Unleashing Central America’s Growth Potential : Cross-Cutting Themes - Strengthening Productive Links and Managing Volatility
Central America comprises a diverse set of countries, including two high-middle-income countries (Costa Rica and Panama), two of the poorest countries in Latin America and the Caribbean (Honduras and Nicaragua), and two middle-income economies (Gua...
| Main Authors: | , |
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| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/454661627621111640/Cross-Cutting-Themes-Unleashing-Central-America-s-Growth-Potential http://hdl.handle.net/10986/36051 |
| Summary: | Central America comprises a diverse set
of countries, including two high-middle-income countries
(Costa Rica and Panama), two of the poorest countries in
Latin America and the Caribbean (Honduras and Nicaragua),
and two middle-income economies (Guatemala and El Salvador).
Low productivity and weak institutions are behind the modest
economic growth in Central America in recent years. Both the
common features and striking differences among Central
American countries provide a fertile ground for exploiting
complementarities. Common features include: (i) strong
economic links to the United States; (ii) high labor
mobility across countries and a high level of informality;
(iii) the relatively poor quality of infrastructure,
including border crossings; (iv) a concentration of poverty
in rural areas, with a low provision of public services,
that affect particularly vulnerable groups such as
indigenous and Afro-descendent populations; and (v) a high
exposure to natural disasters and economic and financial
volatility. The economies of each of the six countries in
the sub-region were heavily affected by Coronavirus disease
2019 (COVID-19). In order to restore economic activity in
the short run and increase potential output over the long
run, Central America should launch coordinated policy action
in five areas: (i) global value chain (GVCs); (ii) trade
integration; (iii) formalization; (iv) management of
volatility; and (v) remittances (for the northern Central
American countries). The findings and recommendations
emerging from the analyses are presented in the report. |
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