Jocsan Avilés Díaz comes from a town called El Progreso – progress – but for him it was anything but. Unemployment drove him out of Honduras in 2019, bound for the United States. “I haven’t had a job for years,” he said, still stuck on the Mexican side of the border two years later.
The fate of people like Avilés has only strengthened Central America’s reputation for poverty and misery. He comes from the fringes of the “dry corridor” where drought, in addition to violence, poverty and extortion, has driven tens of thousands of desperate families from the so-called Northern Triangle of Honduras, Guatemala and of El Salvador to attempt to enter the country. United States via Mexico.
Unauthorized border crossings into the United States from Mexico have soared to nearly 20-year highs this year. This poses an acute political problem for President Joe Biden, who called on Vice President Kamala Harris to deal with the crisis and allocated $ 4 billion in aid to the Northern Triangle. How this will be spent is not clear.
“We want to help people find hope in their homes,” she told a regional conference this month as the United States focuses less on the ban, as it does. did under Donald Trump, and more on development finance. “So we are trying to tackle both the acute factors and the root causes of migration.”
Since the end of the Central American civil wars in the 1980s, the region’s economic growth has consistently lagged behind the rest of Latin America. Over the past 30 years, growth in gross domestic product per capita has averaged a paltry 1.2 percent per year in the Northern Triangle, according to the IMF.
A 2004 free trade agreement with the United States, known as Cafta-DR, aimed at increasing access to the main North American market, and an agreement with the EU in 2012, aimed at stimulating trades. Central American exports grew by 6 percent per year on average between 1991 and 2017.
But while Costa Rica and Panama, the region’s two outperformers, have thrived on ecotourism and financial services respectively, the gains in the Northern Triangle and Nicaragua have proven elusive.
“Central America has Cafta, but even so, it failed to move forward,” said Laura Chinchilla, who has been involved in negotiations for the Dominican Republic-America free trade agreement. Central United States and later, as President of Costa Rica, was a signatory to the EU’s regional trade agreement.
“For Costa Rica, Cafta meant a qualitative leap in exports and attracting investment. But not for Nicaragua, Honduras, El Salvador and Guatemala. ”
These four countries contain most of the region’s population and just over half of its GDP, but they are the four with the lowest incomes, according to the World Bank. They are plagued by corruption, impunity, gang violence and weak rule of law. Experts say their governments have invested far too little in education and infrastructure.
“Governments in the region have not been able to generate opportunities for people to become prosperous because they just don’t have the development plans,” said Ricardo Castaneda, senior economist at the Institute. Central American Fiscal Studies Think Tank. .
Cafta supporters hoped that an increase in trade with the United States would create better jobs and better wages as a result of the 1994 North American Free Trade Agreement that solidified Mexico as a hub. of manufacturing even if it did not allow development on a national scale.
“Cafta-DR did not work as planned for various reasons: we have seen that. . . as a means of securing access to the US market rather than integrating with them; he did not get along effectively with Nafta. . . and during negotiations, the United States restricted imports of a number of products where the region was highly competitive, ”said Eric Farnsworth, vice president of the Council of the Americas.
In fact, the United States appears to have benefited to a much greater extent than the Northern Triangle: U.S. merchandise exports to Guatemala in 2019 climbed 140% from their pre-Cafta levels, while Guatemala’s exports to the United States grew only 27% in 2019. that period, official US data shows. The increase in US exports to Guatemala was more than three times that of Guatemalan exports to the United States.
The rise in exports created jobs, but most jobs were low-productivity and low-paying and there wasn’t enough for everyone: more than 600,000 young people a year in the region seek only 250,000 new jobs in the region. the formal sector, according to the UN.
As a result, “instead of being successful and exporting goods and services like Costa Rica did, these countries exported their citizens,” Chinchilla said.
“Since about 2009, about 1% of the population of the Northern Triangle has stood up and moved every year,” said Ricardo Zúñiga, Biden’s special envoy for the Northern Triangle, during a recent Council of Europe webinar. Americas. “There is absolutely no way we can solve it. . . this long-standing problem unless jobs are created in Central America. “
But with the size of the working-age population set to drop sharply in Central America by 2035, the World Bank has warned in a new report that countries will need to increase productivity and integrate into northern supply chains. -american to ensure strong growth.
For many businesses in the region, this is a big challenge. Most are micro or small businesses with no ability to compete. “It’s like they’re in a Formula 1 race but on a motorcycle without the two wheels,” Castaneda said.
Poor governance is another problem. Zúñiga skipped Honduras on a recent trip to the Northern Triangle – a sign that President Juan Orlando Hernández, who has been named by US prosecutors as an accomplice in drug trafficking, is “a leper,” Pedro said Barquero, head of the Chamber of Commerce. and Industry of the Cortés in Honduras. Hernández denies the allegations.
In El Salvador, Zúñiga was defended by President Nayib Bukele, criticized for his excessive authoritarianism.
“In reality, free trade agreements will be useless if countries don’t do the job,” Barquero said, noting that Honduras’s precipitous decline in Transparency International’s Corruption Perceptions Index over the past five years. recent years has been accompanied by a dip in its image as a workplace.
Biden is hoping to tackle the causes of migration from Central America with a $ 4 billion aid package, but that will require a long-term commitment from Washington, and success, if it occurs, will take a long time to come. many years.
“The reality is that the United States has had little, if any, success in nation building in Latin America or elsewhere, at least since the Marshall Plan,” said Michael Shifter, president of the Inter-American Dialogue in Washington. “It is important to ask an uncomfortable question: where has the United States achieved what it is trying to do today in Central America?”