Guatemala Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Guatemala is a Central American country that shares borders with Mexico, Belize, Honduras, and El Salvador. Its economy is heavily reliant on the agricultural sector, in particular the export of bananas, coffee, sugar, textiles, and fresh vegetables. Its population is over 12.7 million (2007). With a highly unequal distribution of wealth, the average gross domestic product per capita in Guatemala is $2,108 (2004), and about 29 percent of the population lives below the poverty line.

Before the arrival of the Spanish, the Mayan civilization controlled much of present-day Guatemala. It had already gone into steady decline many centuries before the arrival of the Spanish, who conquered the area and, because there were no supplies of gold and silver, established an export economy based on sugar cane, cocoa, and dye from cochineal insects and also from logwood. Many tropical hardwoods such as mahogany were also exported to Spain, where they were used in the construction of churches and palaces. However, the initial Spanish settlements were badly located and faced problems from the elements; the first capital flooded and the second was destroyed by an earthquake. This led to the establishment of Guatemala City as the administrative center, and later the capital of the country. In 1821 the region gained its independence and was incorporated briefly into the Mexican Empire, and then into the United Provinces of Central America. Guatemala gained independence in 1840, when Rafael Carrera caused the end of the federation, with Guatemala firmly in the control of the conservatives and landowners who continued the export trade to Spain and to other countries. Indeed, under Carrera, the crimson natural dye that was produced from insects harvested from the nopal cactus became the principal export of country, with the dye sold largely to Great Britain.

After the “Liberal Revolution” of 1871, the new government of Justo Rufino Barrios wanted to break the control of the supporters of Carrera and the Roman Catholic Church and modernize the country through exports. He developed the infrastructure of the country with the building of railroads and the expansion of the existing ports. His policies led to the introduction of cash crops, and coffee became the major export product in the country, with the alienation of much Indian land that Carrera had resisted.

By 1871 coffee made up half of all the exports from Guatemala. The agricultural sector of the economy still employs about half of the workforce in the country, with coffee still being very important. There are about 12,000 coffee plantations in the country, with about 300,000 metric tons of coffee being produced each year. The importance of coffee can be seen from the fact that it earns about half of Guatemala’s income from exports. Debt servitude became important and the wealth of the elite expanded dramatically under the dictatorship of Jorge Ubico from 1931 until 1944.

The other major export income came from bananas, with the United Fruit Company playing a part in the Guatemalan economy. Indeed, the United Fruit Company was involved in the overthrow of the Guatemalan president, Jacobo Arbenz, in 1954. Arbenz had been trying to introduce major reforms to the country that would have eroded the power of the United Fruit Company and U.S. influence, and his overthrow by the Central Intelligence Agency (CIA) has led to many studies of the involvement of the CIA in the promotion of U.S. business interests in Latin America and elsewhere. The events in Guatemala, and also in neighboring Honduras, led to the term banana republic entering the vocabulary of politicians, economists, and social commentators around the world.

The coup d’état that overthrew Arbenz also ended the plans for land reform, and there were a large number of right-wing presidents who presided over a desperately poor country whose economy was further adversely affected by the earthquake of 1976 that devastated parts of the country. Following a fraudulent election in 1978, a civil war began, and this only ended in 1996, by which time the economy of the country was totally wrecked, with about a million people being internal or external refugees.

Since then there have been efforts to rebuild Guatemala, and the export of coffee continues to be a major part of the Guatemalan economy. The other major agricultural exports are sugar, bananas, oil, and cardamom, with coconut products, tobacco, tea, cotton, and rubber playing a smaller role. Over half of Guatemala’s exports are to the United States, and these now include meat and petroleum.

Bibliography:

Liliana R. Goldin, Global Maya: Work and Ideology in Rural Guatemala (University of Arizona Press, 2009);
Thomas McCann, An American Company: The Tragedy of United Fruit (Crown, 1976);
David J. McCreery, “Debt Servitude in Rural Guatemala 1876–1936,” Hispanic American Historical Review (v.63/4, 1983);
Stacy May and Galo Plaza, The United Fruit Company in Latin America (National Planning Association, 1958);
Thomas Melville and Marjorie Melville, Guatemala: The Politics of Land Ownership (Free Press, 1971);
John E. Spillan and Christopher Ziemanowicz, “Strategic Management in Small Retail Business: The Case of Guatemala,” International Small Business Journal (v.21/4, 2003);
Robert G. Williams, Export Agriculture and the Crisis in Central America (University of North Carolina Press, 1986).

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