INDUSTRY

Mining and Energy

Belize has negligible known mineral deposits, although hopes persisted that large reserves of oil would be found. Extensive drilling, which began in 1981, primarily in the Corozal Basin, has been unsuccessful. Some of the nation's oil has been supplied at concessionary terms because Belize was a signatory in 1988 to the San José Pact with Mexico and Venezuela. This treaty obligated Mexico and Venezuela to offer concessionary credit for at least 20- 25 percent of the purchase price of their oil exports to Central American beneficiaries. In August 1991, Venezuela and Mexico increased the oil supplies offered under this agreement.

In the early 1990s, Belize had a limited capacity to generate electricity. Several small diesel generators, mostly powered by oil imported from Mexico, had a total capacity of 34.7 megawatts. In 1990 these plants produced 90 gigawatt-hours of electricity. Mexico agreed in 1990 to supply electricity to the Belize Electricity Board, but electricity remained costly and in short supply.

Manufacturing

The manufacturing sector has been dominated by agro-industries such as sugar-milling, citrus-processing, and processing of domestic foodstuffs. Belize also had a significant garment industry in the early 1990s. Nonagricultural industries that produced import substitutes were highly protected. Their output was limited by the size of the domestic market.

The garment industry was the only export-producing nonagricultural industry of note. As with the country's other major products, its level of exports fluctuated throughout the 1980s. In 1980 the garment industry was Belize's second largest industry. By 1990 the industry had dropped to fourth behind sugar, tourism, and citrus.

Garment manufacturing in Belize was an offshore industry using imported United States cloth. The finished product was then reexported, with the product exempt from United States duties for all but the portion of value added in Belize, per United States Tariff Schedule 807. Belize's garment exports have also benefited from the Multi-fibre Arrangement, which placed a United States import quota on garments from major exporters. Belize was not subject to the United States quota because of its relatively small share of United States imports.

Construction

Beginning in 1985, the construction industry began to grow faster than other sectors of the economy. Growth was especially strong after 1988, when investments in tourism and in the public sector accelerated. The industry continued to benefit from major infrastructural projects, such as the renovation of the Hummingbird Highway (the road linking Belmopan and the coast), the construction of numerous schools and urban housing, and a 24-megawatt hydroelectric project. In 1990 construction accounted for almost 10 percent of GDP.

TOURISM

Belize offers some of the most beautiful coral reefs in the Western Hemisphere, as well as more than 175 sandy cay islands, various archeological sites, about 240 varieties of wild orchids, and about 500 species of birds. Naturally, Belize would appear to be a prime objective for United States tourists. However, a lack of infrastructure has kept the tourism industry relatively underdeveloped.

Apart from making infrastructural improvements such as enlargement of Belize International Airport in 1989 and offering fiscal incentives, the public sector has done little to promote tourism. The unhappy experience of the Colonial Development Corporation (CDC) in the early 1950s may have contributed to the government's hesitancy. In 1953 the CDC opened the Fort George Hotel, realizing that the lack of hotel accommodations in the colony had been an obstacle to investment. The costs of this project were excessive, however, and the architectural difficulties were overwhelming because of the swampy ground on which the hotel was built. The hotel's operations proved to be difficult as well. As a result, CDC's capital in the project had to be written off.

During the 1980s and early 1990s, the tourism sector developed into the second most important source of foreign exchange for the Belizean economy. In 1980 tourism receipts had been about a tenth of sugar-export receipts. By 1990 the two sectors were almost equal in size. In 1991 hotel receipts were estimated to have grown by an additional 15 percent. Tourist arrivals almost tripled between 1985 and 1990. In 1990 the Fort George Hotel joined the Radisson chain and doubled its capacity to seventy-six rooms. In 1991 the Ramada Royal Reef Hotel opened with a capacity of 120 rooms. The total number of rooms had increased from 1,176 in 1980 to 2,763 in 1990.

The Belizean Ministry of Tourism has encouraged controlled development of tourism without endangering the country's ecological balance. Although tourism had great potential for growth, the sector was still constrained by poor infrastructure, unsophisticated services, and a shortage of qualified labor.