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“The Economic History of Belize From the 17th Century to Post-Independence”

Features“The Economic History of Belize From the 17th Century to Post-Independence”

Barbara Bulmer-Thomas and Victor Bulmer-Thomas
Cubola Productions, Benque Viejo del Carmen, Belize, 2012
Paperback; 214pp; US$24.00
ISBN 978-976-8161-39-0

Barbara and Victor Bulmer-Thomas have done us an enormous service in producing a very readable, concise text that traces the modern macro-economic history of Belize from the days of the earliest settlement by the British adventurers in the 17th century through to present times, and that analyses the factors that influenced that history. It is written in a way that makes what it says easy to understand and fully accessible to practically everyone in Belize. I stress “macro-economic history” because it is not a general history, and it is not detailed; it covers political and social developments only insofar as these are directly linked, through cause or effect, to economic developments, and it covers only the broad trends and strands of Belize’s economic history. It is worth noting that a detailed history, even if limited to the economics-related aspects of Belize’s evolution, would not be easily accessible to the general reader. Perhaps in compensation, the authors have included an extensive bibliography that will facilitate exploration of all aspects of the country’s history by the interested reader.

The book is published by Cubola Productions, of Benque Viejo del Carmen in Cayo. Cubola’s director, Montse Casademunt, has maintained her strong ongoing effort to bring to Belizeans the works of authors and editors (Joseph Palacio, Nigel Bolland, Jaime Awe, and Karla Heusner among them) critical to an understanding of who we are and where we have come from.

The authors trace the origins of the “British Settlement in the Bay of Honduras” as one consequence of the expulsion in the early 17th century of British logwood cutters by the Spanish authorities from the Campeche area in the Gulf of Mexico, and their movement into an area of the Yucatán Peninsula claimed, but not permanently occupied or settled, by Spain.

The book draws attention, as indicated below, to the impact on Belize’s development of the consequences of the ongoing recognition by successive British Governments of Spanish sovereignty over the area right through to the political breakaway of Central America from Spain in the first half of the 19th century. It explains the switch from logwood to mahogany extraction, and identifies the circumstances which maintained the colony’s focus on dead-end forestry-based operations (describing along the way the brief period of entrepôt affluence between 1820-1855), even as demand for mahogany declined as a result of competition from other producers and the shift from wood to metal in shipbuilding, as mahogany supplies dwindled as a result of extraction without replacement, and as the settlement/colony lost importance in the British scheme of things as the Empire expanded in the Caribbean, and particularly in Africa, India, and Australasia.

The book covers Belize’s relative economic decline, compared with the fortunes of most of its neighbours in Central America and the Caribbean, from a high point in the mid-19th century through much of the colonial period (which began with the formal status of a British colony in 1862, following agreement with Guatemala on country borders in 1859; agreement on the border with Mexico came in 1893).

It includes the labour-led protests in the first half of the 20th century against poor living conditions for the majority of the population resulting from British colonial neglect in alliance with the self-serving attitudes of the local elite, protests that started with the return of the Belize soldiers in 1919 following the end of World War I, when they saw what they were coming back to after risking their lives for King and Empire. The emergence of nationalist politics was a direct consequence of these protests. (It should be noted in passing that in Belize, like in the rest of the British Caribbean, the movement that organised the mass of the population against what it saw as an oppressive colonial and merchant-class elite, and that led the struggle for better living conditions for the working class, metamorphosed itself into organised labour, and served as a springboard for the political movement that eventually produced self-government and independence. In much of the former British Caribbean, political parties still have a strong trade union base.)

The book examines in some detail the performance of the economy since independence in 1981 (curiously omitting mention of the role of the Mennonites in the country’s agricultural and industrial capacity development, although a footnote acknowledges their share of the population in 2010 as approaching that of the Garifuna), and concludes that the country has not performed nearly as well as it could and should have, and that substantial and focused economic development effort is required if Belize is to overcome the significant social and political challenges that it faces.

There is much that will be of interest to the general reader in the slim volume. As Assad Shoman points out, among many other perceptive comments in his very readable “Foreword,” the authors effectively debunk the myth that the country’s name is a corruption of that of some British freebooter called “Wallace,” and establish that “Belize” is most likely of Mayan origin, though not connected with “Be-likin.”

The reader will be interested as well in the consequences of the dominance of timber extraction activities, and the way in which those were organised, for labour, population distribution, the structure of production, and general living conditions, as Belize moved from settlement to colony to independent country: as the grab for land-concessions for timber extraction resulted in the settlement elites awarding themselves location tickets that granted exclusive timber extraction rights, and then converting those location tickets into full freehold titles to the bulk of the country’s area north and west of the Sibun, minimizing the opportunity for the emergence of an agriculture-based peasantry and forcing workers into urban-controlled wage-labour, working for those same elites. The extensive landholdings of the Belize Estate and Produce Company Ltd. is a direct result of this process; as the search for cheap labour services by the timber extractors first pushed the descendants of the Maya to the western and southern periphery to avoid conscription as forced labour, and then encouraged the importation of Africans (initially as slaves) and Indians and Chinese (as indentured labourers) in order to assure a labour surplus; and as the absence of any encouragement of agriculture minimised the need for road and related infrastructure (timber logs were floated down the creeks and rivers, and then out to sea in the Belize Town harbour for ship-loading), and thereby reduced the need for self-taxation by the local elite monied class (who were both the merchants and the loggers), since the British authorities generally required their colonies to be self-supporting, and since the local elites also controlled both the legislature and the judiciary. In any case, extensive land ownership meant that the logging class had no interest in taxing land to raise public revenue, while the merchant class resisted taxes on trade; so that activities to be financed from public revenue were generally underfunded.

The authors point out that the British authorities, mindful of the provisions of the Anglo/Spanish treaties which limited British activities in the area to logging before Belize moved from being a “Settlement” to being a “Colony” in 1862, did not support the development of agriculture, and therefore saw no purpose in developing infrastructure. This position was strongly supported by the timber extractors for the taxation and labour supply reasons set out above. (The British attitude changed somewhat as mahogany extraction in Belize and sugar production in the West Indies became less profitable and, against local logging opposition in Belize, the botanical station project, mentioned below, was started in the 1880s.) The consequences of this attitude show up today in part in limited internal transport infrastructure and in underdeveloped port facilities. For much of the historical period, extending into the 20th century, travel around the country was mostly by water (sea and rivers), including travel to Cayo (San Ignacio) in the western (inland) part of the country, resulting in much of the country remaining relatively inaccessible to casual travel until very recent times. One can also see the legacy of forestry-dominance and the continuing pervasive influence of “forestocracy” attitudes, even though timber operations ceased to play any significant role in the country’s economy long before 1980, in Belize’s independence coat-of-arms.

(For completeness, a flow of Yucatan residents into Belize commenced into the north involving refugees from the Guerra de Castas, which erupted in southern Mexico about 1847, after mahogany had long been cut from easily accessible areas in that part of Belize; and into the south at about the same time, as the Maya sought once again to escape labour coercion, this time in Guatemala, consequent on the alienation of communal land in that country.)

Except for the emergence of tourism and for the Mennonite-led expansion in agricultural production (both of which require further analysis), Belize (certainly up to about 1950 and, in some aspects, even up to the present time) appears to fit very closely the Jamaican economist George Beckford’s description of a particular kind of a colony as a “hinterland of exploitation” (in contrast to one of “settlement,” as in the 13 colonies in North America), where effort is directed to extract as much as possible in the shortest possible time, for transfer abroad to the location of permanent residence of the owners of the extraction operation. One might even regard Belize as exceeding (from a negative perspective) the specifications of Beckford’s model in the sense that, while Beckford was primarily concerned with the effects on the hinterland of the continuing extraction of value after bringing together, for example, land and slave-labour in the West Indies for the planting of sugarcane and the subsequent production of sugar and sugar profits for export, nothing was planted in Belize by the adventurers and colonizers: the activity involved the pure extraction of what was already there; and there was no replanting.

The examination of post-independence economic developments will perhaps be of greatest interest to present-day planners and economic analysts, and the book devotes an entire chapter (out of seven) to this period, citing the significant improvement in the availability of data since independence compared with earlier periods that allowed the analysis to be undertaken. In the authors’ view, Belize’s economic performance since 1980 has stagnated, and in some cases fallen behind that of its Caribbean counterparts. The analysis focuses on the three areas of production, distribution, and employment; and then looks briefly at the impact of Government economic policy on overall performance.

With respect to production, the authors point to the country’s 2010 ranking at #22 out of 28 Caribbean countries in constant-price Gross Domestic Product (GDP) per capita, unchanged from 1980 (although noting a significant issue in relation to the reliability of the country’s population estimates). While GDP growth remained relatively high, on average, over the 1980-2010 period, it was accompanied both by substantial year-to-year volatility (resulting from both price and volume fluctuations in the country’s exports, both of which were beyond the control of the domestic authorities, on the one hand; and, perhaps more important, by large swings in public sector spending financed by borrowing, on the other); and, at the per capita level, by substantial net population inflows as a result of inward migration, despite the large outflow of Belizeans, mainly to the US. This per capita GDP performance occurred despite substantial broadening in the output product-mix as a result of ongoing economic diversification, with a strong shift towards services and towards higher earnings per unit of product.

Alternatively, one may posit that, despite the reliability issues with both the population and the GDP numbers (and this issue would affect the statistics for all the countries in the Caribbean and Central America to varying degrees), the population growth rates during 1980-2012 published by the World Bank for the countries in both the Caribbean and Central America (excluding the special circumstances of the “tax haven” UK Dependent Territories and The Bahamas) are on average noticeably lower than in Belize. This could mean that, in respect of the per capita calculations undertaken by the authors, Belize has not really done all that badly, and that the relative economic stagnation may in fact reflect an inability to cope adequately with the effects of substantial migration, both in terms of the net inflow, and in terms of the net loss of skills. What remains to be established is whether the growth that took place was, and is, sustainable, regardless of how the numbers are interpreted.

In relation to the distribution of income, the authors point to a striking increase in poverty generally (poverty rates nationally rose from 33.8% of the population to 41.3%) and extreme poverty (indigence) in particular (from 10.8% to 15.8%) in the country as a whole between 2002 and 2009, the years in which poverty assessments were undertaken. They also point to a number of features of poverty in Belize: its association with rural areas (80% of indigent households were found in rural areas); its association with education (only 12% of heads of indigent households had secondary or post-secondary education, compared with 35% for heads of households nationally).

The authors regard the education issue as important, stating that secondary school attendance rates in Belize have been low by international standards, and that the country is falling badly behind the Caribbean and Central America in this area (a very recent publication by the IDB on education challenges in Belize has already been receiving attention from the authorities); and a fall in indigence rates in Toledo from 45% in 2002 to 37.5% in 2009 alongside rising rates in Stann Creek and Orange Walk (above 10%) and, in particular, the Corozal District (15.7%).

The authors note that, in contrast to the rest of the Caribbean except Haïti, the rural population in Belize exceeds 50% of the total, and that this share has been rising (good potential for increased agricultural production in the future, if properly organised, despite possible issues in the present). They also note that new migrants to Belize from Central America have tended to settle, at least initially, in rural areas. Indigence (extreme poverty) rates in Belize in 2009 approximated those in Guatemala in 2000; and in relation to broader poverty, only Haïti and the Dominican Republic in the Caribbean were reporting higher rates.

As an interesting sidebar to the distribution developments, the authors point to what appears to be a growing gap between output and incomes produced in Belize (GDP), and the share of that output and incomes that accrues to residents of Belize (Gross Domestic Income – GDI). This gap, of course, reflects the income payments that have to be made abroad to foreign investors, and is reported as approaching 15% of GDP, a substantial percentage. Because of the extent of the involvement of Michael Ashcroft as a foreign investor in Belize in recent times, the authors refer to the emergence of this gap as the “Ashcroft Effect”. Income payments to foreign investors in Belize are, of course, not limited to the Ashcroft group; and the country, like others that welcome foreign direct investment, must therefore balance the benefits of such investment against its costs. A number of countries have discovered that the balance is not always on the side of the benefits; but the assessment should perhaps always be made on a project by project, or investor by investor, basis, focusing on the medium- and longer-term effects rather than on short-term income and employment gains.

The third area reviewed in the post-independence period is employment; and here all the countries in the region have been struggling. The authors discuss a number of factors affecting labour markets, including migration and the rise of the rural population; the efforts to expand education access generally and in rural areas in particular; the structure of labour market demand and the supposed impact of minimum wages on employment; the rise in the female participation rate and in female employment, particularly in services; gender differences in education performance; and shifts in the ethnic composition of the population as a result of migration. They, however, offer no silver bullet for unemployment.

In their discussion of Government macroeconomic policy over the post-independence period, the authors express the view, after spending some time reviewing the performance of monetary and exchange rate policy and noting the very large interest rate spreads in the banking system, that fiscal policy performance has been weak. They point to minimal growth in the ratio of government revenue to GDP despite relatively strong and sustained growth in nominal GDP over the period, suggesting that overly generous tax concessions to business firms have been an important factor (the authors do not discuss the capacity of the authorities to enforce the existing tax laws).

They also point to high rates of public investment leading to large fiscal deficits financed by borrowing following 1998; the consequential large increases in public sector debt and problems for the DFC (the substantial difficulties in the Social Security Board are not mentioned); and the eventually resulting public debt default and the need to renegotiate external debt repayment terms. The authors do mention that the country faced a real risk of currency devaluation during the early years of the century as a result of the high levels of Government spending financed by borrowing, and point out that the World Bank ceased its lending operations to Belize because of its dissatisfaction with the fiscal policy stance. Not well known is the fact that the Caribbean Development Bank acted in similar fashion.

The review of public sector macroeconomic policy is perhaps too limited, given the importance of Government in the economies of very small countries. While there is a brief attempt to link monetary sector developments with economic activity and trade performance, there is no discussion of any consequences for economic performance flowing from planned central government operations focused on development, particularly given the more important role played by fiscal policy compared with monetary policy in undeveloped financial systems, and especially in small countries.

As well, the broader discussion of post-1981 developments ignores the tremendous shifts (both physical and ethnic) in the distribution sector that have been taking place. East Indian-origin haberdashers have substantially taken over the clothing, apparel and household supplies business, with (again) East Indian-origin and Chinese migrants mostly taking over supermarket and grocery/restaurant operations, with the Chinese predominant in the restaurant business, and in the grocery business in rural areas. These developments have been taking place at the same time that rapid growth in border towns in Guatemala and Mexico, accompanied by the establishment of US-style merchandising, fast-food, and entertainment franchise operations in the Mexican border town, has encouraged major expansion in cross-border shopping and entertainment excursions, overwhelming the capacity of the domestic customs service to levy the appropriate trade taxes. One result has been the transfer of a significant part of the growth and development contribution of distribution sector operations abroad, with little apparent incentive for the establishment of attractive domestic facilities. This has been exacerbated by the increasing ease of online purchasing directly from suppliers abroad, further constraining domestic distribution sector growth. Further constraining the development of domestic distribution and entertainment facilities has been a sharp rise in violent crime, apparently linked to the international trade in illegal drugs.

Three unusual features in particular encourage the reviewer to describe the book more as a labour of love, or of appreciation for a place that is dear to the hearts of the authors, than as a standard economic history text. First, the discussion (very enlightening) about the origin of the country’s name would more likely be of interest to Belizeans, and perhaps to older Belizeans, than to an outsider, and may perhaps be better described as an anecdotal footnote than as an important part of the country’s economic history. Secondly, the book provides in an appendix a short review of what used to be known as “The Belize Estate and Produce Company Ltd,” a firm that was one of the principal landowners in the country (for reasons mentioned earlier), and whose behaviour played a significant role in shaping modern Belize. The authors properly invite Belizeans to study the operations of that company and its influences on the country’s development. Thirdly, Barbara Bulmer-Thomas has contributed a very interesting chapter on the under-funded attempt by parts of the British colonial hierarchy to establish botanic stations, first at Government House opposite the present St. John’s Cathedral, and subsequently in other parts of the country, including at Bolton Bank, near the present Haulover Bridge. It needs to be recalled that the forestry-based profitability of the colony was then in decline, and that the British authorities at the time (late 1800s) had an interest in identifying opportunities for agricultural production, both for export from the colonies and for domestic food production, since a large proportion of the items in international trade at that time had an agricultural base of some kind (ten botanic stations were in fact established in the Caribbean). Hence the involvement in rubber and tea plantations in British India and South-East Asia; in the production of spices; in timber extraction; in fabrics and dyes; in sugar, coffee and tobacco; and hence the two attempts (the first aborted by the mutiny on the “Bounty”, the second successful) to bring breadfruit from the Pacific to the Caribbean. The chapter is informative and eminently readable; but doesn’t quite fit in the short economic history.

The authors conclude that Belize, for much of its existence, has (apart from the brief period of entrepôt profitability) been generally slow to identify and seize opportunities for growth and development, and has been slow to respond to changes in its environment. This begs the question: why? It is worth noting that the authors do not address explicitly issues of planning, organisation, or institutional capacity development; and this is perhaps associated with the very brief treatment given to fiscal and macroeconomic management, and to their role in Belize’s economic performance. These issues have become crucial to country development elsewhere in the world, in setting priorities and in planning for the achievement of objectives. This is particularly true in a current environment that is dominated by globalization, by regional collaboration and integration, and by a need for ongoing trade-related negotiations at all levels. Things only get done if people do them, and in a planned, organised and coordinated fashion. Perhaps a focus on these issues may help us to identify what needs to be done, so that we can do appreciably better than we have been doing. The authors are clear in their view that economic performance in Belize must improve substantially and on a sustained basis if the country is to overcome the challenges that it faces.
A Final Note:

This book provides an interesting and useful supplement to other substantial work on the economic history of the region by Victor Bulmer-Thomas. “The Political Economy of Central America Since 1920” was published in 1987, while “The Economic History of Latin America Since Independence” was first published in 1995. “The Economic History of the Caribbean Since The Napoleonic Wars” (which contains a chapter on Belize) was published in 2012, subsequent to the publication of “The Economic History of Belize”. He co-edited the two-volume “The Cambridge Economic History of Latin America”, which was published in 2006. The Bulmer-Thomas’ links with Belize are strong. Victor taught for a while at St Michael’s College in Belize City (among his students was one Dean Oliver Barrow); and Barbara, his wife, hails from Melinda, in the Stann Creek District, the location of one of the sites for the Belize Botanic Stations.

Cubola Productions, based in Benque Viejo del Carmen, has been publishing a wide range of books on Belize, both fiction and non-fiction, written both by Belizeans and by scholars who have done research on Belize. The Belize Collection offers interesting material on the country’s economy, history and sociology. More information, including how to purchase books published by Cubola, is available at www.cubola.com

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