Complete Thesis_double spaced abstract.pdf

went unheeded. President Arana’s administration actually moved in the opposite direction;
strengthening protections and subsidies for coffee growers (Calvert, 1985, 157).
Guatemala’s attempts at economic diversification did not include widespread
industrialization; though there was modest growth in the industrial sectors between 1950 and
1960. General Ydígoras had overseen the implementation of the Industrial Promotion Law in
1959; a liberal foreign investment law. The industrial promotion law “offered generous fiscal
incentives in the form of exemptions from income taxes and from import duties on machinery and
raw materials” (Jonas, 1991, 48). These types of incentives were similar to those already given to
the elites who monopolized the agricultural export sector. The same elites participated in the
manufacturing and industrial sectors in Guatemala. Foreign investors responsible for financing
growth in the manufacturing and industrial sectors were the same entities and individuals who
were already investing in Guatemalan agricultural exports. Guatemalan elites did begin to engage
in more partnerships with U.S firms during this time; however, they were content to be the
“junior partners” in the relationships (Jonas, 1991, 43).
The Industrial Promotion Law had negative consequences for the development of
domestic industries and availability of state resources. Access to credit in industrial production
was prioritized to large foreign investors, imports were “favored” over domestic supplies and
resources, and the state suffered losses of government revenue as it paid out incentives and failed
to collect taxes (Jonas, 1991, 48). Furthermore, industrial development did not result in
substantial gains to the domestic population, due to the fact that the industry employed few
people, relative to agricultural exports, and that wages rose very slowly in industry and
manufacturing. From the 1960s up into the 1980s employment in the industrial sector hovered
around 10% of the economically active population (Dunkerly, 1988, 207). The Guatemalan
government was partially responsible for the downward pressure on wages, the
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