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«My research agenda focuses on understanding a single question: If Mexico has long been a player in the illegal-drug industry, why is it only now that ...»

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Understanding Mexico’s Drug War

Viridiana Rios

August 5, 2011

My research agenda focuses on understanding a single question: If Mexico has long been a

player in the illegal-drug industry, why is it only now that drug-related violence has spiked?

A brief of my research agenda

A wave of drug-related violence has hit Mexico. Since 2007, there have been 41,648 homicides

in the country, all in direct relationship with drug trafficking activities (Castillo 2011, Rios and

Shirk 2010). The escalation in crime has been brutal (See Section 1). Drug-related homicides have increased at least 30% every year, creating a total toll of 15,273 people just in 2010. This means traffickers are responsible for 47% of all intended homicides happening in the country (Rios and Shirk 2011). Border towns such as Jurez, particularly important for the transshipment of cocaine into the US, exhibit homicide rates of 185.9 victims per 100,000 inhabitants.

These figures are equivalent to homicide rates in areas engaged in actual wars.

My goal is to find the reason behind this escalation in violence. I claim, Mexico is violent because its illegal drug industry evolved from one in which drug traffic organizations (DTOs) were stable oligopolies, as most illegal industries are 1 – to one in which DTOs want to compete between each other (See Section 3). In legal industries, a decrease in competition would Monopolistic arrangements –a single organization controlling a whole market– are not popular among illegal providers. A single, large firm is easier to target by authorities and is a more enticing booty for potential competitors (Reuter 1983, Fiorentini and Peltzman 1995, Gambetta 1996). Perfect market competition is not desired by criminals either. In perfect competition, criminals lack of extra profits meaning entering illegal industries become just as good a business decision as any legal option except illegal industries have negative externalities that affect the lives of their members in the long-term. For example, working in illegal industries comes with the cost of large exit barriers because of prosecution and gang loyalty (Western, Bruce and Wilson, William J.) generate price wars or other forms of cartel punishments (Stigler 1964, Green and Porter 1984, Rotemberg and Saloner 1986). In illegal industries with low prosecution rates, a lack of competition evolves into violent confrontation (Snyder and Duran-Garcia 2009, Andreas and Wallman 2009). Mexico’s drug traffickers turned violent when more than one DTO started operating in a single territory.

When violence started increasing, Mexican authorities became more motivated to enforce laws. Previously, authorities had faced low incentives to prosecute DTOs because organized criminals did not represent a substantive threat to Mexico’s security (See Section 4). New enforcement operations locked Mexico into a vicious feedback loop of violence [Figure 1]. In the short term, law enforcement indirectly triggered violence by further increasing the incentives of DTO’s to compete between each other and within themselves. First, competition between DTOs decreased when enforcement operations weakened some DTOs, generating incentives for stronger DTOs to take advantage of the situation of their enemies and conquer new territories.

Then, the capture of traffickers generated the need to replace leadership within DTOs which triggered secession battles, fragmentation and violence inside DTOs’ structure. Furthermore, fragmentation increased the actual number of DTOs in business. With more DTOs, the chances of experiencing violent confrontations also increased. 2.

Under the previous oligopolistic equilibrium, drug-related violence was self-contained. Contrastingly, in the current climate, the motivations of each actor ultimately led to a feedback loop of violence.

The reason why the Mexican trafficking industry became more competitive can be found in institutional and structural changes, particularly in what I identify as the evolution of Mexico’s DTOs into higher-profiting, more-diversified firms. The combination of increased law enforcement in Columbia and decreased law enforcement in Mexico made Mexican traffickers wealthier and allowed them to extend their operations into other illegal businesses such as kidnapping, extortion, robbery and domestic distribution of drugs. With higher profits and with the newly acquired ability to get revenues from other illegal activities, activities which do not require the The expectation was that enforcement will weaken DTOs up to a point in which exercising violence between/within them would be impossible. This may indeed be the equilibrium of higher enforcement in the long run. Further research will have to be done when the time comes.

Figure 1: Feedback loop of drug-related violence in Mexico

same level of structural organization or long-lasting corruption agreements that importing drugs into the US requires, middleman traffickers who previously needed to work under traditional Mexican kingpins realized the profitability of working independently. These middlemen became increasingly autonomous in their actions and finances, and competition increased when they split from their original organizations because there was no longer an incentive to remain loyal.

The diversification of criminals into other industries also increased the incentives of Mexican authorities to enforce the law. The electorate values enforcement operations only when organized crime affects them directly. When Mexican traffickers concentrated their business into exporting drug to the US, Mexico’s electorate was not bothered. Yet, when traffickers became kidnappers, extorters and domestic drug sellers, the pressure that Mexican authorities felt to increase their enforcement operations raised significantly.





The following is an outline of my current research agenda planned to provide a detailed answer to my overarching question. It has been organized in short briefs describing research questions, hypotheses, and methodology. First, I begin by measuring drug-related violence and estimating the accuracy of the measures that we have up until now. This will be my dependent variable in subsequent sections. Second, I provide a mechanism for measuring drug-trafficking activities within Mexico. No hypothesis can be tested until I determine when and where the object of my study operates. Third, I analyze traffickers’ behavior, in particular their competition dynamics to assess whether this has been the cause of spikes in violence. I provide an empirical test of the effects of DTOs’ territorial competition in violence, and case studies to support my interpretation of the data. In the fourth section, I follow the same design but testing for the causes’ impact on government enforcement3. Finally, a fifth section describes miscellaneous research endeavors that I am pursing as part of my broad agenda. These are answers to shorter puzzles and reactions to alternative hypotheses brought forth by journalists.

–  –  –

Section 1: Trends and measures of drug-related violence in Mexico4

1.1 How violent are Mexican traffickers? Measuring drug-related violence from 1990 to 2010 Goal: Measuring drug-related homicides from 1990 to 2006 to complement official measures available only from 2007 to 2010.

Research design: Using a detailed dataset containing information on gender, age, location, and date of all 35,000 drug-related homicides officially measured by Mexico’s National Security Council during December 2006 - December 2010, I generated a profile of the average drugrelated victim, an explanation of how this profile has changed over time, and how it differs from region to region within Mexico. This information, along with controls for law enforcement, the extensiveness of the drug industry, and determinants of general homicides in rural/urban areas (Villareal 2002, Eisenstadt 2010), will be used to predict the number of drug-related casualties from 1990 - 2006.

Empirics: Multiple imputation algorithm using bootstrapping for time-series-cross-sectional estimation as developed by Honaker, King, and Blackwell (2011), and not-covariated trend estimation assuming constant victim’s profile as described by Girosi and King (2008).

Inputs: (a) Gender and age of 35,000 victims of drug-related violence, (b) monthly general intended homicides (INEGI), and controls for (c) the effects of 2006 - 2010 enforcement efforts in drug-related violence, (b) the ability/experience of enforcement institutions, (c) agrarian conicts and other determinants of rural homicides, and (d) local drug markets Output: Estimated drug-related homicides per month, and municipality from 1990 to 2006 to be shared open-source.

Case studies: Study cases will be selected to test whether estimated drug-related violence figures match what previous ethnographic accounts have described as periods of large spikes in violence. I will use the cases of Tijuana 1994 (Blancornelas 2002), Nuevo Laredo 2005 (Corchado 2008), and Michoacn (Survesa 2009) A preliminary analysis of drug-related violence in Mexico has been published as a coauthored piece with David Shirk and is available here Figure 2: Estimates of drug-related violence for Baja California

–  –  –

Preliminary findings: Figures 2 to 7 show my preliminary estimates of drug-related homicides for six different states. Each line represents a different specification. Further details on the mechanics of estimation and access to preliminary data is possible under request.

Figure 4: Estimates of drug-related violence for Tamaulipas Figure 5: Estimates of drug-related violence for Michoacan Figure 6: Estimates of drug-related violence for Mexico City (DF)

1.2 How accurate are our measures of drug-related violence? Comparing official and media-generated figures of drug-related violence 5 Goal: Understanding when, where, and why media and official estimates of drug-related homicides differ.

Research Design: The media underestimates official figures of the number of drug-related homicides by about 17.53%, with a large variance at state level. While in states like Tamaulipas, the media predicts 29% more casualties than the government, in others like Sonora, Veracruz, Chiapas and Oaxaca it only reports less than half of the cases [Figure 8].

My working hypothesis is that the ability of the media to capture drug-related homicides diminish due to (a) structural factors determining news coverage (literacy rates, isolation of communities, extensiveness of rural areas), and (b) temporal shocks caused by the assassination of journalists.

Case studies: I will describe two cases of discrepancies between media and official reports:

(a) Chihuahua, the most violent state in Mexico is underestimated by about 30%, and (b) the year 2009 –the year that generated the most inaccurate media estimates even though drug trafcking coverage had been improving systematically since 2006.

Empirics: OLS estimation Dependent Variable (DV): The difference between the number of drug-related homicides officially reported and those reported by the media.

Independent Variable (IV): Urbanization, newspaper printing figures, distances to state’s capital, literacy rates, miles of paved roads, dates and places where Mexican journalists have been assassinated (Rios and Shirk 2010).

Coauthoring with David Shirk, Faculty at the University of San Diego and Director of the Trans-Border Institute Figure 7: Share of total drug-related homicides that were not reported by the press Section 2: Trends and measures of Mexico’s drug trafficking industry



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