What Is a Banana Republic? Definition and Examples

A banana republic is a politically unstable country with an economy dependent entirely on revenue from exporting a single product or resource, such as bananas or minerals. It is generally considered a derogatory term describing countries whose economies are controlled by foreign-owned companies or industries.

Banana Republic Definition 

The term “banana republic” was coined in 1901 by American author O. Henry in his book “Cabbages and Kings” to describe Honduras while its economy, people, and government were being exploited by the American-owned United Fruit Company. 

The societies of banana republics are typically highly stratified, consisting of a small ruling-class of business, political, and military leaders, and a larger impoverished working-class.

By exploiting the labors of the working class, the oligarchs of the ruling-class control the primary sector of the country’s economy, such as agriculture or mining. As a result, “banana republic” has become a derogatory term used to describe a corrupt, self-serving dictatorship that solicits and takes bribes from foreign corporations for the right to exploit large-scale agricultural operations—like banana plantations. 

Examples of Banana Republics 

Banana republics typically feature highly stratified social orders, with depressed economies dependent solely on a few export crops. Both agricultural land and personal wealth are unequally distributed. During the early 1900s, multinational American corporations, sometimes aided by the United States government took advantage of these conditions to build banana republics in Central American countries such as Honduras and Guatemala.

Honduras

In 1910, the American-owned Cuyamel Fruit Company bought 15,000 acres of agricultural land on the Caribbean coast of Honduras. At the time, banana production was dominated by the American-owned United Fruit Company, Cuyamel Fruit’s main competitor. In 1911, Cuyamel Fruit’s founder, American Sam Zemurray, along with American mercenary Gen. Lee Christmas, orchestrated a successful coup d'etat that replaced the elected government of Honduras with a military government headed by General Manuel Bonilla—a friend of foreign businesses.

The 1911 coup d'etat froze the Honduran economy. The internal instability allowed foreign corporations to act as the de-facto rulers of the country. In 1933, Sam Zemurray dissolved his Cuyamel Fruit Company and assumed control of its rival United Fruit Company. United Fruit soon became the sole employer of the Honduran people and took complete control of the country’s transportation and communications facilities. So complete was the company’s control over the agricultural, transportation, and political infrastructure of Honduras, the people came to call the United Fruit Company “El Pulpo”—The Octopus.

Today, Honduras remains the prototypical banana republic. While bananas remain an important part of the Honduran economy, and workers still complain of being mistreated by their American employers, another product aimed at American consumers has become a challenger—cocaine. Because of its central location on the drug smuggling route, much of the cocaine bound for the United States either comes from or passes through Honduras. With the drug traffic comes violence and corruption. The murder rate is among the highest in the world, and the Honduran economy remains depressed. 

Guatemala

During the 1950s, the United Fruit Company played on Cold War fears in trying to convince U.S. Presidents Harry Truman and Dwight Eisenhower that popularly elected Guatemalan President Jacobo Árbenz Guzmán was secretly working with the Soviet Union to advance the cause of Communism, by nationalizing vacant “fruit company lands” and reserving it for the use of landless peasants. In 1954, President Eisenhower authorized the Central Intelligence Agency to carry out Operation Success, a coup d'etat in which Guzmán was deposed and replaced by a pro-business government under Colonel Carlos Castillo Armas. With the cooperation of the Armas government, the United Fruit Company profited at the expense of the Guatemalan people. 

During the bloody Guatemalan Civil War from 1960 to 1996, the country’s government consisted of a series of U.S.-backed military juntas hand-picked to serve the interests of the United Fruit Company. More than 200,000 people—83% of them ethnic Mayans—were murdered over the course of the 36-year-long civil. According to a 1999 U.N.-backed report, the various military governments were responsible for 93% of the human rights violations during the civil war.

Guatemala still suffers from its banana republic legacy of social inequality in terms of the distribution of land and wealth. Just 2% of the country’s farming companies control nearly 65% of the agricultural land. According to the World Bank, Guatemala ranks as the fourth most unequal country in Latin America and the ninth in the world. Over half of the Guatemalan people live below the poverty line, while corruption and drug-related violence retard economic development. Coffee, sugar, and bananas remain the country’s main products, 40% of which are exported to the United States.  

Sources and Further Reference

• “Where did banana republics get their name?” The Economist. (Nov. 2013).
• Chapman, Peter. (2007). “Bananas. How the United Fruit Company Shaped the World.” Edinburgh: Canongate. ISBN 978-1-84195-881-1.
• Acker, Alison. (1988). “Honduras. The Making of a Banana Republic.” Toronto: Between the Lines. ISBN 978-0-919946-89-7. 
• Rozak, Rachel. “The Truth Behind Banana Republic.” University of Pittsburg. (March 13, 2017). 
• “Guatemala: Memory of Silence.” Commission for Historical Clarification. (1999).
• Justo, Marcelo. “What are the 6 most unequal countries in Latin America?” BBC News (March 9, 2016).