Does Tobacco Affect Economy?

Abstract

Academics have thoroughly investigated how commodities affect the economy. Some examples from recent papers discuss how commodities trigger economic growth (De V. Cavalcanti et al., 2015) and global economic activity (Mont'Alverne Duarte et al., 2021), affect real GDP (Charfeddine and Barkat, 2020), and contribute to real and nominal shocks (Kim and Zhang, 2020). However, none of them try to explore how tobacco, a hot commodity, affects the economy. This is surprising because tobacco has a huge market size. The US market size of tobacco was more than 30 billion USD in 2011 (Zheng et al., 2017), whereas the global market size in 2018 was estimated at around 814 billion USD (British American Tobacco, 2020).Tobacco's sector contribution has been positive to the economy in many tobacco-producing countries. In China, out of the seven food industries with significant market power, the tobacco industry has the largest return to scale to the economy (Dai et al., 2018). Moreover, in an even smaller producer such as Malawi, a positive shock to tobacco prices yielded a positive return to the country's GDP (Bangara and Dunne, 2018). This also applies to

Health taxes in Indonesia: a review of policy debates on the tobacco, alcoholic beverages and sugar-sweetened beverage taxes in the media

“…This practice is also common in other countries 33 51. While there was enough pro-health tax evidence against the industry’s arguments,52–55 these studies were rarely covered in the media. The lack of media interest in covering scientific evidence in opposing the industry is unfortunately related to the well-funded industry in commissioning the media 44…”

Economic priorities over population health: A political dilemma in addressing noncommunicable diseases in developing countries

“…These include discouraging the use of tobacco products and sugar sweetened (SSB) like carbonated drinks which are from industries with a significant contribution to the gross domestic product of countries and employment opportunities while at the same time costing the health of consumers. [10][11][12] As the World Health Organization and the World Bank recommend the implementation of taxation so as to increase the cost and discourage purchases among consumers, questions arise on the effectiveness, sustainability, and practicality of this recommendation to bring best results. [13][14][15][16][17] This article highlights the global political dilemma faced by countries, especially in low and middle income regions, in addressing the rapidly increasing burden of NCDs.…”

“…There is ongoing debate on the approaches to reduce the public exposure from modifiable risk factors which are of economic potential. These include discouraging the use of tobacco products and sugar sweetened beverages (SSB) like carbonated drinks which are from industries with a significant contribution to the gross domestic product of countries and employment opportunities while at the same time costing the health of consumers 10–12 . As the World Health Organization and the World Bank recommend the implementation of taxation so as to increase the cost and discourage purchases among consumers, questions arise on the effectiveness, sustainability, and practicality of this recommendation to bring best results 13–17 …”