ECON trade carried out in the 80’s. My








ECON 2001
Research Report


Underground Economy

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Underground Economy in Columbia













Columbia is a developing nation situated in the
northwest of South America. Columbia also shares borders to the northwest with
Panama an illegal drug trade paradise, east of Venezuela and south of Ecuador
and Peru. They became a focus of public attention for all the wrong and illegal
activities carried out in the country. Mafia, drugs and crime business is the
major headlines for news channel and this is not only affecting the Columbian
economy but also adversely affecting other neighbouring countries. Columbia
major image was affected due to the large-scale production of cocaine trade
carried out in the 80’s. My major key research in this paper would be to talk
about the criminal groups that are involved and how the economy of Columbia is
affected. (Illegal Drug Trade in Canada, 2010)


Drug Cartel network in Columbia

Columbia has four major criminal drug business cartels
and many small drug trafficking groups that created their own social class and
influenced the Columbian politics, economy and culture. There has been an
ongoing rivalry war between narcoparamilitary groups, drug cartel groups and
guerrillas fighting all over Columbia to increase their influence against the
Columbian Government. Cocaine that was produced at approximately $1500/kilo
would be sold for around $50000/kilo because of the high demand in the market.

These drugs were supplied throughout the world of which more than half of them
were supplied to the United States of America. The United States Government
tried to intervene and put a stop to these drugs from entering the United
States. During that time drug lord and drug barons of Columbia Jose Rodriguez
and Pablo Escobar were the most influenced people in the whole of Columbia and
were considered to be very dangerous, powerful and wealthy men across the
world. Pablo Escobar’s criminal organization supplied approximately 85% of the
cocaine supplied to the United States having a turnover capital of $21.9
million. He was titled the King of Cocaine and was known as the richest
criminal with a net worth of $30 billion.  He was known not only to supply cocaine but
also kidnapping and extortion. During the 80’s approximately 60 to 70 ton of
cocaine was smuggled from Columbia to United States monthly. His criminal
business name operated under Medellin Cartel that often competed across other
criminal organizations locally and internationally resulting in wars, murders
and death of many locals, politicians and police officials. Pablo began his
cocaine smuggling operation in 1975 by flying out planes from Columbia to
Panama across the route of United States where he would often smuggle his
products and expand relations. Due to small aircrafts, the smuggle would take
longer which made Pablo buy 15 large aircrafts and 6 helicopters that would decrease
time and increase export. (Bowden, 2015)


Establishment of Drug Network

Pablo Escobar was elected as a member of Chamber of
Representatives of Columbia for Liberal Alternative movement in 1982.  He became well known and his network Medellin
Cartel took charge of a large portion of drugs that were smuggled into Mexico,
Dominican Republic, Puerto Rico and United States. (Escobar, 2014) Pablo Escobar
further worked with Roberto Suarez Gomes to increase the cocaine production and
begin export of Cocaine to Asia. Pablo Escobar was a criminal drug lord mafia
in front of the Columbian and United States Government but on the other hand he
was a role model to many poor people. According to many poor people he worked
for the goodwill among the people of Columbia.  He was known for constructing houses for the
needy people and football fields in Western Columbia that made him famous.

Because of his good nature towards the poor people of Columbia many would help
him to hide from the police and protect him from the authorities. Many drug
traffickers in Columbia would hand over 25% to 40% of their profits to Pablo
Escobar as he would in return help them smuggle their cocaine production to the
United States. Soon because of many crime organization and cartels developing
Columbia became a murder capital in 1991 with deaths estimated of 24100 and
27200 in 1992. Pablo Escobar gave rewards to his hitmen for killing police
officials that resulted in these numbers. Pablo Escobar was then killed n a
shootout carried out by Columbian forces. Hundreds of soldiers and police officials
took charge of his Medellin hide out and killed him. (Bowden, 2015)


After Medellin Cartel that aged between 1976 – 1993,
the next most powerful was Cali Cartel that was based in South of Columbia
between 1977 – 1998. This cartel was led by Rodriguez Orejuela and two brothers
Miguel and Gilberto. They initially based out by kidnapping people for ransom
and then used that money for financing their drug trafficking business. They
started their drug trafficking business with Marijuana and then moved to
Cocaine with a profit of approximately $8 billion annually. After collapse of
Cali Cartel, the North Coast Cartel led to empowerment between 1999 – 2004 that
was led Alberto Orlandez Gamboa. He was considered as ruthless as Pablo Escobar
and given the title as “Caracol” that means a snail. Unlike other drug
trafficking cartel leaders, Gamboa categorized his dealings. It was indicated
by DEA Intelligence that many drug trafficking organizations needed to get
permission from Gamboa before shipping drugs to other places or conducting
assassinations. Alberto Gamboa was caught by the Columbian National Police on
June 6th, 1998. (Siebert, 2011)


Even after that the drug trafficking business did not
stop. Many cartels carried out drug trades and many of them were exported to
the United States and Europe. The way they export drugs is when drugs arrive to
the Columbia’s coastline they are then loaded onto container ships and are
sailed to port hubs in United States and Caribbean which are supervised by
crime cartels of Mexican Sinaloa. (Winslow, 2005) In some cases, the local government
officials are bribed and then they coordinate with the drug trafficking
cartels. In the recent years, Venezuela a nation bordering Columbia has become
a hub for cocaine. Many aircrafts containing cocaine have been used to fly in
and out to closer places like Puerto Rico, Dominican Republic and Bahamas.



Formation of Paramilitary Groups

Many new paramilitary groups formed after 2006 that
are present in the drug trafficking and have been operating in the AUC process.

According to the Columbian Police intelligence 40% of cocaine exports from
Columbia were controlled by these groups. An investigation carried out in 2011
in a local newspaper “El Tiempo” states that 50% of cocaine was controlled by
BACRIM groups. (Reports, 2017) 
These paramilitary group organizations have many small groups build in
them of which some are: –

Los Rastrojos

The Black Eagles

Los machos

Los Urabenos

Los Paisas


These groups are well known to carry out the drug
trafficking trade, spread human rights abuses and oppose FARC EP guerrillas.

Their main targets are Labor union, victims of AUC members, people defending
human rights. (Reports W. , 2011)



After carrying out research on the underground economy
in Columbia, I would like to conclude by saying that underground economy in
Columbia has existed since a long time and there is still a lot of drug trafficking
and black market that is carried out in Columbia, but unlike before due to
intervene of Columbian Government and help from US Government they have reduced
to quite an extent. Columbia is restructuring as a place where people can now
live in peace and efforts are been made by the Columbian Government to sustain
the illegal trades carried out in Columbia.























Escobar. (2018, January 10). Retrieved January 14, 2018, from


drug trade in Colombia. (2018, January 14). Retrieved January 14, 2018, from



(2017, November 09). Colombia drug trafficking | Fact sheet. Retrieved January
14, 2018, from


M. (2015). Killing Pablo: The Hunt for the World’s Greatest Outlaw.


5.     Allum, F., & Siebert, R. (2003). Organized
crime and the challenge to democracy. London: Routledge.


Marroqui?n, S.

(2017). Pablo Escobar, my father. New York: Thomas Dunne Books, St. Martins Press.


World Report 2011:
Colombia. (2015, November 02). Retrieved January 18, 2018, from













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