MUNZSSInlD - usaid

Annex F
Economic Analysis
1.0 INTRODUCTIQ
The rapid growth of the non-traditional agricultural export (NTAE)
industry in Central America has foundations in a twenty year history of trial
and error. Dominated in the early years by a few opportunistic exporters and
profit seekers, often for short-term gain, the industry is now characterized
by a large number of firms with established linkages with foreign importers
having investments pointed toward longer-term profits. This industry is now
making significant contributions to the economies of Central America as
measured by foreign exchange earnings, diversification of export earnings, use
of more productive technologies with increased value of production from labor
and land, and increased demand for service industries.
The products included in Table F-i represent (with one exception) products
that, until recently, were not grown or were grown in smaller quantities for
the domestic markets of Central America. The exception, plantain, is a staple
in Central America but was not exported until the growth of ethnic markets in
the United States. Snow peas and melons were the first successful products to
be placed in foreign markets in significant quantities. The others reached
significant export quantities more recently.
Reaching $475 million, the NTAE industry is approaching the level of
traditional agricultural exports, long the mainstay of foreign exchange
earnings in Central America. As prices for traditional agricultural exports
have plateaued or fallen in recent years, the earnings from this new industry
has taken on new economic and political importance.
The economic viability of the NTAE industry is dependent on several factors,
apart from natural phenomena. These include:
The policy environment
Market prices
Market saturation
Regulatory factors
Availability of appropriate technology
Political support
7-1