These are depressing figures indeed, and they triggered multiple and often diverging interpretations across the political spectrum.

The government tends to see rising drugs statistics as a sign of success in policing.

The logic here is that, assuming the actual crime rates stay put, improved policing will lead to increased recording of crimes.

If this is the case, there should be supportive evidence that this improved effectiveness is having an impact on the illicit drugs markets. One such piece of evidence would be a slowdown in the rate of price deflation in illicit drugs sold in Ireland, as police effectiveness should . . . at least in theory . . . translate into tighter supply of drugs.

Alas, no such trend is visible in Ireland. The evidence on the prices of drugs suggests that the cost of obtaining illicit drugs has gone down over recent years, showing that the drugs trade is proliferating, rather than abating.

And the DPP's latest annual report shows that drug offences cases finalised by DPP in 2005 have fallen by 8.7% relative to 2003, with the actual convictions rate rising only marginally from 97% in 2003 to 99% in 2004 and 2005. In short, if there is any evidence of improved policing, it is hardly convincing, given these figures.

On the opposite side of the political spectrum, opposition parties have been quick to claim that the increases in recorded offences are due to a crime wave getting out of control. Again, simple but robust economic thinking would suggest that, should this be true, increased supplies of drugs in Ireland would drive prices of these drugs lower than in the case of other European countries with more effective policing and slower-growing crime statistics.

Alas, this view is also not supported by the evidence.

Since at least the beginning of the new millennium, drug prices declined roughly the same across the 15 EU states and the US, according to the UN World Drug Report 2007 released last week.

Based on the UN data, Ireland scores ninth highest in cocaine seizures in Europe . . .the highest in per-capita terms. We have the 16th highest rate of seizures of cannabis resin in the world (eighth-highest in absolute terms in Europe and first in per-capita terms). At 2% of the world total, we are ranked the 11th highest country in terms of seizures of ecstasy in the world (fifth in Europe in absolute terms and first in per-capita terms). Between 2003 and 2005, in real terms, Irish street prices of drugs have fallen for opiates (we were the 10th cheapest opiates market in Europe in 2005 and 2006, down from sixth lowest in 2004 and ninth lowest in 2003).

In cocaine markets, Ireland recorded relatively flat price dynamics over the years 2002 to 2006. In fact, if one needs any evidence that competition works, look no further than wholesale prices of cocaine in Ireland . . . the lowest in the EU for every year since 2003.

This evidence suggests that a large share of the price movement in Ireland's illicit drugs markets is not due to the successes or the failures of garda efforts. Instead, it is due to the fact that Ireland is one of the world's most open economies, operating in a globalised universe of internationally traded illicit drugs.

Supporting this assertion, a paper by Paul De Grauwe from the Catholic University Leuven (one of the leading economists working in the international finance area) and Caludia Storti from Banco de Portugal, published in April this year, shows that retail prices of major drugs such as cocaine and heroin have declined dramatically during the last two decades across the EU.

"This price decline has tended to offset the effects of drug policies aimed at reducing drug use in major industrial countries. The main finding of this paper is that the decline in the retail prices of drugs is related to the strong decline in the intermediation margin (the difference between the retail and producer prices) in the drug business, " says De Grauwe.

Globalisation had two main effects on drugs markets.

First, lower transport costs, the use of the new IT and enhanced worldwide competition among drug dealers have brought about a dramatic improvement in the efficiency of the distribution of drugs. Second, globalisation has opened the borders of many countries with a surplus of poor and low-skilled workers, people who are willing to take risks.

Remember the 'shop around' advice Mary Harney had for inflation-shocked Irish consumers? Well, finally, here is some evidence that this works in Ireland, at least assuming one is shopping for illicit drugs, that is.