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An Economic Look At Guatemala

The population of Guatemala has been rapidly expanding over the past 20-50 years according to information provided by the U.S. Census Bureau. In 1960, the population was a modest 4,099,721. By 1985, however, its population had grown to 7,580,844 with no sign of slowing down. Today the population is 13,550,440 and its growth rate is slowing down towards a more modest percentage. In 1985, a growth rate of 3.1% was recorded along with a high fertility rate of 5.7 per woman. Today, the growth rate has been reduced to 2.0% with a fertility rate of 3.4 per woman and is expected to continue slowing down through 2025. This current fertility rate is still much higher than the average which is around 2 and indicates that Guatemala’s population is continuing to increase albeit a little more slowly than experienced in the 1980’s. The current age pyramid, as can be seen in figure 1 below, indicates that a large percentage of the population is less than 20 years of age and a much smaller portion are more than 65 years of age. This shows there was still very strong growth in recent years which produced many young children and adults. The gender breakdown of the current population is almost even with a male population of 6,685,453 and a female population of 6,864,987. At the expected growth rate levels, Guatemala’s population is expected to double by 2050.

There are several factors that contribute to Guatemala’s high growth rate trend which are very typical symptoms of less developed countries. Guatemala’s economy’s largest industry is in agriculture which creates a high incentive for families to produce many kids to help work on the land. This is evidenced by the higher fertility rate of rural women versus urban women. On average, rural women have 2 more children than urban women. Also, there is a very large economic gap between the rich and poor. In order to maintain themselves in their older age, Guatemala’s elderly rely on their children to take care of them. This means that the elderly will have more security if they have more children. Birth control techniques are also not promoted by Guatemala due to their strong Catholic background. Due to Guatemala’s poor economic condition, many older people do not have access to proper medication which causes them to die at a younger age. These many factors have resulted in the very high growth rates experienced in Guatemala over the past 50 years.

HEALTH & WELFARE:

In mainly the rural areas of Guatemala, there are high rates of intestinal diseases and infant mortality due to the insufficiency of Guatemalan health services. Contributory factors to these problems are famine and minimum use of sanitation. To aid those with these medical problems, there are hospitals that provide free healthcare in communities that are fairly large, and there are also a variety of private hospitals. These hospitals are maintained by the Ministry of Public Health and Social Assistance. To help better rural inhabitant’s health’s, there were rural health centres established in hundreds of regions during the 1980’s. Since the 1980’s, there has been improvements in these centres, yet many of the individuals of the rural areas of Guatemala are malnutrition and are in need of medical attention but lack the access. (Stansifer, C., Griffith, W., & Anderson, T. (n.d.). Guatemala. Retrieved September 29, 2010, from <http://www.history.com/topics/guatemala>).

With regards to the health and welfare of the people in Guatemala, The degree of major infectious diseases is high. Such diseases are “food or waterborne diseases: bacterial diarrhoea, hepatitis A, and typhoid fever vector borne disease: dengue fever and malaria water contact disease: leptospirosis (2009)” (Guatemala People 2010. From <www.theodora.com/wfbcurrent/guatemala/guatemala_people.html>). According to gapminder.com, the current infant mortality rate per 1000 births is 28.63 (Indicator gapminder infant_mortality. (n.d.). Retrieved October 1, 2010, from <http://spreadsheets.google.com/pub?key=phAwcNAVuyj0NpF2PTov2Cw) and the maternal mortality rate per 100,000 births is 88.28703 (Maternal Mortality Ratio 1800-2008 . (n.d.). Retrieved October 1, 2010, from <http://spreadsheets.google.com/pub?key=pyj6tScZqmEcVezxiMlWaRw>). From the 1800s to the 1980s, the life expectancy at birth went from being 26 years to 57 years and then increased to 71 years by year 2000.

ENERGY:

Following the 1996 Peace Accords, which ended about 40 years of civil conflict, Guatemala has enhanced their infrastructure regarding to electricity and telecommunications. Electricity, sanitation services, and water have been improved and have resulted to an increase of over 40%. Prior to the Peace Pact of 1996, many of the indigenous, poor, and rural individuals were not likely at all to be the receivers of new infrastructure connections as they are currently twice as likely to be. The use of telephones, mainly cellular phones, has increased from 4.2 of density in 1997 to 19.7 of density in 2001. Furthermore, since the end of the civil war, there has been an increase in public phones for rural locations. (Ike-Okoh, C. (2010, April 19). Retrieved October 9, 2010, from <http://businessdayonline.com/index.php?option=com_content&view=article&id=10232:do-not-ignore-the-need-for-infrastructure-reform&catid=44:business-intelligence&Itemid=318>).

Using both renewable and non-renewable resources, the country has the ability to produce energy on its own. Using wind, sun, biogas, hydro, energy crops, bioethanol, and biodiesel, Guatemala could generate around 13,800 MW. (Rivera, M. (2010, March 27). Sustainable Energy for Guatemala […]. Retrieved October 9, 2010, from <http://www.reeep.org/index.php?id=51&content=2659>). The nation’s government has created a programme specifically for the expansion of energy sources for the natives and for fuel diversification supplying a long-term solution.

ECONOMY:

Guatemala is the most heavily populated and largest country in Central America. With regards to the economy in Guatemala, agriculture is the most important because through agriculture they obtain most of their money. Their main products of exporting are coffee, bananas, and sugar. They currently are exporting 75% of these goods to various countries and their Gross Domestic Products (GDP) are at approximately 15%. This shows Guatemala’s overall economic output. Moreover, other goods and services in this country include winter vegetables, fruits, apparel, textiles, cut flowers, and tourism. The private sector which supplies nearly 85% of GDP controls Guatemala’s economy. On the other hand, the government only has a limited involvement in the economy which is to airports, docking and other ports, public utilities, and numerous development-orient financial institutions.

With regards to the stabilization of macroeconomics, Guatemala has had important improvements since the 1996 Peace Pact. These improvements have been made through policies and structural reorganizations to encourage district economic integration as well as promoting growth. The increase of higher economic growth and low public debt in recent years was due to robust remittance. However, Guatemala is susceptible to external shock due to its open economy. Because of this, Guatemala’s economy is unpleasantly impacted by the global economic crisis. Thus, remittances, falling exports, and capital inflows are reasons for Guatemala’s economy to rapidly slow down.

When taking into account, income disparity in this country, there is only 2.6% of income inequality with regards to labour and training experience, 15% of income inequality with regards to education in human capital, 6% of direct results of gender and ethnic discrimination, 2.5% of income disparity between self-employed and paid workers, 3.6% of income gap between informal and formal divisions, and 2.4% of non-labour profits. “Among the three categories used to decompose non-labour income, factor payments have the largest participation, explaining 1.1% of income differentials.” (Alejos, L. A. (n.d.). Contribution of the determinants of income inequality in Guatemala. Retrieved October 8, 2010, from <www.uwcades.org/papers/alejos2003.pdf>). Lastly, the disparity of the area of living is calculated to be 3.4%. Table 1 on page 8, indicates the contributed determinants at a national level of income disparity. (Alejos, L. A. (n.d.). Contribution of the determinants of income inequality in Guatemala. Retrieved October 8, 2010, from <www.uwcades.org/papers/alejos2003.pdf>).

OBSTACLES:

Guatemala is a very underdeveloped country in many areas such as politics, economics, and education which creates obstacles to sustainable development. The government of Guatemala is a very young democracy that has been formed through many years of civil war. In order for Guatemala to create, maintain, and enforce governmental policies that will contribute to the country’s wellbeing, it must have a reliable and trustworthy government. Currently, government officials are easily bribed and policies are formed with a very biased influence. Drug trafficking, money laundering, and illegal alien smuggling are all major problems in Guatemala that leads to a more corrupt and less stable society. The lack of a proper education, especially for rural children, proves to be a huge problem in creating a more productive economy. Almost half of Guatemala’s economy is dependent upon agriculture. Thus, many rural families grow up working on farms rather than getting a proper education. The lack of facilities, especially in rural areas, also hinders Guatemala’s ability to educate their youth. Guatemala’s economy is undiversified and relies primarily on agriculture, and in particular coffee beans. The crash in the agricultural markets, the depressed prices for coffee beans, and the widespread global recession in 2001 has proved how fragile Guatemala’s development is due to its dependence on a single industry. In order to have sustained development, Guatemala would need to educate its population and diversify its economy. It would also need a reliable and responsible government to provide the proper leadership in the face of so many challenges. (Guatemala. (n.d.). USAID from the American People. Retrieved October 11, 2010, from <www.usaid.gov/policy/budget/cbj2004/latin_america_caribbean/guatemala.pdf>).

Figure 1:C:\Users\Artee\Desktop\Introduction to Environmental Studies\populationPyramid.php.jpg

Source: U.S. Census Bureau, International Data Base.

Table 1: Contribution of the determinants of income inequality at a national level

Source: Contribution of the determinants of income inequality in Guatemala. Luis Alejandro Alejos. October 2003.

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