Economic Progress in Central America and the Caribbean in the Past 30 Years

This study assesses the economic performance of Central American and a selection of Caribbean (CAC) countries over the past 30 years, using the Human Development Index as the measure of gains in the overall well-being of their populations. The majority of CAC populations are in the categories of High and Very High Human Development, and there has been steady improvement in almost every case. Growth in real GDP per capita was strongest in the countries that export manufactured goods, along with significant receipts from tourism and other activities. External economic shocks caused no lasting impairment of economic growth, except for some tourism-dependent economies, in the wake of the Global Recession. Although the extent of export diversification is limited by the small size of CAC countries, those countries whose main export is manufactured goods, with significant earnings from tourism and other sources, have been more successful than those which are heavily dependent on one main foreign currency earner. Costa Rica stands out as the CAC country that has been most consistently competitive, maintaining its market share and increasing the domestic share of returns on exports and tourism. Exchange rate policies had no discernible effect on relative prices.