Exploring Opportunities for FDI-led Growth in Belize

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Guest blog by Alex Sanchiz Vincente, LEG ’22

There are different methodologies to evaluate why countries, cities or regions do not achieve a sustained and inclusive economic growth and strategize around how policymakers can reorient their efforts to creating the necessary conditions for this growth to happen.

By participating in this new edition of the Leading Economic Growth course, I have witnessed how new approaches can be applied, that unlike more classical theories, allowing to i) better contextualize the obstacles preventing the prosperity rather than focusing on a set of solutions, and ii) define an actionable agenda targeting the implementation of practical steps to generate change.

The concepts and frameworks presented in this course, particularly the Problem Driven Iterative Adaptation (PDIA) and the Economic Complexity Index (ECI)[1],[2] have proven to be effective in the initial design of new strategies for my specific growth challenge: through the Inter-American Development Bank (IDB) current technical cooperation portfolio, increase inward investments in Belize as a mean to generate employment, growth, diversification of the economy and the reach of SDGs targets.

Belize has traditionally presented an array of systemic issues that affect the country’s international competitiveness and prevent to reaching its development full potential, including unemployment, informality, lack of innovation and low insertion in value chains. As important as this is, the weak track record of Foreign Direct Investment (FDI)[3], and low number of exporting firms. Coupled with its vulnerability to global warming effects, as it happens with virtually every nation in the developing world, these issues make the case for the National Government, with the support from Development Finance Institutions (DFIs) to mobilize resources and deploy interventions focused on climate resilience, for the benefit of the local communities and industries.

In the course, I have gained a more nuanced understanding of the FDI problem by applying the diagnostic tree approach, which provided a holistic view on the contribution of each key variable. By applying the economic complexity analysis, I could have a better sense of the current capabilities and sector competitiveness, as well as the country’s chances to diversify into related economic activities which would be new (such as Blue Economy industries), hence providing an opportunity to craft the storyline for policy reforms to make these possible.

Based on the preliminary work that stems from the last 10 weeks, factors that may affect the investment competitiveness are the inefficient concentration of public goods (e.g., transport infrastructure) as well as policy-related factors (e.g., large educational inequality and lack of incentives). Regarding the key aspects to be considered as priorities for reform area:

  • A strong legislative and regulatory framework,
  • An investment promotion strategy and additional resources through Belize’s Investment Promotion Agency (IPA),
  • New partnerships and collaboration and advocacy mechanisms with the private sector, and
  • An increased focus on results management.

What is more, this exercise allowed me to pay closer attention to the inclusion variables and have it as a pivotal part examine why the growth has not been inclusive. The current population of Belize is 412,190.[4] The fact that the rural areas are not very dense in comparison with the country’s main economic center in Belize city contributes to the regional inequalities: currently the economic activity mainly revolves only around this and that of Belmopan – where the capabilities lie, productive firms and formal jobs are based, etc. This is also related to the FDI track record, since most of the foreign multinational Companies (MNCs) are established in these two areas. In rural areas of Belize, given the huge importance of agriculture – that employs well over one-third of the country’s labor force – agglomeration seems to be the main root cause and the people in rural areas lack opportunities to shift to other promising sectors such as tourism, services, garments or blue economy.

In this case, the Framework for Policy Action on Inclusive Growth by the OECD is a helpful tool to consider inclusion as a pivotal part of any growth strategy; in the case of Belize, a good start in this area would be to treat inclusion data collection as a top priority for the statistical office and economic research departments, to get deeper knowledge on the factors contributing to this inequalities.

During this journey, I have also learnt how to frame every course of action in a more iterative way, including feedback loops from the stakeholders, so that functionality can be communicated, and authorization from the decision-makers can be gained from early stages. These, I consider, are key factors for succeeding in the implementation of potential strategies to solve any economic challenges.

I was expecting to learn from a well-renowned faculty and get high-level insights from different examples around the world on strategies to make countries grow, however, I never expected to amplify my current set of skills and challenge my previous thinking towards my economic growth in the way I did in just 10 weeks’ time. The interaction and exposure to other students’ contexts and experiences has also contributed to my learning process, in particular to i) think of potential alternatives courses of action, ii) reaffirm what actions implemented are indeed working, and iii) acknowledge that starting small can have a significant impact in the process, by identifying the right entry points to trigger further changes.

All in all, despite the complex nature of this economic challenge in Belize – involving many factors and varied stakeholders across the public and private sector spheres – now I have a greater set of tools to address every step in the process of assisting the Belizean Government in attracting and retaining FDI.

This is a blog series written by the alumni of the Leading Economic Growth Executive Education Program at the Harvard Kennedy School. 71 Participants successfully completed this 10-week online course in May 2022. These are their learning journey stories.

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