Central America: an Emerging Market Worth Watching

Central America: An Emerging Market Worth Watching

According to the World Economic Forum - Global Competitiveness 2009-2010 report - the Central American economies, specifically those of Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica are quite asymmetric. However, this grouping of countries into one region is not much different from a much larger economy with geographic political divisions (e.g. Europe, Southeastern Asia).

These asymmetries clearly indicated that common regulations and incentives are not cohesive from one country to the next. Much work remains to be done. Nonetheless, their cultural and economical differences must be diluted to act as a single element and overcome the technological gap in a coordinated and sustainable effort.

On the other hand, the countries share common ground: a wide ecological diversity, with enviable tourism options and opportunities, unexploited resources and low international corporate presence making them attractive to any long term visionary.

Due to their low cost and labor intensive advantage, SME production in Central America is concentrated in low value-added activities revolving around commodities. In the meantime, service enterprises are furtively seeking to move up on the human capital intensive segments (BOPS) with little evident progress. Generally, this phenomenon is fostered by international companies such as Wal-Mart, Dell, Intel and other cases where represented service models are needed. Unfortunately, until very recently the volume approach is a predominant factor in the minds of entrepreneurs and government policies.

Knowledge concentration, production, dissemination and technological transfer needs, brand and intellectual property awareness, are becoming more perceptible. These factors continue to move forward endorsing product and services quality as an evident driver to access bigger markets and achieve further progress. From a bystander’s point-of-view, the discussion and references on...