Globalized Fruit, Local Entrepreneurs. Douglas Southgate

a few household effects, Noboa’s mother scraped together passage for her offspring and herself back to Guayaquil, where one of her husband’s elderly relatives provided modest quarters on the city’s outskirts. Less than four months after losing her husband, Zoila Naranjo de Noboa delivered her last child and only daughter. She also sold one of her three gold coins and used the proceeds to start a small business, thereby providing an early tutorial in entrepreneurship to her sons. The business consisted of selling milk by the serving throughout Guayaquil and required a modest investment in containers, purchases from neighboring dairies, and recruitment of local boys to serve as a sales force. Any merchandise left at the end of the day was mixed with eggs and rum to make rompope, which was hawked along with rolls made from wheat and yucca flour.³³

      Out of a desire to help support his family, Noboa decided at eleven to leave school after just three years with the Salesian Fathers. “One day,” he vowed as he presented his mother with the first sucres he had earned, “I will be a rich man and will bring you lots of presents.” After starting out selling magazines on the streets of Guayaquil and even on trains running up to Quito, Noboa consistently engaged in a diverse array of ventures. One was a sidewalk stand, named “Basantes” after its former proprietor, where he and a partner named Modesto Rivadeneira shined shoes and sold magazines and sundry items. The two boys figured out that premium prices could be charged after six in the evening, when other street vendors went home.³⁴ Learning the value of long hours on the job, they each cleared 100 sucres (equivalent to $225 today) a month at a time when the prevailing daily wage for adult laborers was little more than one sucre. Noboa also sold cloths for polishing metal, which led to his job at the Sociedad General as well as lifelong business associations and personal friendships with Juan F. and Juan X. Marcos.³⁵

      Fully appreciative of Noboa’s talents and capabilities, the Marcoses were wise enough to give him free rein. For example, Noboa was allowed to continue running his own businesses, including a small office in central Guayaquil where he traded currency and sold souvenirs and Parker Pens starting in 1933. Six months after joining the bank, the former street vendor asked the younger Marcos for a loan of 3,000 sucres ($6,750 in today’s money), promising “you’ll have your money back in three months and a profit of 3,000 sucres.” The loan was made and Noboa delivered on his promise in full. He also asked for a follow-up loan under the same terms. When a third loan was requested—for 10,000 sucres ($22,500)—Marcos could no longer contain his curiosity and asked what was being done with the money. Only then did he find out that the thirteen-year-old had been trading in the auction room of the customs house.³⁶

      Just as the proprietors of the Sociedad General did not hold Noboa back from buying and selling on his own, the budding entrepreneur was not prevented from associating with other businessmen. His personal office was close to the Banco La Previsora, a leading financial institution managed by Victor Emilio Estrada. “This young man is worth his weight in gold,” concluded the banker, who not only befriended the teenager but offered him a job as assistant manager. Noboa did not accept the position, although he became Estrada’s partner in a company engaged in importing and in representing foreign firms, including Chrysler and Coca Cola. Before he turned eighteen, Noboa was managing the company, in which he held a one-third equity stake. Renamed Comandato S.A. after a few years, it is still in business.³⁷

      Aside from being a superb commercial operator in his own right, Noboa benefited substantially from his partnerships. In this, he had something in common with entrepreneurs who had preceded him in the banana business. Zemurray, for example, got an early boost thanks to associations with other merchants in Mobile as well as financial backing from United Fruit. By the same token, Latin American entrepreneurs who followed Noboa flourished in large part because of their partnerships. A case in point was Vives, who did well as an exporter by working with Francisco Dávila—someone who provided “a touch of sophistication” reflecting his undergraduate studies in France and the MBA he had earned at Stanford University.³⁸

      The Right place, the Right Entrepreneurs

      In a book about the Ecuadorian operations of United Fruit, Steve Striffler has little to say about the costa’s capitalists, other than to chronicle their disputes with campesinos and workers. He draws no distinctions between commercial farmers, some of whom operate on a large scale while others do not, and individuals engaged in overseas marketing and other non-agricultural pursuits. Nor is he concerned with entrepreneurial innovation and the various forms it takes. His commentary on capitalists largely echoes the convictions of a rural laborer named Patricio, whom Striffler quotes often. Firmly maintaining that workers such as he “produce the bananas,” Patricio complains that farm owners, local intermediaries, and multinationals do little or nothing for the money coming their way.³⁹

      Alberto Acosta, author of a widely read economic history of Ecuador, does not endorse the view that capitalists merely appropriate the wealth their employees are solely responsible for creating, as adherents of an ideological perspective at least a quarter century past its expiration date would have it. Rather, he finds fault with the country’s businessmen and women for lacking entrepreneurial verve. According to Acosta, this shortcoming has held Ecuador back—especially during the Great Depression, but also at other times.⁴⁰

      As a rule, the apparent defects of entrepreneurs are a weak explanation for disappointing economic performance, when and where it occurs. Along with other economists, Baumol emphasizes that firms and individuals can be counted on to seize opportunities for profit that come their way. If they are not venturing into new markets, for example, then the rewards for doing so must be weak.⁴¹ Such has been the case at times in Ecuador, not to mention other Latin American nations, and Acosta undoubtedly would have arrived at better insights by examining economic incentives more and speculating less about the people responding to those incentives.

      If businessmen and women in Ecuador really have been indolent and if the 1930s were an inauspicious time for entrepreneurship, no one seems to have told Marcos, Noboa, and others like them. Based in a port city that for centuries was remote both from its most important markets and from political capitals, these individuals never acquired the habits of rent-seeking and other unproductive pursuits. Instead, Guayaquil’s entrepreneurs have specialized productively, seeking out and serving customers overseas.

      Cities with a long tradition of productive entrepreneurship are rare in the banana-growing regions of the Western Hemisphere. There were no such settlements along the Caribbean coast of Central America when United Fruit and Standard Fruit started operating in the region. In addition, Guayaquil differed from cities along Colombia’s Caribbean coast. According to Bucheli, Cartagena, which well into the nineteenth century was a slave-importing terminal, was not a place to cut one’s teeth in foreign trade. The area to the northeast, the same author adds, was “stagnant or decaying prior to the banana export industry,” and Santa Marta languished between the wars of independence, during which it was a pro-Spanish bastion, and the turn of the twentieth century, when United Fruit’s arrival put an end to the city’s “state of abandonment.”⁴²

      One by one, the geographic and environmental impediments to economic progress have been overcome in western Ecuador. Yellow fever and other illnesses no longer prevent large numbers of workers from gathering in the same place, as happens routinely on banana farms. Notwithstanding the tolls charged for use of the Panama Canal, which producers in the Caribbean Basin need not reckon with, the waterway constructed under budget and ahead of schedule by the U.S. Army Corps of Engineers has been an enormous boon to Ecuador since it provides a direct route to markets bordering the Atlantic Ocean.

      Once obstacles to development were removed, the commercial strengths and orientation of Guayaquil could be brought into play in the banana trade. Finance and other business services, which entrepreneurs in the port city began to provide during the cacao boom, did not disappear once the boom was over. To the contrary, “a financial infrastructure easily adapted to support banana exports as well as individuals with experience in the production and export of agricultural products” was in place,⁴³ which made international commerce much easier. Without local brokers adept at arranging transoceanic shipping, each and every aspiring banana exporter would have needed refrigerated vessels of his or her own. The expense of these vessels undoubtedly