Cayman Is Rich, Belize Is Poor. Why?
January 19, 2012
Cayman is rich, and Belize is poor. Why? Both are small Caribbean countries with the same climate and roughly the same mixed racial heritage, and both were English-speaking British colonies. Belize received its independence in 1981, while Cayman is still not fully independent but is self-governing at the local level, with its own currency, laws and regulations, says Richard W. Rahn, a senior fellow at the Cato Institute.
Back in the early 1970s, Cayman was as poor on a per capita basis as is Belize today. Both countries had ambitions to be tourist and financial centers. Cayman succeeded and has about six times the real per capita income of Belize. What did Cayman do right and Belize do wrong?
It comes down to one word: governance.
- Perhaps most important is that Cayman had and maintained a competent and honest judicial system, which gave foreign investors confidence that their property would be protected.
- Cayman also has a very low crime rate, allowing tourists to walk around freely without fear.
- Unfortunately, many judges in Belize are poorly trained, incompetent and, in some cases, corrupt.
- These issues cause foreign investors to consider higher-risk factors for projects in Belize as contrasted with Cayman.
If Belize would clean up its courts, fully protect property rights and adopt the best economic practices of its competitors, it could quickly become rich.
- For instance, it takes an average of 44 days to get all of the required permits to open a new business.
- In some countries, such as Estonia, Singapore and even the Commonwealth of Virginia in the United States, the required paperwork to open a business can be done online, turning days into hours.
Source: Richard W. Rahn, "Tale of Two Small Countries," Washington Times, January 16, 2012.
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