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Volume 57 / Social Sciences

ECONOMICS: CENTRAL AMERICA


CLARENCE ZUVEKAS, JR., Consulting Economist, Annandale, Virginia
DEREKA RUSHBROOK, Independent Consultant, University of Arizona


REGION-WIDE STUDIES in this section are dominated by the theme of international trade. Many Central American and other researchers continue to support stronger regional economic integration, but increasingly as part of a broader, outward-oriented strategy called “open regionalism.” Thus, even a notable long-time critic of outward-oriented trade strategies currently views globalization as inevitable and argues that stronger regional integration is important for strengthening Central America's ability to compete internationally (item bi 98008276). A collection of essays by a distinguished Costa Rican economist with a longer commitment to open regionalism provides good insights on regional integration (item bi 98008277).

The effect of NAFTA on Central American trade with the US is receiving much attention. One work provides a thorough discussion of issues and policy options (item bi 96000567). A study by CEPAL finds few negative effects of NAFTA on Central America in the short run; but preliminary data for 1996 suggest that some production for the US market may be shifting from Central America to Mexico (item bi 98008274). This topic merits more detailed investigation which will strengthen the growing policy debate on NAFTA's implications for macroeconomic and trade policies in Central America.


EL SALVADOR

El Salvador's economy has rebounded strongly since adopting significant policy reforms in 1989 and signing the Peace Accords in January 1992. The recovery, however, has had little impact on the distribution of income and wealth. Rapid economic growth and large-scale remittances from abroad (a large portion of which goes to poor families) have reduced the incidences of poverty, but not as much as suggested by household survey data. Observers regarding the pattern of economic recovery as a threat to the consolidation of peace are rightfully concerned.

A good starting point for understanding recent economic performance in El Salvador, and the reasons for concern about equity issues, is the introduction in the December 1995 issue of World development (item bi 98008298; individual articles annotated separately). One collection of seminar papers presents different sides of the economic policy debate (item bi 98008284). A representative critique of orthodox policies offers a pro-poor strategic vision combining valid suggestions with a strong utopian outlook and an unwillingness to eschew well-intentioned State interventions which have failed to help the poor in the past (item bi 99000488).

Other noteworthy studies include a regional study of the urban informal sector (item bi 98007862); a study on El Salvador's social security system (item bi 96011910); and a review of changes in El Salvador's agrarian structure (item bi 99000776).

More research is needed on poverty and income distribution and how they are affected by alternative economic policies. Solid analytical work is hampered by the lack of a consistent database: El Salvador's household survey instrument continues to have major weaknesses. Costa Rica is the only Central American country that has adequate household survey data.


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