable; and the economic effect of the "war on drugs" on producer and consumercountries. Other chapters examine the hidden financial flows of organized crime, patterns ofsmuggling in international trade, Iran's illicit trading activity, and the impact of mafia-likecrime on foreign direct investment in Italy.

Claudia Costa Storti is an economist affiliated with the European Monitoring Centre for Drugs and Drug Addiction and editor of the International Journal of Drug Policy. Paul De Grauwe is Professor of Economics at the Catholic University of Leuven, the author of The Economics of Monetary Union, and the editor of three previous books in the CESifo Seminar series.