Staples, Institutions and Growth. Competitiveness of Guatemalan Exports 1524-1945

In the integrated institutional-staples-‘vent for surplus’ approach, the opening of trade occurs because of initial demand. Once demand is determined, competitiveness is a function of transportation costs, entrepreneurship, capital, land and labour costs, as well as the role played by the State. When all these factors promote competitiveness within an institutional framework that decreased transaction costs and established efficient property rights, linkage effects are usually created around the export base that spurs sustained economic growth in the economy. The objective of the present study is to define the structure of the approach and to analyse historically the competitiveness of Guatemalan exports from 1524 to 1945. The analysis of Guatemala is divided into two time periods. From 1524 to 1870 staples were exported sporadically. Their production hardly created linkage effects and they had a limited impact on the employment on land and labour. From 1871 to 1945 two staples, coffee and bananas, made their inroad into the world market. Their production created linkage effects and had a substantial impact on the employment of land and labour.