Trade, Industrialization, and Integration in Twentieth-Century Central America

By Irma Tirado de Alonso | Go to book overview

The social conditions existing at the start of the 1980s included extreme poverty, unequal income distribution, limited access to education and health services, and poor levels of nutrition. It is natural to conclude that the growing unemployment and inflation over this decade only reinforced and worsened these already appalling conditions.


SUMMARY AND OVERVIEW

One of the main conclusions that can be drawn from this analysis is that prospects for economic growth in the region do not look very good. The circumstances leading to this conclusion have been discussed throughout the chapter, beginning with the implementation of the ISI model (via the CACM), which led to a misallocation of resources away from the export sector. This, in turn, reduced the region's ability to import the capital goods necessary to maintain current levels of GDP. The loss of foreign exchange earnings also triggered a financial crisis whereby the amount and number of sources of funds available for investment rapidly dwindled. Trade and budget deficits resulted in massive capital flight as government intervention became imminent. Furthermore, in order to secure necessary loans from the IMF, governments in the region were obliged to offset budget deficits with reductions in expenditures and deficit-financing measures. This led directly to a reduction in the level of capital expenditures made on infrastructure, and to a reduction as well in the amount of funds available for private investment as governments competed with the private sector for domestic savings.

Recent figures on employment and wages also, suggest that social conditions deteriorated rapidly and that this phenomena was inextricably linked to the region's financial crisis. Without new investment, jobs cannot be created. Moreover, inasmuch as population growth exceeded employment growth in this decade, the cycle of poverty was inevitably reinforced, creating a serious obstacle to future growth. Although there was some improvement in the investment picture in the mid-1980s, budget deficits were on the rise again in the latter part of this decade and export earnings still remain lower than the 1980 figures. Some hard lessons were learned during this latest crisis. Unfortunately, another financial crisis may be looming in the not-too-distant future, and once again the region will be tested.


NOTE
1.
Merchandise exports are used here because they are significantly more important than service exports, except in the case of Panama.

-36-

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Trade, Industrialization, and Integration in Twentieth-Century Central America
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Illustrations vii
  • Preface xi
  • PART I INTRODUCTION 1
  • 1: CENTRAL AMERICA: THE CHALLENGES OF TRADE, INDUSTRIALIZATION, and INTEGRATION IN THE TWENTIETH CENTURY 3
  • 2: A MACROECONOMIC ASSESSMENT OF CENTRAL AMERICA 15
  • SUMMARY AND OVERVIEW 36
  • Note 36
  • PART II TRADE IN CENTRAL AMERICA 39
  • 3: THE STRUCTURE OF TRADE IN CENTRAL AMERICA 41
  • SUMMARY 58
  • Notes 59
  • References 59
  • 4: IDUSTRIALIZATION and TRADE IN CENTRAL AMERICA 61
  • Notes 85
  • References 85
  • 5: MEXICO AS A POTENTIAL MARKET FOR CENTRAL AMERICAN and CARIBBEAN PRODUCTS 87
  • Notes 98
  • PART III INDUSTRIALIZATION AND INTEGRATION IN CENTRAL AMERICA 101
  • 6: THE INTENSITY OF CENTRAL AMERICAN ECONOMIC INTEGRATION 103
  • CONCLUSIONS 111
  • Notes 113
  • Notes 114
  • 7: ASSEMBLY OPERATIONS IN CENTRAL AMERICA 117
  • References 149
  • 8: PANAMA: ECONOMIC INTEGRATION ALTERNATIVES, IMPLICATIONS, and PERSPECTIVES 153
  • Notes 178
  • References 179
  • 9: THE CENTRAL AMERICAN COMMON MARKET: AN ANALYSIS Of WELFARE EFFECTS FROM 1970 TO 1984 183
  • Conclusion 202
  • Notes 203
  • Notes 204
  • PART IV SPECIAL ISSUES 207
  • 10: ECONOMIC PROSPECTS FOR CENTRAL AMERICA IN THE DECADE OF THE 1990S 209
  • Notes 220
  • REFFERENCES 220
  • 11: A REVIEW OF ECONOMIC POLICIES and STRATEGIES FOR TRADE and INDUSTRIALIZATION IN CENTRAL AMERICA 223
  • CONCLUSION: WHERE TO FROM HERE? 232
  • References 235
  • 12: THE DILEMMA OF EXPORT RIVIVAL: NICARAGUAN AGRICULTURE AT A TURNING POINT 237
  • Notes 251
  • References 251
  • 13: CHALLENGES and PROSPECTS FOR CENTRAL AMERICA IN A GLOBAL TRADE CONTEXT 253
  • BIBLIOGRAPHICAL ESSAY 271
  • SELECTED BIBLIOGRAPHY 277
  • Index 279
  • ABOUT THE CONTRIBUTORS 289
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