Why is Latin America so violent?

A new natural experiment

Why is Latin America and the Caribbean so much more violent than the rest of the world? Homicide rates are significantly higher in this region, and the top 6 highest homicide rates are in the Caribbean Basin.

map source

Long-time listeners to Conversations with Tyler will recognize that this was a regular question Tyler asked guests. Charles Mann pointed to lower levels of social engineering and policing. Chris Blattman also speculated that the region is low on policing resources but elaborated and said that the professionalization of violence had gone further there. Juan Pablo Villarino highlighted the history of violent conquest in Latin America, suggesting that violence became part of Latin American culture. Nathan Nunn, admitting he knew less about the region than the other guests, suggested that, relative to African countries, Latin America relied more on formal institutions for enforcement and that the formal institutions were too weak to do what was demanded. Also, Nunn pointed to high levels of inequality.

Absent from all of these answers is the elephant in the field: the drug trade.

Of course, you can connect many of these answers to the drug trade. For example, Latin American institutions are too weak, so the drug trade thrives. But the drug trade also has some important fundamentals that are being ignored. Latin America’s climate not only has a comparative advantage in producing high-value drugs, its location next to high-paying customers gives it a comparative advantage in trading high-value drugs. And because the rents from the drug trade are high, they are protected through violence. This then leads into Blattman’s explanation, that “once you had people prove that it could be done and it could be profitable, then you had this relatively small group who professionalize it and do it. And now it becomes a thing, and it’s entrenched.”

But empirically demonstrating the drug trade’s contribution to violence is difficult. Since the trade is illegal, we don’t have good data on who is producing it, when production has changed, or how it is connected to violence. There’s also the reverse causation problem: maybe cultures that are more violent are willing to enter the drug trade; maybe inequality drives violence and the drug trade; etc.

So how do we test for the drug trade’s effect?

A new paper by Brian Marein has come up with a clever solution.

While today we typically associate South American drug trafficking with Colombia, before the 1970s the major player was Chile. That changed in 1973 when Pinochet took office and wanted to build favor with the US, so he eradicated the drug trade. The demand still existed, so instead of going through Chile the drugs came up through Colombia. This shifted the trafficking routes. Instead of coming up the western coast of Latin America, drugs flowed through the Caribbean. Drug trafficking would benefit a lot from a location that had regular flights to the United States that was also an American territory and therefore not subject to customs searches. So naturally the drugs routed through Puerto Rico.

Puerto Rico is convenient for the analysis for two reasons. First, it was not a primary node in the drug trafficking network before the 1970s, so the Chile-shock was a major change to its drug trade environment. Second, and probably more important, Puerto Rico has good historical data on vital statistics. We can go back to at least the 1930s and look at homicide rates. Not only can we track the data, we know that Puerto Rico wasn’t particularly violent in the past: in the 1930s, six states, all in the South, had higher homicide rates.

Marein’s paper uses a synthetic control analysis, which is conveniently represented in a picture.

For the two decades before 1973, the homicide rate in Puerto Rico followed similar trends as a weighted average of US states. Sometimes Puerto Rico outdid the states (1960-65), and sometimes it fell below their rates (1966-70). But after 1973, there is a large shift, where Puerto Rico has a much higher homicide rate and it’s no longer trading places with the states.

This was not some society-wide shift. Most of it, as seen in the figure below, occurred around San Juan, Puerto Rico’s largest port.

I think this is a fascinating paper. It reminds me of how California’s assault rifle ban changed the pattern of gun trafficking and gun violence in Mexico. Maybe someone will look at this and say it’s not that surprising that the drug trade led to increased violence. But remember, in the four interviews cited above, none of them mentioned the drug trade specifically. The results are not self-evident!