Trade liberalization and economic growth in Central America

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.