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

By Irma Tirado de Alonso | Go to book overview
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and the vicissitudes the interzonal trade has been sbject to. 6 + ̰/ Alternately, the relation detected between Costa Rica and Guatemala may also be explained in part by the devaluation of the real exchange rate of the Costa Rican colon after 1978, which made the Costa Rican exports more competitive.

Next, values were computed for the Index of Relative Acceptance between two pairs of countries: between Guatemala and El Salvador and between Nicaragua and Costa Rica, for selected years between 1965 and 1985. (See Table 6.1.) This index represents the difference between the actual and expected values of the commercial flows divided by the expected value. When the index shows a high value, it is understood that besides the level of trade itself, there exist other important factors that influence trade, indicating the presence of a high degree of integration between these countries.

It can be appreciated from Table 6.1 that in the case of El Salvador's exports to Guatemala, the index shows a rising tendency, particularly after 1977, denoting the importance of the Guatemalan market for El Salvador's exports. Conversely, the index corresponding to Guatemala's exports to El Salvador shows a rising tendency only up until 1980, afterwards there is a decline, which may possibly be due to the significant contraction of El Salvador's economy during this period.

It can be noted also that in the case of Nicaragua and Costa Rica, the index shows consistently higher values for Nicaragua's exports to Costa Rica than for Costa Rica's exports to Nicaragua, although this tendency has decreased over the last decade. This indicates the relative importance of the Costa Rican market to Nicaragua. The index corresponding to Costa Rica's exports to Nicaragua does not demonstrate any clear tendency, which may indicate that in the past decade Nicaragua was not as significant a market for Costa Rica as it had been in the past. All this points to a diminished intensity of Central American trade between 1965 and 1985.


CONCLUSIONS

From the previous analysis it can be concluded that salient flows are evident only among neighboring countries, thus the role of distance is to cushion trade. The salient flows between Guatemala and El Salvador in each year analyzed, as well as those between Costa Rica and Nicaragua until 1981, are noteworthy. Equally noteworthy is the fact that El Salvador and Nicaragua did not show a salient flow at all throughout the period, its relative proximity notwithstanding, while important flows were detected between Costa Rica, on one hand and Guatemala and El Salvador, on the other, even though there is a considerable geographic distance between them. 7 + ̰/

If remoteness is an inhibiting factor of salient flows, then the one country that would be expected to have the most salient flows is Honduras, since it occupies the geographical center of Central America and shares borders with

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