fruit, although the switch was prompted by the vulnerability of the former type of banana to Panama Disease and every effort was made to avoid changing either the appearance or the taste of the final product. Also, processing (aside from controlled ripening on board reefer ships and in storage facilities) has been a fairly unimportant part of the banana business, which is not the case with much of the food economy. Moreover, retail packaging today is indistinguishable from what it was in the past. Bananas have always been sold fresh and in the skins that nature provided them, adorned these days with nothing more than small stickers that advertise supplying firms and countries.
But while the introduction of novel goods ceased long ago for many intents and purposes in the tropical fruit industry, other innovations have been a recurring part of the business. Methods of production have changed substantially, largely because multinationals have supported much of the experimentation from which better agronomic practices and disease-resistant cultivars stem. For much of the twentieth century, the firms’ willingness to finance research and development was a consequence of their dominance of leading markets, which enabled them to capture the benefits of technological advances not accruing to consumers.4 In addition, Standard Fruit had a special motivation to improve technology. Opportunities for the company to establish new plantations after existing farms had been ravaged by Panama Disease were limited because so much territory had been snapped up previously by United Fruit. It is therefore unsurprising that Standard Fruit, not its larger rival, came up with the Cavendish variety, which could resist the soil-borne fungus.
To this day, U.S.-based multinationals invest in technological improvement, even though their standing in the banana industry is not what it used to be. One reason for this is that Chiquita Brands International (formerly United Fruit), the Dole Food Company (formerly Standard Fruit), as well as Del Monte Corporation (which has been in the banana business since its 1967 purchase of the West Indies Fruit Company) still handle a sizable share of the world’s banana exports, and so can gain much from any supply-side advance. In particular, the adoption by independent planters of better cultivars and farming methods created by the multinationals still benefits Chiquita, Dole, and Del Monte, since these companies continue to deal regularly in fruit raised by those planters.
The ready availability of multinational technology in Ecuador, where independent growers predominate, reduces the need there for banana research and development. Spending on laboratories and test plots, salaries for scientists and technicians, and related expenditures are consequently avoided. In addition, “free-riding” growers, who hope to gain from the advances other farmers have paid for but whose reluctance to contribute financially can prevent those advances from materializing, would be a problem if foreign firms did not share their technology. Similarly, Ecuadorian exporters along with their counterparts in Colombia have been the long-term beneficiaries of United Fruit’s popularization of bananas during the late 1800s and early 1900s—a marketing effort like New Zealand’s popularization of kiwifruit and also involving appropriation issues.
Excused from having to undertake either the first or second business innovation identified by Schumpeter, Ecuadorian entrepreneurs have been able to concentrate on other innovations. Time and again, they have placed bananas in new markets. They also have entered a number of existing markets, thereby increasing competition. Exporters from the South American nation, which is smaller and poorer than Colombia to the north and Peru to the south, have been successful thanks largely to the business services and mutually-rewarding partnerships on offer in Guayaquil, which was a haven for international commerce generations before Noboa or any other Ecuadorian began selling bananas overseas. Since the mid-1900s, the country has maintained an edge over its competitors—including the Mesoamerican republics where United Fruit and Standard Fruit got their start.
Central Versus South America
Warm and humid, the Caribbean lowlands of Central America have always been an obvious place to grow tropical fruit for the United States, where demand was seemingly insatiable around the turn of the twentieth century and for many years afterward. Bananas from the region had been finding their way to New Orleans and other U.S. ports since the 1870s. Some of this fruit was harvested alongside the railroad Keith built in Costa Rica and more came from the Bay Islands of Honduras.5 However, Central America’s potential for banana production remained largely unexploited as the nineteenth century drew to a close, primarily because few rural laborers were willing to relocate from the temperate highland valleys where the region’s population had long been concentrated to coastal settings that swarmed with disease-bearing insects.6
Multinationals dealt with labor shortages and other barriers to large-scale production as they established their own plantations, which were the core of company-controlled enclaves that had few linkages to the Central American economy. Some of the workers in northern Honduras, which during the early 1900s lacked a rail connection to the rest of the country, were from El Salvador, which was (and remains) more densely populated than its neighbors and is the only Mesoamerican nation with no Caribbean coastline. Also, many of Central America’s bananas were harvested by West Indians who spoke English and were of African descent. Migration by this group into the highlands, which was proscribed by law in a number of countries,7 was unappealing because the wages paid by foreign fruit companies far exceeded what other rural employers offered.
Sizable expenditures on the clearing and preparation of land and on infrastructure of every description were needed before tropical fruit could be produced and exported. Prior to these expenditures, investing firms demanded long-term concessions, which included grants of real estate as well as guarantees of minimal taxation. The handful of companies that received these concessions from public officials in San José, Tegucigalpa, and other capitals ended up with nearly all the best coastal land from Guatemala to Panama, which effectively preempted competition either on Central Americans’ part or by outsiders.
Circumstances were not the same a century ago in South America. Whereas urban centers were lacking along the Caribbean coasts of Costa Rica, Nicaragua, Honduras, and Guatemala, there were cities of long standing in northern Colombia. Santa Marta, Ciénaga, and Barranquilla, within 100 kilometers of each other, were settled in the sixteenth century. Cartagena, a colonial stronghold built to prevent incursions by Spain’s European adversaries and to discourage attacks by pirates, was a little farther down the coast, in the direction of Panama. In addition, sugar and other crops had been raised in northern Colombia for generations. In no sense, then, could the region be considered a tabula rasa, as Central America’s eastern littoral was regarded in the late 1800s and early 1900s by the tropical fruit industry and even by national governments. Western Ecuador, which is bounded on the east by the Andes (the world’s tallest mountains other than the Himalayas) and opens toward the Pacific Ocean, had agriculture and an urban population as well. Parts of the costa, as the area’s inhabitants and all their countrymen call it, have been farmed continuously for millennia. Also, Guayaquil, which was founded in 1538, was a commercial center decades before Baker, Preston, and Keith joined forces in 1899 to create United Fruit.
The costa was the first part of South America to export bananas, which had been brought to the New World by Spaniards following close on the heels of the conquistadors. However, Ecuadorian fruit traveled south, to Peru and Chile, instead of to the north. This trade, which was under way by 1877, grew modestly over the years and in 1908 a Chilean firm, the South American Fruit Company (SAFCO), opened an agency in Guayaquil to handle bananas and other tropical goods. None of the vessels plying the waters between Ecuador and Chile were refrigerated, so fruit was transported in small quantities as deck cargo. Banana exports amounted to $40,000 in 1915 and had risen to $60,000 in 1933, with SAFCO consistently accounting for more of the business than any other firm.8 Tropical fruit comprised less than 1 percent of Ecuador’s total exports at the end of this period,9 when United Fruit started to invest in the country.
In Colombia, José Manuel González made an initial shipment of bananas to the United States in 1889. However, this early venture failed because, as Marcelo Bucheli notes, “the fruit rotted by the time it arrived in New York.” More rewarding
