Skip to Main Navigation

Unleashing Central America’s Growth Potential : Cross-Cutting Themes (English)

Central America comprises a diverse set of countries, including two high-middle-income countries (Costa Rica and Panama), two of the poorest countries in Latin America and the Caribbean (Honduras and Nicaragua), and two middle-income economies (Guatemala and El Salvador). Low productivity and weak institutions are behind the modest economic growth in Central America in recent years. Both the common features and striking differences among Central American countries provide a fertile ground for exploiting complementarities. Common features include: (i) strong economic links to the United States; (ii) high labor mobility across countries and a high level of informality; (iii) the relatively poor quality of infrastructure, including border crossings; (iv) a concentration of poverty in rural areas, with a low provision of public services, that affect particularly vulnerable groups such as indigenous and Afro-descendent populations; and (v) a high exposure to natural disasters and economic and financial volatility. The economies of each of the six countries in the sub-region were heavily affected by Coronavirus disease 2019 (COVID-19). In order to restore economic activity in the short run and increase potential output over the long run, Central America should launch coordinated policy action in five areas: (i) global value chain (GVCs); (ii) trade integration; (iii) formalization; (iv) management of volatility; and (v) remittances (for the northern Central American countries). The findings and recommendations emerging from the analyses are presented in the report.


  • Author

    Arenas,Guillermo Carlos, Campora,Natalia Leonor, Kasyanenko,Sergiy, Lakatos,Csilla, Mulabdic,Alen, Yu,Shu, Ulku,Hulya, Zaourak,Gabriel Roberto

  • Document Date


  • Document Type


  • Report Number


  • Volume No


  • Total Volume(s)


  • Country


  • Region

    The World Region,

  • Disclosure Date


  • Disclosure Status


  • Doc Name

    Unleashing Central America’s Growth Potential : Cross-Cutting Themes

  • Keywords

    transport cost; Intra-regional Trade; constant elasticity of substitution function; information and communication technology; rate of return on capital; trade costs; lack of transport infrastructure; domestic value added; productive use of remittance; cost of money transfer; per capita income growth; small and medium enterprise; foreign value added; global value chain; value of trade; transport infrastructure investment; purchasing power parity; role of remittance; Trade and Transport; quality of infrastructure; trade and transportation; bilateral trade; foreign direct investment; removal of trade; concentration of poverty; human development outcome; reduction in poverty; Access to Education; rate of crime; Poverty & Inequality; impact of remittance; recipient of remittance; vegetable and fruit; border crossing procedure; increase in remittance; cost of remittance; cross-cutting themes; per capita term; trade facilitation indicators; high quality employment; regional trade integration; Computable General Equilibrium; million people; export value; trade in goods; impact of policy; demand for import; agricultural and food; trade and investment; privileges and immunity; living in poverty; human capital; informal sector; productive investment; reduce trade; Informal Economy; advanced economy; food product; business environment; infrastructure demand; high trade; total trade; Political Economy; financial flow; baseline scenario; regional collaboration; backward linkages; consumption smoothing; common denominator; business service; construction services; remittance inflow; common feature; political empowerment; apparel sector; negative shock; policy scenario; labor productivity; red tape; rural area; vocational program; market instrument; crossing border; Brain Drain; credit arrangement; increasing investment; retail service; Labor Market; Economic Policy; rural transportation infrastructure; political will; cross-sectional regression; equal amount; Basic Education; welfare gains; increase productivity; trading partner; transport good; bilateral tariff; unemployment rate; monthly data; transmission channel; trade relationship; remittance channel; comparative advantage; labor flow; marginal impact; domestic supply; export product; increased demand; export demand; average trade; tariff equivalent; resource constraint; foreign market; lower price; Population Projection; Population Growth; macroeconomic projection; steady state; adaptive expectation; capital accumulation; domestic production; transport expenditure; trading services; other sectors; model result; input cost; high transport; percent change; export procedure; cost component; international transport; simple average; sectoral results; domestic output; International Trade; high wage; woman entrepreneur; financial buffer; financing instrument; efficiency gain; regional policy; subjective view; several times; cutting issues; productive potential; financial system; financial market; low education; increasing consumption; dutch disease; goods trade; import good; Natural Resources; skilled labor; Dynamic CGE; global economy; trade flow; recipient countries; free flow; trade tensions; customs procedure; high share; political difficulty; Female Entrepreneurship; recent times; program leader; empirical result; Fiscal policies; fiscal policy; border post; Business Climate; governance measure; long-term growth; institutional set-up; trade negotiation; labor mobility; improving productivity; transmission network; middle-income economy; longitudinal data; protected status; financial volatility; natural disaster; Public Services; vulnerable group; input use; recent years; low-skilled job; research assistance; mountain chains; forward linkages; noncommercial purposes; subsidiary right; potential output



Official version of document (may contain signatures, etc)

  • Official PDF
  • TXT*
  • Total Downloads** :
  • Download Stats
  • *The text version is uncorrected OCR text and is included solely to benefit users with slow connectivity.


Arenas,Guillermo Carlos Campora,Natalia Leonor Kasyanenko,Sergiy Lakatos,Csilla Mulabdic,Alen Yu,Shu Ulku,Hulya Zaourak,Gabriel Roberto

Unleashing Central America’s Growth Potential : Cross-Cutting Themes (English). Unleashing Central America's Growth Potential Washington, D.C. : World Bank Group.