3071-The political economy of new slavery

Rachel Nizan 145
around 33 per cent of the Latin American population fall below the $2
a day poverty line, which is regarded as the minimum needed to cover
basic consumption needs (IDB, 1998, p. 22).
Honduras ‘has traditionally been the poorest country in Central
America, depending on banana and coffee exports to bring in foreign
exchange’ (Green, 1995, p. 229). In comparison to its conflictual neighbours
El Salvador, Guatemala and Nicaragua, it has been fairly peaceful.
However, Honduras did have a bout of military dictatorship, which
put severe restrictions on civil and political liberties and perpetrated
gross human rights violations. 21
Honduras and its neighbours are characterized as having the worst
levels of social exclusion and inequality and the highest percentage of
households suffering from poverty or extreme poverty in the region.
Consequences of this poverty are very weak social indicators, such as
life expectancy, infant mortality, sanitation and access to safe water and
a high degree of indebtedness (Caballero, 2000, p. 113; IMF, 1999, p. 5).
Factors contributing to poverty in Honduras are ‘slow economic growth;
the unequal distribution of income; the low level of education; and the
weakness of local governments’ (Groves, 2003, p. 1). 22
As is the case for Latin America in general, a substantial number
(43 per cent) of the Honduran poor are children under 15 years of age
(IMF, 2001, p. 16). This indicates a life-cycle poverty trap, as under these
circumstances child labour becomes a necessary means for survival.
But at the same time it perpetuates poverty, in that it precludes the
children from becoming skilled adults, who will work in low-paid jobs.
Indeed, the average level of schooling in Honduras is second grade.
A study by the Honduran Institute of Childhood and Family (IHNFA)
found that 24 per cent of children aged seven to 13 do not attend
school, while only 43 per cent of children registered in primary school
actually end their primary education. The prospects for higher education
look even bleaker with 30 per cent (of the initial 43 per cent)
graduating from secondary school and only 8 per cent graduating
from university (IHNFA, 1998, p. 6, as cited in Caballero, 2000, p. 17).
The Honduran economy was growing at 3 per cent in 1998, but
Hurricane Mitch hit the region in late October of that year. As a result
of the dreadful effects of Mitch, Honduras was classified as a heavily
indebted poor country (HIPC) by the IMF and the World Bank (WB). 23
In order to qualify for HIPC status and receive partial debt cancellation,
Honduras had to complete a poverty reduction strategy paper (PRSP).
This paper outlines the strategies proposed to combat poverty. What
makes the PRSP interesting is the strong involvement of civic groups,