The
human and the economic insecurity in Central America
During the last 25
years, Central America has been the scenario of profound economic, social, political
and even military crisis, which have affected all of the countries of the region
except for Costa Rica. Eventually, these turning points have been overcome;
however, the conditions that originated the crisis have remained intact, and
constitute a potential risk for the social and the economic stability of the
region.
The problems related to the economic concentration and the limited social investment
presently interact together along with relatively undefined poles for the economic
growth, a prolonged stage of slow growth, and an unrestricted commercial openness.
The Central American countries become more and more dependent of the external
factors “thanks” to this situation. The relative importance of the foreign maquila
in both the production and the exportation fields keeps growing, just like the
immigration flow and the family remittances which –in extreme cases such as
the one of El Salvador- have turned into one of the pillars of the economy.
A quick glance at the economic, the social, and the human development performance
indicators of the Central American countries reveals that, although there are
significant improvements in the last two decades, Central America is still living
a period of transition from an economy of agricultural exportations to a new
economic model that has not been completely defined yet. However, that economic
model is shaping up as a sort of an
enclave of three sectors that depends on the foreign investment and which is
not necessarily the solution to the complicated Central American problems.
In the first place, an aspect that must be highlighted is the fact that in Central
America the traditional exportations, formerly considered as the leading pillars
of the economy have drastically reduced its importance in the production field.
The emblematic cases are the cotton and the coffee issues, which have eventually
lost its importance inside the Central American production structure. An evaluation
performed by the Economic Commission for Latin America and the Caribbean (CEPAL,
in Spanish) showed that the areas cultivated with cotton have practically disappeared.
In Costa Rica, these areas went from representing a 2.4% in 1980, to represent
a 0.1% in 2000. In El Salvador, it descended from a 12.3% to a 0.3% during the
same period; while in Guatemala, it went from a 9.6% to a 0.1%.
The behavior of the area cultivated with coffee (between the formerly mentioned
period), in relation to the total cultivated area was also a symptomatic event.
El Salvador went from a 26.9% to a 23.5%; Nicaragua went from a 21.9% to a 13%;
and Costa Rica went from a 26.7% to a 24.1%. The atypical cases were those of
Guatemala and Honduras, where the cultivation of coffee increased its area from
a 19% to a 19.9%, and from 16.8% to a 28.8% respectively, between the same years.
In the context of this tendency, there has not emerged any new kind of cultivation
to activate the economic growth. The non-traditional cultivation is far from
reaching the importance that coffee, bananas, and cotton had in their economic
moment. The new poles of economic growth in Central America are gradually moving
towards the tertiary sector (commerce, services, tourism), the maquila and the
consumption favored by the considerable flow of the family remittances sent
by the immigrants. The slow growth of the agricultural and the industrial activities,
and the relatively considerable fall of the primary exportations are the consequences
of the formerly discussed situation.
Another important aspect that must be discussed is the strong concentration
of the income, reflected in the GINI coefficient calculated by the Development
Program of the United Nations (PNUD, in Spanish), presented along with other
indicators (which will be used in this article). This coefficient measures the
level of the economic concentration assigning a value of zero to the concentrated
distribution of the income, and a value of 100 to the total concentration. The
Central American countries present the following GINI coefficients: Costa Rica,
45.9; Panama, 48.5; El Salvador, 50.8; Nicaragua, 60.3; Honduras, 59; and Guatemala,
55.8. These levels are among the highest in the world, and easily exceed the
levels of those countries that have a low level of human development. As for
the economic concentration, Nicaragua occupies the second place (in the world’s
scale), it can only be exceeded by Swaziland. While a coefficient of 50.3 puts
El Salvador in the fourth place of the Central American scale, and it is enough
to consider this country as a nation where the concentration of the income exceeds
that one of most of the African countries.
Central America is, therefore, in a compromising situation because of the recent
behavior of its economies and because of the income concentration, mostly a
structural problem. It cannot be denied that it has experimented a significant
progress in its Human Development Index (IDH, in Spanish) –which includes in
its calculations the life expectancy, the education, and the GNP indicators
per capita- in all of the cases. Between 1975 and 1999, Costa Rica increased
its IDH from 0.745 to 0.821; El Salvador, from 0.585 to 0.701; Nicaragua, from
0.569 to 0.635; Honduras, from 0.517 to 0.634; and Guatemala, from 0.505 to
0.626. There are no records about Panama and Belize that could allow us to compare
the numbers of its IDH; however, for 1999 its IDH were 0.782 and 0.776, respectively.
It is important to mention that the levels reached by El Salvador, Nicaragua,
Honduras, and Guatemala are still under the levels that Costa Rica had in 1975,
and this reflects the long and winding road that the rest of the countries still
have to deal with in this context. Additionally, it is important to notice the
relatively high level of human development that Panama and Belize have, which,
although it is much lower than the levels of Costa Rica, it holds a better position
than the rest of the Central American countries.
At the foundations of this evolution (and this regional status), we can also
find certain redistribution policies throughout the public expense in health
and in education. It would be impossible not to notice that Costa Rica and Panama
have a much higher relative expense level in education and health than those
of the Northern countries of the region –with the exception of Belize. For example,
while Costa Rica spent between 1995 and 1997 an average of 5.45 of the GNP in
education, in Guatemala they only spent 1.7%; in El Salvador, 2.5%; while in
Honduras, the expense reached a 3.6%, and in Nicaragua, a 3.9%.
The evidence of the health problem is overwhelming: by 1998, Costa Rica and
Panama respectively invested 5.2% and 4.9% of its GNP in the health field; while
El Salvador spent 2.6%; Guatemala 2.1%; and Honduras, 3.9%. Nicaragua has a
peculiar case. In that same year, it would have invested over 8,3% of its GNP
to finance the public health. Obviously, these differences reflect not only
the political compromise of the governments with the social development, but
they also help the education and the life expectancy levels to become much higher
than those of the countries in which the social investment is more modest.
In this context, an examination of the historical behavior of the expense in
education and health reveals that between the periods of 1985 and 1987, and
that between 1995 and 1997 the countries with a smaller IDH (Nicaragua, Honduras,
Guatemala, and El Salvador), reduced their public expense in education. At the
same time it is important to consider that there were improvements in the health
budget practically in all of the cases –only Costa Rica fell from 5.3% to 5.2%
in its GNP between 1990 and 1998.
It is clear to see that Central America is not going through a positive period,
since the traditional development model is gradually being dismantled. The problem
is that an actual change in the economic concentration and in the social underdevelopment
has not taken place yet. The IDH improvements do deserve some credit, but they
are in a way the result of the forced immigration process, which reduces the
pressure and frequently turns into remittances for the families and countries.
El Salvador is an extreme case, where one fourth of its total population are
immigrants and the support they give their families has allowed the country
to stabilize its macroeconomics, and without a doubt it has improved the social
indicators. With a different intensity, the same process also takes place in
the other countries of the region; Costa Rica and Panama are the exception once
again.
Central America still does no find its internal growth poles and this reduces
the possibilities that the region might have to become a part of the global
economy. Becoming a part of the globalization process through the maquila is
not a viable option to reach a sustainable development level, since the maquila
is an unstable business that depends on the concessions granted by The United
states and that does not even generate any taxes for the state. The maquila
can also be a source of instability for the economic growth and the employment,
due to its volatility and to the high dependency levels that the Central American
countries can develop with it. In El Salvador, the maquila industry represents
a 60% of the gross number of exportations, and a 30% of the industrial product.
Another important piece of information is that in Costa Rica the reduction of
the maquila activity (in this case, computer products) in 2001 was enough to
significantly reduce the growth of the industrial sector.
The imminent negotiation of a Free Trade Agreement with The United States begins
to rise as a new element that will transform, for better or for worse, the economic
insertion of the region inside the global economy. That is why it is necessary
to use this agreement to promote a sustainable economic growth, and promote
the efforts to increase the social investment and the achievements of the human
development process.
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