Forestry was the only economic activity of any consequence in Belize until well into the 20th century, when the supply of accessible timber began to dwindle. Cane sugar then became the principal export. Exports were augmented by expanded production of citrus, bananas, seafood, and apparel. The agricultural sector suffered from damage resulting from hurricanes that struck Belize in late 2007 and heavy flooding in mid-June and October of 2008. The farm shrimp industry, a chief export earner until 2005, continues to decline. The service sector and nascent petroleum sector lead Belize's economic growth.
The country has about 809,000 hectares of arable land, only a small fraction of which is under cultivation. To curb land speculation, the government enacted legislation in 1973 that requires non-Belizeans to complete a development plan on land they purchase before obtaining title to plots of more than 10 acres of rural land or more than one-half acre of urban land.
Domestic industry is limited, constrained by relatively high-cost labor and energy and a small domestic market. Some 185 U.S. companies have operations in Belize, including Archer Daniels Midland, Texaco, and Esso. Tourism attracts the most foreign direct investment, although significant U.S. investment also is found in the telecommunications and agriculture sectors.
A combination of natural factors--climate, the longest barrier reef in the Western Hemisphere, numerous islands, excellent fishing, safe waters for boating, jungle wildlife, and Mayan ruins--support the thriving tourist industry. Development costs are high, but the Government of Belize has designated tourism as one of its major development priorities. However, although in 2006 tourist arrivals in Belize totaled 958,813 (about 70% from the United States), tourist arrivals were down 2.5% in 2008 alone. This decline is primarily the result of the global economic crisis.
A major constraint on the economic development of Belize continues to be the scarcity of infrastructure investments. As part of its financial austerity measures started in late 2004, the government froze expenditures on several capital projects. Although electricity, telephone, and water utilities are all relatively good, Belize has the most expensive electricity in the region. Large tracts of land, which would be suitable for development, are inaccessible due to lack of roads. Some roads, including sections of major highways, are subject to damage or closure during the rainy season. Ports in Belize City, Dangriga, and Big Creek handle regularly scheduled shipping from the United States and the United Kingdom, although draft is limited to a maximum of 10 feet in Belize City and 15 feet in southern ports. American Airlines, Continental Airlines, U.S. Air, Delta Airlines, and TACA provide international air service to gateways in Dallas, Houston, Miami, Charlotte, Atlanta, and San Salvador.
Belize's economic performance is highly susceptible to external market changes, a fact that is reflected in the rise of its real growth rate from 1.2% in 2007 to 2.1% in 2008. World commodity price fluctuations and continuation of preferential trading agreements, especially with the United States and the European Union (cane sugar) and the United Kingdom (bananas), greatly impact Belize's economic performance.
Belize continues to rely heavily on foreign trade. Imports at June 2008 totaled $788.8 million, while total exports were $462.6 million. The United States continues to be Belize's number-one trading partner. Through 2008, the United States provided 34.0% of all Belizean imports and accounted for 42.4% of Belize's total exports. Other major trading partners include Mexico, the United Kingdom, European Union, Central America, and the CARICOM member states. In 2006-2007, Taiwan and Japan emerged as new trading partners with Belize.
Belize aims to stimulate the growth of commercial agriculture through CARICOM. However, Belizean trade with the rest of the Caribbean is small compared to that with the United States and Europe. The country is a beneficiary of the Caribbean Basin Initiative (CBI) program, which forms part of the U.S.-Caribbean Basin Trade Partnership Act--signed into law by President Clinton on May 8, 2000--a comprehensive U.S. Government program designed to stimulate investment in Caribbean nations by providing duty-free access to the U.S. market for most Caribbean products. Significant U.S. private investments in citrus and shrimp farms have been made in Belize under CBI. U.S. trade preferences allowing for duty-free re-import of finished apparel cut from U.S. textiles have significantly expanded the apparel industry. European Union (EU) and U.K. preferences also have been vital for the expansion and prosperity of the sugar and banana industries.
Information by U.S. Department of State
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