The Economics Of Human Trafficking

July 23, 2013

The human trafficking industry is a 32 billion dollar industry. Many people ask what is human trafficking! According to the UN Office of Drug and Crime they define human trafficking as: “the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation. Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs” (UNODC, 2012). There are several key elements that make up trafficking. First is The Act; meaning what is done. The act includes recruitment, transportation, transfer and harboring or receipt of persons. Trafficking is done by the threat or use of force, coercion, abduction, fraud, deception, abuse of power or vulnerability, or giving payments or benefits to a person in control of the victim. People prey on the powerless for the purpose of exploitation, which includes exploiting the prostitution of others, sexual exploitation, forced labor, slavery or similar practices and the removal of organs.

To better understand the industry we need to define the market. As people become vulnerable to exploitation and businesses continually seek the lowest labor sources, 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 (possibly migrants), 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 one hand, and the politically motivated restrictions on migration, on the other” Human traffickers connect the supply of labor in source areas with the demand for labor in destination areas. The numbers of the industry are shocking.

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. The ILO estimates that annual global profits generated from trafficking amount to be around $32 billion. 61 countries are reported to be affected by trafficking. Trafficking is the third largest illegal industry in the world following drugs and arms sales. According to EM Wheaton within the next 10 years crime experts expect human trafficking to surpass drug and arms trafficking in its incidence, cost to human well being and profitability to criminals.

In the human trafficking market, the consumers are employers of trafficked labor and the products are human beings. Employers demand labor for the production of goods and services, individuals and households use a large number of trafficked labor—the household is the employer or consumer in this situation The benefits to employer employers is the low cost of discarding the trafficked victims. Consumers have the same goal as employers: Paying the lowest price to receive the highest benefit. Increasing costs to human traffickers is the main way to affect the supply side of the market. Consumers can include companies that subcontract certain types of services, end-consumers who buy cheap goods produced by trafficking victims, or individuals who use the services of trafficking victims. As long as people demand prostitution services and are willing to pay for them, there will be someone who will emerge and supply that demand. The 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 skills of the trafficker.

Today a trafficked individual can cost a few hundred dollars versus an estimate 100,000 dollars for a male slave in May of 1808. Prices are largely based on market principles, depending on the local demand, the distances involved and the mode of transport. The emergence of international smuggling organizations has helped to substantially drive up the traffickers’ fees. INS reports indicate that fees can range from a few hundred dollars for Central Americans to up to $50,000 for Chinese. Location plays a part in trafficking. 56% of trafficking victims are in Asia and the Pacific, 10% are in Latin America and the Caribbean. 9.2 percent of victims are in the Middle East and Northern Africa region while 5.2 percent of victims are in sub-Saharan countries; eleven percent are in industrialized countries. Only 8% are in countries in transition. There are several industry drivers to trafficking.

The industry is Fueled by an Emigration Push and Immigration Pull. Human trafficking is an opportunistic response to the tension between the economic necessity to migrate and the politically motivated restrictions on migration. Trafficking is a product of the larger socioeconomic forces that feed the emigration push and immigration pull toward risky labor migration practices in our globalized economy. According the US State Department rising unemployment leads to greater trafficking vulnerabilities—both supply and demand.

Globalization and the opening of national borders have led not only to greater international exchange of capital and goods, but also to increasing labor migration. The wealth disparities created by our globalized economy have fed increased intra-and transnational labor migration as livelihood options disappear in less wealthy countries and communities. Economic globalization as a facilitator of human trafficking: An increasingly integrated global economy enables human trafficking to thrive. Globalization fosters interdependence between states and countries for commerce and facilitates the transfer of commodities. Comparative advantage in goods and cheap labor in developing countries has played a significant role in objectifying and exploiting humans for economic ends. State-centered approaches to combat trafficking are proving obsolete and futile since trafficking knows no boundaries. Human Trafficking affects the global economy as source countries lose part of their labor supplies and transit and destination countries deal with the costs of illegal immigration. Breakdowns in international trade relations can occur when human trafficking becomes a bargaining issue. Historically and economically prohibition has not decreased the trade in illegal goods and services. Because 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 as well as Internal and external wars and conflicts over resources – oil, water, land.

Trafficking has also affected the US economically. Politically response saw Migrants viewed as defenseless victims – possible refugee or asylum status and Migrants viewed as laborers making dual contributions to U.S. and home country – possible guest worker program or documentation/citizenship . Migrants viewed as security threats – national security or job security – 700 mile wall along Mexico. In a Post 9/11 country, restricted entry increased number of undocumented and created a Growing backlash among citizens and in Congress. Also discrimination both legal and personal rose up. We also see the increase of vigilantism.

The largest influx of humans trafficked to the U.S. are coming from the less developed regions of the world. The most popular transit route for Chinese, South Americans and South Asians is through Central America and Mexico . And traffickers are increasingly utilizing the U.S. Canadian border as a corridor into the U.S. The Southwest border continues to serve as the biggest point of illegal entry into the U.S., largely because traffickers are able to get aliens across without documents. The major points of entry into the United States are located in southern and central Texas, Southern California, Tucson, Arizona, and areas of New Mexico. While the Southwest border is often used as the main portal  traffickers are increasingly moving migrants into the U.S. through New York, Chicago, and San Francisco. Other newly emerging ports of entry include Atlanta, Houston, Orlando and  Washington D.C. The U.S. has seen a re-emergence of Chinese boat smugglers using both the East and West coasts.

Changes 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 strategies include: Attracting direct foreign investments from MNC’s and their networks, Investing in tourism industries widely associated with recruitment of trafficked females for entertainment of foreign tourists to ease unemployment problems and accumulate foreign currency earnings indebted countries may encourage their labor force to seek employment in wealthier countries. Globally, the main smuggling pipelines stretch from Asia, across Europe, through Central America and the Caribbean to the United States.

To combat trafficking we need a globalized law enforcement network that collaborates and works across state boundaries. The United Nations Convention Against Transnational Organized Crime: brings laws in line with international standards to raise awareness of the issue, prevent trafficking, and protect victims and prosecute traffickers. Numerous activists have proposed a multi-tiered approach to combat globalized human trafficking. We need to understand and confront the root causes of trafficking including: Poverty, Unemployment, Discrimination, Gender-based violence, Education and Lack of resources .


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