Drugs, Sex Trade and the GDP Figures
Drug Market Already Adding To GDP Figures
What does GDP mean?
It stands for the Gross Domestic Product. It is an economic measure of any given country, and it is used to gauge the health of an economy of a country. It looks at the total value of all the goods and services produced by a given country for a specified period of time, mostly a period of one year.
Many illegal businesses have not been captured in these estimates in many countries. This is due to the fact that such businesses are considered illegal and are not seen to contribute to the economy of the country in question. Some of such businesses are prostitution and drug trafficking. Though it is still debatable on whether these businesses should or not be considered when estimating the gross domestic product of a given country, some countries have already turned out to include sex business and drugs trafficking in their gross domestic product. Some of the European countries have already boosted their economy by including prostitution and drugs in their GDP.
It is now official that it will be obligatory in September 2014 for all European Union countries to include drugs, prostitution, and other illegal and shadow economy businesses in their gross domestic product
calculations. The 2010 version of the European System of Accounts states that “illegal economic actions shall be considered as transactions when all units involved enter the actions by mutual
agreement. Thus, purchases, sales or barters of illegal drugs or stolen property are transactions, while theft is not.” The goal is to make European Union countries’ economic data comparable. According to
the Guardian Britain’s Office of National Statistics (ONS) has estimated that illegal drugs and prostitution added £9.7bn to Britain’s economy, equal to 0.7% of gross domestic product, in 2009.
Is USA following the suit soon and include illegal business in the GDP?
Every country will always want its GDP to grow by a factor every year, or at least remain at a high level. Any activity or inclusion to the GDP which is considered to boost the GDP will always be welcome as long as it acceptable. Following the acceptance and inclusion of illegal drugs and prostitution in the GDP of many European countries, the United States of America is also believed to be on the verge of following the suit. This idea has though been on a hold as they wait to analyze the result or impact of inclusion of the illegal business from the data from the countries which have already embraced it.
There is likelihood that USA will be including these illegal businesses in their GDP soon, especially looking at the statement given by one of the prominent personnel, who is the chief of public affairs and outreach at the United States Bureau of economic Analysis, Jeannine Aversa. Jeannine Aversa was quoted as saying, “The united states has no plans for now, to start counting illegal sex and drugs. We need to look at the issue closely to see what data are available before any decision could be made.” He also added, “We haven’t done any research yet, so we don’t know how much this would add to the U.S economy as measured by GDP.”
From these statements, there is a probability that U.S will be joining Europe in the inclusion of illegal sex and drugs in the GDP, but this remain to be seen in future. This is in the assumption that there will be a positive impact of the inclusion from the data that will be collected from the forerunners, European countries. This positive impact would be mouthwatering for U.S and hence consider including the illegal businesses in GDP also.
Can sex and drugs inclusion in GDP boost the economy of a country?
This question can be sufficiently answered based on the statistics from the countries which have already done it. A noticeable country which has already included sex and drugs in the GDP is Italy. Italy is one of the countries which were struggling with poor economy for years. Upon inclusion of black market in the GDP, it registered a growth in economy reported to be around 18%. This growth was taking it past UK to make it the fourth richest country in the world. Illegal sex and drug trafficking lie under black market squares and go untaxed. The taxation of these businesses would result to a remarkable boost in the economy by a factor.
It is estimated that in U.S for example, the sale of illegal marijuana business is worth between $10 billion and $100 billion each year. This is a very big figure which evades the government’s taxing and hence a big loss to the state. Just like illegal marijuana, illegal sex among many other illegal or black market businesses go untaxed and governments lose a lot of money which would otherwise contributed to the country’s economy.
Would inclusion of drugs and sex in GDP have benefit to the people involved?
If these businesses succeed to being included in the GDP, it will mean that they will be legalized. This will be a boost to the people involved in these businesses since it is no longer considered illegal by the states and thus transacting in such businesses is not punishable by the state. Likewise to the drugs user, it brings sense of responsibility, as the person can regulate one’s self on when to take the drug and the quantities to take at given times.
Drug Market Already Adding To GDP Figures
