Sunday, March 20, 2011

BELIZE - It´s the economy stupid! 2011

By Ray Auxillou
Belize is still short circuited in the mind trap of colonialism when it comes to our economy. We are not making maximum use of our neighbors like Mexico, Guatemala and Salvador. Our sugar industry exports are stalled by legislation that does not allow competitive smaller sugar mills, to create export sugar orientated value added products. The sugar mill legislated monopoly follows a lot on the previous citrus colonial model, which is only now breaking out into world competition. We need to change the sugar mill monopoly legislation, but no leadership economically speaking, is coming from the UDP Cabinet, nor the civil service, who seem inadequate, despite an improvement in educational levels. They talk a good game in the Belize Civil Service, but like any civil service, while the written reports are glowing, the performance shows, it is just self-justification rhetoric. There is no meat in the bun, so to speak. Maybe we need more frequent turnover of senior civil service administrators?
For example; BELTRAIDE has been deemed a useless expenditure of tax funds. Different business groups have stated so. The Belize Foreign Office seem disorientated when it comes to developing Belize economically. Perhaps the problem lies with the compartmentalization of Cabinet Ministerial posts, so there are turf wars? While President OBAMA is courting BRAZIL, the world´s FIFTH LARGEST ECONOMY on the grounds, that exports to BRAZIL will create manufacturing jobs at home in the USA, or CHILE, or COLOMBIA, our own Cabinet Ministers seem to have no desire, or clue, about creating a desirable economic environment here in Belize. For example; our neighbor GUATEMALA has 8 local mills now producing yarns, woven fabrics and knits. They also have 169 sewing factories ( mostly KOREAN investment owned ) using local materials but aimed at the USA market. Asia out competed the Guatemala fabric factory market, so now they are converting the Guatemalan apparel industry, to specialized niches of clothes production, aiming at the high end special luxury clothing trade. While the USA fights for foreign investment and foreign immigrant expertise; in Belize we do nothing. Our government as a policy sits and waits for technical immigrants to apply for permanent residency and invest, with Cabinet ministers looking to make a quick dollar in bribes or stock participation shares. While in the USA, or Guatemala new immigrants are actively solicited. We have no equivalent lobby in Guatemala City through our Belize Embassy to go around inviting Korean/Guatemalan manufacturers to invest in Belize and become our citizens, like the Mennonites did more than 50 years ago. Regionally in Central America the move in job heavy employment garment manufacturing has switched to local suppliers, not those from abroad from Asia. Subsequently the new companies in Guatemala making yarn spinning, or supplying die making, or finishing of raw material yarns for manufacturing. We could be doing this in Belize, if we knew how. We don´t , so encouraging Korean/Guatemalan, or Japanese / Guatemalan companies to transfer to Belize is a new ball game, with new rules our limited civil service needs to adapt too. Already new small, very cheap technology, extruded hand held, plastic looms replacing knitting machines of old, are sweeping across Mexico. My wife in Hillview is doing some of that, but has more orders than she can do in the small local market that is the TWIN TOWNS. Heaven only knows the potential for piece work jobs, that are possible if you were to export products from Belize. To facilitate such economic paradigm shifts, we need an open frontier with Guatemala and Salvador, to temporarily import wools and yarns and spices and box materials, label making machines, etc. We import materials and export elsewhere in the world, our MADE IN BELIZE products. _We can do the same with shoes and sugar derivative products also, if you opened the monopoly on small sugar mill factories, now protected and forbidden under old colonial legislation. One factory monopoly will not provide the innovative competitive edge needed to solidify and expand our sugar industry.
Did you hear the latest speech by USA Secretary of State Hilary Clinton this weekend? President OBAMA is seeking trade with BRAZIL, CHILE and COLOMBIA. Did you know why? The AMERICAS are the largest developing economy group now in the world, outside of CHINA and India. Venezuela and Colombia now produce the most oil. BRAZIL is expected to match them in oil production over the next ten years. The untapped reserves are fantastic. The economy of Colombia, dominated by the Europeans, is a breadbasket for feeding the EU countries. The USA is still the biggest economy in the world, China is second, Japan is third still, don´t know who is fourth, but BRAZIL is the fifth largest economy. The American Continent is taking it´s place in the world since democracy is replacing the tyrants, dictators and autocrats. Colombia has come a long way in the last ten years. You would not believe the change in that country. Colombia now rivals Mexico for technology and manufacturing. BRAZIL looks to replace Japan.
While Matura Shepherd laments the fact that BEL will not supply electricity to the growing number of villages in the Toledo Hills and our government will not make them. BEL uses the old argument used once on San Pedro and Caye Caulker, there is insufficient viability. What nonsense! When you introduce electricity, the local village economy undergoes a dynamic transformation and expansion. BEL is actually stagnating the TOLEDO DISTRICT hill economic development. Yet our policy makers ignore proven experience and facts in Belize, we on the Barrier Reef islands learned the hard way for the generation past. Always supply electricity 5 times more than your best BEL commercial estimate, because over 30 months, the villages will grow into the supply. A natural fact of human nature.
( from Belize Culture listserve debate )

Before any government of Belize can effectively pursue a new economic paradigm shift there needs to be a complete restructuring and revamping of how government functions in Belize. We have a system that we inherited from our colonial masters that wasn't designed and historically used to provide a service to the public but rather to control the resources of the country and siphon the wealth to benefit those who hold political power and influence. Growing the GDP won't necessarily fix the problem 'cause the income inequality is likely to keep getting worse with the system of government that we practice in Belize.



by Ian Fletcher
This is no accident. Free trade tends to mean that the industrial sectors of developing nations either "make it to the big time" and become globally competitive, or else they get killed off entirely by imports, leaving nothing but agriculture and raw materials extraction, dead-end sectors which tend not to grow very fast.

Free trade eliminates the protected middle ground for economies, like Mongolia or Peru, which don't have globally competitive industrial sectors but were still better off having such sectors, albeit inefficient ones, than not having them at all. The productivity of modern industry is so much higher than peasant agriculture that it raises average income even if it is not globally competitive.

Nations which open up their economies to (somewhat) free trade relatively late in their development, and continue to support domestic firms with industrial policy, are far more likely to retain medium and high technology industry, the key to their futures, than nations which embrace full-blown free trade and a laissez faire absence of industrial policy too early in their development.

There are numerous documented cases in which trade liberalization simply killed off indigenous industries without supplying anything to replace them. To take some typical examples given by the International Forum on Globalization:

Senegal experienced large job losses following liberalization in the late 1980s; by the early 1990s, employment cuts had eliminated one-third of all manufacturing jobs. The chemical, textile, shoe, and automobile assembly industries virtually collapsed in the Ivory Coast after tariffs were abruptly lowered by 40 percent in 1986. Similar problems have plagued liberalization attempts in Nigeria. In Sierra Leone, Zambia, Zaire, Uganda, Tanzania, and the Sudan, liberalization in the 1980s brought a tremendous surge in consumer imports and sharp cutbacks in foreign exchange available for purchases of intermediate inputs and capital goods, with devastating effects on industrial output and employment. In Ghana, liberalization caused industrial sector employment to plunge from 78,700 in 1987 to 28,000 in 1993.

One unhappy corollary of this is the so-called Vanek-Reinert effect, in which the most advanced sectors of a primitive economy are the ones destroyed by a sudden transition to free trade. Once these sectors are gone, a nation can be locked in poverty indefinitely.

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