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

It has been shown that international commerce in Central America has evolved positively over the past few years. The search for alternative strategies to improve welfare led the Central American economics to intensify their orientation abroad starting in 1990 (Moreno-Brid and Pérez, 2003: 158). In absolute terms, the US is their principal partner, while China is undergoing exponential growth. Regional commerce among the countries has seen strong and consistent growth as well. In terms of the basket of goods, agricultural products occupy the international market, and manufactured goods and agro-industrial products dominate the intra-regional market. In addition, Free Trade agreements have been put into place to strengthen commercial ties with neighbors. This region is made up of countries that share similar commercial patterns in their trade relations with the US, Chin and the EU, but these relations vary in a scenario of intra-regional commerce or a hypothetical diversified basket of products. This work has demonstrated that the major macroeconomic effects in the region result from geographic diversification in export policies and intra-regional commerce.

As proposed, in general terms, a globalized economy requires nations to seek advantages, strategies and opportunities to be competitive. This implies employing human resources, investing in infrastructure and technology. Consequently, modifying the traditional commercial structure is imperative to development. In Central America, the region has the potential to achieve strong product diversification with higher added value and reduce its dependence on the exportation of primary products, as well as alter its geographic concentration. However, each of these achievements will not produce the same effect. For example, although we can agree that with more diversified trade, both in terms of products and destinations, a country is less vulnerable, reducing threats to growth (Herzer and Nowak-Lehman, 2006: 1825), our research has confirmed these extremes in Central America only in terms of geographic diversification, and not so for differentiating productive channels. As a result, a policy aimed at reducing commercial concentration with the US and China would be more effective than a policy focused on diversifying the basket of specialized goods.

Our study has also shown that the direct effect of intra-regional commercial dynamics is important, and therefore strengthening and consolidating the intra-regional market could lead to greater regional productivity, to be scaled up in the value chain and satisfy demand (Ciéslik et al., 2012: 70). It would also result in widespread benefits for smes, as 75% are involved in this type of exchange. It should also be noted that Central America needs to improve its customs cooperation, eliminating obstacles to intra-regional commerce and strengthening its negotiating power with third parties.

Similar to any dynamic economy, the current of commercial activity requires Central America to innovate and identify opportunities to improve activities and strategies to effectively develop. Central America has obstacles ahead, but sacrificing short-term marginal revenue currently generated by commercial concentration in the US and China, will pay off in medium and long-term consolidation, with more consistent, comprehensive and inclusive growth through the strengthening of intra-regional commerce. Companies and governments in the region will also have to strive to make this process a success. The results obtained here clearly show that strengthening intra-regional commerce and diversifying trade destinations beyond the US, China and the EU will be key for commercial consolidation and optimizing the impact of national macroeconomic variables.


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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 195 October-December 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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