GROWTH AND STRUCTURE OF THE ECONOMY

The Colonial Economy

British Honduras officially became a British colony in 1862, after more than two centuries of vague status. Early Spanish settlers based the colonial economy entirely on the export of logwood. British buccaneers first settled in the early 1600s. Giving up their practice of capturing Spanish cargo ships laden with logwood, the erstwhile pirates began to cut the timber themselves. Logwood, a source of black dye, was in great demand in Europe at the time. However, by the end of the eighteenth century, dyes derived from logwood had been largely replaced by synthetic dyes. The decline of the logwood industry during the 1760s and the 1770s was accompanied by fruitless efforts to compensate for lost value by increasing the rate of production and hence the rate of exports. Once they realized the inevitability of failure, the settlers began exploiting other forest products, mainly chicle and mahogany. The latter wood became the mainstay of the economy for most of the next two centuries.

Although the logging of mahogany greatly enriched the colonial economy, particularly during the 1800s, it also seriously disrupted the indigenous Mayan culture. As the British pushed into the interior of the country, there were numerous violent confrontations with the Maya.

In the absence of a forestry policy, the country's mahogany reserves gradually ran low. This depletion, among other factors, led to the decline of the industry in the 1950s. By 1991 forestry accounted for less than 3 percent of gross domestic product, and mahogany trees were so rare in Belize that one of them, in the center of Belize City, was labeled as if it were a museum piece.

Sugar succeeded logwood and mahogany as the third main staple of the colonial economy. The Maya had cultivated sugar since the mid-1800s, but the modern history of British Honduran sugar production did not begin until 1937, when a small factory was opened at Pembroke Hall (later known as Libertad) in northern Belize.

In 1964 the small mill at Libertad was bought by the large British sugar conglomerate of Tate and Lyle. This event accompanied the beginning of nearly twenty years of great profit. Foreign investment, boosted production and productivity, and record prices fueled the growth of the sugar agro-industry. Sugar production increased from 17,000 tons in 1959 to 40,000 tons in 1963, to 70,170 tons in 1973, and to 114,000 tons in 1983. Production decreased rapidly thereafter to 81,700 tons in 1988 and underwent a mild recovery in 1990, when it reached 100,000 tons. The result of drought, smut diseases, froghopper (spittlebug) infestation, occasional labor shortages, and fluctuating demands and prices, the swings in sugar production created severe dislocations in the Belizean economy.

Belize's status as a former British colony has provided benefits that have translated directly or indirectly into economic advantages. As in many of its former colonies, Britain left behind a well-established two-party political system based on the British model. Belize's democratic tradition made postcolonial stability more likely and appealed to many foreign investors.

The British also left behind a network of education institutions that formed the basis for the country's 93-percent nominal literacy rate and high level of enrollment in secondary schools. As the 1990s began, most of the schools at the primary level were church-administered. Education was compulsory until age fourteen. Health care, too, was better than what was available most in other Central American countries. Belize had a higher daily calorie intake per capita, longer life expectancy, and higher literacy rates than El Salvador, Honduras, or Nicaragua, with quality-of-life statistics comparable to those of Costa Rica, Central America's most prosperous state, or the Bahamas, whose gross national product per capita was seven times larger. Another regionally distinctive feature of Belize was its relatively even distribution of income. All these factors have contributed significantly to social stability and economic productivity.