The Lure of Cheap Labor

Honduras, Guatemala, Nicaragua and El Salvador attract investment based on the exploitation of natural resources and unskilled, but cheap, labor.  

Tuesday, June 18, 2013

A report by the Central American Institute for Fiscal Studies (ICEF), reveals that Central America recorded last year $9.70 billion in foreign direct investment (FDI), with Panama and Costa Rica being the recipients of about 60% of these flows.

Of that amount, "$3 billion remained in Panama", the most dynamic economy in the region along with those of Costa Rica and Nicaragua, explains the analysis. According to Jonathan Menkos, ICEFI executive director, the situation "has been repeated for about 15 years, to a large extent as a result of the efforts that both nations are making to improve their human capital."

"We note that much of the investment that is coming to Panama and Costa Rica will allow higher growth in the medium and long term, because they relate to services and telecommunications," he added.

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