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Study on Economic Development, Focusing on the Eastern Region, of the Republic of El Salvador

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Study on Economic Development, Focusing on the Eastern Region, of the Republic of El Salvador No. Japan International Cooperation Agency (JICA) Comisión Nacional de Desarrollo The Republic of El Salvador The Study on Economic Development, Focusing on the Eastern Region, of the Republic of El Salvador Final Report Volume 4 Sector Review Report March 2004 RECS International Inc. Nippon Koei Co., Ltd. UNICO International Corp. SSF J R 04-24 Japan International Cooperation Agency (JICA) Comisión Nacional de Desarrollo The Republic of El Salvador The Study on Economic Development, Focusing on the Eastern Region, of the Republic of El Salvador Final Report Volume 4 Sector Review Report March 2004 RECS International Inc. Nippon Koei Co., Ltd. UNICO International Corp. List of Reports Volume I Executive Summary Volume II Master Plan Report Volume III Project Report Part 1 Project Profiles Part 2 In-Depth Studies Part 3 Additional Action Proposals Part 4 Industrial Location Planning for the Eastern Region and Macrozoning for La Union-Conchagua Area Part 5 Pre-Feasibility Study on Rio Grande de San Miguel Water Resources Development and Management Project Part 6 Initial Environmental Examination (IEE) Part 7 Coffee Pilot Project Part 8 Indigo Pilot Project Volume IV Sector Review Report Part 1 Economic Sectors Part 2 Infrastructure and Resources Part 3 Human Capital Volume V Survey Report Survey 1 Industrial Location Survey Survey 2 Investment Potential Survey in El Salvador and Neighboring Countries Survey 3 Investment Potential Survey in Japan Survey 4 Survey on Salvadorans in the United States Survey 5 Port Utilization Survey Survey 6 Public Safety Survey Survey 7 Survey on Existing Enterprises in El Salvador CCeennttrraalll AAmmeerriiiccaa TThhee RReeppuubblliicc ooff EEll SSaallvvaaddoorr EElll SSaalllvvaaddoorr TThhee EEaasstteerrnn RReeggiioonn ooff EEll SSaallvvaaddoorr The Study on Economic Development, Focusing on the Eastern Region, of the Republic of El Salvador Final Report Volume 4: Sector Review Report Contents Page PART 1: ECONOMIC SECTORS 1 Agriculture 1-1 1.1 Agricultural Land Use 1-1 1.2 Production Performance 1-2 1.3 Production Systems 1-8 1.4 Livestock and Poultry Production 1-10 1.5 Agriculture Support System 1-11 1.6 Fishery 1-15 1.7 Directions for Agricultural Development in El Salvador and the Eastern Region 1-17 2 Industry 1-19 2.1 Industrial Sector Overview 1-19 2.2 Industrial Structure in El Salvador 1-22 2.3 Industry in the Eastern Region 1-25 3 Tourism 1-28 3.1 Existing Conditions of Tourism in El Salvador 1-28 3.2 Tourism Products and Infrastructure in El Salvador 1-32 3.3 Conditions of Tourism in the Eastern Region 1-35 3.4 Issues and Directions for Tourism Development in the Eastern Region 1-36 4 Commerce and Services 1-39 4.1 Overall Performance of Commerce and Services in El Salvador 1-39 4.2 Existing Conditions by Subsector 1-41 4.3 Commerce and Services in the Eastern Region 1-43 4.4 Issues and Directions for Commerce and Services Development 1-44 PART 2: INFRASTRUCTURE AND RESOURCES 1 Transport Infrastructure 2-1 1.1 Road Network 2-1 1.2 Port System 2-3 1.3 Airports and Air Transport 2-7 1.4 Railroads 2-9 1.5 Issues and Directions for Transport Development in El Salvador 2-9 2 Power Supply 2-14 2.1 Power Sector Overview 2-14 2.2 Existing Power Supply System 2-15 2.3 Some Existing and Planned Projects 2-17 i 2.4 Issues and Prospects for Power Development in El Salvador and the Eastern Region 2-19 3 Telecommunications and ICT 2-21 3.1 Telecommunications Sector Overview 2-21 3.2 PPP Initiative 2-23 3.3 ICT-related Activities 2-24 3.4 Position of El Salvador and Prospects 2-26 4 Urban Infrastructure 2-29 4.1 Urban Hierarchy in the Eastern Region 2-29 4.2 Existing Conditions of La Union and Its Hinterland 2-29 4.3 Prospect for Future Development 2-36 5 Land Resources 2-39 5.1 Existing Conditions 2-39 5.2 Land Capability and Vulnerability 2-41 6 Water Resources 2-44 6.1 Water-related Institutions 2-44 6.2 Water Resources Endowments in El Salvador 2-45 6.3 Existing Water Use and Facilities in El Salvador 2-47 6.4 Water Resources and Water Use in the Eastern Region 2-49 6.5 Issues for Water Resources Development and Management 2-52 Annex to Chapter 6: Detailed Data on Potable Water Supply 2-56 PART 3: HUMAN CAPITAL 1 Demography and Employment 3-1 1.1 Demography 3-1 1.2 Employment 3-2 2 Education and Training Opportunities 3-4 2.1 Education 3-4 2.2 Vocational training 3-12 2.3 Directions for improving education and training in El Salvador 3-13 3 Overseas Salvadorans 3-14 4 Poverty Situations 3-16 4.1 Poverty Trend in Recent Years 3-16 4.2 Poverty and Human Development by Department 3-18 4.3 Position of El Salvador 3-25 4.4 Issues for Poverty Alleviation 3-27 ii List of Tables Part 1 ECONOMIC SECTORS Table 1.1 Changes in Planted Area of Main Crops in El Salvador 1-1 Table 1.2 Changes in Planted Area and Production of Major Crops in El Salvador, 1989-2000 1-2 Table 1.3 Planted Area and Production of Main Crops by Department, 2001-2002 1-3 Table 1.4 Changes in Agro-Products Production, 1997-2001 1-4 Table 1.5 Coffee’s Contribution to GDP, 1985-2000 1-6 Table 1.6 Coffee Harvested Area, Yield and Production, 1985-2001 1-6 Table 1.7 Coffee-Planted Area by Department and Land Elevation, 1996 1-7 Table 1.8 Number of Farmers, Production and Yield by Size of Coffee Farms 1-9 Table 1.9 International Coffee Price and Amount Paid to Coffee Farmers 1-10 Table 1.10 Scale of Coffee Cultivation under Intensive Production System 1-11 Table 1.11 Allocation of Bank Loans by Economic Sector 1-12 Table 1.12 Import of Agro-Products in El Salvador, 1987-2000 1-14 Table 1.13 Agricultural and Fishery GDP, 1998-2000 1-15 Table 1.14 Production of Fish by Various Fishery Categories, 2000 1-15 Table 1.15 Location of Fish Landing Sites in El Salvador 1-16 Table 2.1 Foreign Direct Investments by Sector, 1997-2002 1-21 Table 2.2 Cumulative Foreign Direct Investments by Country, 1998-2002 1-21 Table 2.3 Definitions of SME in El Salvador 1-22 Table 2.4 Compositions of Companies and Employees by Region and Company Scale 1-23 Table 2.5 Number of Companies and Employees by Region and Company Scale 1-23 Table 2.6 Composition of Number of Company and Employment by Industrial Category 1-24 Table 2.7 Number of Establishments and Employment in Manufacturing, 1997 1-25 Table 2.8 Number of Manufacturing Companies by Scale and Location 1-25 Table 2.9 Composition of Manufacturing Companies by Sub-industry 1-25 Table 2.10 Size Structure of Enterprises in the Eastern Region, 1997 1-26 Table 2.11 Composition of Manufacturing Companies in the Eastern Region 1-27 Table 3.1 Tourism Earnings Compared with Export Value of Major Export Products, 1997-2002 1-28 Table 3.2 Visitor Arrivals in El Salvador, 1980-2000 1-29 Table 3.3 Visitor Arrivals in El Salvador by Month, 2000-2002 1-29 Table 3.4 Visitors by Resident Country 1-29 Table 3.5 Number of Visitors by Mode of Transport and Entrance Point 1-30 Table 3.6 Number of Visitors by Purpose, 2000 1-31 Table 3.7 Visitors’ Preference of Activities 1-31 Table 3.8 Foreign Visitors’ Impression of El Salvador 1-31 Table 3.9 Visitors’ Use of Turicentros 1-32 Table 3.10 Evaluation of Tourist Offerings in Central American Countries 1-33 Table 3.11 Evaluation of Tourism Resources by Destination 1-34 Table 3.12 Lodging Accommodations by Department, 2001 1-35 Table 4.1 Service Industry in GDP, 1970-2000 1-39 Table 4.2 Recent Performance of Commerce and Services, 1996-99 1-40 iii Table 4.3 Commerce and Service Sector by Subsector, 1998 1-40 Table 4.4 Annual Foreign Investment Inflow in the Commerce and Services Sector 1-41 Table 4.5 Commerce and Services in the Eastern Region 1-43 Table 4.6 Sales Volume in the Eastern Region, 1996 and 1998 1-44 Table 4.1 Characteristics of Main Central American Airports 4-8 Part 2 INFRASTRUCTURE AND RESOURCES Table 1.1 Piers and Berths of Acajutla Port 2-4 Table 1.2 Existing Piers at Cortes Port 2-5 Table 1.3 Characteristics and Performance of Limon-Moin Ports 2-6 Table 1.4 Characteristics of Main Central American Airports 2-8 Table 1.5 Railroads in Central America 2-9 Table 1.6 Existing Rail Lines in El Salvador 2-9 Table 1.7 Typical Maritime Freight Costs per Container from Central America to the U.S. 2-11 Table 1.8 Import and Export Volume at Atlantic and Pacific Ports of Central America, 1999 2-12 Table 1.9 Volume of International Trade in Central America, 1998-2010 2-12 Table 1.10 Container Traffic Mobilized in Central America and Panama Ports, 1993-96 2-13 Table 2.1 Major Power Stations in El Salvador 2-16 Table 2.2 Shares of Installed Power Generating Capacity and Energy Generation 2-16 Table 2.3 Comparison of Power Tariff 2-17 Table 2.4 Electricity Coverage in El Salvador and the Eastern Region, 2000 2-20 Table 3.1 Changes in Fixed Telephone Lines by Service Provider 2-21 Table 3.2 Increases in Mobile Telephones by Service Provider 2-21 Table 3.3 Changes in Total Teledensity Rank of Selected Countries, 1990-2000 2-22 Table 3.4 ICT-related Human Resources Development 2-25 Table 3.5 Infocentros in the Eastern Region 2-26 Table 3.6 Comparison of El Salvador with Selected Countries by ICT-related Indices 2-27 Table 4.1 Water Supply Service in La Union Municipality 2-32 Table 4.2 Composition of Solid Waste 2-34 Table 4.3 Sources of Solid Waste Generation in La Union 2-34 Table 4.4 Garbage Collection Vehicles Operated by La Union Municipality 2-34 Table 4.5 Social Infrastructures Available in La Union and Conchagua 2-36 Table 4.6 Dimensions of Berths of La Union Port and Ship Sizes 2-36 Table 4.7 Existing Free Trade Zones in El Salvador 2-38 Table 5.1 Existing Land Use in El
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