The COVID-19 pandemic has fundamentally altered the global economic landscape, with the smallest and most vulnerable economies particularly hard hit. In the Northern Triangle countries of El Salvador, Guatemala, and Honduras, the crisis has cost lives and livelihoods. It has impacted both the demand and supply sides of the economy, posing difficult policy tradeoffs. Risks to macroeconomic stability are now growing. Each country will likely exit the crisis with an even greater need for reform.
Escaping the Governance Trap: Economic Reform in the Northern Triangle provides a framework for understanding the challenges of those three Central American nations, proposing that the lack of governing capacity in each country is a crucial problem. This book argues that economic reforms can help the Northern Triangle countries escape their governance traps and identifies priority areas of economic reform. Sectors covered include fiscal policy, monetary and exchange rate policy, financial access and deterrence, and structural reforms. It also highlights the role that stakeholders like the United States can play to help in these reform efforts, and how those outcomes affect the United States and the global community. All told, Escaping the Governance Trap provides an accessible, direct account of the Northern Triangle’s economic challenges and how to fix them.
Author(s): Neil Shenai
Publisher: Palgrave Pivot
Year: 2022
Language: English
Pages: 169
City: Cham
Foreword
Preface
Acknowledgements
Contents
About the Author
Abbreviations
List of Figures
List of Tables
1 From the Northern Triangle to Northern Europe: How Good Governance Can Rescue Central America
1 Perspectives on Stateness, Governance, and Economic Growth: Six Propositions
2 The Governance Trap
3 Conclusion
Annex 1: Changing the possibilities of stateness and scope: Potential reform paths
Annex 2: The Governance Trap
References
2 Economic Reform Priorities and the Governance Trap
1 Understanding the COVID-19 Context
2 Fiscal Policy
2.1 Fiscal Policy in the Northern Triangle: Prior to and During the COVID-19 Shock
2.2 Post-COVID Fiscal Priorities
2.3 Fiscal Policy and the Governance Trap
3 Monetary and Exchange Rate Policy
4 Financial Policy
5 Structural Reforms
6 Conclusion
Annex 1: Schematic Of Financial Integrity
Annex 2: El Salvador’s experience with Bitcoin
References
3 Enhancing Global Engagement
1 The United States
1.1 U.S. Strategic Interests in the Northern Triangle
1.2 Recommended Principles of U.S. Engagement in the Northern Triangle
2 Canada and Mexico
3 International Partners
4 Conclusion
References
4 Conclusions and Potential Futures
1 Main Conclusions
2 Limitations of Escaping the Governance Trap
3 Scenario Analysis
3.1 The Baseline Scenario: The Status Quo
3.2 Downside Scenario: Growing Entropy
3.3 Upside Scenario: A Renaissance of Cooperation
4 Conclusion
Works Cited
Index
