Belize Table of Contents
The Belizean economy entered the 1990s in much better condition than it had entered the 1980s. The economy was more diverse, export biases had been removed, private-sector incentives and privatization had been well received, private and public investments had reached record levels, the tourism sector had boomed and was positioned to become an engine of further growth, and, most important of all, the government had successfully completed a process of fiscal consolidation. All of these gains were financed mainly by direct foreign investment and concessionary funding and accomplished with comparatively low external debt ratios.
Negotiations on trade matters were underway that posed challenges as Belize entered the 1990s. As in most small economies, much of Belize's growth was based on export performance, which depended on preferential trade arrangements. Prices for Belizean sugar exports were 45 percent above world market prices in 1990, and the price of bananas exported to Britain was 30 percent above world market prices. The results of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT--see Glossary) negotiations, the creation of the single European market by 1993, the implementation of action programs under the EAI, and the prospect of a North American Free Trade Agreement would eliminate some of these trade preferences and decrease Belize's exports.
Economic growth could also be affected by a withdrawal of British troops. In 1991 British prime minister John Major gave assurances that the troops would remain despite the diplomatic recognition accorded Belize by Guatemala in September of 1991. But constraints on the British budget might change that position and affect Belize's growth in the future.
The consolidation of government finances was central to the progress made in the second half of the 1980s. Capital expenditures rose sharply in order to cover the cost of providing the physical infrastructure necessary to continued growth. Future increments would have to keep pace with the nation's rate of economic growth. The prospect that Belize would continue on its path to economic development and social progress was good, but the economy nevertheless faced new tests as the century drew to a close.
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Economic literature on Belize is mostly outdated and usually not very comprehensive. The economic chapter in O. Nigel Bolland's book Belize: A New Nation in Central America discusses the economic structure of the country in the context of Belize's historical experience. The last chapter in William David Setzekorn's book, Formerly British Honduras: A Profile of the New Nation of Belize provides a good understanding of the various sectors of the Belizean economy and their prospects.
The best sources of up-to-date information are the country reports and profiles of the Economist Intelligence Unit and World Bank data. Two relatively recent country guides that also contains economics chapters are Tom Barry's Belize: A Country Guide and his Inside Belize.
Finally, as a small developing country Belize faces many special constraints. As an aid to understanding these constraints and putting them in the Caribbean context, the most relevant standard piece written on the subject is William G. Demas's The Economics of Development in Small Countries. (For further information and complete citations, see Bibliography).
Data as of January 1992