Volume 44, Number 174,
July-September 2013
Central America: The Urgency of Coherent
Commercial Diversification
Juan Sebastián Castillo, Esther Aguilera and Carmen García Cortijo
Defining the General International Commerce Model

The first definition of a general model for international commerce in Central America will allow us to validate/refute the working hypotheses H1, H2 and H3:

(6)


With: t = 1993, 1994,…, 2009.

i = 1, 2,…, 5. (1: Costa Rica, 2: El Salvador, 3: Guatemala, 4: Honduras, 5: Nicaragua).

h = 1, 2, 3. (1: raw materials, 2: extracted products, 3: manufactured goods).

j = 1, 2,…, 4. (1: Free Trade Agreement with US, 2: Trade with China, 3: Trade with the UE, 4: 2008 crisis).

Where:

i is the i-th country, t are the years, h is the product classification, j represents structure changes, αi are the fixed transverse effects and μ is the common constant term. The endogenous variable (Yit) is the gdp and exogenous variables include: the three product diversification indices (IDPhit), a geographic diversification index (IDGit) and four fictitious variables (fjit).

The sums of the expression (6) can be broken down as:

(7)

(8)

(9)

When these expressions are substituted in, another expression of (6) is obtained:

(10)

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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