El Salvador Essay

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El Salvador is the smallest country in Central America, bordering the north Pacific Ocean between Guatemala and Honduras. The total land area is approximately 20,720 sq. km (about the size of the U.S. state of Massachusetts).  According  to  estimates  in June 2008,  over  7  million  people  inhabit  the  country; the population  growth  rate is 1.68 percent  and the median age is 22.2 years. The country achieved independence  from Spain in 1821 and from the Central American  Federation  in 1839. A civil war between 1979 and 1992 ended with the government  and the leftist rebels signing a treaty that provided for political and military reforms.

Almost 90 percent of the population  belong to the mestizo  ethnic  group, 9 percent  are white, and the remaining  1 percent  are classified as Amerindians. Approximately  83 percent  are Roman Catholic,  but there is no official religion. Spanish is the official language, although some Amerindians speak Nahua and other native languages. Culturally, according to Geert Hofstede’s analysis, El Salvador scores very high on “uncertainty avoidance,” indicating a high concern for rules, regulations, controls, and issues of career security and risk averseness. On the other hand, they rank fairly low on “individualism,” indicating a propensity toward  collectivist  tendencies,   i.e., manifesting  in close  long-term  commitments  to  family, extended family, or extended relationships, and everyone taking responsibilities for fellow members of their group.

El Salvador has the third-largest  economy in Central America, yet growth has been modest in recent years. The country’s gross domestic  product  (GDP) was $41.65 billion in 2007 and was growing at the rate of 4.7 percent  a year. It exported $3.85 billion worth of commodities  to  the  United  States  (50 percent), Guatemala  (14 percent),  Honduras  (9 percent),  and Nicaragua (5 percent),  primarily in the form of offshore assembly, coffee, sugar, shrimp, textiles, chemicals, and electricity. The commodities imported were valued  at  approximately  $8.2 billion  (2007) in  the form of raw materials, consumer  and capital goods, fuels, foodstuffs, petroleum,  and electricity, primarily from the United States (32 percent), Guatemala (9 percent),  Mexico (7 percent),  Germany  (6 percent), and China (5 percent).

Approximately  2.5 million legal and illegal Salvadorans, equivalent to more than a third of the population of El Salvador, live in the United States and remit an estimated $2.5 billion annually, or 17.1 percent of the GDP, back to their  family members.  The remittances have grown at the rate of over 6 percent  per year over the last decade and currently almost one in four households receives money from relatives in the United States, the most of any Latin American country. Three-quarters of the money goes to paying for household expenditures—with  a 13 percent sales tax, the remittances  in many ways subsidize the government budget.

The country  lost control  over its monetary  policy with the adoption  of the U.S. dollar as the currency in 2001, and is now focused on maintaining  a disciplined fiscal policy. It was the first to ratify the Central  America–Dominican  Republic  Free Trade Agreement  (CAFTA-DR) in 2006, thus strengthening an  already  positive  export  trend.  The current focus has been  on economic  diversification  in the form of promoting  textile production,  international port  services, and  tourism  through  tax incentives. Another trend is the growth of privatization, including industries  such as telecom, electricity, distribution, banking, and pension funds. In 2007, the government  signed a five-year $461 million agreement with the Millennium Challenge Corporation to alleviate poverty and stimulate economic growth in the country’s less-developed  areas,  particularly  in  the northern region, through  investments  in education, public services, enterprise  development,  and transportation  infrastructure.


  1. Paul Almeida, Waves of Protest: Popular Struggle in El Salvador: 1925–2005 (University of Minnesota Press, 2008);
  2. Esteban Brenes, Vince Ruddy, and Rene Castro, “Free Zones  in El Salvador,” Journal of Business Research (v.38, 1997);
  3. CIA, “El Salvador,” The World Factbook, www.cia.gov (cited March 2009);
  4. Andres Maldonado and Alejandra Robledo, “Sending Money Back Home,” The McKinsey Quarterly (November 2002);
  5. Igor Oleynik and Natasha Alexander, El Salvador: Country Study Guide (Minnesota Press, 2008);
  6. Angelika Rettberg, “The Private Sector and Peace in El Salvador, Guatemala, and Colombia,” Journal of Latin American Studies (v.39, 2007);
  7. Nina Rohe, “Update: The Central American Free Trade Agreement—A  Survey and  Comparison  to  the  Treaty  of the European  Community,” Law and  Business Review of the Americas (v.12, 2006);
  8. Helen Rupp, Agricultural Trade Liberalization and Gender: A Case Study on Small Farmers in El Salvador Facing CAFTA (Verlag Dr. Müller, 2008);
  9. Carol M. Sanchez, “Motives for Corporate Philanthropy in El Salvador: Altruism and Political Legitimacy,” Journal of Business Ethics (v.27, 2000);
  10. Christopher M. White, The History of El Salvador (Greenwood Press, 2008).

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