The Economy

THE MAIN INFLUENCES on the economy of Belize have been the country's small size and its long history as a colony. As occurred elsewhere in the Caribbean, over the centuries the colony's administrators precariously based its economy on a succession of single raw commodities--logwood in the 1600s and 1700s, mahogany in the 1800s, and then sugar in the mid-1900s. During the 1980s, the dangers of a single-crop economy became brutal realities for the many Caribbean countries that had grown heavily dependent on sugar exports. Sugar prices collapsed, and protectionist trade practices by industrialized countries exacerbated the producers' problem. Belize's experience was no exception. However, the commodity crisis of the 1980s led to economic reform in Belize aimed at diversification and taking the economy definitively beyond the colonial period.

Small economies, such as Belize's, tend to be less diverse and more dependent on exports than larger economies, a situation that makes them volatile and highly vulnerable to outside forces. A small work force and limited capital, dependence on foreign markets and investment funds, and high overhead costs are all factors that have hindered Belize's economic growth. Despite these problems, the economy has steadily improved since independence was achieved in 1981. The British legacy of stable representative government, respect for education, a relatively even distribution of income, and a comparatively high standard of living has attracted increasing amounts of foreign investment. In 1991 the economy was more diverse than ever, the export sector was strong, a growing tourism industry promised increased revenues, and the government had avoided dangerous levels of foreign debt. The outlook for Belize's economy for the remainder of the 1990s seemed bright.