“If the drug trade were a country, it would have the 19th largest economy in the world. In 2005 the UN estimated that the illegal drug trade is worth more than $320 billion. If currently illegal drugs were taxed at rates comparable to those on alcohol and tobacco they would yield $46.7 billion in tax revenue.”
In an article highlighting the size of the global drug trade, Richard Branson claimed that if the illegal drug industry were a country, it’d be the 19th largest economy in the world.
The source for the figure – $320 billion – is the 2005 UN World Drug Report, which is largely based on 2003 data. No new breakdown has been established since. According to the UN 2012 World Drug Report:
“UNODC estimates suggest that the total retail market for cocaine amounts to some $85 billion and the opiate market amounts to some $68 billion (figures for 2009). The overall value of the illicit drug market was estimated at about $320 billion for the year 2003, equivalent to 0.9 per cent of global GDP. The 2003 estimates suggested that the largest markets — in value terms, calculated on the basis of retail sales — were North America (44 per cent of the total) and Europe (33 per cent), followed by Asia, Oceania, Africa and South America. Though no new breakdown has been established since, partial data suggest that the proportions may have declined for North America and increased for the other regions.” [emphasis added]
So the first thing to note is that this is a fairly dated estimate, and it’s quite possible that the size of the drugs industry has grown considerably since then.
If the drug industry were worth $320 billion today, would the United States of Drugs have the 19th largest economy in the world? Currently the 19th largest economy in the world, according to the IMF 2012 World Economic Outlook database, is Switzerland with a GDP of $660 billion.
Given that Richard Branson uses 2003 data, it’d be fair to insert the hypothetical country in a 2003 league table of nominal GDPs. In 2003, the 19th largest economy was Belgium with a GDP of $312 billion. Our hypothetical country would place 18th in the league table, stealing the spot from Sweden whose GDP at the time was $314 billion.
How would the United States of Drugs fare today? According to IMF data, a nation with a net worth equivalent to that of the global drugs industry would be the 34th largest economy in the world, just above Denmark and below Venezuela.
As this estimate is nine years old, it’s quite difficult to calculate how much the drugs trade would have to pay now in tax revenue, but it’s fair to assume it would be more than it currently contributes.
Flickr image courtesy of U.S Embassy Kabul Afghanistan