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Central America's Recent Development

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Central America's Recent Development ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT _____________________________________________________________________________ CENTRAL AMERICA’S RECENT DEVELOPMENT Following is a brief description of how development, in its diverse aspects, has taken place within the Central American context throughout the most recent decades, with a view to more clearly understand the needs to transform and modernize the economies and societies of the region. PEACE AND DEMOCRACY During the eighties Central America was immersed in the deepest crisis of its history. Combined with the economic situation – which will be discussed in the following section – the fragility of the democratic processes in some of the countries, and the armed confrontations in Guatemala, El Salvador and Nicaragua, affected the region as a whole. The deterioration of social conditions and of economic development, as well as setbacks in the regional integration process, produced tensions between the States, and massive migratory movements occurred within and outside Central America. The “lost decade” for the entire Latin American region superimposed itself over the accumulated historical gaps and the political, social and economic roots of the Central American situation. The confrontation between the great powers involved Central America in their disputes. In spite of the above, at the beginning of 1983, a Latin American initiative took place to seek pacific solutions to the Central American conflicts. The Contadora Group - integrated by the governments of Mexico, Venezuela, Colombia and Panama - to which the Support Group, comprised of Argentina, Brazil, Peru and Uruguay, was added later on, headed it. These initiatives highlighted the linkage between the pacification and democratization processes and the vision of inter- dependence between peace and development. Then, towards the end of 1984, and by initiative of the then European Community, the Dialogue of San Jose was initiated. Chancellors of the twelve countries that belonged at the time to the Community participated, with the purpose of avoiding an overflow of the Central American conflict to a confrontation between the two prevailing powers. Additionally, they participated in the pacification and democratization process and, later on, in the strengthening of Central American integration. In the middle of 1986, the Central American countries institutionalized the Central American Presidential Summits, and directly took over the process of negotiations1. The following year, the Central American Presidents signed the Esquipulas II agreements, which is perhaps one of the most important events since the countries’ independence, through which a procedure was established to attain a firm and lasting peace in Central America.2 These agreements opened the possibility to conduct intense internal negotiations in each of the countries involved in armed conflicts, and lead to the subscription of other agreements. In 1990, the demobilization of the so-called Nicaraguan Opposition forces took place. In January 1992, the Chapultepec peace accords enabled the incorporation of the Farabundo Martí Front to the political life of El Salvador. In December 1996, the agreements that put an end to the armed fight of 35 years 1 See Declaración de Esquipulas, Esquipulas, Guatemala, May 1986. 2 See Declaración de Esquipulas II, Guatemala City, August 1987. ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT _____________________________________________________________________________ in Guatemala were subscribed, and which recently have been the object of reprogramming. With it, the cycle of pacification in the region was concluded. It is worth to mention that solution to these conflicts was achieved only after adopting a regional approach to the search for peace. This as well as democracy were finally established in Central America when the actors of the crisis met at the highest level and found a solution to the prevailing conflicts on a regional basis. This solution was possible after fully recognizing and accepting that peace in the region must be unique, integrated and indivisible, and that if a situation of confrontation or violence arose in some of the countries, its negative effects would extend to the region as a whole. 3 There is no doubt, therefore, that regional integration played a very important role in the solution of the Central American crisis. Furthermore, peace and democracy in the region were reached only after they were dealt with from the perspective of a common regional destiny, where all actors sat around the table to decide a shared democratic and peaceful future. In the declarations of Presidential Summits that followed, beginning with Esquipulas II, it was made evident that the deactivation of the armed conflicts was intimately related to the strengthening of the democratic processes, to the rule of law and to the alleviation of social inequities, in a region that was characterized by significant institutional deficits. Peace could only be accomplished if all parties accompanied it with a clear and strong commitment to democracy, the rule of law, and respect of human rights. In relation to the above, agreements reached at regional and national levels required the dissolution of armed groups and the integration of their members to civil society and productive life, and deep transformation of democratic structures. With it, a new era, without precedent in the history of the region, was initiated, whereby all and each of the countries had governments democratically elected. The peaceful solutions to the conflicts of the region constituted a model and example of political will and determination of the Central American region, supported, by the international community in an effort without precedent, that enabled Central America to seek paths for peace and development. It is precisely these efforts, undertaken with great sacrifice and vision, that are to be consolidated through the transformation and modernization of Central America, for which a new proposal is being presented. It aims to put forth the region within a development scheme that will alleviate poverty and existing inequities, in the new Century. ECONOMIC DEVELOPMENT Since the fifties, the Central American region initiated a process of relatively accelerated economic growth, as a result of attractive prices of its main export products in the international markets and – in the following decade – due to the growth of intra-Central American trade. In spite of the above, it is of greater relevance to examine the development achieved during the past three decades. Between 1970 and 1999, gross domestic product (GDP) has more than doubled in the region, growing from 14,580 to 34,020 million Dollars (in 1990 constant value)4. (See Figure A-1). 3 Declaración de Puntarenas, Puntarenas, Costa Rica, December, 1990. 4 CEPAL, Producto interno bruto de los países centroamericanos, 1970 a 1999, Mexico City, March 2000. ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT _____________________________________________________________________________ 35000 30000 25000 20000 15000 10000 Millions of 1990 US$ 5000 0 1970 1975 1980 1985 1990 1995 1999 Figure A-1. Evolution of regional GDP, from 1970 to 1999. In order to better appreciate the region’s economic reality, it is necessary to examine variations that occurred in these figures within this period. In this regard, it must be taken into account that regional GDP grew at annual rates close to 6% during the first half of the seventies. This rate became negative (reaching close to -1%) in the first half of the eighties. In the second half of that decade, a growth of 2% was attained. Finally, the decade of the nineties has been characterized by a renewed growth of close to 5%. (See Figure A-2). 6 5 4 3 2 Annual GDP Growth, % 1 0 -1 1970-75 1975-80 1980-85 1985-90 1990-95 1995-99 Figure A-2. Evolution of the growth rate of regional gross domestic product per quinquenniums, in the period between 1970 and 1999. ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT _____________________________________________________________________________ The noticeable reductions in growth of the regional economy between the period comprising the end of the seventies and half of the following decade were directly influenced by the internal war conflicts that characterized the sub-region, as well as by the international crisis that affected the entire Latin American region in the eighties. The term of the “lost decade”, coined by ECLAC to refer to the eighties for the whole Latin America and Caribbean region, acquired its own dimension in Central America due to its internal conflicts. With the signing of the peace accords at the beginning of the nineties, and with the consolidation of democracy, the sub-region reinitiated its course of development, reaching annual economic growth rates close to 5%. (See Figure A-2). It is worth to mention that the average growth rate of the most recent quinquennium was slightly lower than that of the preceding one. This was largely due to the negative impact of natural phenomena that affected the region as of 1997: the El Niño phenomenon and hurricane Mitch. In addition, there occurred a decrease in international prices for some Central American exports to the world markets. It is also necessary to visualize the economic growth of the sub-region in terms of per capita values, to obtain a better idea of the income of the population. In 1970, average per capita gross domestic product in the region – considering the existing population at the time – was estimated at 960 Dollars (in constant 1990 value) per inhabitant. It increased to 1,082 Dollars ten years later. Nevertheless, since then, a very important reduction in that variable has taken place, as a result of the international and the region’s internal crises, combined with population growth, and levels below those of 1970 were reached. This trend was reverted in the nineties; however, the levels reached in 1980 have not been recovered as yet. See the following figure. 1100 1050 1000 950 1990 US$ 900 850 800 1970 1975 1980 1985 1990 1995 1999 Figure A-3. Evolution of the region’s per capita GDP between 1970 and 1999.
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