ANNEX: ’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 , and , 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 , , and - to which the Support Group, comprised of , , and , 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 . 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, , 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 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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It is worth to mention, nonetheless, that there is a clear trend towards an improved economic development of the region, as measured in terms of regional gross domestic product growth. Furthermore, it must be recognized that the growth of regional GDP disguises the fact that development has not been sustained. In other words, even when high average rates were achieved in some periods, growth has not been sustained over time, especially in some of the countries.

The Central American governments have made significant efforts to achieve healthy macro- economic policies, with relatively low fiscal deficits in relation to GDP, decreasing inflation rates, etc. Such efforts might have had some effect in the moderate recovery of the economies. (See Figure A-4).

10000

1000

100

10 Annual rate, % 1

0.1 CR ELS GUA HON NIC

1990 1995 1999

Figure A-4. Evolution of the annual rate of inflation in the countries in the past 10 years.5

THE ASYMMETRIC DEVELOPMENT AMONG COUNTRIES

Figures given in the preceding paragraphs refer to average values in the region as a whole. Nevertheless, differences in the relative development among countries do exist.

In this regard, two countries stand out – and Nicaragua – that have a lower degree of development than the rest of the region.6 They represent small fractions of the gross domestic product of the region, 13 and 8 percent respectively. In addition, important differences exist in per

5 Annual rates are shown using a logarithmic scale that enables showing the high rates of inflation in one of the countries during 1990. 6 It is worth to mention that, contrary to what occurred in the sixties, when only one country in the region belonged to the lowest relative development category, at the present time there are two, which are benefiting from the HIPC initiative.

ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT ______capita income in these countries. They are equivalent to 60 to 70 percent of the region’s average.7 (See Figure A-5).

1400

1200

1000

800

600

400

Per capita GDP, 1990 US$ 200

0 1970 1975 1980 1985 1990 1995 1999

Honduras Nicaragua Regional Average

Figure A-5 Evolution of per capita GDP between 1970 and 1999 for Honduras and Nicaragua in comparison to the region’s average.

The inhabitants of these two countries have an income of approximately two dollars per day at the present time. This fact sets them in the category of poorer countries worldwide, and the difference with other Central American countries of higher income is noteworthy. In fact, the present income of inhabitants in Costa Rica and El Salvador – the two countries located at the upper level in the region – are three or two times, respectively, those corresponding to Honduras and Nicaragua.

Similar asymmetries occur in terms of the intra-regional trade, as will be discussed later on. They have triggered migratory flows that have worsened in recent years due to the effect of natural disasters.

SOCIAL AND HUMAN DEVELOPMENT

The above-mentioned figures exclusively refer to traditional economic variables. When complementing them with other elements, a more precise idea can be obtained about the quality of life of the population in the region.

The population of Central America has been decreasing its growth rate, a situation where extra- regional emigration plays an important role, from an annual rate of 3.0 per cent in the first half of the seventies, to slightly less than 2.8% in the second half of the nineties. It contrasts with a rate of 2% for all of the Latin American and Caribbean region as a whole. This implies that Central

7 CEPAL, Producto interno bruto de los países centroamericanos, 1970 a 1999, Op. Cit.

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America is in a moderate demographic transition, with relatively high indexes of birth rates, mortality and population growth. 8

Using the Human Development Index developed by the Development Program in 1990,9 two of the countries of the region – Costa Rica and Panama – have a high level of human development, whereas the other countries have only an intermediate degree. The following table shows this index for the countries of the region, referred to 1997. 10

Country Human Development Index Position in the World Costa Rica 88.9 34 Panama 86.8 45 Guatemala 61.5 111 El Salvador 60.4 114 Honduras 57.3 119 Nicaragua 54.7 126

From the previous information it can be seen that only one fifth of the Central American population lives in countries with a high degree of human development, whereas the remaining 80% do so in countries that have an average degree of human development. Putting it differently, four out of five Central Americans have limited life expectancy, educational level and per capita income.

The magnitude of poverty and indigence in the subregion is significantly more unfavorable than that of Latin America in general, although some advances have been made in recent years. Whereas 36% of the households were under the line of poverty and 15% were at indigence levels for the entire subregion in 1997, Costa Rica and Panama had higher levels. 11 (See Figure A-6). Additionally, the relation between average income of the upper 20% in relation to that of the lower 20%, ranged from 10 to 20 times. This relation reached 30 in the case of Guatemala. 12

8 CEPAL, Indicadores sociales básicos de la subregión norte de América Latina y el Caribe, México City, 1997. 9 The Human Development Index is estimated on the basis of a formula that relates the basic indicators of life expectancy, educational level and per capita income. A country has a high human development when its index is between 80 and 100; an intermediate human development when its index is between 50 and 79. 10 Proyecto Estado de la Región, Informe Estado de la Región en Desarrollo Humano Sostenible, page 46, San Jose, Costa Rica, 1999. 11 CEPAL, La brecha en la equidad, II Conferencia regional de seguimiento de la Cumbre Mundial sobre Desarrollo Social, Santiago, Chile, 2000. 12 PAHO/WHO, Situación de la Salud en las Américas, Washington, D.C., 1998.

ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT ______

80

70

60

50

40

30

20

10 PERCENTAGE OF HOUSEHOLDS 0

Costa Rica El Salvador Guatemala Honduras Nicaragua Panamá

¢¡¤£¦¥¨§ ©  ¡¤  ¡¤¥¨©  ¡¤ ¢¡¤£¦¥¨§  §¨¦§¨   ¡¤¥¨  §¨¦§¨!

Figure A-6. Percentage of households in poverty and indigence levels for the countries of the region in 1997. 13

In regard to education, there does not exist a uniform situation in the subregion either. On the contrary, noticeable differences exist among countries in this sector as well. Costa Rica and Panama have remarkable lower rates of illiteracy in comparison to other countries, and a gender difference prevails insofar as women have higher rates of illiteracy than men. 14 In regard to school attendance, a similar situation is observed whereby Costa Rica and Panama have higher net rates at the primary level; nevertheless, when considering the net rate of school attendance at the secondary level, El Salvador joins those two countries. It is worth to mention that the net rates of schooling are reduced in a significant way when passing from primary to secondary school attendance, with reductions that vary from country to country. 15 (See the following graph).

13 In the case of Guatemala, figures refer to 1986; for Nicaragua, no figures for rural zones are available. 14 UNESCO, Informe mundial sobre la educación, Madrid, 1998. 15 CECC, Anuario centroamericano de estadísticas, San Jose, Costa Rica, 1998.

ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT ______

120

100

80

60 Rate% 40

20

0 Costa Rica El Salvador Guatemala Honduras Nicaragua Panamá

Male Illiteracy Female Illiteracy School Attendance 7-12 years School Attendance 13-17 years

Graph A-7. Rates of illiteracy and schooling in the Central American region.16

In regard to health, some diseases were eradicated in previous decades; however, at the present time there are several of them affecting the population. Among these, cholera, malaria, tuberculosis, AIDS and, very recently, dengue. Mortality rates – total, maternal and of children under 5 years of age – are high in the region. Furthermore, there are disparities among the countries, whereby Guatemala, Honduras and Nicaragua have the highest rates.

In connection with access to potable water and sewage disposal services, limitations exist at the regional level, especially in rural areas, with the exception of Costa Rica that has total coverage. Furthermore, coverage of potable water services – except in Costa Rica and Panama – are unsatisfactory, especially in rural areas. In the case of Nicaragua, coverage is also deficient in urban zones. In regard to the provision of sanitary disposal of sewage, the situation is equally unsatisfactory. In addition, sewage waters are not treated prior to being discharged in rivers, lakes or coasts, and this causes environmental contamination.

The preceding paragraphs illustrate not only the situation of human development in the Central American region, but also the existing asymmetries between the countries, as well as the inequities among the societies of the countries. In this respect, it is worth to emphasize the situation of social groups who are currently not integrated to the development; i.e., the indigenous population, the Afro-Caribbean natives, and those living within the informal sectors in urban marginal areas.

Nevertheless, the Governments of the region have been making significant efforts in recent years to revert the deterioration of social conditions, and some indicators are already showing improvement.

16 Illiteracy rates correspond to 1995, whereas those of school attendance refer to 1997.

ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT ______

THE EVOLUTION OF CENTRAL AMERICAN INTEGRATION

At the beginning of the sixties, Central America initiated an integration process – that could be classified as the “first regionalism”17 – whose purpose was to develop a Customs Union; that is to say, free intra-regional trade, with a common external tariff. It was geared towards establishing integration and regional cooperation as requisites for growth, extension of the domestic market, and initiation of an industrialization process. This initial project of a common market (MCCA) involved not only the free flow of goods between the Central American countries; it included elements of monetary cooperation, and involved physical infrastructure and industrial development projects, with the support of the Central American Bank for Economic Integration (CABEI).

Throughout the years, intra-Central American trade grew in a sustained manner, even during the periods of crisis already mentioned in earlier paragraphs, and maintained higher exchanges than other processes of integration in other developing regions. Trade growth has been especially high since the subscription of the peace accords in the nineties, from 664 to 2,394 million dollars. 18 See the following figure.

2500

2000

1500

1000

500

0 1970 1975 1980 1985 1990 1995 1999

Figure A-8. Evolution of intra-Central American trade between 1970 and 1999, measured in terms of exports.

In the eighties, the phase of “second regionalism” took place, with the aim of adopting a common external tariff, in which achievements were obtained.

In the decade of the nineties, the process acquired a new vitality, as a phase of the “third regionalism”. On one hand, new political instruments were established, as part of the Esquipulas Dialogue that culminated, as previously stated, in the processes of pacification and regional democratization. At the institutional level, the Central American Integration System (SICA) was created instead of the Organization of Central American States (ODECA), adopting a new vision of Central America as a region of peace, freedom, democracy and development, and extending its

17 CEPAL, Los bloques comerciales regionales en América Latina y el Caribe: características y efectos estáticos y dinámicos, Mexico City, 1999. 18 SIECA, Boletín estadístico No. 8-2, Guatemala City, May 2000.

ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT ______action to social and environmental issues. 19 In the economic arena, advances were made in trade liberalization. The countries entered into the multilateral disciplines of trade, becoming members of the GATT and signing the agreements of the Uruguay Round. They also became contracting parties and founders of the new World Trade Organization (WTO). ECLAC’s “open regionalism” 20 served as an inspiration and guiding force, using the experiences of Southeast Asia as a basis. The Central American process is aiming to the progressive elimination of discriminatory policies, tariffs or any other tax that may create distortions in relative prices, and to the preservation of the intra-regional preference within the integrated zone.

Within the new vision regarding the integration expressed in the Protocol of Tegucigalpa, new actors were incorporated to the integration process as part of the System, by establishing a Consultative Committee composed of the private, labor, and academic sectors and other dynamic forces of the region. Presently, the Consultative Committee embodies 27 organizations of the Central American civil society, representing approximately 14 million members. The same Protocol established a unique system to maintain political dialogues and cooperation, as well as to negotiate free trade agreements with other countries and regions, carried out by SICA’s pro tempore chairmanship.

Additionally, in the middle of the present decade, the governments of the region undertook a series of reforms regarding the institutions of integration, seeking its strengthening and rationalization, 21 using as a basis the results of the Support Program for the strengthening and rationalization of the institutions of the Central American Integration, developed by ECLAC and the IDB. 22 Previously, the Presidents subscribed the Alliance for Sustainable Development, geared towards building a political paradigm, economic progress, social equilibrium and interdependence, centered in the human being, able to promote an improvement of the quality of life, without deterioration of the environment. 23 In addition, the Treaty for Democratic Security was adopted, which includes the principles of the rule of law, the strengthening and constant improvement of democratic institutions in the States, the subordination of the Armed Forces to constitutionally established civilian authorities, and the maintenance of a dialogue on security aspects. 24

At the end of the millennium, Central America finds itself entering into the “fourth regionalism”. In this phase, the countries – whether individually or in sub-groups within the region - are advancing in the negotiation of free trade agreements, economic complementation or other trade relations with different countries or blocks of countries from other regions.

In brief, as a result of the succession of the different “regionalisms” that have been undertaken in the Central American region since the beginning of its integration process, a vision for regional integration that responds to the needs of the region’s development has been arising. The accumulated experience of integration throughout five decades reveals that Central American integration, in the first instance, is a process that has prevailed in spite of existing difficulties of varied natures, including natural disasters and armed confrontations, whether internal or between some of the countries. On the other hand, within the framework of this process, the participating countries - together or in groups of two or three - have adopted measures and undertaken joint

19 Tegucigalpa Protocol, Tegucigalpa, Honduras, 13 December 1991. 20 CEPAL, El regionalismo abierto en América central; los desafíos de profundizar y ampliar la integración, México City, 1995 21 Declaración de Panamá, , 12 July 1997. 22 CEPAL and IDB, La integración centroamericana y la institucionalidad regional, Mexico City, 1998. 23 Adopted during the Central American Presidential Summit, Managua, Nicaragua, 12 October 1994. 24 Adopted during the Presidential Summit at San Pedro Sula, Honduras, 15 December 1995.

ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT ______projects to support national efforts for economic, social and political development. In addition, activities carried out within the process of Central American integration have been undertaken with the support of regional institutions. Finally, joint activities have been carried out to supplement efforts that each government has made singly to overcome obstacles to its development. Stated in other words, in contrast with the objectives of other processes of integration in different regions, where the goal is the building of a larger unit or a wider space, Central American integration is in fact a supplement to national efforts of development.

There exists a clear need to define the integrating process to be followed in the future, and to strengthen the institutions of integration.

THE VULNERABILITIES TO NATURAL AND MAN-MADE PHENOMENA

PHYSICAL VULNERABILITIES. Much has been said about the vulnerability of the Central American region to the presence and effects of natural phenomena, which are aggravated by man’s actions.

Nonetheless, it is worth to mention briefly that most of the Central American population is concentrated in areas that are prone to flooding during the rainy season, due to severe natural phenomena. In effect, zones having higher demographic density coincide with flood-prone areas, as can be seen in the following map:25

Figure A-9. Demographic density and flood plains in Central America.

25 USGS, Flood Plains, EROS Data Center, Washington, D.C.

ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT ______

A similar situation occurs in regard to the location of population in areas having high seismicity rates or where volcanoes are present. The greater population concentration and density areas are located in the vicinity of active or dormant volcanoes, as well as in zones where the contact between tectonic plates frequently produce earthquakes, as can be observed in the following map:26

Figure A-10. Demographic density and location of epicenters in Central America

Human settlements have concentrated in vulnerable zones as has been described due to the existence of a more benign climate, the presence of better agricultural soils and, in general, due to availability of infrastructure to facilitate development.

In view of the fact that vulnerability complete maps of adequate scale as well as appropriate regulations and legal dispositions are being prepared, many human settlements have been undertaken in high risk areas. Deforestation for commercial purposes or for domestic energy supply has advanced at very high rates, with corresponding negative effects on the environment and aggravating existing vulnerabilities. A high percentage of the population – especially of urban zones – is still located in areas with high indexes of vulnerability. In summary, a vicious circle exists whereby the action of man progressively deteriorates the environment, severe natural phenomena negatively affect the environment, and the resulting disasters have a greater economic and social impact.

26 USGS, Seismic Hazard map of North and Central America and the Caribbean, Washington, D. C., 1998

ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT ______

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The decisions adopted by the Central American Presidents during their Twentieth Summit (Guatemala, October 1999) and the plans and projects already under implementation in this respect, represent a significant advance to the modification of this vicious cycle.

THE SOCIO-ECONOMIC EFFECTS OF DISASTERS. The economic and social effects of disasters that have occurred in the Central American region during the past three decades have been evaluated in a systematic manner, using a uniform methodology developed by ECLAC27. It has been possible to determine that small disasters with limited effect occur throughout the year which, when added up, do have negative implications to the economy and to society. Estimates in this respect, based on data for a 15-year period, indicate that these losses amount to an average of 170 million dollars (in 1998 terms) per year. 28

Large-scale disasters occur with relative frequency as well. Their social and economic effects are very significant. See the following table:

27 CEPAL, Manual for the evaluation of socioeconomic effects of natural disasters, Santiago, Chile, 1991. 28 Jovel, Roberto, Los desastres naturales y su incidencia económico-social, Op.Cit.

ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT ______

Large-scale Damages, in Population Disasters and Millions of US$ Deaths Wounded Affected Year (1998) Earthquakes Managua 1972 3,018 6,000 20,000 300,000 Guatemala 1976 2,154 22,800 76,000 1,000,000 San Salvador 1986 1,346 1,200 10,000 228,000 Hurricanes Fifí 1974 1,340 7,000 ... 142,000 Juana 1988 1,159 248 184 230,000 César 1996 210 101 50 114,560 El Niño 1997-1998 ~475 -- -- ... Mitch 1998 6,018 18,385 12,842 1,191,908

By adding the losses caused by small annual disasters to those referring to the large disasters of the above-mentioned table as well as to other disasters on which there is only partial information available, total losses for the region may be estimated. The total amount of damages caused by all disasters in the past three decades reaches to 22,450 million Dollars (of 1998), or an annual average of 748 million. 29 (See figure 2-10). This is the equivalent of approximately 1.8% of the region’s gross domestic product and provides an idea of the negative impact that disasters have had on the development of the region. During the same period, disasters caused the death or disappearance of 55,734 people, 119,076 wounded, and 3.2 million directly affected, a figure that is almost equivalent to 10% of the total population of the region for 1998. It is therefore not possible to disregard the social and economic impact of these phenomena in the region.

In view of the magnitude of these losses, the strategy for transformation and modernization of the region for the XXI Century has as one of its main objectives the reduction of vulnerabilities to natural phenomena and of the economic and social impact of disasters. Significant results have already been achieved in this respect. This makes possible to optimistically envision a safe future for the region when severe natural phenomena affect it.30

29 Jovel, Roberto, El impacto económico y social de los desastres naturales en la región centroamericana, Congress on Medicine and Disasters, School of Medicine, University of El Salvador, 2000. 30 Even though it must be recognized that victims due to political violence for the same period were greater.

ANNEX: CENTRAL AMERICA’S RECENT DEVELOPMENT ______

7000 6000 5000 4000 3000 2000 Million 1998 US$ 1000 0 1970 1975 1980 1985 1990 1995

Figure A-11. Total losses caused by disasters in Central America between 1970 and 1999.