Economic growth and balance of payments constraints in Central America (2009-2020)
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Abstract
Although economic growth in Central America was 3.6% for the period 2014-2019 and its balance of payments current account deficit was 6.2% of Gross Domestic Product (GDP) between 2010-2014, the data shows that it is not growing sufficiently and there is little competitiveness due to socio-political conflicts and the effects of the COVID-19 pandemic. With this in mind, the research evidences the influence of export growth and other relevant external flows on long-term economic growth in Central American countries, as part of a Keynesian school of thought, through the cointegration method between the period 2009-2020. The study concludes that balance of payments restrictions is a relevant tool for analysing the long-term growth trajectories of these small open economies.
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