<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 great, poor 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> <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 a banana republic in Central American countries such as Honduras and Guatemala . </P>

Where does the phrase banana republic come from