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

By Irma Tirado de Alonso | Go to book overview

9
THE CENTRAL AMERICAN COMMON MARKET: AN ANALYSIS Of WELFARE EFFECTS FROM 1970 TO 1984

Patrick C. Flower

Walton T. Wilford


INTRODUCTION

As the turbulence of the 1980s subsides and peace returns to Central America, there is renewed interest in economic integration among the five republics that originally comprised the Central American Common Market ( Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua).

Integration efforts in the region began in the 1950s and evolved into the formally established Central American Common Market (CACM) in 1960. Throughout this movement toward integration, the concept of "balanced" development and industrialization of each member's economy was the primary goal. 1 + ̰ Prior to the actual formation of the CACM in 1960, there were agreements to establish common import duties and a regime for establishing the distribution of regional industries in a manner that would equalize free trade benefits among the group. 2 + ̰/, 3 + ̰/ These agreements were followed in 1960 by the General Treaty of Economic Integration, which established free trade among the members, endorsed the common external tariffs and the Regime for Integration Industries, and created the Central American Bank for Economic Integration (CABEI). It is noteworthy that, since there was never an agreement regarding the free mobility of factors, the integration is more properly termed a customs union rather than a common market. 4 + ̰/

In many respects, the CACM enjoyed a high level of success during its first decade. Trade in the CACM expanded rapidly, with intraregional imports growing by nearly 600 percent between 1960 and 1967, while total imports expanded by about 200 percent during the same period. 5 + ̰/Per capita income increased substantially in all five countries ( Guatemala: 13.6 %, El Salvador: 21.7 %, Honduras: 13.1 %, Nicaragua: 43.0 %, and Costa Rica: 18.0 %). There was also an impressive increase in foreign private investment in the region, from $22.6 million in 1960 to $80.7 million in 1967. 6 + ̰/

However, by the late 1960s, there was increasing discontent among Honduras, Nicaragua, and Costa Rica that they were receiving an inequitable

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Trade, Industrialization, and Integration in Twentieth-Century Central America
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Illustrations vii
  • Preface xi
  • PART I INTRODUCTION 1
  • 1: CENTRAL AMERICA: THE CHALLENGES OF TRADE, INDUSTRIALIZATION, and INTEGRATION IN THE TWENTIETH CENTURY 3
  • 2: A MACROECONOMIC ASSESSMENT OF CENTRAL AMERICA 15
  • SUMMARY AND OVERVIEW 36
  • Note 36
  • PART II TRADE IN CENTRAL AMERICA 39
  • 3: THE STRUCTURE OF TRADE IN CENTRAL AMERICA 41
  • SUMMARY 58
  • Notes 59
  • References 59
  • 4: IDUSTRIALIZATION and TRADE IN CENTRAL AMERICA 61
  • Notes 85
  • References 85
  • 5: MEXICO AS A POTENTIAL MARKET FOR CENTRAL AMERICAN and CARIBBEAN PRODUCTS 87
  • Notes 98
  • PART III INDUSTRIALIZATION AND INTEGRATION IN CENTRAL AMERICA 101
  • 6: THE INTENSITY OF CENTRAL AMERICAN ECONOMIC INTEGRATION 103
  • CONCLUSIONS 111
  • Notes 113
  • Notes 114
  • 7: ASSEMBLY OPERATIONS IN CENTRAL AMERICA 117
  • References 149
  • 8: PANAMA: ECONOMIC INTEGRATION ALTERNATIVES, IMPLICATIONS, and PERSPECTIVES 153
  • Notes 178
  • References 179
  • 9: THE CENTRAL AMERICAN COMMON MARKET: AN ANALYSIS Of WELFARE EFFECTS FROM 1970 TO 1984 183
  • Conclusion 202
  • Notes 203
  • Notes 204
  • PART IV SPECIAL ISSUES 207
  • 10: ECONOMIC PROSPECTS FOR CENTRAL AMERICA IN THE DECADE OF THE 1990S 209
  • Notes 220
  • REFFERENCES 220
  • 11: A REVIEW OF ECONOMIC POLICIES and STRATEGIES FOR TRADE and INDUSTRIALIZATION IN CENTRAL AMERICA 223
  • CONCLUSION: WHERE TO FROM HERE? 232
  • References 235
  • 12: THE DILEMMA OF EXPORT RIVIVAL: NICARAGUAN AGRICULTURE AT A TURNING POINT 237
  • Notes 251
  • References 251
  • 13: CHALLENGES and PROSPECTS FOR CENTRAL AMERICA IN A GLOBAL TRADE CONTEXT 253
  • BIBLIOGRAPHICAL ESSAY 271
  • SELECTED BIBLIOGRAPHY 277
  • Index 279
  • ABOUT THE CONTRIBUTORS 289
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