Comparative Advantage in Real Life: Bananas

Comparative advantage makes a lot of sense in a perfect little bubble: One country makes one thing efficiently, so they trade with other countries for things that those countries make efficiently. The math seems simple, and it looks like everyone benefits from comparative advantage. However, the reality of trade is much more complicated than the theory. This idea is shown strongly in the American trade of bananas. Since the 1920s, American demand for the tropical fruit has led to large demand. But making bananas in America violates the principles of comparative advantage since South American tropical areas are much better suited to grow them. As a result, many American corporations, most notably the United Fruit Company, (now known as Chiquita) have flocked to countries like Colombia to start farming, where bananas could be grown on a large scale.

To establish banana plantations, United Fruit Company bought, or in other cases, bribed and cheated to gain access to large areas of land. They used slash and burn techniques to clear cut massive swaths of land for their plantations and established massive monocultures. In doing this, UFC essentially created a form of "forced specialization" of bananas on Colombia. The once fertile land became a massive monoculture, and the environmental damage that came from the actions of the company severely limited the flexibility of Colombian resources and making it practically impossible to produce other goods for much of the country. So, in order to make money, Colombia had to produce these bananas or it would sink further into poverty. While the rules of comparative advantage dictate that a country should specialize in something that they are good at, Colombia had no choice in this decision making. Additionally, while Chiquita and the American Markets benefitted from a large supply of cheap bananas, Colombia suffered under a corrupt corporate system that exploited them mercilessly. This system, known as a "banana republic," had horrible consequences for the native plantation workers. One instance of this happened in 1928 when a group of workers called a strike for better wages. The United Fruit Company lobbied for help from the US government, which threatened to invade Colombia if they did not intervene to break up the strike. As a result, the Colombian army sent in soldiers to stop the protest. The resulting conflict ended in a massacre with an estimated number of anywhere from 1000-3000 workers killed. More recently, in 2007, Chiquita was fined 25 million dollars as a punishment for their financial support of Colombian terrorist groups after they spent over 750,000 dollars lobbying against the "Justice against Sponsors of Terrorism Act" to hide their actions from the public.

In a true situation of comparative advantage, everyone benefits, since trade happens on equal terms. However, in real life, corruption, greed, and a lack of regard for human rights make specialization in trade a much darker reality.

Sources:
https://medium.com/@FeunFooPermaKra/the-red-on-yellow-chiquitas-banana-colonialism-in-latin-america-1ca178af7616
http://members.tripod.com/foro_emaus/BanPlantsCA.htm