History

Needs For Capital in Latin America

• In 1916, Honduras wasn’t “on the map” due to its internal struggles and foreign debt. The debt had an interest of over $125,000,000.00 created for the purpose of building railroads. The debt hasn’t been paid but there’s opportunity for capital to happen for Honduras. The three opportunities are pertaining to government needs, railroads, and loans. The government has been capable of paying its internal budget so it’s able to withstand without direct financial help. Despite taking on the debt, the country was only able to build 37 miles of road with the rest built by private companies. The placement of railroads would cause major development for the country and removal of riches. Lastly, the loans would help Honduras invest in capital. When there’s development made then there will be wealth coming into the country.

The Tragic Course and Consequences of U.S. Policy in Honduras

• The Reagan administration was more focused on their own interests than helping out Honduras. Reagan took advantage of Honduras’ fear about security and increased regional instability, terrorists attacks, human rights abuses, etc.. The U.S. policy in Honduras had three objectives: to intimidate and destabilize Nicaragua, Honduras supporting Salvador’s government conflict with the guerillas, and transform Hondura into free market capitalism. There was an increase of military assistance such as millions of dollars being spent on military infrastructure alone. The money being spent wasn’t for the benefits of Honduras but for the interests of the Reagan administration. The political and military instability situation increased as a result of involvement of U.S. foreign policies which led to Honduras being pushed to the troubles from neighboring countries.

Post-Coup Honduras: Latin America’s Corridor of Reaction

• Between 1997-2001, Carlos Flores was president of Honduras. Due to the protests against neoliberal restructuring from the previous president, he had to campaign about IMF loan conditionalities. Once Flores went into office, he focused his attention on expanding tourism, maquila industry, and the non-traditional argo-export sector. The president who succeeded Flores, Maduro, continued the neoliberalism in the economy and introduced “war on gangs”. The result of neoliberal restructuring in the countryside caused for large amounts of the people residing there to relocate to the United States or poor areas within the major cities. In 2000, agriculture as a percentage of Gross Domestic Product (GPD) decreased by 14% and did other areas within agriculture. In the next few years, the rural population had less than 5 acres of land. They were forced to seek employment away from farms that resulted in resistance. The charge for neoliberal restructuring only led to the destruction of homes  and displacement of people.

The Dynamics of Inequality Change in a Highly Dualistic Economy: Honduras, 1991-2007

• Honduras has an open economy that relies on the exports of bananas and coffee. In 1998, Hurricane Mitch halted banana production for the next 2 years and decreased coffee prices until 2002. However, Honduras was able to diversify its production by investing in the U.S. factories operating in Honduras. During this time, there was a lack of policies for promotions of exports, real exchange rate, and increasing capital. The lack of policies led to an increasing inequality that occured unlike other Latin American countries. During the 2000s promotion of equality happened by possessing favorable external conditions and refined exported revenues.  

Honduras: Background and U.S. Relations

• The United States and Honduras have kept close ties economically. The Honduran export-assembly companies were able to benefit from production-sharing arrangements with the United States. Despite there being a decrease due to the global financial crisis, the merchandise trade was able to increase 38% between the two countries. The United States was Honduras’ largest trading partner with exporting and importing various goods. After the Dominican Republic–Central America Free Trade Agreement (CAFTA-DR) was approved in 2005, there has been a significant increase of U.S. foreign direct investment in Honduras that has amounted to over a billion dollars. Despite the amount of wealth Honduras possess from the investments high levels of crime, low education, and poor infrastructure are still riddled throughout Honduras.