Trade liberalization and economic growth in Central America

Moreno Brid, Juan Carlos
Pérez Caldentey, Esteban

2003-12

LC/G.2216-P

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This article examines the long-run relationship between export performance and economic growth in three Central American countries from 1950 to 1999. Therefore, it excludes the recent years of slowdown in the world economy, 2000-2002. The cointegration analysis supports the view that the external sector has been a key determinant of these countries' long-run rate of economic growth. The article also suggests that the trade liberalization experiences seen since the mid-1980s have had very disparate impacts on these countries' long-run rates of economic growth. Lastly, the implications of these results for trade liberalization strategies and the possible impact of a United States-Central America Free Trade Agreement are examined.

Includes bibliography

TRADE LIBERALIZATION; EXPORTS; ECONOMIC GROWTH; LIBERALIZACION DEL INTERCAMBIO; EXPORTACIONES; CRECIMIENTO ECONOMICO;