5. THE EFFECTS OF GLOBALIZATION ON WORKING CONDITIONS: EL SALVADOR, 1995–2005
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Deep and profound structural changes began early in the 1990s and have continued until the present. The following paragraphs summarize the results in these areas. Trade Trends
El Salvador’s goods trade accelerated through the 1990s, increasing the ratio of exports to GDP from 10.8 percent in 1990 to 22.4 percent in 2000 (see figure 5.2). Since 2000, however, the rate of growth of exports has declined considerably: total exports remained close to 20 percent of GDP through 2005, falling to 18.8 percent in 2006. Conversely, trade liberalization and an abundance of foreign exchange (from remittances) have led to even faster growth in total imports. Imports as a percentage of GDP increased from 23.3 percent in 1990 to 40.9 percent in 2006. Trends in the composition of exports. Since 1990, El Salvador has undergone important changes in the composition of its exports. In 1990, traditional exports, mainly coffee, sugar, cotton, and shrimp, amounted to nearly 51 percent of total exports. Their share in total exports declined steadily through 2006, ending with a share of 7.5 percent in that year. In the meantime, the role of maquila exports (mainly apparel) increased steadily, growing from US$137 million in 1991 to US$1.9 billion in 2004, reaching 58 percent of total exports. Nontraditional exports, including some agricultural products and many kinds of light manufacturing, also grew, from US$287 million in 1990 to US$1.65 billion in 2006 (see figure 5.3). Apparel (maquila exports). Maquila, also known as export processing, refers to assembling imported intermediate inputs into finished goods, and then exporting those goods. For apparel, cut and uncut fabric are imported for assembly (sewing) into garments.
45
8,000
40
7,000
35
6,000
30
5,000
25
4,000
20
3,000
15
2,000
10
1,000
5
0
0
imports (CIF) exports (FOB)
exports (% of GDP) right axis imports (% of GDP) right axis
SOURCE: Central Bank of El Salvador. NOTE: CIF = Cost, insurance, and freight; FOB = Free on board.
% of GDP
9,000
19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06
US$ millions
FIGURE 5.2 Exports and Imports of Goods, 1990–2006