<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 enabled by collusion between the state and favored 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), rendering the country ineligible for international development credit . </P> <P> In the 19th century, the American writer O. Henry (William Sydney Porter, 1862--1910) coined the term banana republic to describe the fictional Republic of Anchuria in the book Cabbages and Kings (1904), a collection of thematically related short stories inspired by his experiences in Honduras, where he lived for six months until January 1897, hiding in a hotel in Trujillo, Colón, when he was wanted in the U.S. for embezzlement from a bank . </P> <P> In the early 20th century, the United Fruit Company, a multinational American corporation, was instrumental to the creation of the banana republic phenomenon . Together with other American corporations, such as the Cuyamel Fruit Company, and with occasional support from the United States government, the corporations created the political, economic, and social circumstances that established banana republics in Central American countries such as Honduras and Guatemala . </P> <P> The history of the banana republic began with the introduction of the banana fruit to the U.S. in 1870, by Lorenzo Dow Baker, captain of the schooner Telegraph, who bought bananas in Jamaica and sold them in Boston at a 1,000 percent profit . The banana proved popular with Americans, as a nutritious tropical fruit that was less expensive than locally - grown fruit in the U.S., such as apples; in 1913, 25 cents (equivalent to $6.19 in 2017) bought a dozen bananas, but only two apples . In 1873, to produce food for their railroad workers, the American railroad tycoons Henry Meiggs and his nephew, Minor C. Keith, established banana plantations along the railroads they built in Costa Rica; recognizing the profitability of exporting bananas, they began exporting the fruit to the Southeastern U.S. </P>

While other central american countries were called banana republics this country