The Economics of Human Trafficking


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The Economics of Human Trafficking

  1. 1. Economics of the Human TraffickingIndustry
  2. 2. Outline• What is Human Trafficking?• Definition• Elements of• Human Trafficking Market• Defining the Market• Consumers and Product• Supply and Demand• Pricing• Locations• Industry Drivers• Globalization’s Affects• Economic and Industry Impact s• Economics and Migration• Conclusion and RecommendationsEconomics of the Human Trafficking Industry 2
  3. 3. ―the recruitment, transportation, transfer, harbouring or receipt of persons, by means of thethreat or use of force or other forms of coercion, of abduction, of fraud, of deception, of theabuse of power or of a position of vulnerability or of the giving or receiving of payments orbenefits to achieve the consent of a person having control over another person, for thepurpose of exploitation.Exploitation shall include, at a minimum, the exploitation of the prostitution of others or otherforms of sexual exploitation, forced labour or services, slavery or practices similar to slavery,servitude or the removal of organs‖ (UNODC, 2012).Economics of the Human Trafficking Industry 3The United Nations Office of Drug and Crimedefine human trafficking as:
  4. 4. The Act (What is done)Recruitment, transportation, transfer, harboring or receipt of personsThe Means (How it is done)Threat or use of force, coercion, abduction, fraud, deception, abuse of power or vulnerability, or givingpayments or benefits to a person in control of the victimThe Purpose (Why it is done)For the purpose of exploitation, which includes exploiting the prostitution of others, sexual exploitation, forcedlabor, slavery or similar practices and the removal of organs.(UNODC, 2012)Economics of the Human Trafficking Industry 4Key Elements
  5. 5. Market: Defining the MarketEconomics of the Human Trafficking Industry 5• As people become vulnerable to exploitation and businesses continually seek the lowest laborsources, trafficking human beings generates profit and a market for human trafficking is created.• The market for trafficked people involves labor supply decisions by vulnerable populations (possiblymigrants), labor demand decisions by employers, and the intermediary decisions by human traffickers.• Profit is the driving motive for trafficking• ―An opportunistic response to the tensions between the economic necessity to migrate, on the onehand, and the politically motivated restrictions on migration, on the other‖ (Chuang, 2006).• Human traffickers connect the supply of labor in source areas with the demand for labor in destination areas(Wheaton et al., pg. 117)Within the next 10 years crime experts expect human trafficking tosurpass drug and arms trafficking in its incidence, cost to humanwell being and profitability to criminals (Wheaton et. al, pg. 114)
  6. 6. Market: The NumbersEconomics of the Human Trafficking Industry 6Estimates involving human trafficking are imprecise due to disparities in governmental and non-governmentaldefinitions and the underground nature of trafficking.• The United States estimates that 600,000-800,000 persons are trafficked across international borders annually• It is thought that 2.5 million people are being trafficked around the world at any given time• 80 percent are woman and girls while 50 percent are minors(Wheaton et al, pg. 119).• The ILO estimates that annual global profits generated from trafficking amount to be around $32 billion (Brewer, pg. 46)• 161 countries are reported to be affected by trafficking (UN.GIFT, 2012)• Third largest illegal industry in the world following drugs and arms sales(Besler, pg. 6)
  7. 7. Economics of the Human Trafficking Industry 7Market: Consumers and ProductsIn the human trafficking market, the consumers are employers of trafficked labor and the products are human beings.(Wheaton et al., pg. 114)• Employers demand labor for the production of goods andservices, individuals and households use a large number oftrafficked labor—the household is the employer or consumer inthis situation• Benefits to employer employers is the low cost of discarding thetrafficked victims• Consumers have the same goal as employers: Paying the lowestprice to receive the highest benefit• Increasing costs to human traffickers is the main way to affectthe supply side of the market.• Consumers can include companies that subcontract certaintypes of services, end-consumers who buy cheap goodsproduced by trafficking victims, or individuals who use theservices of trafficking victimsAs long as people demand prostitution servicesand are willing to pay for them, there will besomeone who will emerge and supply thatdemand.
  8. 8. Economics of the Human Trafficking Industry 8Market: Supply and DemandThe price the trafficker will receive is based on:• availability of the desired product,• characteristics of the product,• the number of similar products available, and• the negotiating acumen of the human trafficker.At very low prices, human traffickers will be unwilling and unable to supply trafficked individuals because costs exceed revenue(Wheaton et al, pg. 119).Most economic research deals with legal goods and services, perhaps due to the difficulty of reliable data on illegal markets(Wheaton et al, pg. 12)Employers favor migrant domestic workers over localdomestic because of their vulnerability and lack ofchoice that results from their foreign status….byreducing opportunities for regular migration greateropportunities are awarded to traffickers.(Chuang, pg. 146)In many cases of labortrafficking, consumers provide thedemand, and thus the profitincentive, to the traffickers.Individuals who buy commercial sexacts create the demand for sextrafficking.(Polaris, 2012)
  9. 9. Economics of the Human Trafficking Industry 9Market: Supply and DemandThe figure below shows a decrease in thedemand for trafficked individuals by a specifictrafficker as a leftward shift in the demand curve.This leads to a decrease in the quantity oftrafficked victims exchanged in the market(Wheaton et al, pg. 131)Reducing the demand for trafficked humans meansdecreasing benefits to employers of employingtrafficked labor.(Wheaton et. al, pg. 131)Until 2007 the UK plan against humantrafficking was targeted at the supplyside of the market. They are nowtackling the demand side and, ―callingfor a more sophisticated approach andunderstanding of the demand factor.‖(Wheaton et. al, pg 131)
  10. 10. Economics of the Human Trafficking Industry 10Market: PricingToday a trafficked individual can cost a fewhundred dollars vs. an estimated $100,000 (2003dollars) for a male slave in May 1808• Prices are largely based on marketprinciples, depending on the local demand, thedistances involved and the mode of transport.• The emergence of international smugglingorganizations has helped to substantially drive upthe traffickers fees.• INS reports indicate that fees can range from a fewhundred dollars for Central Americans to up to$50,000 for Chinese(Finckenauer & Schrock, pg. 1)
  11. 11. Economics of the Human Trafficking Industry 11Market: Locations• 1.4 million – 56% - are in Asia and the Pacific• 250,000 – 10% - are in Latin America and the Caribbean• 230,000 – 9.2% - are in the Middle East and Northern Africa• 130,000 – 5.2% - are in sub-Saharan countries• 270,000 – 10.8% - are in industrialized countries• 200,000 – 8% - are in countries in transition
  12. 12. Economics of the Human Trafficking Industry 12Industry Drivers• Fueled by an Emigration Push and Immigration Pull• Human trafficking is an opportunistic response to the tension between the economic necessity to migrateand the politically motivated restrictions on migration• Trafficking is a product of the larger socioeconomic forces that feed the emigration push and immigrationpull toward risky labor migration practices in our globalized economy(Chuang, pg. 140)• Rising unemployment leads to greater trafficking vulnerabilities—both supply and demand(US Department of State, 2012)• Poverty
  13. 13. Economics of the Human Trafficking Industry 13Globalization’s AffectsGlobalization and the opening of national borders have led not only to greater international exchange of capital andgoods, but also to increasing labor migration.The wealth disparities created by our globalized economy have fed increased intra-and transnational labor migration aslivelihood options disappear in less wealthy countries and communities (Chuang, pg. 140)• Economic globalization as a facilitator of human trafficking: An increasingly integrated global economy enables humantrafficking to thrive• Globalization fosters interdependence between states and countries for commerce and facilitates the transfer ofcommodities• Comparative advantage in goods and cheap labor in developing countries has played a significant role in objectifying andexploiting humans for economic ends• State-centered approaches to combat trafficking are proving obsolete and futile since trafficking knows no boundaries(Brewer, pg. 46-47)Globalization Enabling and Fostering Trafficking through:• Information technology• Global Media• Internet Access• Opening of boardersGlobalization has provided a means tobroadcast the promise of betteropportunities aboard.
  14. 14. Economics of the Human Trafficking Industry 14Globalization’s AffectsGlobal economic integration• Trade Liberalization• Foreign Investment• Economic Liberalization• Tax Policy• Weaken Role of Government• De(re)regulation of financial sectors –• banking, insurance, investmentTechnology• Communications – internet, cell phones, electronic banking• TransportationEffect – the opening of borders to the free flow of capital, goods and servicesBut not labor(COC, pg. 3-4)
  15. 15. Economics of the Human Trafficking Industry 15Economic and Industry ImpactsWithin the broad socioeconomic context we can connect root causes of trafficking to violations of economic, social and culturalrights (Chuang, pg. 160). Globalizing trends that produce an environment that is conducive to trafficking include(Chuang, pg.142):• Shift to export-oriented approaches: production of essential goods is targeted for external trade rather than a countries ownmarkets• Entry of Multi-National Corporations (MNCs) into developing countries and their networks of subcontractors• Structural adjustment policies mandated by the International Monetary Fund or the World Bank as a condition for loans.This requires governments to open their markets to further financial and trade flows and to undertake austerity measureswhich fall heavily on the poor and particularly women• Shift in structure of power at the international level, or the rise in the power of international institutions focused on marketsMany MNC’s prefer female workers due to their lower cost and lesser likelihood of resisting adverse workingconditions. While they are providing a job source, MNC’s also create a pool of lower-skilled labor exposed tostandards of western consumption and representing a potential source of emigration.
  16. 16. Economics of the Human Trafficking Industry 16Economic and Industry Impacts• Human Trafficking affects the global economy as source countries lose part of their labor suppliesand transit and destination countries deal with the costs of illegal immigration.• Breakdowns in international trade relations can occur when human trafficking becomes abargaining issue• Historically and economically prohibition has not decreased the trade in illegal goods and services(Wheaton et. al, pg. 132-135)
  17. 17. Economics of the Human Trafficking Industry 17Economic and Industry ImpactsBecause of human trafficking the majority of countries experience:• Increased and deeper poverty• Changing patterns in the labor market and forms of labor• Social and economic dislocation• Internal and external wars and conflicts over resources – oil, water, land(COC, pg. 6)
  18. 18. Economics of the Human Trafficking Industry 18Economy and MigrationCompelled to leave their homes in search of viable economic options, previously invisible, low wage-earning, migrants (especially women) are now playing a critical role in the global economy• Rather than confront xenophobic reactions to migration, many governments have sought political advantage by promotingincreasingly restrictive immigration policies which fosters conditions that enable and promote trafficking (Chuang, pg. 146)• State or country centered approaches to combat trafficking are proving futile since trafficking knows no boundaries• Globalization fosters interdependence between states/countries for commerce and facilitates the transfer of commodities—including people!Internal Migration• Rural to urban areas• Lack of housing – growth of slums• Inadequate essential human services• Lack of employmentCross-Border Migration• Seeking ways to survive• Employment• Opportunities for their children(COC, pg 8)
  19. 19. Economics of the Human Trafficking Industry 19Economy: United StatesPolitical Response:• Migrants viewed as defenseless victims – possible refugee or asylum status• Migrants viewed as laborers making dual contributions to U.S. and home country – possible guestworker program or documentation/citizenship• Migrants viewed as security threats – national security or job security – 700 mile wall along Mexico(COC, pg. 12)Post 9/11: Restricted entry• Increased number of undocumented• Growing backlash among citizens and in Congress• Discrimination both legal and personal• Vigilantism• Local policing(COC, pg. 13)According to an IOM report, almost all migrants attempting to gain entry into the U.S. employ theassistance of smugglers or traffickers. A bi-national study of migration between the U.S. and Mexicofound that 70 percent of the Mexicans who entered the U.S. illegally entered with the help of traffickers.(Finckenauer & Schrock, pg. 1-2)
  20. 20. Economics of the Human Trafficking Industry 20Economy: United StatesThe largest influx of humans trafficked to the U.S. are coming from the less developed regionsof the world. The most popular transit route for Chinese, South Americans and South Asians isthrough Central America and Mexico .• And traffickers are increasingly utilizing the U.S. Canadian border as acorridor into the U.S.• The Southwest border continues to serve as the biggest point of illegalentry into the U.S., largely because traffickers are able to get aliens acrosswithout documents• The major points of entry into the United States are located in southern andcentral Texas, Southern California, Tucson, Arizona, and areas of NewMexico.• While the Southwest border is often used as the main portal traffickers areincreasingly moving migrants into the U.S. through New York, Chicago, andSan Francisco.• Other newly emerging ports of entry include Atlanta, Houston, Orlando andWashington D.C.• The U.S. has seen a re-emergence of Chinese boat smugglers using boththe East and West coasts(Finckenauer & Schrock, pg. 2-3)
  21. 21. Economics of the Human Trafficking Industry 21Economy: InternationalChanges in the international political economy have caused a number of countries in the global south,especially Asia to either directly or indirectly foster labor-networks. Trafficking growth strategiesinclude:• Attracting direct foreign investments from MNC’s and their networks• Investing in tourism industries widely associated with recruitment of trafficked females for entertainment offoreign tourists• To ease unemployment problems and accumulate foreign currency earnings indebted countries mayencourage their labor force to seek employment in wealthier countries(Chuang, pg. 144)Globally, the main smuggling pipelines stretch from Asia, across Europe,through Central America and the Caribbean to the United States.(Finckenauer & Schrock, pg. 2)
  22. 22. Economics of the Human Trafficking Industry 22ConclusionTo combat trafficking we need a globalized law enforcement network that collaborates and worksacross state boundaries• The United Nations Convention Against Transnational Organized Crime: brings laws in line withinternational standards to raise awareness of the issue, prevent trafficking, and protect victims andprosecute traffickers• Numerous activists have proposed a multi-tiered approach to combat globalized human traffickingWe need to understand and confront the root causes of trafficking including:• Poverty• Unemployment• Discrimination• Gender-based violence• Education• Lack of resourcesResearch calls for a system of international cooperation to decrease benefits toemployers of using trafficked labor to increase costs to traffickers and lower the netbenefits to persons for relocating illegally.(Wheaton et. al, pg. 132)
  23. 23. Economics of the Human Trafficking Industry 23ReferencesBrewer, D. (2012). Globalization and Human Trafficking. Retrieved from September 21, 2012.COC. (2007). The Economics and Social Context of Human Trafficking. Retrieved from on September 24, 2012.Chuang, J. (2006). Beyond a Snapshot: Preventing human trafficking in the global economy. Indiana Journal of Globaland Legal studies: Vol. 13, Iss. 1, Article 5. Retrieved on September 22, 2012.Finckenauer, J., & Schrock, J. (2012). Human Trafficking: A growing criminal market in the U.S. Retrieved from on September 22, 2012UN.Gift. (2012). Human Trafficking: the facts. Retrieved from on September 23, 2012.UNODC. (2012). What is Human Trafficking. Retrieved from on September 22, 2012Polaris Project. (2012). Why Trafficking Exists. Retrieved from on September 22, 2012.US Department of State. (2009). Rising Unemployment Leads to Greater Trafficking Vulnerabilities. Retrieved on September 23, 2012.Wheaton, et. al. (2010). Economics of Human Trafficking. International Migration: 114-136. Retrieved from on September 21,2012.