#141 The Beginnings of Industrialization in Central America

By Edelberto Torres-Rivas

Abstract

The subject of this paper is the relative importance of political, social, and economic conditions, both internal and external, in the industrialization process in Central America following World War II. The paper points out that the dependence on the world market is such that external conditions determine development, although the forms of development vary from one country to another, according to the internal conditions of each one.

In order to surmount the political crisis which coincided with the end of the Second World War, the local oligarchies were forced to incorporate the middle classes and the bourgeoisie in an attempt to modernize the State and broaden its functions. These social strata had their own deliberate industrialization project which was based on the agrarian sector's expansion, modernization, and diversification. The modernization of the export-producing plantations strengthened local commercial capital, thus allowing its transfer to the industrial sector. However, as long as the rate of profits depended more on the world market than on the development of internal productive forces and salary levels, the internal market was considerably limited, because of the way in which local income was distributed via salaries. By substituting a social broadening of the internal market for a purely geographical one, the Central American Common Market allowed agrarian reform to be postponed.