The GROW Forum: Guatemalan Industry proposes a concrete solution to common problems

por | 10 Jun 2023

On June 6th, 2023 the Chamber of Industry of Guatemala (CIG) stormed D.C. to celebrate the GROW Forum. The name GROW was given to the event to stand for Generating Renewed Opportunities for Wealth-Creation in Guatemala.

Guatemala is important for the U.S. because it is the largest country, in the whole world, that still formally recognizes Taiwan, in terms of aggregate economic size and population. This is something the U.S. wants other countries to do, even though it does not do so itself. Guatemala has also been a stalwart ally of Israel, another pillar of longstanding U.S. foreign policy. Clearly, Guatemala is a strong ally of the U.S., and a country very close to our shores.

The purpose of the GROW forum was to promote the Guatemalan private sector´s initiative known as Guatemala Moving Forward (GMF). The GMF initiative is perfectly complementary with the framework of the U.S strategy of Nearshoring and Friendshoring, as it aims to increase Guatemalan exports and create 2.5 million additional jobs, something which will help to mitigate illegal immigration.

The forum was called GROW for a simple reason. Growth solves all the problems that the US faces in the Central American region. Economic growth generates wealth, good jobs, and higher quality democratic outcomes, by any measure. This is proven by the historical data.

It is significant that it was CIG that assumed the leadership to host the GROW forum. Industrial jobs are formal jobs, they pay better, and they are accompanied by social security coverage. U.S. government studies have determined that an annual GDP per capita of $8,000 is the sweet spot for reducing illegal immigration. The annual industrial salary in Guatemala is $7,800, already very close to that number.

The industrial salary in Guatemala is 40% higher than the national minimum wage, 50% higher than the GDP per capita, and almost 200% higher than the median income in the informal rural sector.  In Guatemala, industrial work pays better, with better conditions and social security coverage. Those, of course, are the Push factors of migration that the US Government has identified.

CIG is an important leader of the Guatemalan private sector, with 1,200 members, representing the largest industries in manufacturing, mining, energy, telecommunications, food and beverages, textiles and footwear, just to name a few key sectors.

However, it is important to emphasize that over 80% of CIG´s membership is made up of small and medium enterprises. Guatemala is the industrial powerhouse of Central America, where 1 out 4 manufacturing products are made. Together, industry represents over 20% of formal employment in Guatemala, over 23% of GDP, and 24% of income tax receipts for the government.

On the matter of tax receipts, it bears reminding that, according to the International Monetary Fund, corporate tax receipts as a % of GDP is 3.2% in Guatemala, more than double than the figure for the U.S.. Additionally, tax receipts on goods and services as a % of GDP is 6.2% in Guatemala, more than the 4% which the IMF reports for the U.S.. Moreover, just 90 Tax Identification Numbers represent a third of income tax receipts for the government in Guatemala. This fact destroys, once and for all, the narrative that big business does not pay its fair share of taxes in Guatemala, a favorite topic among the anti-american left in Guatemala that enjoys the support of the U.S. State Department.

In Guatemala, it is the formal private sector that funds social security, which is known as IGSS. Also, it is the private sector that fully funds INTECAP, the Technical Institute for Training and Formation of the labor force, a program dedicated to increasing labor productivity and standards of living in Guatemala. It bears mentioning that since 1991, in terms of the constant value of the product in the agro, industrial and service sectors, Guatemala has outperformed the average for the region of Latin America and the Carribean. In fact, according to the Global Competitiveness Index, Guatemala ranks in the top third of countries in both the reach and quality of staff training, the very mission of the private sector-financed INTECAP.

Corruption is among the things that most hurt Guatemala´s desire to industrialize and create the wealth necessary to deter illegal migration out of the country. Guatemala has a problem with poor quality institutions. Once again, the private sector has risen to the challenge. CIG´s program GuateÍntegra was specifically designed to promote integrity, compliance certification, and anticorruption standards among the private sector in Guatemala.  Another landmark initiative, ASTRA, the Institute for Leadership and Governance, was founded  with the goal of training ethical and efficient public administrators committed to the principles of republican democracy and market economics. ASTRA operates completely on private sector scholarship funding.

These are programs which could immensely increase their effectiveness if USAID funding would be directed to work together with the authentic, formal, organized private sector in Guatemala, on projects where bilateral interests align.

CIG is to be congratulated for its leadership among the private sector in Guatemala. It is especially to be commended for its demonstrated ability to engage American political leaders, in a bicameral and bipartisan manner, on the basis of shared values and common interests between Guatemala and the United States.

CIG should host a GROW forum annually in the United States. However, the bar has already been set very high. This has never been done before, but it should be done again. Our two countries have nothing to lose, and everything to gain.

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