Challenges of CAFTA: Maximizing the Benefits for Central America

Challenges of CAFTA: Maximizing the Benefits for Central America

Challenges of CAFTA: Maximizing the Benefits for Central America

Challenges of CAFTA: Maximizing the Benefits for Central America

Synopsis

'This study provides a balanced and serious evaluation of the trade and development challenges facing Central America in the next decade, especially those associated with DR-CAFTA. And there is a sobering and timely message within these pages. DR-CAFTA offers great opportunity, but it is no magic potion. Capitalizing on the opportunities andd mitigating the costs depends critically on the success by the Central Americans in developing an effective domestic agenda and handling the ensuing economic and social restructuring. The study provides useful guidance toward this objective, including how best to assist vulnerable groups. It is an indispensable reference for policy makers and social actors in the region and for international partners who wish to help Central Americans fulfill thier hopes and dreams.'--Jose Manuel Salazar-Xirinachs, Executive Director of the International Labour Organization's Employment Sector, Former Minister of Trade for Costa Rica

Excerpt

The signing of the free trade agreement (FTA) among Costa Rica, the Dominican Republic (DR), El Salvador, Guatemala, Honduras, and Nicaragua with the United States (DR-CAFTA) may represent a landmark for the five Central American countries and the dr that decided to engage in a reciprocal fta with their main trading partner, the United States, instead of relying on the hitherto discretional unilateral preferences received through the Caribbean Basin Initiative. Indeed, although the authors of this book caution that estimates of impact are “more art than science,” they provide a body of evidence that strongly suggests important consumer, efficiency, and dynamic gains derived from the expanded and more certain market access. Dynamic gains, in terms of investment promotion and technological progress through the acquisition of foreign technologies and know-how (that will receive a push from the highest certainty in market access), as well as the pressures exerted on domestic firms and institutions to become more innovative and efficient, can be especially large. Moreover, in the case of the DR-CAFTA beneficiaries, the fta with the United States presents perhaps the clearest option for enhancing Central America's economic and social prospects in an inevitably globalizing economy characterized by fast-growing economies with . . .

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