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Volume 59 / Social Sciences

ECONOMICS: CENTRAL AMERICA


CLARENCE ZUVEKAS, JR., Consulting Economist, Annandale, Virginia
LUIS RENÉ CÁCERES, Inter-American Development Bank, Washington, DC


ISSUES OF INTRAREGIONAL AND INTERNATIONAL TRADE continue to dominate research focused on Central America as a region. The Central American Common Market Secretariat (SIECA) has published two more volumes in its useful series of collected essays by distinguished observers of, and participants in, the regional integration process (items #bi 98004609# and #bi 99000878#).

Although intraregional trade receives more attention than trade with countries outside Central America, the regional integration process once again faltered in the second half of the 1990s, after some significant progress in the first half of the decade. Progress toward formal integration with NAFTA and/or the proposed Free Trade Area of the Americas (FTAA) is also stalled, partly for reasons external to Central America. Nevertheless, the countries of the region continue to make progress on policy reforms that would make feasible eventual accession to NAFTA or the FTAA.

The other region-wide studies reviewed in this section cover a wide range of subject areas. Perhaps most notable among these topics is the persistence of rural poverty (items #bi 97007388# and #bi2001004123#). [CZ]

After the periods of crisis and social conflicts that characterized the 1980s, Central American countries undertook structural reform programs that have changed both the structure of the economy and the manner in which economic management is performed. A body of literature has emerged that examines the costs and benefits of these reform programs, mostly raising doubts about the strength of the regional economies and the level of appropriateness of the reforms.

Many of the works annotated here review various aspects of structural adjustment. The analysis of recent economic policies and their effects are best represented by the case of Costa Rica, where Lizano (item #bi 00005473#), Alonso (item #bi 98009882#), and Fernández, Jiménez, and Vargas Brenes (item #bi 00005420#) present surveys of major sector policy changes. Nicaragua's concerns mainly focus on the effects of policy reform on poverty, as in Vargas (item #bi 00005581#). This approach is also present in Honduras, as seen in Hernández Chávez (item #bi 00007096#) and Montesino Castro (item #bi 98006013#), although Zuvekas presents a more general overview (item #bi 00007067#).

In addition, financial aspects of development occupy a prominent place, particularly in Nitlapán's recent works on Nicaragua. The effect of financial liberalization is studied in several papers, such as Salgado (item #bi2001004118#) and Rivera Campos (item #bi2001004115#). Impressive examinations of the effectiveness of monetary policy appear in Recinos (item #bi 99005531#), Urízar and Saavedra (item #bi 99005529#), Iraheta (item #bi2001007769#), and Milliard Flores, Loranca Irueste, and Guerra Torres (item #bi2001007770#).

Moreover, many works are directing considerable attention to the performance of the postreform external sector, particularly in Costa Rica in the works of Kikut Valverde (item #bi 98009051#), Carballo Salazar (item #bi 98009880#), Hidalgo Capitán (item #bi 99006323#), Orozco (item #bi 98009052#), Monge (item #bi 99003672#), and Zúñiga, Azofeifa, and Kikut (item #bi 99009782#), as well as in Guatemala in Gutiérrez Echeverría (item #bi 99005530#). Concerns about the benefits of the maquila and export processing zones are evident in the works of Chaves and Peralta (item #bi 99009271#) and Buitelaar (item #bi 00007497#).

Works on poverty and social development are not abundant, except for Nitlapán's ongoing research and the impressive papers from Costa Rica. The topic of remittances, which is becoming more important to the region, is discussed in Rivera Campos (item #bi2001004115#) and Serrano Calvo (item #bi 00003694#). Labor policy issues are not receiving much attention; the only work is that of Trejos (item #bi 00001944#).

Despite the vivid preoccupation with the social effects resulting from structural reform, only one work proposes an alternative model (item #bi 98009871#). There thus exists the need to go beyond the diagnostic stage and formulate models that lead to growth and equity and avoid polarization.

Some new topics are receiving growing interest, such as gender issues in Nicaragua (items #bi 99009277# and #bi 99009147#), Honduras (item #bi 99009272#), and El Salvador (item #bi2001004114#); and internal migration in Guatemala (item #bi 98009873#). The studies of AIDS in El Salvador and Honduras are particularly alarming (items #bi2001004113# and #bi 98009773#, respectively).

On topics of a subregional nature, the Central American integration program continues to receive considerable attention. Of particular interest are Urquidi's historical review (item #bi2001007765#) and Cáceres' evaluation of the feasibility of monetary integration (item #bi 00006533#). Interesting works on economic convergence in Central America include Cáceres (item #bi2001005230#) and Córdova (item #bi2001003943#); and on savings, Cáceres (item #bi 00002658#) and Lazo, Jované, and Neira (item #bi2001004224#). [LRC]


El Salvador

Economic growth in El Salvador was less rapid in the second half of the 1990s than in the first half. Factors contributing to slower growth include the decline of the stimulus of postwar reconstruction; unfavorable external forces; and the sluggishness of the agricultural sector, partly because of exchange-rate appreciation and partly because of insufficient public investment in rural infrastructure and related services. Macroeconomic policies, meanwhile, continued to be generally solid. However, progress in reducing poverty, especially in rural areas, has not met expectations (items #bi 98004602# and #bi 99000874#).

Various works comprehensively review economic performance (items #bi2001004134#, #bi2001004135#, and #bi 99000880#). El Salvador, Rural Development Study provides a detailed examination of factors limiting rural development (item #bi 98005979#).

A number of studies provide good insights into the structure of labor markets (items #bi2001004245#, #bi 97016181#, and #bi 98009836#). One study finds little evidence of labor-market segmentation (item #bi 97016181#), while another, although not testing directly for segmentation, suggests that it may be significant (see HLAS 57:1386).

A two-volume study examines microenterprise development comprehensively (item #bi 98004601#). Other studies advancing knowledge of this subject include items #bi 99000881#, #bi 98006428#, and #bi 99000872#. [CZ]


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