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- Economy_of_El_Salvador abstract "Compared to other developing countries, El Salvador has experienced relatively low rates of GDP growth. Rates have not risen above the low single digits in nearly two decades – part of broader environment of macroeconomic instability which the integration of the US dollar has done little to improve. One problem that the Salvadoran economy faces is the inequality in the distribution of income. In 2011, El Salvador had a Gini Coefficient of .485, which although similar to that of the United States, leaves 37.8% of the population below the poverty line, due to lower aggregate income. The richest 10% of the population receives approximately 15 times the income of the poorest 40%.As of December 1999, net international reserves equaled US$1.8 billion or roughly five months of imports. Having this hard currency buffer to work with, the Salvadoran Government undertook a monetary integration plan beginning 1 January 2001, by which the U.S. dollar became legal tender alongside the colón, and all formal accounting was undertaken in U.S. dollars. This way, the government has formally limited its possibility of implementing open market monetary policies to influence short term variables in the economy. Since 2004, the colón stopped circulating and is now never used in the country for any type of transaction; however some stores still have prices in both colons and U.S. dollars. In general, people were unhappy with the shift from the colón to the U.S. dollar, because wages are still the same but the price of everything increased. Some economists claim this rise in prices would have been caused by inflation regardless even had the shift not been made. Some economists also contend that now, according to Gresham's Law, a reversion to the colón would be disastrous to the economy.Some banks however claim that they still do some transactions en colones, keeping this change from being unconstitutional.The change to the dollar also precipitated a trend toward lower interest rates in El Salvador, helping many to secure credit in order to buy a house or a car; over time, displeasure with the change has largely disappeared, though the issue resurfaces as a political tool when elections are on the horizon.A challenge in El Salvador has been developing new growth sectors for a more diversified economy. As many other former colonies, for many years El Salvador was considered a monoexporter economy. This means, an economy that depended heavily on one type of export. During colonial times, the Spanish decided that El Salvador would produce and export indigo, but after the invention of synthetic dyes in the 19th century, Salvadoran authorities and the newly created modern state turned to coffee as the main export of the economy. Since the cultivation of coffee required the highest lands in the country, many of these lands were expropriated from indigenous reserves and given or sold cheaply to those that could cultivate coffee. The government provided little or no compensation to the indigenous peoples. On occasions this compensation implied merely the right to work for seasons in the newly created coffee farms and to be allowed to grow their own food. Such policies provided the basis of conflicts that would shape the political situation of El Salvador in the years to come.ARENA governments have followed policies that intend to develop other exporting industries in the country as textiles and sea products. Tourism is another industry Salvadoran authorities regard as a possibility for the country. But rampant crime rates, lack of infrastructure and inadequate social capital have prevented these possibilities from being properly exploited. The government is also developing ports and infrastructure in La Union in the east of the country, in order to use the area as a "dry canal" for transporting goods from Gulf of Fonseca in the Pacific Ocean to Honduras and the Atlantic Ocean in the north. Currently there are fifteen free trade zones in El Salvador. The largest beneficiary has been the maquila industry, which provides 88,700 jobs directly, and consists primarily of cutting and assembling clothes for export to the United States.El Salvador signed the Central American Free Trade Agreement (CAFTA), negotiated by the five countries of Central America and the Dominican Republic, with the United States in 2004. In order to take advantage of CAFTA, the Salvadoran government is challenged to conduct policies that guarantee better conditions for entrepreneurs and workers to transfer from declining to growing sectors in the economy. El Salvador has already signed free trade agreements with Mexico, Chile, the Dominican Republic, and Panama, and increased its exports to those countries. El Salvador, Guatemala, Honduras, and Nicaragua also are negotiating a free trade agreement with Canada, and negotiations started on 2006 for a free trade agreement with Colombia.Fiscal policy has been the biggest challenge for the Salvadoran government. The 1992 peace accords committed the government to heavy expenditures for transition programs and social services. The stability adjustment programs (PAE, for the initials in Spanish) initiated by President Cristiani's administration committed the government to the privatization of banks, the pension system, electric and telephone companies. The total privatization of the pension system has implied a serious burden for the public finances, because the newly created private Pension Association Funds did not absorb coverage of retired pensioners covered in the old system. The government lost the revenues from contributors and absorbed completely the costs of coverage of retired pensioners. This has been the main source of fiscal imbalance. ARENA governments have financed this deficit with the emission of bonds, something the leftist party FMLN has opposed. Debates surrounding the emission of bonds have stalled the approval of the national budget for many months on several occasions, reason for which in 2006 the government will finance the deficit by reducing expenditure in other posts. The emission of bonds and the approval of a loans need a qualified majority (3/4 of the votes) in the parliament. If the deficit is not financed through a loan it is enough with a simple majority to approve the budget (50% of the votes plus 1). This would facilitate an otherwise long process in Salvadoran politics.Despite such challenges to keep public finances in balance, El Salvador still has one of the lowest tax burdens in the American continent (around 11% of GDP). Many specialists claim that it is impossible to advance significant development programs with such a little public sector (the tax burden in the United States is around 25% of the GDP and in other developed countries of the EU it can reach around 50%, like in Sweden). The government has focused on improving the collection of its current revenues with a focus on indirect taxes. Leftist politicians criticize such a structure since indirect taxes (like the value added tax) affect everyone alike, whereas direct taxes can be weighed according to levels of income and are therefore fairer taxes. However, some basic goods are exempt from the indirect taxes. A 10% value-added tax (VAT), implemented in September 1992, was raised to 13% in July 1995. The VAT is the biggest source of revenue, accounting for about 52.3% of total tax revenues in 2004.Remittances from Salvadorans working in the United States sent to family members are a major source of foreign income and offset the substantial trade deficit of around $2.9 billion. Remittances have increased steadily in the last decade and reached an all-time high of $2.9 billion in 2005—approximately 17.1% of gross domestic product (GDP). As of April 2004, net international reserves stood at $1.9 billion.In recent years inflation has fallen to single digit levels, and total exports have grown substantially.".
- Economy_of_El_Salvador wikiPageExternalLink appareltextiles.html.
- Economy_of_El_Salvador wikiPageID "9361".
- Economy_of_El_Salvador wikiPageRevisionID "595823577".
- Economy_of_El_Salvador aid "3.0E8".
- Economy_of_El_Salvador caption "Headquarters of World Trade Center San Salvador".
- Economy_of_El_Salvador country "El Salvador".
- Economy_of_El_Salvador credit "AAA".
- Economy_of_El_Salvador credit "BB".
- Economy_of_El_Salvador credit "BB-".
- Economy_of_El_Salvador currency "--01-01".
- Economy_of_El_Salvador edbr "112".
- Economy_of_El_Salvador expenses "$5.534 billion,".
- Economy_of_El_Salvador exportGoods "offshore assembly exports, coffee, sugar, textiles and apparel, gold, ethanol, chemicals, electricity, iron and steel manufactures".
- Economy_of_El_Salvador exportPartners "14.9".
- Economy_of_El_Salvador exportPartners "45.8".
- Economy_of_El_Salvador exportPartners "5.8".
- Economy_of_El_Salvador exportPartners "9.6".
- Economy_of_El_Salvador exports "5.804E9".
- Economy_of_El_Salvador gdp "$45.98 billion $7,600 23.99 billion".
- Economy_of_El_Salvador gini "48.5".
- Economy_of_El_Salvador grossExternalDebt "1.284E10".
- Economy_of_El_Salvador growth "1.5".
- Economy_of_El_Salvador hasPhotoCollection Economy_of_El_Salvador.
- Economy_of_El_Salvador importGoods "raw materials , consumer goods, capital goods, fuels, foodstuffs, petroleum, electricity".
- Economy_of_El_Salvador importPartners "10.8".
- Economy_of_El_Salvador importPartners "34.4".
- Economy_of_El_Salvador importPartners "4.0".
- Economy_of_El_Salvador importPartners "5.5".
- Economy_of_El_Salvador importPartners "5.7".
- Economy_of_El_Salvador importPartners "6.8".
- Economy_of_El_Salvador imports "1.044E10".
- Economy_of_El_Salvador industries "food processing, beverages, petroleum, chemicals, fertilizer, textiles, furniture, light metals".
- Economy_of_El_Salvador inflation "2.4".
- Economy_of_El_Salvador labor "2593000".
- Economy_of_El_Salvador occupations "agriculture: 21%; industry: 20%; services: 58%".
- Economy_of_El_Salvador poverty "30.7".
- Economy_of_El_Salvador publicDebt "57.4".
- Economy_of_El_Salvador rank "98".
- Economy_of_El_Salvador reserves "US$2.623 billion".
- Economy_of_El_Salvador revenue "4.835E9".
- Economy_of_El_Salvador sectors "agriculture: 10.5%; industry: 30.0%; services: 59.4%".
- Economy_of_El_Salvador unemployment "6.9".
- Economy_of_El_Salvador width "280".
- Economy_of_El_Salvador year "calendar year".
- Economy_of_El_Salvador subject Category:Economy_of_El_Salvador.
- Economy_of_El_Salvador subject Category:World_Trade_Organization_member_economies.
- Economy_of_El_Salvador comment "Compared to other developing countries, El Salvador has experienced relatively low rates of GDP growth. Rates have not risen above the low single digits in nearly two decades – part of broader environment of macroeconomic instability which the integration of the US dollar has done little to improve. One problem that the Salvadoran economy faces is the inequality in the distribution of income.".
- Economy_of_El_Salvador label "Economia de El Salvador".
- Economy_of_El_Salvador label "Economy of El Salvador".
- Economy_of_El_Salvador label "Economía de El Salvador".
- Economy_of_El_Salvador label "Économie du Salvador".
- Economy_of_El_Salvador label "Экономика Сальвадора".
- Economy_of_El_Salvador sameAs Economía_de_El_Salvador.
- Economy_of_El_Salvador sameAs Économie_du_Salvador.
- Economy_of_El_Salvador sameAs Economia_de_El_Salvador.
- Economy_of_El_Salvador sameAs m.0117q6lw.
- Economy_of_El_Salvador sameAs Q2397105.
- Economy_of_El_Salvador sameAs Q2397105.
- Economy_of_El_Salvador wasDerivedFrom Economy_of_El_Salvador?oldid=595823577.
- Economy_of_El_Salvador isPrimaryTopicOf Economy_of_El_Salvador.