Competitiveness and sustainable development in Central America: The role of regional integration

Abstract

Central American countries have a long history of regional economic integration and today it is central to its growth, poverty alleviation and sustainable development strategies. The Central Common Market (CACM), which celebrates its 50th Anniversary, was the first economic integration effort in the Americas. All the Central American countries are Members of the WTO and have concluded regional trade agreements with most countries in Latin America and the Caribbean. The DR-CAFTA and the Association Agreement with the European Union are highlights of Central America’s efforts to deepen the economic integration between its Members and the rest of the World. Of the four regional integration blocs in the Americas (Mercosur, the Andean Pact, CARICOM and the CACM), it is the last that, although it has the smallest fanfare, shows furthest progress. Much has still to be done, but these five nations are very integrated. Annual intra-regional trade today exceeds US$ 3 billion, and three of the five participants direct to the CACM, more than one quarter of their exports. Certain key goods, including processed foods, and services, including banking, are regional rather than national in corporate scope and market structure. The very fact that the region has jointly negotiated a trade agreement with its most important partners, the United States and the EU, and that those agreements display a variety of features that allow and reinforce the integration process, demonstrates to what extent Central America is on its way to achieving deeper integration. Nevertheless, despite vigorous economic growth in the last two decades, Central America still faces many challenges, including, income inequality, poor governance, crime and violence, and environmental degradation. Fostering economic integration, including the building of regional infrastructure, promoting trade facilitation and improving the business climate in the region, could tackle some of the challenges mentioned.

Biography of the Speaker

Arturo Condo has been President of INCAE Business School since 2007. INCAE has been the top ranked business school in Latin America since 2003. Its Executive MBA is among the top 100 programmes in the world according to the Financial Times and its executive programmes are ranked 36 in the Financial Times Executive Education Ranking.

Arturo Condo obtained his doctoral degree from Harvard Business School where he specialized in strategy, international business and competitiveness. His thesis advisors were Professors Michael Porter (Chairman), James Austin and Tarun Khanna. Previously he obtained an MBA degree with the highest honours from INCAE, where he also received the Distinguished Scholar award that honours leadership in addition to academic excellence and that has been conferred only seven times in four decades. He teaches on INCAE's masters and executive masters programmes as well as in seminars all over Latin America. For the past four years, he has taught, in coordination with Prof. Michael Porter, a course on the Microeconomics of Competitiveness, which was originally taught at INCAE and HBS and now involves more than 30 graduate schools around the world. At CLACDS, INCAE'S think tank, he leads a team of professors and researchers who conduct projects in Latin America, supporting private and public leaders in their efforts to strengthen competitive clusters and to develop national and local competitiveness programmes that seek to upgrade current levels of development. He also serves as Institute Associate of the Institute for Strategy and Competitiveness at Harvard Business School. Dr Condo is a Young Global Leader of the World Economic Forum.