IN Central America the 1980s have been dubbed "the lost decade."
Civil wars. Soaring debt. Staggering hyper-inflation. Roller
coaster oil prices. The combination created a period of
unprecedented economic decline.
You can see the effect in the glazed eyes of Guatemalan street
kids sniffing glue to drive away hunger. It is evident also in the 2
million refugees who abandoned families, homes, and traditions to
find safety and work in El Norte ("the North," as the United States
has come to be known).
Or you can see it in the statistics.
During eight years of the Reagan administration, the US pumped
more military and economic aid on a per capita basis into Central
America than to any area in the world except Israel and Egypt. But
in this case war and growth did not mix.
Central America slid backward faster than the rest of Latin
America, also caught in the debt crisis. The six nations' economic
output fell from 4.1 percent of Latin America's total in the 1970s
to 3.5 percent by the end of the 1980s. Per capita income in Central
America tumbled 17.5 percent on average during the decade.
But there are signs that the region is beginning to emerge from
the economic rubble. The '90s may yet be known as an era of
recovery, a number of economists and other analysts say.
"I'm a little more sanguine about the '90s," says Marko Voljc,
the World Bank's division chief for Central America. "The elements
for improvement and greater pragmatism are in place in every country
in the region."
Political stability, crucial to gaining foreign investment, is
slowly returning, and in a more democratic environment. At the
decade's start, Costa Rica was the only country in the region
without a military dictatorship. Now, every nation boasts at least
the rudiments of a democracy.
Less military spending allows more money for basic needs for the
region's population, nearly half of which lives in poverty. With the
war in Nicaragua and the cold war in Eastern Europe finished,
Central America is no longer a flash point for East-West conflict.
Prospects for peace in El Salvador, and to some extent in Guatemala,
are growing. Gen. Manuel Antonio Noriega, Panama's ex-ruler, is
Export-oriented market reforms sweeping through Latin America are
under way. Trade barriers are falling. Bloated government
bureaucracies are being shrunk; state-owned enterprises privatized;
inflation harnessed; currencies devalued to maintain competitive
Most such reforms have been at the insistence of international
banking institutions that have begun lending again to Costa Rica, El
Salvador, and Honduras.
"We've been encouraged by initial successes - particularly the
growth in nontraditional exports," Mr. Voljc says.
Agriculture will remain the mainstay of Central American
economies for the foreseeable future. But there is increasing
diversification from the traditional tropical exports of coffee,
bananas, cotton, sugar and beef. Costa Rica, Guatemala, and more
recently El Salvador have succeeded in exporting flowers, "luxury"
fruits, and vegetables.
Bank economists are also encouraged by regional trade
liberalization trends. Trading among the region's six countries
reached $652 million in 1989, up from a low in 1986, but still only
half as much as the 1980 level, according to the Inter-American
Development Bank. There are new moves to rebuild the Central
American "common market" that collapsed in the late '70s and early