Belize’s long-term growth performance has been comparatively good.... Compared with its Central American counterparts, Belize’s has been a growth star.
In 1950 it was the second poorest country in the region. Now it is among the top tier countries, with gross domestic product per capita near that of Costa Rica and Panama.
Moreover much of this growth was achieved after independence.
Among its Caribbean peers however, Belize’s performance has been average, and it has not been able to close the gap with the better performing economies of the region. And since 2004, economic growth has been sluggish, barely above the rate of population growth, implying that re-activating economic growth is a central development challenge for the country.
The above assessment is from the opening paragraph of an October 2010 report prepared for the Inter-American Development Bank entitled “The Development Agenda for Belize - towards a sustainable and efficient state. (October 2010).
Much of the baggage that restrains Belize from a more vigorous growth profile is identified in this report, which also provides a valuable blueprint of what we must do to catch up with the leading Caribbean economies of Barbados and the Bahamas.
The report makes several key recommendations which we intend to examine in subsequent editorials. This week we want to underscore two areas of weakness exposed by the IDB report.
The first is the high cost of doing business in Belize. This is not due entirely to the high cost of credit, though excessively onerous interest rates have played a pivotal role in weighing down the economy. Taxes, import duties and utilities also play a role in keeping the cost of Belizean goods and services uncompetitive with goods coming from places like Chetumal and Melchor de Mencos.
The IDB report acknowledges that Belize’s cost structure is “quite high” when compared with those of major world exporters with which Belize must now compete.
The other, perhaps more challenging task is how to create foreign exchange gains, either by exportation of goods and services or by import substitution, which cut down on imports which eat away at foreign exchange.
Mennonite success in producing rice and corn for export and the more recent effort to produce corn meal for local consumption and for export are significant moves towards value-added production.
But Belize needs to make a special effort to increase petroleum production. Petroleum today accounts for some 40 percent of Belize’s exports. We could perhaps double or triple that figure with one or more significant new fields and with more emphasis on petroleum by-products such as natural gas.
The challenge for Belize during 2011 is for us to start doing things which will create wealth - with tourism, arts and crafts, intellectual property, and of course, exports.http://www.reporter.bz/index.php?mod=article&cat=Editorial&article=4881