Does Guatemala have a free market economy?

That is a part of Motive‘s 2025 summer season journey subject. Click here to learn the remainder of the problem.

Everybody is aware of concerning the McDonald’s Comfortable Meal—a worldwide icon, with its vibrant field, its golden arches, and a toy that retains children entertained lengthy after the fries are gone. What most do not know is that this worldwide sensation was born in Guatemala, a small Central American nation extra typically related to espresso, bananas, and (sadly) crime.

Within the mid-Seventies, Yolanda Fernández de Cofiño, who based the primary McDonald’s in Guatemala, seen that youngsters struggled to complete their meals. She created “Ronald’s Menu,” a kid-friendly meal that included a smaller hamburger, somewhat batch of fries, a drink, a sundae, and a toy she picked up from native markets. Her thought caught the eye of McDonald’s company places of work, and by 1979 it had developed into the Comfortable Meal we all know as we speak.

It is outstanding {that a} product so central to McDonald’s international empire had its beginnings in Guatemala. Nevertheless it’s not stunning. Beneath the headlines of corruption, violence, and poverty, the nation pulses with entrepreneurial power.

Stroll by way of downtown Guatemala Metropolis, and you may really feel it. Distributors line the sidewalks, promoting all the pieces from shucos (Guatemalan sizzling canines) to handcrafted jewellery—typically simply steps away from glossy purchasing facilities stuffed with native luxurious manufacturers. It is a nation the place folks do not look ahead to permission or good circumstances. They improvise, adapt, and construct.

Guests can see this spirit in motion at locations just like the Mercado Central (the central market), the place generations of retailers have arrange store within the metropolis’s historic heart, or the Mercado de Artesanías La Aurora (the handcrafts market), the place artisans from throughout the nation promote handwoven textiles, ceramics, and leather-based items. It is also alive in Cuatro Grados Norte, a once-neglected neighborhood now revived by artists, restauranters, and small companies. And on Sundays, town’s Pasos y Pedales program transforms two of its foremost boulevards into full of life pedestrian zones, buzzing with cyclists, meals carts, and households searching handmade items.

“About 45 % of adults are concerned in some type of entrepreneurial exercise,” explains David Casasola, director of analysis for the International Entrepreneurship Monitor (GEM) at Universidad Francisco Marroquín (UFM). In 2023, Guatemala ranked second out of 45 international locations collaborating in GEM’s survey—the world’s most complete research on entrepreneurship, which incorporates economies from each area and earnings degree—for the best share of adults proudly owning and managing a just lately created enterprise. It additionally held the third highest charge of feminine entrepreneurship.

That is partly formed by necessity. Round 90 % of Guatemalan entrepreneurs begin their very own companies as a result of formal job alternatives are scarce and strict labor rules make it troublesome to enter the formal work drive, in accordance with GEM.

“Guatemala has a significant issue producing employment alternatives,” Casasola explains. “Many individuals cannot entry the job market as a result of, first, it is a extremely regulated market. The best way hiring works may be very strict….Second, for a proper job to be worthwhile to an employer, the employee wants a degree of productiveness that’s typically out of attain—primarily due to low-quality training, restricted technical coaching, and industries that also lack the type of construction wanted to generate important worth.”

Labor laws designed to guard staff—akin to inflexible termination guidelines, obligatory bonuses, and restrictions on part-time or freelance work—typically find yourself discouraging hiring altogether. Beginning a proper enterprise is not straightforward both, because of layers of paperwork and paperwork. Add rampant corruption, poor infrastructure, restricted entry to credit score, and authorized uncertainty, and it turns into clear why alternative is commonly stifled.

Paradoxically, these very obstacles have pushed many into entrepreneurship. Confronted with countless crimson tape within the formal markets, many Guatemalans flip to casual ventures. About 70.6 % of early-stage ventures function with out registration, in accordance with GEM. People who survive and adapt to the difficult setting are those that ultimately formalize. However whether or not formal or casual, a enterprise remains to be a enterprise—and the worth these ventures add to society, from creating jobs to fostering innovation, is simple.

“It is a growing nation burdened by numerous obstacles,” says Ramón Parellada, a board member of the Heart for Financial and Social Research (CEES). “Folks want extra freedom to pursue entrepreneurship.”

CEES was founded in 1959 by the entrepreneur and economist Manuel Ayau and others keen to know why Guatemala was so poor. Their conclusion: financial obstacles—not a scarcity of expertise or effort—had been holding the nation again.

In 1971, Ayau went on to discovered UFM, a libertarian college devoted to selling free markets, particular person liberty, and the rule of legislation. “The thought of making a college that stood out from the remainder wasn’t pushed by an curiosity in instructing simply any topic—these may be taught wherever,” Parellada explains. “As a substitute, the main target was on instructing the rules that govern a society of free and accountable people.”

At UFM, my alma mater, “Tutorial freedom led to different kinds of freedom,” as George Gilder put it in Life After Google. Its graduates have been central to key financial reforms. Probably the most notable examples occurred in 1996, when a bunch of alumni helped privatize Guatemala’s dysfunctional state-run cellphone system. Inside a number of years, Guatemala turned one of many best-connected international locations in Central America. Right this moment, name facilities are booming. “Typically ideas turn into issues,” Alfredo Guzmán, who performed a key function within the privatization effort, told Motive in 2011.

Guided by CEES’ motto “for particular person freedom to provide, devour, alternate, and serve with out coercion of privileges,” different key reforms have adopted. These embrace deregulating international foreign money, permitting Guatemalans to conduct enterprise in any foreign money, and securing higher autonomy for universities by separating them from state management. These adjustments have helped begin the method of dismantling the obstacles that preserve so many Guatemalans in poverty.

One in all UFM’s present initiatives is the Kirzner Center for Entrepreneurship, named after the economist Israel Kirzner. His idea of “entrepreneurial discovery” describes how entrepreneurs establish and remedy unmet wants, creating worth within the course of. The middle applies this framework by serving to Guatemalans flip concepts into companies.

UFM has additionally pioneered a degree in entrepreneurship, encouraging college students not simply to construct companies, however to critically assess the insurance policies that form their success or failure. The aim is not simply revenue; it is long-term, widespread prosperity.

Guatemala is a unprecedented nation: dwelling to historic Mayan pyramids hidden in jungles, lively volcanoes towering over vibrant cities, and 23 formally acknowledged languages. However maybe its biggest untapped treasure is its entrepreneurial power.

Guatemala faces severe structural challenges, a lot of them imposed by the state. However its folks proceed to search out workarounds by way of casual markets and voluntary alternate. Whether or not it is inventing the Comfortable Meal or deregulating whole industries, Guatemalans aren’t ready for permission. They’re constructing prosperity regardless of the system, not due to it.

Day 1
Flight to Guatemala Metropolis

Whenever you arrive, head to your lodge and drop off your baggage earlier than exploring town.

Keep in Guatemala Metropolis 
for 3 nights.

Commonplace lodge: La Inmaculada Resort Upscale lodge: Hyatt Centric

Go to the Historic Heart

Begin your journey in Zone 1, the center of Guatemala Metropolis. Wander by way of the central sq., surrounded by such iconic landmarks because the Metropolitan Cathedral (Catedral Primada Metropolitana de Santiago), a mix of baroque and neoclassical structure, and the Nationwide Palace of Tradition, as soon as the seat of presidency and now a museum.

Do not miss the Central Market, the place you will discover all the pieces from textiles and handicrafts to recent produce and road meals.

Optionally available exercise: Go to Guatemala’s a centesimal McDonald’s—often called “Mc100″—in Mixco’s Zone 7. The flagship location contains a distinctive architectural design in addition to the biggest McPlay space in Central America.

Seize a drink at El Portalito, one of many metropolis’s oldest bars, identified for its reside marimba music. For dinner, head to La Cocina de la Señora Pu, a comfy spot that recreates conventional Guatemalan flavors.

Day 2
Dive into Mayan Heritage

Discover Guatemala’s historic roots at two of the nation’s greatest museums: Museo Popol Vuh, dwelling to one of many world’s most essential collections of Mayan artwork, and the Ixchel Museum of Indigenous Textiles and Clothes, which showcases Guatemala’s textile traditions. Each museums are situated on the Universidad Francisco Marroquín campus, so take a while to benefit from the stunning grounds and fashionable structure.

For lunch or dinner, head to Zone 4, town’s artistic district. It is full of nice eating choices. A neighborhood favourite: Mercado 24, identified for its artistic tackle Guatemalan substances.

Optionally available actions: Get shucos from a road vendor in Zone 4. No have to get out of your automotive—they’re going to come to you!

Day 3
Day journey to Antigua

Simply an hour from the capital, Antigua is a UNESCO World Heritage Web site well-known for its cobblestone streets, pastel-colored colonial buildings, and unbeatable volcano views.

Stroll by way of the Santa Catalina Arch, hike as much as Cerro de la Cruz, and discover town’s many outlets and markets. Seize lunch at Tartines for panoramic views of the cathedral from the rooftop. Take pleasure in a cocktail at Ulew, a speakeasy identified for ingenious drinks.

Day 4
Join with Nature

Go on an journey and hike one in all Guatemala’s volcanoes: Pacaya Volcano is a well-liked half-day hike, with an opportunity to witness volcanic exercise and even roast marshmallows over geothermal vents. For a more difficult expertise, strive Acatenango, an in a single day trek with unimaginable dawn views of the erupting Fuego Volcano subsequent door.

Optionally available actions: Fly to Tikal within the Petén area to go to the Mayan ruins within the jungle; go to Lake Atitlán, a highland lake surrounded by volcanoes and dotted with picturesque conventional villages.

Day 5
Flight dwelling

Make a listing of the issues you did not have time to see on your subsequent go to!