Central America at a crossroads

This paper considers the challenges and opportunities facing the Central American countries and explores the choices open to them for fuller integration into the world economy. The paper presents a brief historical account of the origins and evolution of the Central American Common Market (CACM), and its near demise in the 1980s and highlights the thrust of these countries'trade and payments policies over the past decade. It presents an overview of the pattern and trends in Central America's trade relations within the region and with the rest of the world, examines prevailing access conditions for the region's exports in the main industrial country markets and explores the ways in which three major developments in the international economy -- the Uruguay Round, EC-92 and the North American Free Trade Agreement -- are likely to affect Central America's economic interests. The paper analyses the options open to the region as it seeks greater integration into the world economy and examines the domestic policy implications of such an outward-oriented development strategy. Finally, it contains the conclusions and policy recommendations of the paper.