Pablo Escobar Economic Effects on Columbia

Pablo Escobar Economic Effects on Columbia


Pablo Escobar’s impact on the country Columbia is vast and diverse ranging from social, political and economic effects on the country. Although most of the impacts were negative, some of the economic effects had long lasting bearing on the people of Columbia. At his time, Medellin, a city in his countryside was considered one of the most dangerous in the world. The contribution of Escobar to the livelihoods of the locals was overshadowed by the suppression of economic development in the country. The author posits that the socio political and economic ramifications of the illegal drug trade had profound impacts on the lives of ordinary Colombians. This paper is an analysis of the economic aspects of the illegal drug trade under the leadership of Pablo Escobar and the indirect costs of the fight against the trade. The grip on illegal drug business by Escobar was so great that it at one point accounted to 80% of the international trade in cocaine. In achieving his ambitions, he engaged in politics and resulted in the assassinations of numerous politicians through hired militia. However, he is also known for his numerous charitable contributions for the betterment of the poor locals in the society. In the end, the cost of his illegal trade was detrimental to the economic development of Columbia.


Pablo Escobar’s impact on the country Columbia is vast and diverse ranging from social, political and economic effects on the country. Ideally, most of the impacts were negative in nature as his illegal drug trade led to the destruction of thousands of lives. However, positive impacts cannot be ruled out especially with regard to the uplifting of economic and social livelihoods of people. These positive changes were realized through the various donations he made to families living in the neighborhood. Through his position as the leader of the Medellin cartel, he managed to impact on the lives of millions of people in both negative and positive ways. The cartel was a large empire that orchestrated unimaginable levels of violence while attacking the legal government of Columbia. During the cartel’s rule, its revenue amounted to about $4 billion every year most of which ended up financing illegal trade (Becker, 2013).

Despite the organization led by Escobar being called a cartel, it was in reality a criminal syndicate that supplied voluminous cocaine in the market. Essentially, it controlled the illegal trade business while letting the market set the price for the cocaine, something that most cartels do not do. In the end, most of the users of the cocaine ended up dead in the streets with others reeling from addiction and occasional drug abuse. Regardless, the business was well organized as any other but was fashioned to operate in the absence or total violation of the law. Ultimately, the illegal business led by Escobar achieved its goal of making large sales and thus pumping huge sums of money into the economy. It is believed that more than $2500 was used every month to buy rubber bands meant for rolling the notes in proper arrangements (Bowley, 2013). In addition, some millions of dollars were lost annually through eating by rats pointing to the large amounts of money that was in circulation.

One unique aspect about Pablo Escobar is the fact that he remained largely popular among the citizens despite participating in the illegal trade. The secret to this popularity is in the fact that he always stepped in where the government failed. As a result, the poorest citizens in Columbia rallied behind Escobar for provision of basic needs such as clothing and food. In fact, his contribution is reflected through an apartment complex that he constructed in his neighborhood during his prime years. To date, people still assemble in the building to praise his positive contributions towards families and the community at large. Some of his projects included the replacement of slums and wooden houses with decent houses for the poor families in impoverished locations (Castro & Echeverri, 2011). Most of the residents account to having respected Escobar thus outlining his contribution to societal development.

In cases where loyalty failed to work, Escobar relied on brutal violence with police officers and government officials facing the brunt of his wrath. Some writers have compared the use of violence in the illegal drug business with the tactics of mergers and acquisition in legit businesses. Opponents of his dealings including his fellow members in the cartel were killed by his hired militia men most of whom he sourced from the community. By remunerating handsome amounts of money, Escobar was able to use the services of poor and desperate citizens who rarely came across such amounts of cash. In his Medellin neighborhood, Escobar is reported to have hired goons as young as 14 years at a pay of between $100 and $3000 for services of killing both cops and opponents (Becker, 2013). In these towns, the youths had few options when presented with such opportunities leading to a high uptake of his assignments and a ready militia to do his dirty dealings. In the end, Escobar orchestrated a campaign of killing his detractors and in the process cemented his place in shaping the socio economic status of Columbia.

In addition to violence, the availability of large amounts of money at the disposal of Escobar was largely influential in the success of his illegal business. Indeed, he used vast amounts of money to bribe both government personnel and law enforcement agencies therefore guaranteeing his way out of tight situations. Although bribes ultimately took a sizeable amount of his income, the impact that it had on the success of his drug business warranted its use. Comparatively, the bribes were equivalent to the use of lobbying techniques in attaining favorable regulatory decisions. Even when he used bribes to get his way through government regulations, Escobar attached threats of violence to his bribes (Leiken, 2012). It was either the law enforcers take the bribe or they would face violence in the form of killings. To this end, his famous philosophy of offering either silver (to mean money) or lead (meaning bullet) sufficed in most scenarios. Ultimately, the law enforcers had little options even where there seemed to be clear options against the drug kingpin.

Economic Effects

It is no doubt that the drug war had terrible negative impacts on Columbia’s economy. Moreover, the nature of the impacts made it hard for the country to recover even after many years of reconstruction. Leaders in politics and academia worldwide agree that the illegal drug in Colombia has had the most dramatic impacts on the socio political and economic spheres of the country. The scale of impacts observed in Columbia as a result of the illegal drug trade had never been observed in any other country. Perhaps, it is out of this realization that most of the scholars have had keen interest in the study of the dynamics of the trade. Indeed, no other drug cartel has been studied with as much enthusiasm to the point of producing films in the cartel’s settings (McGee et al, 2014). Essentially, the impacts of the Pablo Escobar era were not only direct but spiraled to include indirect economic impacts, some of which were realized later.

Although Pablo Escobar’s trade was a booming business in itself, most of the impacts were negative to the country in general. In addition, the illegal drug trade had grave political and social impacts on the citizens that culminated in the partial destruction of the country of Columbia. The reliance on violence by Escobar led to the weakening of Columbia through corruption and violence as well as the killing of government officials and law enforcers. Ultimately, the trade added to the undermining of the legal process in the country while frightening foreign investors and trashing the social fabric that once held Columbia together.

In the years of Escobar’s trade, negative impacts on the economy ranged from unemployment, income inequality and land ownership (Riano-Alcala, 2002). It is important to note that these aspects were very dear to the people of Columbia and the upset of the same had very dire consequences in the long run. The negative economic effects notwithstanding, the illegal drug trade had some positive impacts on the economic livelihood of the people. However, these impacts were short-lived and were eventually overshadowed by the long term negative impacts. It is also important to take note of how the social and political influences of both violence and immorality brought changes to the status of the economy. It has been observed in the past that the political aspects of the trade had much more economic impacts than the drug trade itself. The political influences as magnified by the illegal drug trade focused on the use of violence against opponents of Escobar’s dealings.

The illegal drug trade was not all bloom, however, as it resulted in the creation of employment for the locals. Although illegal, it must be observed that the trade enabled thousands of youths to get paid employment, albeit for a short time. Most of the employment was channeled in the production and cultivation of the coca plants as demand for the same improved (Holmes et al, 2006). However, these employment opportunities were only substitutes as the demand led to lower profits for the cultivation of other crops. Ideally, the illegal drug trade only shifted the focus of profits from the legal cultivation of crops such as coffee to the illegal cultivation of coca. Also, the scale of legal crops is much more and has higher potential to support more people than the illegal trade. For instance, coffee in the country is planted in small farms and manages to employ more than one million people. In contrast, the illegal trade in coca is dominated by few individuals who then employ a few people.

Although the illegal drug sector employed about 6% of the agricultural population in Columbia, coffee had double the percentage at 12% (Becker, 2013). In addition, the boom in agricultural employments resulting from illegal drug trade was a short term mirage. The long term effect was an accumulated decline of more than six percent in the total employment opportunities. Moreover, people that chose not to engage in the cultivation of the illegal crops faced forced displacements thus leaving them few options. It is in order to therefore assert that the illegal drug trade had much more negative impacts on the employment of Columbians than positive impacts. At some point, the government managed to ban illegal crop cultivation leading to the spraying of many coca plantations in an effort to kill the production. The result is the stagnation of farms as the chemical used in the process made it difficult for other legal crops to grow after it had been applied.

The illegal drug trade also affected the economic status of Columbia through the establishment of a complicated system of money laundering. It is through this system that the trafficking of smuggled contraband was effectively initiated by the drug dealers. The impact is the constraint by contraband leading to an impact on legal exports and imports (Bowley, 2013). Moreover, the existence of such a system results in higher costs for the government through the search of contraband by custom officials. In contrast, however, Columbians welcomed the drop in prices from illegal imports as its improved their purchasing power. In addition, it removed the tight foreign exchange dilemma that had faced them in previous years making them not to afford the market prices on foreign imports.

The trade in illegal trade resulted in contraband trafficking as a method of money laundering in Columbia. In the process, traders in illegal drug trade would purchase products abroad using the dirty money and then smuggle the products into Columbia. Eventually, the products were then sold at a lower price in Columbia thus outcompeting the local products. Although the availability of these products made life cheaper for Columbians, it also undermined legitimate businesses and threatening the economic livelihoods of thousands of local traders (Kelly et al, 2005). The oversupply of this smuggled contraband further displaced local products produced within the country thus undermining efforts to create employment in Columbia. Therefore, although the trade did benefit a few in terms of contraband sales, it had a negative impact on the economic livelihoods of traders in the country.

The money laundering process was however not limited to the smuggling of goods from other countries. Rather, the drug cartel laundered money through the national football team of the country. The players in the national team had key and close friendships with the leaders of the cartel including Pablo Escobar. The matters were further complicated by the fact that Pablo Escobar was a strong supporter of football and a number one fan of the national team. At some point of his life, Pablo’s cartel was the sole financier of the national team thus giving them rights to every match that the team played (McGee et al, 2014). In this regard, the dirty money from the illegal trade in drugs infiltrated even the most monitored industries in the country. In similar fashion, the wealth generated from drug trafficking infiltrated most of the government institutions. Eventually, arms of the government including the army, judiciary and even regional and local governments fell prey to the bribes offered by Escobar. Even the church was not spared in the bribery allegations from the dirty money acquired through illegal drug trade.

The effect of sponsoring the national team was not all negative though as pointed out in various cases. For the first time, Colombia was able to buy international coaches and players for the national team thus making the country more recognized across the globe. Indeed, it became one of the premiere teams in the world in 1994 thus creating a sense of hope and pride for the citizens of the time. The benefits achieved in the football arena shifted the focus from the era of violence terrorism and crime witnessed in the country before. In truth, the impact of the team’s contribution was effective in portraying the Columbians as not people entrenched in illegal trade. Part of the goals of the transformation of the football team was to change the international view that all Columbians were involved in the illegal drug business (Morris, 2013). The high expectations on the team to perform led to the killing of some players when they lost matches. One example is the match between Columbia and the United States that resulted in the murder of the captain after he had deflected a shot into his own net. Even ion the captain’s death, the cartels reminded the people of its power over their lives through threats of violence.

The nature of the illegal trade and the manner in which it encompassed people of different divides was quite astounding. The participants in the illegal trade included poor peasants as well as educated chemists (Abel, 1993). In addition, these people included paramilitary members, politicians, police officers and even lawyers thus pointing out to the impacts of the trade. The development of a complex web of different personalities sourced from different professions was pivotal in the success of the illegal trade. Through this web, the cartel was able to transport laundered money into the country without major hurdles from law enforcers and customs officials. On the other hand, the cartel was also able to export more than 40 metric tons of cocaine on an annual basis thus cementing its place in the illegal business sphere. The web network of social support availed the necessary protection to the illegal drug industry at a price that was usually paid through bribes. It is through the same web that the illegal business in drugs penetrated the local institutions through corruption.

The illegal drug business was responsible for reviving violent conflict related to land distribution in Columbia. In the past, the land distribution conflicts resulted from the eras of violence when guerilla fighters victimized locals. During Escobar’s time, the conflicts were revived leading to regular infighting between rival drug cartels leading to imposition of neoliberal economic policy on the country. Efforts by the government to counter inflation led to the lowering of the tariffs on agricultural products resulting in a general inflow of the same products (Holmes et al, 2005). Additionally, the overvaluation of the country’s currency resulted in the same effect thus worsening the economic situation further. The corruption within the state institutions hindered any efforts to remedy the situation including the lowering of the import tariffs. For instance, the fortunes of the poor peasants continued to dwindle due to the availability of more open markets. This outcome is in spite of the government’s efforts to offer lower protective rates to the poor and middle sized peasant traders.

The availability of inflows from smuggled goods resulted in the economic destruction of a large chunk of the population through direct and indirect channels. Partly to blame was the resultant expansion of the guerilla movement that often countered any government directives. In addition, the increase in the number of citizens with links to the illegal drug trade resulted from the displacement by drug kingpins that gave them little choice of the crops to cultivate (McGee et al, 2014). Most importantly, the fertile lands of the country transformed into confrontation grounds for people with different interests. The importance of maintaining control over the lucrative areas of crop production ensured continuity of the guerilla movement thus hurting the agricultural sector more. The reduction in production reduced the net income of farmers in the agricultural productive areas of Columbia. Moreover, there was an existence of many armed groups fighting over the control and management of coca plantations due to the potential for economic gain. In the end, the fight for economic prosperity through coca plantations resulted in the enrichment of a few individuals at the expense of economic destruction of thousands of farmers.

Land ownership has always been a contentious issue in Columbia owing to past historical happenings in the country. The success of the illegal drug industry powered by Escobar placed land ownership by drug cartels at approximately thirty percent of the country’s total agricultural land. Even with such a huge allocation of land ownership, the illegal drug business and by extension the land ownership was managed by a minority number of rich individuals leaving others as squatters. Indeed, the result of this disproportionate segregation of land was the heightening of income inequality and an increasing in the gap between the rich and the poor (Leiken, 2012). Even though the trade in illegal drugs was beneficial to a few individuals, it was only a short term source of success and a long term case of failure. In truth, majority of the people faced inherent displacements and eventual inequalities in the country of Columbia.

The inequalities in economic distribution in Columbia are evidenced through the distribution of wealth. It is estimated that about a third of the country’s wealth was held by the cartels which were in turn under the leadership of a few individuals. In fact, such was the inequality in wealth distribution that the early 1990s witnessed the proliferation of slums in urban areas (Kelly et al, 2005). The growth of slums resulted from the urban migration of farmers who did not engage in the production and cultivation of the coca plant. The brutality with which the cartels bestowed violence on the people forced them to move to urban areas in fear of being killed. The result was the decline in living conditions for thousands of citizens and their families thus burdening the government further in terms of production of basic needs. In the urban areas, the migrants were abused by the traffickers in their industries to provide unskilled and cheap labor.

Despite having led to the destruction of thousands of lives through the sale of drugs, Escobar also supported the economic livelihoods through numerous donations. In fact, such was his contribution that he was elected to Columbia’s congress in 1982 after a rigorous campaign targeting rival politicians. The journey to his political path resulted in the death of politicians that were opposed to his ascension to power as well as junior law enforcers (Castro & Echeverri, 2011). The decision to join politics is believed to have been an attempt to conceal Escobar’s illegal activity. However, there are those who claim that his ascension to politics was a result of his desire to help the less fortunate in society. While this is true due to the many donations he made to the poor, it was one way of making sure his dealings were not questioned. Still, his acts of generosity may have impacted on the poor but they also ensured that the poor people would support him unequivocally. In fact, the population in Medellin, his native countryside termed Escobar as a god whose word was law. It is out of this support that Escobar even aspired to be the country’s president.

The poor background that Escobar was brought up could have inspired his rise to power thus showing the economic inequalities that invaded his country Columbia (Abel, 1993). The desire to improve the economic livelihoods of Columbians is evident through the many donations that he made. In fact, he used his money, albeit illegally acquired, to build neighborhoods for the poor locals in Medellin. At one point, Escobar is recorded to have bought houses for each of the families that lived in the city’s dumping site. In the same project, he built a neighborhood for the poor which he called Pablo Escobar. His contribution was so vast that to date people in Medellin praise his benevolence. In 1990, he availed groceries and cash to the poor families while building football fields in the poor locations. This acts coupled with his decision to provide sports gear for thousands of people earned him the support and confidence of the locals thus guaranteeing support for all his initiatives. Although Escobar was a dangerous man, his acts of generosity worked towards alleviating poverty and improving the economic status of the people.

The increase in coca revenue further spiraled to the guerilla and insurgent groups that Escobar worked in close conjunction with. The troops were then capable of organizing large attacks on Colombian troops and even train their militia men in foreign countries. The result was the destruction of infrastructure as the troops moved from remote areas to cities where they could control natural resources (Morris, 2013). In most cases, the paramilitaries transformed into paid terrorists thus creating a strong link with the drug cartels. In fact, most of the political assassinations were executed by these militias under strict orders from Escobar. The result was the weakening of local institutions and the eventual economic collapse of the country in general. In one case, the Medellin cartel ran by Escobar paid the militia more than two million dollars to storm the Supreme Court thus leading to a collapse of a case in which suggestions had been made for the extradition of drug dealers. Such was the magnitude of the attacks that over 130 assassinations were executed in less than nine months all of which were funded by cartels. In the end, Escobar was the main beneficiary as he focused on his desire to serve his own business in an unperturbed manner.


The violence and assassinations were not in their selves harmful to the economy of the country. However, the heightening of political violence resulted in the government pumping huge amounts of money and resources into the process of controlling and managing the cartels. In some instances, thousands of dollars were used by the government in efforts to rebuild cities that had been bombed by militias paid by cartels to do their dirty work. The political attention was also shifted to policies and regulation that curbed the power of the cartels instead of focusing on those that enhanced economic growth. In this case, any attempts to fight off the cartels and guerilla movements were done at the expense of economic prosperity of the country. The use of huge amounts of money in controlling petty street and slum violence further ate up into government’s coffers (Bowley, 2013). The money could have been used in different economic spurring initiatives including health.

In addition to policies and regulations, the government also pumped thousands of dollars towards military operations aimed at taming cartel proliferation. The money used in such activities was at the expense of other needs such as infrastructural development and education. The use of large amounts of capital in war and security rarely has any effects on the positive development of a country’s economy. In the 1990s, Columbia experienced drastic decline in economic growth measured through its GDP. In fact, in 1994, the treasury ministry acknowledged a steady and consistent decline in the growth rate of the country owing to the activities of the drug cartels (Kelly et al, 2005). In such times when security was a focal point in the country, officials rarely focused their attention on the improvement of the quality of life or the stimulation of economic development in the country.

The cartel under the leadership of Escobar made important relationships with key figures in the political sphere of the Medellin area. In addition to these relationships, Escobar funded numerous city projects geared towards improving the city to become more luxurious. Through his charitable contributions, Escobar’s opinion became an important influence in the implementation of city policies. In addition, the cartels were instrumental in the determination of areas where the government invested and spent its finances. In fact, the beautification of Medellin that was witnessed in the late 1980s can be attributed to Pablo Escobar’s contributions (Morris, 2013). As a result of the generous contributions and the good will among the public, most politicians turned a blind eye to the cartel’s illegal businesses. Eventually, the protection of the illegal drug cartels led to the decline of the country’s economy and the destruction of thousands of people.



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