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

Irma T. de Alonso Bernadette West

Industry is an important sector for many countries in Central America, generating more than one-fifth of the region's GDP for the last 30 years. Most industry takes place within the manufacturing sector, which is the focus of this chapter. The reason for singling out this sector is to see whether its growth corresponds to changes in the volume and composition of trade outside the region.

The chapter is divided into five sections. The next section analyzes the manufacturing sector of each country in Central America, paying special attention to changing sizes and composition. The third section then studies, in greater detail, the individual components within the manufacturing sector, as well as some general characteristics regarding the number of establishments, employees, wages, and so forth in each country. The fourth section examines trade patterns for manufactured goods in order to determine what structural changes have taken place in trade and industry, and the final section concludes the chapter with a brief summary of observations and perspectives for the future.

As seen in Table 4.1, the total value added in manufacturing for the six countries combined increased from $1.639 billion in 1960 to $3.7 billion in 1970, and then to $4.576 billion in 1980, using 1988 dollars for comparisons. Estimates for 1990 show value added in manufacturing decreasing slightly, to $4.473 billion. By Latin American standards, the manufacturing sector in Central America is still relatively small. Some Latin American countries have manufacturing sectors that are larger than all six Central American countries combined: for example, Chile, Colombia, and Peru.

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