Central America

IV

Patterns of Economic Development

In the early 1990s the countries of Central America had relatively undeveloped economies in which agriculture was the most important sector. Manufacturing largely involved processing raw materials. The annual per capita income was low.

A

Agriculture

Farming is by far the leading economic activity in Central America. The principal cash crops, such as coffee, bananas, sugarcane, and cotton, are typically produced on large landholdings, and a substantial proportion are exported, mainly to the United States and Europe. Food for local consumption is raised mainly on small farms; most of it is consumed by the farm families, and relatively little is marketed. The chief subsistence food commodities are corn, beans, bananas, manioc, rice, and poultry. Cattle are raised on big ranches located mainly in the drier regions of western Central America. Modern farming methods are used on the large landholdings, but the small farmers generally use relatively simple techniques that hold down productivity.

B

Forestry and Fishing

About 40 percent of Central America is forested. The early years of European activity in Belize, for example, revolved around the extraction of dyewoods, and later mahogany, chicle, and pine timber were produced. British timber companies also cut mahogany and cedar along the greater Caribbean coast. Today, forestry is a relatively unimportant aspect of the Central American economy. Pine is the main wood harvested, and some hardwoods, such as cedar, mahogany, and rosewood, also are cut.

Fishing too is a comparatively minor economic activity in Central America. Shrimp and spiny lobster, caught off the coasts of Belize, El Salvador, and Panama, are mostly exported to the United States. Since the mid-1960s Panama has developed a fish-meal and fish-oil industry. Central America has a low rate of per capita fish consumption.

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C

Mining

The mineral output of Central America is small. El Salvador, Honduras, and Nicaragua produce limited quantities of silver, gold, lead, copper, and antimony. In the early 1980s Guatemala began to export small quantities of crude oil.

D

Manufacturing

Most of the manufacturing plants of Central America process raw materials of the region such as sugarcane, coffee, cotton, timber, and fish. In addition, since the 1950s a concerted attempt has been made to reduce the need to import basic fabricated articles. Thus, factories making paint, detergents, tires, paper and cardboard articles, fertilizer, and insecticide have been established in the major urban areas.

Many manufacturing establishments in Central America involve only a handful of workers, and few employ more than 10 people. Large-scale manufacturing is hindered by the region’s lack of energy sources, its undeveloped transportation systems, and its small markets.