ASSEMBLY OPERATIONS IN CENTRAL AMERICA
Gregory K. Schoepfle Jorge F. Pérez-López
This chapter examines export-oriented assembly operations in Central America, which is a preferred location for offshore assembly facilities by many U.S. manufacturers. 1 + ̰/ The section that follows describes selected factors that attract export-oriented assembly firms to Central America and some of the facilities that have been established in the region. The third section examines trends in U.S. imports of assembled products from Central America, with special emphasis on those products assembled from components that originate in the United States. The fourth section provides a discussion of the implications of export-oriented assembly operations for the economies of Central America, and the chapter closes with some general observations about the growth of offshore assembly operations and their potential contribution to the economic development of Central America.
During the last decade, most governments in Central America have mounted a strong campaign to bolster exports, earn foreign exchange, attract foreign investment, and expand domestic employment opportunities in the region through the implementation of a variety of policies related to the promotion of growth in export-oriented industries. This strategy has been marked by a major effort to expand existing operations that assemble and export goods made from imported components. It was hoped that these operations would create much needed jobs in the short run and help to partially offset the effects of the economic structural adjustment programs being implemented in some of the countries in this region. An increasingly popular means to achieve these goals has been through legislation and incentives to attract investors who locate assembly plants in export processing zones.