The Inverse Relationship Between Economic Growth and Sustainability in
Guatemala December 2013
Abstract: The paper will start with the history of Guatemala and its economy. This will give readers the sufficient background knowledge to understand why the economy is in the state it is in today. Specific examples of economic growth will be highlighted along with the general trend of Guatemalas economy. The unrivaled gap between the rich and the poor will be exemplified with a comparison of Guatemala City and Chichicastenango. The case studies of the Santo Tomas de Castilla Port and the Marlin Mine will show economic growths harmful effects on the environment. The paper will end with Guatemalas economic and environmental predictions for the future.
From the beginning, Guatemala was a country dominated by some of the most resourceful and successful new inhabitants of the Americas. Between A.D. 250 and 900, the Mayans had spread their vast empire all the way from Guatemala to Southern Mexico (Croy). They used the tools provided to them by the land to sustain a successful and self- made economy. The Mayans used resources such as stone to build some of the most impressive monuments in history. They relied on the land for hunting, fishing, and farming corn, squash, and beans. The Mayan Empires economy catered to their internal needs. This all changed when Spain invaded in the 16 th century. Set up as a branch of the Spanish economy instead of an independent economy now, Guatemala was run very differently. As a DiPietro 2 Spanish colony, Guatemala no longer produced the goods that served them best internally. They were instead forced to live for and like the Spaniards. The Quich, one of the smallest remaining powers of the Mayan Empire, were forced to work as slaves on farms. These farms produced crops that were exported to the mother country Spain. Agriculture was not the only sector of life that the colonists disrupted in Guatemala. The new colonys towns were built based upon the layout of towns in Spain. The Spaniards had no regard for the way life had been previously lived in their newly acquired territory. Religion was even disturbed as Christianity was taught to the Guatemalans. Their own sense of self and pride seemed to rapidly disappear for almost three hundred years. A call for independence changed this. After violence and controversy, Guatemala declared their independence from Spain in 1821 (Croy). The 1870s marked the start of the coffee exportation that resulted in a huge rise in their economic activity. Guatemalas economy has been one of importance ever since. Guatemala has experienced many advances in their economy over the past fifty years, several resulting from an increase in trade. In 1960, the country signed the General Treaty on Central American Economic Integration to join the Central America Common Market (Hansen). The CACM was created by and for five Central American Nations. Their goal was to increase regional free trade in order to mutually boost their economies (Encyclopedia Britannica). And in Guatemala, it worked. The agreement raised the developing countrys annual growth rate from 4% per year to 5.5% per year in the 1960 decade. Guatemala was able to focus more on growth through trade after settling internal battles and signing the Peace Accords in 1996. The relationship between Guatemala and DiPietro 3 the United States has developed in both countries favors. As of 2003, the United States constituted 41% of Guatemalas imports. We also receive 34% of Guatemalas exports (Shields). Guatemala has also strengthened their relations with their neighbor Mexico. In 2000, Guatemala, Mexico, El Salvador, and Honduras signed the Mexico-Northern Triangle Free Trade Agreement. This agreement aimed to reduce tariffs placed on the goods traded between these four countries. A similar agreement, the Dominican Republic-Central America-United States Free Trade Agreement, was signed in 2004. It increased free trade and communication between the United States, Guatemala, and other countries (CAFTA-DR). Through these types of treaties, Guatemala was able to increase its exports and take an essential step into the global economy. Economic growth in Guatemala can also be observed through its increase in tourism. The infrastructure of the tourism business is currently being greatly improved. In 2011, two new airlines began to offer flights from Mexico to Guatemala City (Travel and Tourism). In the same year, Guatemalas Tourism Chamber came out with the very first Official Visitors Guide (Travel and Tourism). These changes, along with stability within Guatemala, will increase tourism. The country also hopes to implement a tourism tax for entering and leaving. The intention of the tax is to increase money in the economy as well as increase the safety of the countrys visitors. Because of Guatemalas violence-ridden past, tourists have been hesitant to visit the country. Tourism has increased since the settling of the Civil War in 1996 (Croy). While in Guatemala, tourists spend their money on hand made clothing, jewelry, and art. Tourists spent over one billion dollars in Guatemala in the year 2006 (Croy). This money contributes to the growing infrastructure and economy as a whole. Through new and DiPietro 4 improved transportation, Guatemala hopes that the easy access will encourage tourists to travel to their country. Guatemala is taking the necessary steps to increase tourism, and as a result, increase spending in their country. Aside from signing agreements with other countries, Guatemala is also making internal changes in order to increase trade. Forests are being cleared for more farmland in order to increase agricultural output. Small mining operations are being taken on. The land naturally supplies lead, zinc, and antimony (Croy). Factory jobs are on the rise, and as on 2004, 15% of Guatemalans worked in factories (Croy). The factories produce everything from medicine to clothing, and their goods are sold all over the world. The Guatemalan economy currently faces an unrivaled gap between the rich and the poor. Half of the entire countrys wealth lies in the hands of the top 10% of the population. The rest of the wealth is distributed in the 30% of people who live on less than two dollars a day, and the 13.5% who live on one dollar per day (Croy). There are two specific cities that exemplify the disparity of life style. In Chichicastenango, poor farmers sell their crops at a biweekly market. Flowers, avocados, onions, and quetzals are exchanged by women in traditional clothing (Croy). In Guatemala City, these poor producers would be overwhelmed by the huge sky scrapers. The city is the most populous of all of Central America with a reported population of about 1,075,000 people (Shields). The bustling hub serves as the countrys financial, cultural, and historical center. DiPietro 5
The wealth that has accumulated itself in the city is not evenly distributed throughout the country. It is vital to close the gap between the rich and the unbelievably poor in order for economic growth to continue in Guatemala. Unfortunately, Guatemalas economic inferiority leads the country into an entirely different problem: environmental degradation due to economic growth. Although the economy may be expanding due to of the reforms mentioned above, the effects on the environment are extremely negative. Mining for metals such as lead, zinc, and antimony is a part of the economy (Croy). But these mines are having lasting effects on the environment that many are starting to take notice of. In early July, President Otto Perez Molina expressed concern for the mining practices of his country. He suggested a two- year suspension of mining for the purpose of reforming the industry (Hufstader). It has Although fairly close in proximity, these two cities could not differ more. http://www.stayxs.com/guatemala/images/guatemala-map.jpg DiPietro 6 been reported that there are numerous cases of both indigenous and non-indigenous communities objecting to mining projects out of concern for the environment (Hufstader). The costs of mining are beginning to outweigh the benefits. In May 2010, Physicians for Human Rights completed a study entitled Toxic Metals and Indigenous Peoples Near the Marlin Mine in Western Guatemala. Their aim was to highlight the potential dangers of the Marlin Mine on the people living near it. Studies were done on the water downstream from the mine, as well as on the actual people living in close proximity to the mine and stream. The findings reflected the idea that the mine was polluting the areas around it. Blood lead, urine mercury, arsenic, copper, and zinc were found in higher concentrations in bodies living near the stream and mine than in those living away from them (Basu). The closer the distance to the actual mine, the higher the concentrations of these metals in the environment. The conclusion was that both bodies and environments located closer to the mine contain higher concentrations of the metals.
The Marlin Mine is located in western Guatemala. http://intercontinentalcry.org/wp-content/uploads/marlin-mine.png DiPietro 7 The Marlin Mine is just one example in which economic development led to ecological degradation. The Guatemalans intended to use the resources that their specific area of land had supplied to them. The mining, producing, and trading of these resources would allow the country to take a step further into the global market. The mines created jobs internally and contributed money to the economy. Unfortunately for those living near the mine, more harm than help was experienced due to its byproducts. Their bodies were exposed to toxic metals through water and the Earth. The Indigenous people also face another injustice in the midst of economic growth. In June 2005, the Indigenous people in the regions surrounding the Marlin Mine voted. Of the 12 communities present, 11 rejected the mining (Zarsky). The government, who had previously promised the Indigenous more rights in the 1996 Peace Accords, completely ignored their modest request. Instead, they pushed on, claiming that the mine does not pose a threat (Zarsky). These Indigenous people had faith that their government would increase its respect for their opinions, but they were proven wrong. It is extremely hard for a broken country to work together to advance. Economic growth is dependent upon the relationships inside of Guatemala. Without trust in their government, the Indigenous people have no reason to work for the good of their country. Mining is not the only harmful industry being perpetuated by economic incentives. In 2004, a cruise ship terminal was added to the Santo Tomas de Castilla Port. An immediate increase of tourism was seen, meaning more money being spent on and in the country. The new port created jobs as well as an added a stop on cruise ships paths. About four cruise ships dock at the Santo Tomas de Castilla Port each month. The DiPietro 8 increased number of people visiting and spending money in Guatemala is helping their economy to grow. The added port not only means more tourists, but also an increased number of cruise ships. These ships are extremely harmful to the environment, both the land and the water. The Environmental Protection Agency estimates that in just one day, passengers on a cruise ship will create one ton of garbage, 170,000 gallons of dirty water, and an impressive 6,400 gallons of oil-contaminated ocean water (Farden). The EPA also acknowledges the difficulties of regulating an entity that is constantly between the borders of many different countries. A consistent policy on how this waste is to be dumped does not exist. Disparity exists even within the United States itself. In states where it is illegal to dump dirty water off of the coast, some cruise ships will dump it up in Canada. The rest of the states coasts will be polluted with the waste. This is a convenient short-term decision made by people who are unable to realize the bigger picture. The Earth is not separated by place; it is one big cycle. Polluting a different part of the Earth rather than another is not solving anything. Guatemalas economy is on the rise. Unfortunately, this also means that its level of pollution is heading in the same direction. The ever-evolving country is predicted to endure some heavy changes within the next twenty years. The Guatemalan government predicts a complete urbanization movement. The populations of Guatemala City and the areas around it are predicted to continue to grow. Although the economy will be boosted by the increase in consumption and demand, Guatemalas environment is going to be further pushed. The challenge that the improving economy is presenting to the environment should be one that should be welcomed. In a country that has continually DiPietro 9 struggled to keep its head above water, any economic improvement is a positive thing. The fact that Guatemala is even considering economic degradation a national issue shows how far the country has come. Its main focuses have transformed from simply stimulating the economy to stimulating the economy in the most harmless way possible.
DiPietro 10 Annotated Bibliography Anonymous. "Guatemala In The Global System." Oxford Economic Country Briefings (2009): 1-4. ProQuest. Web. Sept. 2013. <http://ezaccess.libraries.psu.edu/login?url=http://search.proquest.com/docview/1 98665057?accountid=13158>. This article presents numbers for GDP per capita, population, life expectancy, etc. It has very concise information that will be helpful as a reference. It also forecasts data for 2010, which I will compare to the actual data from 2010. This will lead me to the conclusion of whether Guatemala is growing in a predictable way.
Basu, Niladri, and Howard Hu. "Toxic Metals And Indigenous Peoples Near The Marlin Mine In Western Guatemala." Physicians for Human Rights, May 2010. Web. Sept. 2013. This report presents the findings of two physicians studying the health and environmental impacts of the Canadian-owned Marlin Mine in Western Guatemala. The mine targets gold.
"CAFTA-DR (Dominican Republic-Central America FTA)." Office of the United States Trade Representative. N.p., n.d. Web. 04 Dec. 2013. This sources gives an overview of the Dominican Republic-Central America- United States Free Trade Agreement. It explains who was involved and what each participant hoped to gain from the agreement.
DiPietro 11 Cardemil, Leonardo, Mercedes De Costa, Alberto Espejo, Jerome La Pittus, Ewe Ghee Lim, and Marcio Ronci, comps. Rep. no. 98/71. N.p.: n.p., n.d. Guatemala: Recent Economic Developments. International Monetary Fund, Aug. 1998. Web. Sept. 2013. This report dives deeper into the information outlined in my book source. Graphs and charts are presented as well as statistics. Economic growths are presented along with the internal problems Guatemala face. The graphs presented will serve me well on my quest for accurate numbers.
Chase-Dunn, Christopher. "Guatemala In The Global System." Journal of Interamerican Studies and World Affairs 42 (2000): 109-26. Full Text. ProQuest, Oct. 2011. Web. Sept. 2013. This article outlines the correlation between Guatemala's upward trend of economic growth and their ecological degradation. It looks at the problems that the country faces through a global perspective. This source will be valuable in my research regarding the effects of growth on the environment.
Croy, Anita. Guatemala. Washington, D.C.: National Geographic Society, 2009. Print. This book outlines the country Guatemala is today, how it came to be that way, and the role that it plays in global economics. Economic growth, including mining, manufacturing, and trading, are highlighted. I will do further research on their effects on the environment, but this book has prompted that research. Overall, this book serves as a very general overview of Guatemala's past, present, DiPietro 12 and future.
The Editors of Encyclopedia Britannica. "Central American Common Market (CACM)." Encyclopedia Britannica Online. Encyclopedia Britannica, 2013. Web. 06 Dec. 2013. This source explains the purpose and reasoning behind the creation of the Central American Common Market.
Farden, Katie. "Green Cruising or Cruise Ship Pollution?" The Daily Green. InvestigateWest, n.d. Web. Sept. 2013. The site outlines the harmful effects of cruise ships on the environment. It will support my case study of the newly opened Guatemalan port, Santo Tomas de Castilla.
"Guatemala: Economy." GlobalEDGE: Your Source for Global Business Knowledge. Michigan State University, 2012. Web. 02 Oct. 2013. This site provides background information on Guatemala's current economy. It also compares the country to the rest of the world in terms of GDP, population, and income distribution. It will serve as a baseline for my research.
Guatemala Economy: Quick View - Planning for Urban Development. Rep. N.p.: n.p., n.d. ProQuest. Web. 9 Dec. 2013. <http://search.proquest.com/docview/1462882879/1423E9059A163299B36/2?acc DiPietro 13 ountid=13158>. The trajectory of Guatemala's economy is predicted. The country's overall fate is discussed.
"Guatemala GDP Annual Growth Rate." Trading Economics. N.p., 2013. Web. 02 Oct. 2013. This site offers a summary, bar graph, and line graph of Guatemala's GDP Annual Growth Rate from 2008 to 2012.
Hansen, John R. "Economic Development: Pattern of Growth." Guatemala: Economic and Social Position and Prospects (1983): 25-30. Print. This article outlines the long-term trends of Guatemala's economy and the possible reasons behind the varying rates of growth.
Hufstader, Chris. "Guatemala's President Proposes 2-year Mining Moratorium." Oxfam America. Oxfam America, 29 July 2013. Web. Sept. 2013. The site highlights the indigenous Guatemalans' concerns regarding their safety and their country's environment caused by the current mining practices.
Shields, Charles J. Guatemala. Philadelphia: Mason Crest, 2003. Print. This book provides an overview of Guatemala's current economic and past political struggles.
DiPietro 14 "Travel and Tourism in Guatemala." Travel and Tourism in Guatemala. Euromonitor International, Apr. 2012. Web. Sept. 2013. This travel site highlights the improvements that Guatemala's tourism industry had made over the past couple of years.
Zarsky, Lyuba. "Searching for Gold in the Highlands of Guatemala: Economic Benefits and Environmental Risks of the Marlin Mine." Global Development and Environment Institute Tufts University, Sept. 2011. Web. Dec. 2013. This document highlights the ecological damage that has been brought out by the Marlin Mine. It also discusses the social injustice behind the mine.