<P> In political science, the term banana republic describes a politically unstable country with an economy dependent upon the exportation of a limited - resource product, e.g. bananas, minerals, etc . In 1901, the American author O. Henry coined the term to describe Honduras and neighbouring countries under economic exploitation by U.S. corporations, such as the United Fruit Company . Typically, a banana republic has a society of stratified social classes, usually a large impoverished working class and a ruling - class plutocracy, composed of the business, political and military elites of that society . Such a ruling - class oligarchy control the primary sector of the economy by way of the exploitation of labour; thus, the term banana republic is a pejorative descriptor for a servile dictatorship that abets and supports, for kickbacks, the exploitation of large - scale plantation agriculture, especially banana cultivation . </P> <P> In economics, a banana republic is a country with an economy of state capitalism, by which economic model the country is operated as a private commercial enterprise for the exclusive profit of the ruling class . Such exploitation is effected by collusion between the State and favoured economic monopolies, in which the profit, derived from the private exploitation of public lands, is private property, while the debts incurred thereby are the financial responsibility of the public treasury . Such an imbalanced economy remains limited by the uneven economic development of town and country, and usually reduces the national currency into devalued banknotes (paper money), thus rendering the country ineligible for international - development credit . </P>

Where does the term banana republic come from
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