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CHAPTER 15
THE ILLICIT GLOBAL ECONOMY: THE DARK SIDE OF GLOBALIZATION
Overview
This chapter examines the scale and scope of illicit transactions in the global economy. Illicit
transactions are transfers of goods and services across borders in defiance of the laws of at least
one of the states. IPE analysts, this chapter argues, often overlook or discount exchanges that
occur in “shadow” economies, black markets, and informal economies. Drug trafficking, human
This chapter identifies key structural causes of illicit global activities, including globalization,
greed, technological change, and survival motives. The illicit global economy has a long
historical legacy. The chapter outlines a number of overarching arguments: (1) Ordinary
The chapter also provides in-depth case studies of smuggling, drug trafficking, and human
trafficking. We have added more discussion of cigarette smuggling, antiquities smuggling, and
animal trafficking in this edition, in part because we want to emphasize to students that many
Key Terms
•
secrecy jurisdictions
•
primitive accumulation
•
socially responsible investing
•
balloon effect
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name-and-shame campaigns
•
anti-kleptocracy norm
Teaching Tips
• Ask students to recount if they have observed illicit activities in their own neighborhoods or
during travels overseas, or if others have told them about illicit global activities. To what
extent do they think these activities are rooted in international causes. Do they tend to identify
the main participants in these markets as non-citizens of their country?
• Students often feel that the problems they read about in the text are somewhere “over there” as
opposed to in their own country or neighborhood. Illicit economic activities especially seem
• This chapter makes the argument that most consumers wittingly or unwittingly purchase a
variety of products and services that may have been part of the extra–legal world at some point
in their “supply chain.” Ask students how responsible they feel for knowing where the
products they consume come from and the background of those who provide services to them?
• Ask students to identify a common product in their home and try to trace where the product or
some of its components came from. Ask them to consider what illicit activities might have
• Ask students to debate whether their government should try to tackle illicit problems mostly
through supply reduction or demand reduction. For which types of illicit problems are
eradication and interdiction better strategies than decriminalization and harm reduction
focused on consumers?
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activities. For example, the jewelry industry has made significant efforts to eliminate blood
diamonds, and home improvement chains like Lowe’s have tried hard to purchase lumber only
from “sustainable” forests.
• This chapter provides an excellent opportunity to invite guest speakers from your area who
• Some feature films to consider assigning students to watch are Lords of War (2005), Blood
Diamond (2006), Maria Full of Grace (2004), and/or Dirty Pretty Things (2002).
1. What are some of the key unintended consequences of efforts to regulate the illicit global
economy?
2. What historical behavior did Western states condone and engage in that they now urge
developing countries to restrict, suppress, or eradicate?
Sample Multiple-Choice Questions
1) Which of the following was not mentioned as a factor limiting coordination between
states against illicit activities?
a) flags of convenience
2) Which of the following is the expectation that that states should prevent corrupt money from
entering their financial system and should return money to countries from which it is stolen?
a) Know-thy-customer rules
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3) Which of the following does the Lacey Act prohibit?
a) Bribing of foreign officials by American companies
4) Which of the following is a correct statement?
a) Annual global sales of illegal drugs are approximately $500 billion.
d) An elaborate program to drastically reduce coca production in Latin America.
major stimulus to sex tourism in Thailand.
d) a major cause of human trafficking
8) Which of the following is not an unintended consequence of supply-side policies against
illicit activities?
a) the restriction-opportunity dilemma
9) An analyst of the illicit global economy would probably not agree with which of the
following statements?
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d) Pressure on pariah states to crack down on illicit networks often backfires.
10) What is a “secrecy jurisdiction”?
d) a bank’s obligation to know its customers and exercise due diligence with depositors
11) The idea of the “Six Degrees of Separation” refers to what?
d) The belief that animal trafficking will lead to the extinction of some animal species in a
short amount of time.
12) In approaching illicit problems, the United States federal government can most aptly be
described as which of the following?
d) doing little to stop human trafficking
13) Which of the following is not a practice designed to reduce global illicit activities?
a) name-and-shame campaigns
14) Which of the following is an historical process involving the violent or coercive stripping of
assets from a class in society?
15) Which of the following is a major reason why it is so hard to eliminate illicit markets?
a) NGOs don’t care much about them.
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Suggested Readings and Links
Andreas, Peter, and Ethan Nadelmann. Policing the Globe: Criminalization and Crime Control
in International Relations. New York: Oxford University Press, 2006.
Environmental Investigation Agency. https://eia-international.org/
Reitano, Tuesday, Lucia Bird Ruiz-Benitez de Lugo, and Sasha Jesperson, eds. Militarised
Responses to Transnational Organised Crime: The War on Crime. Cham, Switzerland:
Palgrave Macmillan, 2018.
Audiovisual Resources
Crime Scene: Rainforest. Ichaela Kirst, dir. Tangram International GmbH for WDR and ARTE,
2011. An exposé on the worldwide lumber mafia.
The Dark Side of Chocolate. Miki Misrati and Roberto Romano, dirs. Bastard Film, 2010.
Investigates forced child labor in cocoa plantations in Ghana and Côte d’Ivoire.
Dirty Pretty Things. Stephen Frears, dir. BBC Films and Celador, 2002. A fictional feature film
set in London with a plot involving illegal immigrants and organ trafficking.
Kidneys on Ice. Anja Dalhoff, dir. Danish Doc Productions, 2008.
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Nightmare in Dreamland. Edgar Wolf, Eva Gruen, and Adamna Adim, dirs. Fernsehbüro, 2010.
Documents the plight of young Ethiopian women working as domestic servants in Dubai.
The Trade. Matthew Heineman, dir. Our Time Projects, 2018. Distributed by Showtime. Five
episodes. “From Columbus, Ohio to Guerrero, Mexico and countless cities in between, the
opioid epidemic has ravaged communities on both sides of the border. But what about the
Virunga. Orlando von Einsiedel, dir. Grain Media, 2014. Distributed by Netflix. “In the forested
depths of eastern Congo lies Virunga National Park, one of the most bio-diverse places on
Earth and home to the planet’s last remaining mountain gorillas. In this wild, but enchanted