The economy of Belize depended on forestry until well into the 20th century. Logwood, used to make dye, was Belize's initial main export. However, the supply outstripped the demand, especially as Europeans developed man-made dyes which were less expensive. Loggers turned to mahogany, which grew in abundance in the country's forests. The wood was prized for use in cabinets, railroad carriers. While many merchants and traders became wealthy from the mahogany industry, ups and downs in the market had a large impact on the economy. In addition, new mahogany trees weren't being planted, and because mahogany trees grow slowly and natural regrowth was not sufficient to replenish the supply. As the 19th century progressed, loggers were forced to go deeper into the forests to find the trees, increasing labour costs. Variations of mahogany exports over long periods of time were linked to the accessible supply of the resource. Thus, improvements in hauling methods helped the cutters satisfy increasing demands for mahogany by enabling them to extract timber from areas in the interior that had been previously inaccessible to them. Immediately after the introduction of cattle in the early 1800s, tractors in the 1920s, and lorries in the 1940s, production levels rose dramatically. When the supply of accessible timber dwindled and logging became too unprofitable in the 20th century, the country's economy shifted to new sectors. Cane sugar became the principal export and recently has been augmented by expanded production of citrus, bananas, seafood, and apparel. The country has about 8,090 km² of arable land, only a small fraction of which is under cultivation. To curb land speculation, the government enacted legislation in 1973 that requires non-Belizeans to complete a development plan on land they purchase before obtaining title to plots of more than 10 acres (40,000 m²) of rural land or more than one-half acre (2,000 m²) of urban land. Domestic industry is limited, constrained by relatively high-cost labour and energy and a small domestic market. The United States Embassy in Belmopan knows of some 185 United States companies that have operations in Belize, including MCI, Duke Energy International, Archer Daniels Midland, Texaco, and Esso. Tourism attracts the most foreign direct investment although significant U.S. investment also is found in the energy, telecommunications, and agricultural sectors. A combination of natural factors—climate, the Belize Barrier Reef (longest in the Western Hemisphere), numerous islands, excellent fishing, safe waters for boating, jungle wildlife, and Maya ruins—support the thriving tourist industry. Development costs are high, but the Government of Belize has designated tourism as its second development priority after agriculture. In 2000, tourist arrivals totaled 189,634 (more than 110,000 from the U.S.) and tourist receipts amounted to $113.3 million. Belize's investment policy is codified in the Belize Investment Guide, which sets out the development priorities for the country.
Several capital projects are either currently underway. The largest of these is a $15 million rural electrification program to be jointly implemented by the government and Belize Electricity Limited (BEL). In addition, the government will continue to implement an Inter-American Development Bank Emergency Reconstruction Fund of $20 million aimed at restoring essential services such as health and education facilities and transportation networks to communities which were severely damaged by Hurricane Keith. The government will also invest close to $4.2 million in projects targeted at poverty alleviation across Belize. Initiated in 1999, the Ministry of Agriculture and Fisheries, through the Belize Agricultural Health Authority, will continue to implement the IDB-funded "Modernization of Agricultural Health Project." This $2.5 million project seeks to improve the competitiveness of Belize's agricultural products and thus enhance the ability of Belizean farmers and processors to maintain and expand the sale of their high-quality products to foreign markets. A $5 million soybean project, funded by the Brazilian Government, is intended to assist northern Belize farmers to diversify away from sugarcane cultivation.
The government also plans to invest $9.85 million to complete the rehabilitation of the Hummingbird Highway, as well as investing $9.5 million in its health-sector reform program. Another $9 million will be invested under the IDB-funded "Land Management Project" over the next 2 years. The Ministry of Tourism is confident that another IDB-funded project, the "Tourism Development Project", will make Belize the Mundo Maya centerpiece for travelers to Central America. The government will spend close to $1.4 million in improving access to the Maya archaeological sites in Belize, especially Caracol. Using a soft loan from the Republic of China, the government is funneling $50 million toward the construction of low-cost housing.
Belize's economic performance is highly susceptible to external market changes. Although moderate growth has been achieved in recent years, the achievements are vulnerable to world commodity price fluctuations and continuation of preferential trading agreements, especially with the U.S. (cane sugar) and UK (bananas). Belize continues to rely heavily on foreign trade with the United States as its number one trading partner. Total imports in 2000 totaled $446 million while total exports were only $349.9 million. In 2000, the U.S. accounted for 48.5% of Belize's total exports and provided 49.7% of all Belizean imports. Other major trading partners include the UK, European Union, Canada, Mexico, and Caribbean Community (CARICOM) member states.
Belize aims to stimulate the growth of commercial agriculture through CARICOM. However, Belizean trade with the rest of the Caribbean is small compared to that with the United States and Europe. The country is a beneficiary of the Caribbean Basin Initiative (CBI), a U.S. Government program to stimulate investment in Caribbean nations by providing duty-free access to the U.S. market for most Caribbean products. Significant U.S. private investments in citrus and shrimp farms have been made in Belize under CBI. U.S. trade preferences allowing for duty-free re-import of finished apparel cut from U.S. textiles have significantly expanded the apparel industry. EU and UK preferences also have been vital for the expansion and prosperity of the sugar and banana industries.
The tourism industry is an important part of the economy of Belize, in 2007 contributing to over 25% of all jobs, and making up over 18% of the GDP. This constituted 590 million BZD (295 million USD), according to the Belize government, up 90 million BZD (45 million USD) from the year before. Tourism is the domain of the Ministry of Tourism, within which the Belize Tourism Board works as a link between the private and public sector.