Boom, Decline, and Frustrated Hopes

São Tomé and Príncipe played a pioneering role in the economic history of sugar and cocoa in the sixteenth and nineteenth centuries, respectively, while in the late twentieth century the small country was a latecomer in the development of oil. In the sixteenth century the Portuguese established on the hitherto uninhabited islands the first plantation economy in the tropics, based on sugar monoculture and slave labor. The sugar industry boomed for almost a century. However, at the end of the sixteenth century sugar production began gradually to decrease due to a variety of factors, predominantly the emergence of Brazilian sugar, forcing the island to adapt to changing global exchange patterns. In the course of the seventeenth century, the plantation economy virtually disappeared, reducing the island to subsistence agriculture and the provisioning of slave ships. The introduction of coffee in 1787 and cocoa from Brazil around 1820 enabled the reestablishment of the plantation economy in the nineteenth century. At the end of this century cocoa production surpassed that of coffee and became by far the most important export crop. In the early twentieth century the archipelago was even for a couple of years the world's largest cocoa producer, although after the First World War, cocoa production began progressively to decrease due to various socioeconomic and ecological factors, including pest infestation of crops and the competition of smallholders in the neighboring continent.

After independence from Portugal in 1975 the downfall of cocoa accelerated due to mismanagement by the ruling regime. Finally, in the 1990s the plantation economy ceased to exist when plantation lands were divided and distributed to small farmers. Despite a currently low output, cocoa remains the principal export product since several attempts of economic diversification have failed. The country's oil hopes began in 1997 when the government signed the first oil exploration agreement with foreign investors, but initial optimism has been replaced by increasing doubts as various offshore exploration drillings have failed to discover commercially viable oil. The chapter analyzes the successes and failures of the country's economy since the archipelago's settlement in the late fifteenth century and puts them in a wider historical and sociopolitical context.