| BUSINESSWEEK ONLINE : NOVEMBER 6, 2000 ISSUE | ||||||||
| ||||||||
 | ||||||||
| COVER STORY
Guatemala on $3 a Day It's Sunday morning in the bustling main square of Villanueva, a hardscrabble working-class suburb of Guatemala City, and already the Pollo Campero fried-chicken restaurant is full of families. People have a little cash in their pockets in Villanueva, thanks to jobs in nearby plants where workers sew garments for such global companies as Gap and Liz Claiborne. A decade after Guatemala began to diversify its agricultural economy, the apparel industry now employs 77,000 people and generates $440 million in exports. But those revenues haven't translated into broader development for Guatemala, where the gap between rich and poor is among the world's widest. Although economic growth ranged between 3% and 5% during the 1990s, little has trickled down. In the Western hemisphere, only Haiti's social indicators are worse, according to the U.N. Up to half of workers earn less than $3 a day, the minimum wage. A third of adults are illiterate. An alarming number of families live in adobe shacks with no electricity or running water. Guatemala's sad experience provides a lesson of sorts on how globalization can fail to deliver the goods. Why has the export push not brought prosperity as it did to East Asia? Corrupt government and protected business oligarchies are one reason. But Taiwan, South Korea, and Thailand had those, too when they began their export drives. The answer starts with Guatemala's fractured, strife-ridden society, its neglect of investment in its own people, and its poor economic policies. So, like most of Central America, Guatemala now lacks the broad middle class and dynamic, diversified industrial base needed to fully benefit from foreign markets. Half of Guatemalans are Indians, many of whom still speak little Spanish. The country is just beginning to recover from a 36-year civil war, in which the military massacred entire villages. Unlike much of East Asia, where land reform and far-thinking public housing policies helped peasants rise above the subsistence economy, just 2% of the people own 70% of the land. Little wonder the savings rate is about a third of Asia's level, meaning the country must depend heavily on foreign investors to grow. And although Guatemalan democracy is 15 years old, the government still can't stand up to the entrenched elite, who put their money into land and luxuries rather than in globally competitive industries. INDIGNITY. So, no matter how many foreign factories Guatemala draws, the nation can't make an economic leap if it doesn't invest in itself. With education spending of just 1.7% of GDP--about the level of Chad--half of children reach fifth grade. Under peace accords reached in 1996, the government boosted social spending sharply--from 4.3% to 7.3% of GDP. But Alfonso Portillo, the populist President who took office in January, needs more cooperation from business and his own party to boost tax revenue from 9% of GDP to 12% by 2002, as the peace accords require. But Guatemala's business class, which is dominated by a handful of families that control such industries as cement, poultry, beer, sugar, and liquor have beaten most reform efforts. ''Whereas nearby Costa Rica has achieved 98% youth literacy ''and is investing millions on the Internet and schools, we haven't invested in teaching [Indians] to speak Spanish,'' admits Carlos Arias Maselli, owner of a 1,500-worker apparel business. Not surprisingly, the country is rife with sweatshops and disgruntled workers. ''We do want work,'' says Sandra Gonzalez, who has tried organizing unions in the garment sector. ''But we want to work with dignity.'' Portillo wants to boost growth to reduce poverty. But real change could take a generation. ''We are opening up now because we have to,'' says economist Carmen Urizar. ''But we have wasted 40 years without preparing ourselves.'' The payoffs from globalization won't trickle down anytime soon. By Elisabeth Malkin in Guatemala City _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
|  |
 | |
 RELATED ITEMS Global Capitalism COVER IMAGE: Global Capitalism CHART: Exports Have Surged for Two Decades... Moving Up the Ladder TABLE: Globalization's Mixed Results Guatemala on $3 a Day Penang's Secret (int'l edition) A World of Sweatshops TABLE: All Too Common Treatment Whose Globe? A Gusher for Everyone? MAP: West Africa On Their Own CHART: From a Flood to a Trickle Thailand's Bank Cop (int'l edition) Commentary: Take a Break, Trade Bullies VIDEOS: Five Views on Globalization INTERACT E-Mail to Business Week Online | |||
|
Copyright 2000-2008, by The McGraw-Hill Companies Inc. All rights reserved.
Terms of Use Privacy Notice  |
