THE INTENSITY OF CENTRAL AMERICAN ECONOMIC INTEGRATION
Luis René Cáceres Carlos Arturo Imendia
Since its beginnings in 1961, the Central American Economic Integration Program has been sustained by the specific functions of certain propelling mechanisms such as specialized regional organizations, common external tariffs, and a unified regime of fiscal incentives for investment, all operating within a context of free trade among the five Central American countries. Throughout all this, it is the free trade environment that has received the most attention. In fact, several studies have demonstrated that, through intraregional trade flows, these countries emit and receive significant stimuli to economic growth, making evident the high degree of economic interdependence that exists among them ( Cáceres, 1979b, pp. 191-99).
Interregional trade was highly dynamic in 1980, surpassing the billion dollar mark. Since then, however, it has declined in every consecutive year. Guatemala, with the highest gross domestic product, has consistently shown the highest level of exports. El Salvador was in second place in terms of sales to the inter-regional market until 1981, when Costa Rica surpassed it. Until then, Honduras was in last place, but that position is now occupied by Nicaragua. Trade data permits the consideration of two periods of exchange within the region. The first period, from 1961 to 1980, is characterized by a growth trend, notwithstanding shocks to the traditional export sector, while the second period, from 1981 on, is characterized by a decline in trade flows due to the political and social problems prevailing in these countries, and also to the contraction felt by traditional exports. In effect, there exists a high correlation between the trajectory of traditional exports (coffee, cotton, bananas) and the dynamics of common market trade flows, a phenomenon that has been subject to various studies. 1 + ̲/