“Dutch disease,” a term coined by The Economist in 1977, is not an academic curiosity; it is a mechanism that ultimately affects the model of country we have built — consciously or unconsciously. It describes how a massive inflow of foreign currency can weaken local industry and make the currency more expensive by shifting resources toward non-exportable sectors. Dr. W. Max Corden and Professor J. Peter Neary later formalized it into an economic model: when the exchange rate appreciates due to an influx of dollars, industry loses competitiveness and the economy tilts toward services.1
In Guatemala’s case, remittances function like oil without a physical well. Dollars enter, the quetzal strengthens, local costs rise, and exporters receive the same international price. Margins disappear. The farm closes. The factory imports. Young people migrate instead of harvesting coffee. But we must be clear about something essential: the problem is not remittances; it is having treated them as an economic model, as a substitute for a national productive strategy.
Remittances are converted into quetzales for consumption: housing, supermarkets, transportation, telecommunications. Demand for non-exportable services rises, and domestic prices increase. The country becomes more expensive in dollars. Exporters face higher internal costs without better external prices. With a cheap dollar, importing becomes more attractive than producing. The result is not felt immediately, but it accumulates year after year, slowly eroding our ability to compete.
The underlying problem is not that today we have more shopping malls and fewer maquilas. Professor Adolfo Barajas of the International Monetary Fund warns in “Remittances and the Equilibrium Exchange Rate: Theory and Evidence,”2 that by weakening the export sector we lose the only engine that generates technological learning and economies of scale. We are burning the bridges toward future development.
Norway, by contrast, used its oil wealth to modernize its industry and avoid this trap.3 We have used this migration-generated income to sustain immediate consumption at the cost of deindustrializing ourselves. Dr. Jonathan Di John reminds us that this is not an inevitable destiny, but a failure of public policy.4 When migration flows reach their ceiling, we will discover that we mortgaged our capacity to generate our own dollars in exchange for fleeting consumption.
In 25 years, Guatemala has grown only 1.5% annually per person. Other economies multiplied that pace several times over. South Korea grew 7.5% annually per capita between 1983 and 2003,5 after expanding its exports by 31% annually between 1964 and 1978.6 In 1968, South Korea and Honduras had similar incomes. Today South Korea surpasses Guatemala fivefold and Honduras eightfold.7 Vietnam grew 5.4% annually per capita between 1992 and 2024, with exports increasing almost 20% annually between 1991 and 2005. Ireland achieved 4.5% between 1995 and 2015 with exports growing 14% annually. No country that has surpassed 6% annual growth achieved it without becoming an export economy.8
Guatemala could have been that miracle. Between 1963 and 1977 our exports grew 9% annually, and by 2011 they reached 27% of GDP.8 We were close to 30%, enough to declare ourselves an export country. By 2025 they will represent only 17%. The decline has not been the result of chance, but of the prevalence of accumulated decisions shaped by negligence, ideology, personal interests, and a clear lack of a national model.
Since 2013, the governments of Otto Pérez, Jimmy Morales, Alejandro Giammattei, and the current administration of Bernardo Arévalo, together with Congress and fiscal and economic authorities, made decisions that extinguished the export momentum. It was not an accident; it was the absence of a clear model and the inability to understand the economic mechanism we were activating. Many of these decisions were marked by incompetence, corruption, or institutional capture, whose responsible actors now face judicial proceedings. But the economic damage is already done.
Until 2010, we competed with Honduras for regional leadership in coffee. In 2011 Honduras renewed its coffee plantations and bet on volume. Today it exports between 6 and 7 million quintals annually; we barely export 3 or 4. Then came the coffee rust plague that devastated the coffee sector. We lost volume and relative dollars. Between 2012 and 2013 sugar prices fell. Many producers shifted to palm and rubber, crops with slow maturation. Meanwhile, remittances rose from 10% of GDP in 2010 to 19.4% in 2023, appreciating the quetzal. Exporting became less profitable and more difficult. While Vietnam and Armenia used crises to sophisticate their industries, Guatemala became comfortable living off remittances. Migrants did not replace exports; but their dollars, without a national strategy, eroded our competitiveness.
The end of the global quota system (MFA) and CAFTA intensified competition. Successful countries offered legal certainty and stable, attractive conditions. The Dominican Republic protected its free zone law without changing a single word in 35 years. Bulgaria, Ireland, and Georgia drastically reduced their corporate income taxes to 10%, 12.5%, and 15%. Estonia and Rwanda fully digitized their procedures. Panama and Costa Rica created modern tax regimes and zones. China and Vietnam built ports and roads before attracting factories. Nicaragua offered aggressive tax exemptions and the lowest wages in the region.
Guatemala did the opposite: high corporate taxes, a 25% income tax plus ISO and a 5% tax on profits; an aggressive tax administration bordering on a policy of fiscal terror and rule changes in the middle of the game. Signals of legal insecurity have encouraged informality, which reached 71% in 2024, and weakened formal employment growth. We declared operating port contracts “harmful” (TCQ/APM). If an investor senses that the State can take away their contract, they certainly will not come to invest. While others opened doors, we raised barriers.
In 2016, the SAT and Congress prohibited 42 productive activities in Free Trade Zones: pharmaceuticals, plastics, processed foods, footwear and leather, paints, cosmetics, construction materials under the premise that we were “losing taxes.” What we lost were investors and exporters who migrated to the Dominican Republic, Honduras, and Nicaragua. Which government, which party, which superintendent are we going to charge for the lost opportunities and dreams?
Today we are told that the economy is doing well because GDP grows 3.5% and shopping malls are full. It is a complacent vision. In 1977 we exported 24.5% of our wealth; today barely 17%. We are an economy shrinking inward, sustained by remittances that now exceed our own exports. We cannot talk about job security, combating malnutrition, or educational quality without first talking about wealth. And history shows that wealth only enters through one place: the ports that today are in ruins.
We do not need to reinvent the wheel. It is time to stop asking for dessert before cooking dinner. Dutch disease is not an economic mystery; it is, ultimately, a political and moral disease: the preference for immediate consumption from remittances over the construction of wealth through a competitive industry. In upcoming columns we will discuss how to achieve this. For now, it is urgent to demand a serious, capable, and competitive national development model: as State policy, not government rhetoric. An exporting Guatemala whose economy is based on competing in the global market and not on the surplus sent by our migrants, who today send an injection larger — US$25 billion — than the US$20 billion we export. Because depending on the sacrifice of those who had to leave is not a development model; it is a resignation. And prolonged resignations are paid for with lost generations. And lost generations do not return.
Ramiro Bolaños, PhD. / President of the Center for Thought and Action: Factoría Libertatis.
References
- Corden, W. Max and J. Peter Neary, “Booming Sector and De-Industrialisation in a Small Open Economy”. The Economic Journal, Vol. 92, No. 368 (1982): pp. 827-831.
- Barajas, Adolfo et al. “Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence”. Economía, Vol. 11, No. 2 (2011): pp. 45-89.
- Larsen, Erling Røed Larsen, “Escaping the Resource Curse and the Dutch Disease? When and Why Norway Caught up with and Forged Ahead of its Neighbors”, The American Journal of Economics and Sociology, Vol. 65, No. 3 (2006): pp. 605-640.
- Di John, Jonathan, “Is There Really a Resource Curse? A Critical Survey of Theory and Evidence”, Global Governance, Vol. 17, No. 2. (2011), pp. 167-184.
- World Bank Group. GDP per capita growth (annual %). Country official statistics, National Statistics Organizations and/or Central Banks; National Accounts, OECD & WB. https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG [Accessed Feb. 15, 2026]
- World Bank Group. Exports of goods and services (annual % growth). Country official statistics, National Statistics Organizations and/or Central Banks; National Accounts, OECD & WB. https://data.worldbank.org/indicator/NE.EXP.GNFS.KD.ZG [Accessed Feb. 15, 2026]
- Maddison Project Database (MPD) 2023. Bolt, Jutta and Jan Luiten Van Zanden, “Maddison style estimates of the evolution of the world economy: A new 2023 update”, Journal of Economic Surveys (2024): pp. 1-41. https://www.rug.nl/ggdc/historicaldevelopment/maddison/releases/maddison-project-database-2023 [Accessed Feb. 15, 2026]
- World Bank Group. Exports of goods and services as a percentage of GDP. Country official statistics, National Statistics Organizations and/or Central Banks; National Accounts, OECD & WB. https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS [Accessed Feb. 15, 2026] Luxembourg (191%); Hong Kong (182%); Singapore (178%); Ireland (143%); thanks to their role as logistics and financial hubs; Vietnam (90%); Lithuania (74%); Armenia (73%); Switzerland (72%); Thailand (70%).
