El Salvador: Industrial policy, business attitudes and future prospects

Abstract

This article analyses the interaction between changes in the domestic and external economic environments, industrial policies and business attitudes in El Salvador. The 1960s were a time of rapid import substitution-based industrialization, which was spurred forward by the expansion of the domestic market through the creation of the Central American Common Market (CACM). During this period, institutions devoted to the promotion and support of CACM-oriented industrial activities were founded and developed, and policies on trade, tariffs, the exchange rate and other matters were implemented that contributed to the import-substitution process. During the 1970s, the style of industrial development which had been adopted by the country began to exhibit a number of structural problems.