Meth-boom Mexico: How American precursor regulations fed industrialized cartel production

Abstract

To combat the growing methamphetamine epidemic, the United States has attempted various supply-side interventions, specifically disrupting chemicals vital to its production with gradual regulations. Research has shown the effects of these regulations on price, purity, and consumption to be temporary across the United States; however, there is not significant research on the unintended regulatory effects on cartel-run production in Mexico—by far the most advanced and devastating production area. As the United States weaponized precursor legislation in its aim to decrease methamphetamine consumption by way of eradicating domestic production, policy makers created a vacuum filled by international drug-producing and trafficking syndicates—much more sophisticated than fellow American producers. Using a framework based on a classic difference-in-differences model, this paper attempts to add to the literature by showing a relationship between precursor regulatory shocks and the shift in production southward over international borders, highlighting the negative externalities of legislation and perhaps indicating its overall failure to curb domestic consumption. Amidst these potential regulatory failures, it is gravely important to re-evaluate American policy in the eternal war on drugs. These supply-side legislations are enacted with the manufacturers in mind; however, the reason the drug trade is so profitable is because it is fueled by America’s insatiable appetite for methamphetamine. By showing the policy failures, this paper can serve as another call to action for policy makers to re-orient their approach, prioritizing demand-side preventive and rehabilitation measures.