By gathering and analyzing data, this paper offers a formal analysis of drug
trafficking in Honduras. The final purpose is to present an estimate of the economic
impact of the industry in the country; because data for the area is very difficult to
acquire, very few empirical studies of the topic in Honduras exist, making this one of
the first in its nature. The analysis measures the economic model of drug trafficking
as well as its position in the world’s market. It also analyzes the policy impacts and
the alternatives to the current war on drugs. Finally, the study presents the main
findings and impacts of the industry in Honduras. The author acknowledges that in
various parts of the country the drug-trafficking industry helps to relieve poverty and
underdevelopment, however it concludes that the negative impacts are much higher,
the intangible costs include the high violence, corruption and migration and the
tangible costs add up to US$ 796.5 million annually, such high value is definitely
preventing economic growth. Recommendations on policy changes are proposed.

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