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Quezaltenango

Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Quezaltenango was a highland town in Guatemala whose commercial prospects were shaped by a struggle over roads, ports, and control of foreign trade. In the mid-nineteenth century, the capital’s merchant organization resisted transport links that could have opened the western highlands to Pacific markets and fostered competing merchants; later, coffee exports brought new opportunities, but the existing elite adapted to control them.

Setting and commercial position

Quezaltenango lay in the western highlands, in the Los Altos region. Its position mattered because improved access to the Suchitepéquez coast could have given highland towns such as Quezaltenango and Mazatenango an easier outlet for goods and access to a different market. At the time, Guatemala’s proper ports were on the Caribbean coast, under the control of the Consulado, which also held responsibility for the country’s economic development and infrastructure.

The blocked road

The Consulado opposed improving the road between Los Altos and the Suchitepéquez coast. A better route could have enabled western merchants to reach Pacific trade and formed a merchant class capable of competing with the Consulado’s merchants in the capital. The organization therefore resisted the project, and the road was not improved. The decision illustrates how control over infrastructure could preserve a trade monopoly by limiting the market access of a region such as Quezaltenango.

A changing export economy

The town’s prospects were affected by wider economic changes even while infrastructure remained constrained. Falling transportation costs, driven by innovations such as steam trains, railways, and faster ships, coincided with rising incomes in Western Europe and North America and growing mass demand for goods Guatemala could produce. Indigo and then cochineal had been exported earlier in the century, but coffee became a more profitable opportunity. Cultivation spread without assistance from the Consulado, and rising world prices and expanding international trade made coffee increasingly lucrative.

Political change and continuity

In 1871, Carrera’s long-running dictatorship was overthrown by Liberals. The Consulado was abolished that year, but the economic and political order did not become broadly inclusive: many of the same families remained in charge and reorganized the economy around coffee production and exports. Quezaltenango’s earlier exclusion from improved Pacific access thus belongs to a larger pattern in which elite control restricted commercial alternatives, then adapted as new export opportunities emerged.