Guatemala

Guatemala

Historical Background

The Maya civilization marks the beginning of Guatemala history. The modern Guatemala history is said to have started with the Guatemala Spanish Conquest of 1524. In 1523, a force of Spaniards was sent to the country under the leadership of Pedro de Alvarado. Due to the tremendous technological advancement that these Spaniards had, they took advantage of the indigenous people within a short period. By 1540, they had gained the overall ruling of the whole area. They then became the rulers of the country. Within the time of their ruling, conversion to Christianity and the growth of the church was exponential. The people, however, cringed to some of their old beliefs that existed before the entry of the Spaniards (Taylor et al, 2016). There also came about the division in Guatemala, where the people from Spain were considered the top. The second rank was the people with Spanish descent who were born in Guatemala, followed by the mixed race. The indigenous people were at the bottom level, and they were less significant when it came to making national decisions.

In 1821, Guatemala picked up freedom from Spain and was seized by Mexico until 1823, when it turned out to be a piece of the United Provinces of Central America. It turned out to be a piece of the four areas; El Salvador, Costa Rica, Honduras, and Nicaragua. This union of provinces did not last long as it broke up in 1840. A liberal regime ruled Guatemala in the 1830s, which was taken over by an uprising that happened in 1839 led by Rafael Carrera and the vicissitudes that had been presented by the liberal done away with. The liberals took over the country again in 1871 with Rufino Barrios, the president. This new president was a dictator who restricted even the power of the church. Barrios, however, died in 1885, which marked the end of his dictatorial leadership.

Estrada Cabrera was the next notable ruler of Guatemala who reigned from 1898 to 1920. During his rule, the American United Fruit Company began its processes in the nation. By the 1930s, vast amounts of bananas were being grown in Guatemala. In 1931, Jorge Ubico was elected president and remained in leadership until he was left the seat in 1944. Election of Juan Arevalo as president, followed in 1945. Education and health care were part of the significant reforms that Ubico paid attention to. Jacobo Arbenz took over in 1951 and introduced that demanded the land that was found unused would be distributed to the poor. CIA orchestrated an invasion into Guatemala, which forced Arbenz to step down. Castillo Armas took over and did away with all the reforms, and all the illiterate people were deprived of their right to vote. Fights rose in the country, but the civilian rule was re-introduced in 1986 after Vinicio Cerezo came to power. The bloodshed did not end not until 1996 after the signing of peace treaties (Bellino, 2016).

In the present day, Guatemala is still an impoverished country. It has been a country that has undergone several regimes and plenty of bloodshed with the harsh rule on the citizens. This has served in lowering its economic status, and this has not risen since then. The economy of Guatemala is still very reliant on agriculture. The society of Guatemala can be defined as very unequal with little improvement in literacy, while poverty levels remain constant. The population of the country as of the present day stands at 15 million.

Economic Description

Guatemala is well known for its fertile soils, tropical climatic conditions, and varied landscape. This can be the reason why the industrial roots of the country are in banana and coffee plantations that started in the 1860s. These two have remained the economic activity for most citizens in Guatemala. Coffee and bananas consisted of 90% of the total exports that Guatemala made annually until 1950. Commercial farming came into existence after World War II, along with the production of sugar, and keeping of livestock, which also made an essential part of the economy. The expansion of the economy had also been augmented by mining and manufacturing activities that had been making entry into the country in the 1960s. Debt calamity arose in the 1980s, and as a consequence, the export prices sunk, product values decreased, and inflation was on the rise. After ratification of the peace consensuses in 1996, the 36-years internal conflict in Guatemala ended, and the Guatemala economy gained a new life (Alonso-Fradejas, 2017).

When a country is at peace among themselves, the citizens tend to be more productive. With the end of the internal conflicts, Guatemala has made it to having the highest GDP in Central America and has maintained a constant rate of growth. Actions of political elites, liberalization reforms such as tax and trade reforms, and the changing international demand for resources are some of the major forces that have been posing a challenge to the economy of Guatemala. A fair balance has been arrived at by Guatemala between the service, manufacturing, and agricultural segments of the economy. Internationally, Guatemala is ranked the third coffee exporter and a leading exporter of sugar and bananas. The industrial sector is mainly dependent on mining processes, structure, and energy industries (Pons et al, 2017).  The largest segment of Guatemala’s GDP is obtained from the service sector, including tourism, technological enterprises, and telecommunication. In Central America, Guatemala is the only country that produces oil. This indicates that if the state invests in oil, the future might not be that bad for the economy. Presently, the infrastructure that is required in the development of the economy of Guatemala is lacking. This can be indicated by factors such as limited access to electricity, a sparse network of roads, and low telephone density outside Guatemala City. This is a turn off for the investors who might be willing to invest in the country.

Macroeconomic indicators are used when measuring the economic status of a nation. For Guatemala, these indicators speak well of its economy. Devaluation of currency and inflation have been steady with the overseas debt of US $5 billion being a handy one for the economy. Over the last decade, the GDP has grown progressively after the stunted growth of the 1980s caused by the debt crisis. When it comes to foreign investments, the political climate is appealing and welcoming investors who are willing to invest in the nation. Privatizations have aided in reducing the load on the government when it comes to the management of the resources. With the people having control of most investments, the country can grow exponentially with time. Despite the macroeconomic indicators having a positive way for the economy, the general situation of the country taints the picture created. Inequality and poverty levels pose a significant challenge to the growth of the country (Durr, 2017). High crime rates and violence, inadequate education systems, and widespread health deficiencies are also part of the reasons why the country might not rise to the levels that we think it might. Tension and unrest within the nation have also threatened the economic and political stability of Guatemala. Despite the aids from international agencies and foreign governments, the funds are not enough to promote the necessary change within the system.

Successful and Sustainable Development

Poverty remains a mega challenge when it comes to the economy of Guatemala. Over the last decade, incomes have not risen enough to reduce the poverty levels by any substantial degree. However, some measures can be implemented to reduce the poverty levels and raise the living standards of the 17 million citizens that Guatemala harbors. One of the reasons behind the resilient state of Guatemala is the monetary and fiscal policy. Since 2016, the economy has been losing steam due to the weakening state of the business sector, court-mandated suspensions, and constrained government spending. These factors have affected the growth of the economy a great deal as the people are limited to the areas of investment as well as the ways of using the available resources. Sustaining private consumption has been significantly aided by substantial remittances. Policies need to be enacted to support the domestic demand in the nation. A supplementary budget needs to be drafted, which should major in capital spending. Government spending should be fueled by infrastructure and social protection. The protection is aimed at ensuring the safety of the citizens as they go about their activities (Zur, 2017). The infrastructure will aid significantly in ensuring that the available resources are used maximumly and that they are aimed at attaining the common good of the citizens. This will boost the economic status since the people will have the freedom and government support when making developments. A government that supports its citizens in development projects is deemed to have a thriving economy within a short time.

The country needs to ease doing business within its boundaries. Government policies such as tax reforms have been a significant challenge when it comes to the opening of businesses in Guatemala. Online business registration and filing of tax returns will aid a great deal in ensuring that an investor does not have to go through several procedures before implementing a business idea. The protection of these businesses by the government will also ensure that the investors are sure of the profits of their investments. This will also lead to the coming of foreign investors and hence the smooth growth of the economy. Extractive industries for a significant part of the economy and therefore need to be supported. The oil industry is set to make huge strands when it comes to the economy of Guatemala since it is the only country producing oil in Central America. The question that might be considered next is that of the source of the revenues to fund all these efforts.

It is expected that if we need to increase the social and infrastructure spending, the government expenditure will rise by at least 20% of the total GDP. For the government to come up with enough revenues, the policies that are to be developed need to focus on strengthening of tax administration. Reinforcing value-added tax will ensure that the government has increased revenue to use in the development projects. To improve tax compliance within the nation, tax collection enforcement, and enhancing the application of tax information is essential. Secondly, the policies need to focus on the implementation of tax reform, such as raising the personal income tax. Lastly, these policies need to focus on revenue mobilization, which is aimed at increasing the efficiency in government spending (Pons et al, 2017). Aligning pay with performance will aid a great deal in striking a balance between the amount paid and the service received from the individual. Salaries in Public Administration will be essential when it comes to ensuring that we have enough revenue for government usage.

Over 60% of the population in Guatemala lives in poverty. What can be done to raise the living standards of these citizens? One of the main actions that can be done is the continued involvement of the citizens in high-impact projects, which are geared towards the achievement of the United Nation’s Sustainable Development Goals.  The expansion of primary health care will ensure that the citizens are healthy and that they can work towards the development projects that have been put up by the investors. Access to nutrition will also build a healthy nation, which is essential for a good economy. Thirdly, literacy levels need to be lifted higher for the people to have a better knowledge of how they are supposed to deal with the resources that surround them. Improving road networks will ensure that all the resources are accessible and that they are put into good use by the people as well as the investors who are coming in. With these measures in place, the living standards of the ordinary citizen will be boosted, and poverty levels decreased.

Policy Proposals

As we have seen from the preceding, Guatemala’s main challenge that has affected it in a very negative manner is poverty. Poverty has made citizens lack the necessary skills to exploit the available resources. Also, poverty has made it hard for the economy of Guatemala to grow as steadily as it might be expected. There is, therefore, a dire need for the alleviation of poverty levels within the country. One policy that can be put in place is the strengthening of tax administration. This policy is aimed at raising the tax that is offered to the government by its citizens. This can be an advantage and a disaster at the same time (Alonso-Fradejas, 2017). Increasing tax will lead to an increase in revenue levels for the government. This might be at the advantage of the developments within the country. On the contrary, it will be a strain on the citizen who has no source of income primarily due to the level of illiteracy in him.

The other proposal that can be implemented within the country is the mobilization of revenue. Government spending is an issue that needs to be looked into to ensure that the citizens have their share of what the government has to offer. However, the major challenge that comes along with the monitoring of government spending is corruption. With corruption, this seems not attainable as the people in higher offices will always tend to love themselves more than the citizens. This implies that the ordinary citizen will continue living in absolute poverty. The rate at which this policy can be implemented is demeaning; hence it might take time.

References

Alonso-Fradejas, A. (2017). Anything but a story foretold: Multiple politics of resistance to the agrarian extractivist project in Guatemala. In Global Land Grabbing and Political Reactions’ from Below’ (pp. 23-50). Routledge.

Aoyama, K. (2017). Ancient Maya economy: Lithic production and exchange around Ceibal, Guatemala. Ancient Mesoamerica, 28(1), 279-303.

Bellino, M. J. (2016). So that we do not fall again: History education and citizenship in “postwar” Guatemala. Comparative Education Review, 60(1), 58-79.

Dürr, J. (2017). Sugar‐Cane and Oil Palm Expansion in Guatemala and its Consequences for the Regional Economy. Journal of Agrarian Change, 17(3), 557-570.

Jonas, S. (2018). The battle for Guatemala: Rebels, death squads, and US power. Routledge.

Pons, D., Taylor, M. J., Griffin, D., Castellanos, E. J., & Anchukaitis, K. J. (2017). On the production of climate information in the high mountain forests of Guatemala. Annals of the American Association of Geographers, 107(2), 323-335.

Taylor, M. J., Aguilar-Støen, M., Castellanos, E., Moran-Taylor, M. J., & Gerkin, K. (2016). International migration, land use change and the environment in Ixcán, Guatemala. Land Use Policy, 54, 290-301.

Zur, J. (2017). Remembering and forgetting: Guatemalan war-widows’ forbidden memories. In Trauma (pp. 45-59). Routledge.