Economy of Central America

TRINIDAD AND TOBAGO

Thanks to their oil and gas production, Trinidad and Tobago has one of the strongest economies in the Caribbean. The population is a mixture of descendants of African slaves and Indian contract workers. Despite the country’s good economy, unemployment is high and the social differences are great.

Trinidad and Tobago

EL SALVADOR

According to COUNTRYAAH, El Salvador is the smallest country in Central America and is marked by the legacy of the 1980-1992 civil war. Crime is high and poverty continues to spread, causing millions of people to leave the country. The country is a presidential democracy with functioning independent institutions such as the judiciary that overthrows the last three presidents for corruption. The trade union movement can act freely but is relatively weak.

El Salvador

Country Facts

State condition: Republic

Surface: 21,000 km2

Capital: San Salvador

Language: Spanish

Labor market and economy:

The economy has traditionally been based on raw material exports such as coffee, sugar and fruit, but in recent years, compound factories, so-called maquilas, have become increasingly important. The factories are located in tax-exempt zones and produce textiles that are exported. The majority of the employees are women with low wages, poor working conditions, precarious employment and there is a lot of sexual harassment.

The economy has long been heavily dependent on the United States, both in terms of trade and the money that Salvadorans in the United States send home to their families. In 2001, the country’s domestic currency was abolished in favor of the dollar, and since 2006 there has been a free trade agreement with the United States.

El Salvador is classified as a middle-income country, but the differences between rich and poor are large and the leveling of social gaps is slow. The low tax collection (18 percent of GDP in 2017) and the widespread informal sector (just over 60 percent of the labor force) means that the state has little resources to use for investments and social initiatives.

GUATEMALA

Ever since the Spanish conquest, Guatemala has been ruled by the country’s ethnic minority: the Ladinos, the Spanish chains. The majority are indigenous Maya with about 20 different peoples and languages. The contradictions between different ethnic groups and social divisions have created political instability and great migration. Trade unionists are subjected to systematic violence and persecution.

Guatemala

Country Facts

State condition: Republic

Surface: 109 000 km2

Capital: Guatemala City

Language: Spanish

Labor market and economy:

Export crops such as coffee, sugar and bananas have been the backbone of the economy and agriculture employs half of the workforce. But the biggest industries are services and trade, where tourism has experienced a boom since the end of the civil war and now draws in as much income as the most important export crop, coffee. Approximately 70 percent of the able-bodied population is estimated to belong to the informal sector.

HONDURAS

Honduras stood as a model when the derogatory term banana republic was coined at the beginning of the 20th century: a country ruled by a small elite, political arbitrariness in the administration of justice, widespread corruption and a total dependence on individual export products. The country is still strongly dependent on agricultural exports but has broadened its economy somewhat by building tax-free zones for foreign companies. However, money that Hondurans, especially in the United States, send home to their families is one of the biggest incomes. The informal economy is widespread and the trade union movement is concentrated on some occupational groups in the public sector such as teachers and care staff.

Honduras

Country Facts

State condition: Republic

Surface: 112 492 km2

Capital: Tegucigalpa

Language: Spanish

Labor market and economy:

According to ITYPEUSA, Honduras is one of the poorest and most indebted countries on the Central American continent. The economy is based on fruit exports and textile production in tax-free zones. The money that Hondurans working in the United States send home to their families has more than doubled in recent years and now accounts for one-fifth of the country’s GDP. More than half of the workforce is active in the informal sector.

NICARAGUA

The revolution of 1979 was followed by a decade of civil war that shattered the economy and created deep rifts in society. Former Revolutionary Leader Daniel Ortega has been leading the country since 2005 in an increasingly authoritarian direction with his wife, who is vice president. Since major protests against Ortega’s policies were brutally crushed in April 2017, violence against all forms of opposition has escalated and the political crisis has paralyzed the country.

Nicaragua

Country Facts

State condition: Republic

Surface: 130,000 km2

Capital: Managua

Language: Spanish

Labor market and economy:

The economy collapsed during the civil war in the 1980’s but has since recovered, although the country remains among the poorest in the region. Agriculture is the basis of the economy, although the industrial sector has grown in recent years, as has tourism.

According to ALLCITYPOPULATION, Nicaragua was for a long time one of the world’s most aid – dependent countries, but more and more countries, including Sweden, have withdrawn their support in protest against political alignment. Venezuela has replaced the previous donors and at the same time the government has managed to attract new international investors, which has created good growth.