Economic Maladjustment in Central America

211 Pages·1993·25.675 MB·English

by  Wim Pelupessy, John Weeks (eds.)

ECONOMIC MALADJUSTMENT IN
CENTRAL AMERICA
Also by Wim Pelupessy
PERSPECTIVES ON THE AGRO-EXPORT ECONOMY
IN CENTRAL AMERICA (editor)
Also by John Weeks
A CRITIQUE OF NEOCLASSICAL MACROECONOMICS
DEVELOPMENT STRATEGY AND THE ECONOMY OF
SIERRA LEONE
Economic
Maladjustment
in Central America
Edited by
Wim Pelupessy
Lecturer in Development Economics
Tilburg University. The Netherlands
and
John Weeks
Director.
Centre for Development Studies.
School of Oriental and African Studies
University of London
M
St. Martin's Press
© Wim Pelupessy and John Weeks 1993
Softcover reprint of the hardcover lst edition 1993
All rights reserved. No reproduction, copy or transmission of
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Any person who does any unauthorised act in relation to this
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claims for damages.
First published in Great Britain 1993 by
THE MACMILLAN PRESS LTD
Houndmills. Basingstoke. Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
A catalogue record for this book is available
from the British Library.
ISBN 978-1-349-22531-6 ISBN 978-1-349-22529-3 (eBook)
DOI 10.1007/978-1-349-22529-3
First published in the United States of America 1993 by
Scholarly and Reference Division.
ST. MARTIN'S PRESS, INC.,
175 Fifth Avenue,
New York, N.Y. 10010
ISBN 978-0-312-08632-9
Library of Congress Cataloging-in-Publication Data
Economic maladjustment in Central America / edited by Wim Pclupessy
and John Weeks.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-312-08632-9
I. Central America-Economic policy. 2. Economic stabilization
-Central America. I. Pelupessy, Wim. II. Weeks, John, 1941-
HCI41.E28 1993
338.9728--<lc20 92-18016
CIP
Contents
List of Tables vii
List of Figures ix
List of Abbreviations x
Notes on the Contributors xii
Foreword by Gert Rosenthal xiii
Preface xvi
1 Adjustment in Central America
Wim Pelupessy and John Weeks
PART I DOMESTIC ECONOMY POLICY
2 The Nicaraguan Stabilisation Programme of 1989 25
John Weeks
3 The Logic behind the Stabilisation Policies of the
Chamorro Government in Nicaragua 41
Oscar Catalan Aravena
4 The Limits of Economic Policy in EI Salvador 53
Geske Dijkstra
5 The Determination of the External Debt of Honduras 67
Luis Rene Caceres
PART II INTERNATIONAL TRADE POLICY
6 Export Promotion and Regional Cooperation in Costa
Rica 89
Willy Soto Acosta
7 Costs and Benefits of Costa Rica Joining GATT 96
Olman Segura Bonilla
8 Non-Traditional Exports in Guatemala 111
Ana Maria Colindres
v
vi Contents
9 Economic Prospects for Central America in the 1990s 128
Maria Eugenia Gallardo
PART III AGRARIAN POLICY
10 The Future of Agrarian Reform in Nicaragua 147
Jan P. de Groot and Jan Plantinga
11 Agrarian Reform and Anti-Reform in EI Salvador 164
Wim Pelupessy
Bibliography 185
Index 196
List of Tables
1.1 Exports of the Central American countries 7
1.2 Capital flight from Central America, 1980-87 8
1.3 Per capita income in Central America: 1975 and 1980s 12
1.4 Private fixed capital coefficient in Central America
(1975, 1979 and 1980s) 14
2.1 Nicaragua: basic macroeconomic data, 1976-89 26
4.1 EI Salvador: growth of Gross Domestic Product (GOP)
and inflation rate 198H9 56
4.2 E1 Salvador: exports (fob) 1979, and 1983-88 57
4.3 EI Salvador: external sector indicators, 1984-89 57
4.4 EI Salvador: composition of public expenditure 1979
and 1985-88 61
4.5 EI Salvador: structure of tax revenue of the central
government, 1982-89 62
5.1 Evolution of external debt of Honduras 69
5.2 Service of the external debt of Honduras 70
5.3 Honduras: debt reduction through savings increase 71
5.4 Reduction of debt through increase of savings 72
5.5 Real rate of interest of the United States 77
5.6 Honduras: external indebtedness which would have
been avoided 83
7.1 Trade balance of Costa Rica 102
7.2 Costa Rica: traditional and non-traditional exports 103
7.3 Costa Rica: central government revenues from imports
and exports 104
7.4 Costa Rica: export and import indicators 105
7.5 Costa Rica: debt indicators 107
7.6 Growth and importance of the service sector in Costa
Rica 108
8.1 Guatemalan non-traditional exports 1980-88 114
8.2 Guatemalan exports to Central America 115
8.3 Guatemalan non-traditional export earnings: hard
currency receipts in proportion to total trade 116
8.4 Guatemala: credit from private banks to agricultural
sector 118
vii
viii List of Tables
8.5 Guatemala: relationship policy instruments and
non-traditional exports 123
8.6 Guatemala: estimated elasticities policy variables 124
9.1 Scenario 1: 1984-87 trends remain unchanged in
Central American economies 132
9.2 Scenario 2: all exogenous variables take their 1970--79
trend 133
9.3 Scenario 3: all exogenous variables take their 1970--79
trend but TX stagnate 134
9.4 Scenario 4: conditions of scenario 3 but IRX grows at
12 per cent 135
9.5 Scenario 5: conditions of scenario 4 but FS decline at
5 per cent and debt is cancelled in 50 per cent 136
10.1 Evolution of the Sandinista agrarian reform, 1979-90:
area affected/distributed in thousands of hectares 150
1l.l El Salvador: distribution of land ownership in 1987 170
11.2 El Salvador: average yields of basic cereals in reformed
sectors: phase I and III, 1985-87 172
11.3 El Salvador: land use by cooperatives, 1980--87 173
11.4 El Salvador: percentage changes in agricultural
production 1980/81-1986/87 178
List of Figures
5.1 Additional borrowing simulation 73
5.2 Total debt simulation 74
5.3 Repercussion of the fiscal deficit of an industrial
country in the economy of a borrowing developing
country 79
5.4 Relation between interest rate and income in a
developing country 80
ix