The most important mines were in the mountains near the capital of Tegucigalpa and were owned by the New York and Honduras Rosario Mining Company (NYHRMC). Silver was the principal metal extracted, accounting for about 55% of exports in the 1880s.
The New York and Honduras Rosario Mining Company (NYHRMC) produced $60 million worth of gold and silver between 1882 and 1954 before discontinuing most of its operations. Mining's contribution to the GDP steadily declined during the 1980s, to account for a 2 percent contribution in 1992.
Between 1913 and 1929, its agricultural exports rose from $3 million ($2 million from bananas) to $25 million ($21 million from bananas).
President Callejas, a US-trained economist, brought new professionalism and technical skills to the central government as he began the arduous task of long-term economic reform. The official exchange rate of the lempira, pegged at US$1=L2 since 1918, was dramatically devalued in 1990.
These "golden" exports were supported by more than $40 million of specialized banana company investment in the Honduran infrastructure and were safeguarded by US pressure on the national government when the companies felt threatened. The overall performance of the Honduran economy remained closely tied to banana prices and production from the 1920s until after the mid-century because other forms of commercial export agriculture were slow to emerge.
Between 1913 and 1929, its agricultural exports rose from $3 million ($2 million from bananas) to $25 million ($21 million from bananas).
During the 1950s—as a result of these improvements and the strong international export prices—beef, cotton, and coffee became significant export products for the first time.
The New York and Honduras Rosario Mining Company (NYHRMC) produced $60 million worth of gold and silver between 1882 and 1954 before discontinuing most of its operations. Mining's contribution to the GDP steadily declined during the 1980s, to account for a 2 percent contribution in 1992.
Honduran sugar, timber, and tobacco also were exported, and by 1960 bananas had declined to a more modest share (45 percent) of total exports.
During the 1960s, industrial growth was stimulated by the establishment of the Central American Common Market (CACM—see Appendix B). As a result of the reduction of regional trade barriers and the construction of a high common external tariff, some Honduran manufactured products, such as soaps, sold successfully in other Central American countries.
The heady days of the CACM (mid to -late 1960s), which produced an industrial boom for El Salvador and Guatemala, barely touched the Honduran economy except to increase its imports because of the comparative advantages enjoyed by the Salvadoran and Guatemalan economies and Honduras's inability to compete. Bananas and coffee have also proven unreliable sources of income.
Unemployment mushroomed, and private investment withered. By 1989 president Callejas's broad economic goal became to return Honduran economic growth to 1960–80 levels.
During the decades of the 1960s and 1970s, the country's economy, spurred mostly by erratically fluctuating traditional agricultural commodities, nevertheless averaged real annual growth of between 4 and 5 percent.
The Honduran population was 77 percent rural in 1960.
For those with jobs, the buying power of their wages tumbled throughout the 1980s while the cost of basic goods, especially food, climbed precipitously. ==Role of government== Throughout the 1960s and most of the 1970s, the military-led governments of Honduras ran a state-sponsored and state-financed economy.
This reluctance to improve techniques, coupled with generally poor soil, a lack of credit, and poor infrastructure, has contributed to low production figures. ===Land reform=== The Honduran government nominally began to address inequitable land ownership in the early 1960s.
About 1,500 hectares of government-owned land were distributed by the National Agrarian Institute (Instituto Nacional Agrario—INA) beginning in 1960. A military coup in 1963 resulted in an end to the land reform program.
The government also pledged to return to peasants land that had been confiscated by the Honduran military in 1983. An Agricultural Modernization Law, passed in 1992, accelerated land titling and altered the structure of land cooperatives formed in the 1960s.
The Honduran Temporary Import Law permits companies that export 100 percent of their production to countries outside the CACM countries to hold ten-year exemptions on corporate income taxes and duty-free import of industrial inputs. Analysts continue to debate the actual benefits of the shift away from the import-substitution industrialization (ISI) policies of the 1960s and 1970s toward a new focus on free zones and assembly industries in the 1990s.
About 1,500 hectares of government-owned land were distributed by the National Agrarian Institute (Instituto Nacional Agrario—INA) beginning in 1960. A military coup in 1963 resulted in an end to the land reform program.
In 1964 forests covered 6.8 million hectares, but by 1988 forested areas had declined to 5 million hectares.
After the 1969 Soccer War with El Salvador, Honduras effectively withdrew from the CACM.
Since the late 1970s, towns in the north began industrial production through maquiladoras, especially in San Pedro Sula and Puerto Cortés. Honduras has extensive forests, marine, and mineral resources, although widespread slash and burn agricultural methods continue to destroy Honduran forests.
During the decades of the 1960s and 1970s, the country's economy, spurred mostly by erratically fluctuating traditional agricultural commodities, nevertheless averaged real annual growth of between 4 and 5 percent.
But the expectation for low inflation made the reality of high inflation that much worse and created additional pressures on the government for action when inflation soared in 1990. == Unemployment== Between 1980 and 1983, 20 percent of the workforce was unemployed—double the percentage of the late 1970s.
Honduras's GDP showed reasonable growth throughout most of the 1980s, especially when compared to the rest of Latin America, but it was artificially buoyed by private consumption and public-sector spending. Mainstay agricultural jobs became scarcer in the late 1970s.
For those with jobs, the buying power of their wages tumbled throughout the 1980s while the cost of basic goods, especially food, climbed precipitously. ==Role of government== Throughout the 1960s and most of the 1970s, the military-led governments of Honduras ran a state-sponsored and state-financed economy.
By contrast, the banana companies paid relatively high wages as early as the 1970s.
Most land under cultivation in 1992 was planted in bananas, coffee, and specialized export crops such as melons and winter vegetables. ===Agricultural policy=== The agricultural sector's output showed little or no growth between 1970 and 1985.
Lacking even modest government-directed land reforms, squatting became the primary means for poor people to gain land throughout the early 1970s.
The Honduran Temporary Import Law permits companies that export 100 percent of their production to countries outside the CACM countries to hold ten-year exemptions on corporate income taxes and duty-free import of industrial inputs. Analysts continue to debate the actual benefits of the shift away from the import-substitution industrialization (ISI) policies of the 1960s and 1970s toward a new focus on free zones and assembly industries in the 1990s.
These actions spurred the government to institute new agrarian reforms in 1972 and 1975.
Although bananas are less subject to the vagaries of international markets than coffee, natural disasters such as Hurricane Fifi in 1974, drought, and disease have appeared with a regular, albeit random, frequency to take their economic toll through severely diminished harvests.
Department of Labor's List of Goods Produced by Child Labor or Forced Labor cites three goods produced in such working conditions in Honduras; namely coffee, lobsters and melons. ===Employment indicators and benefits=== Honduran governments have set minimum wages since 1974, but enforcement has generally been lax.
Squatters have consistently used land suitable only for forests to grow scantyield food crops; large tracts have been cleared for cattle ranches; and the country has gravely mismanaged its timber resources, focusing far more effort on logging than on forestry management. The government began an intensive forestry development program in 1974, supposedly intended to increase management of the sector and to prevent exploitation by foreign-owned firms.
The Honduran Corporation for Forestry Development (Corporación Hondureña de Desarrollo Forestal—Cohdefor) was created in 1974, but it quickly developed into a corrupt monopoly for overseeing forest exports.
These actions spurred the government to institute new agrarian reforms in 1972 and 1975.
Although all lands planted in export crops were exempted from reform, about 120,000 hectares were, nevertheless, divided among 35,000 poor families. By 1975 the pendulum had swung back, and agrarian reform was all but halted.
From 1975 through the 1980s, illegal occupations of unused land increased once again.
Furthermore, violence erupted as discharged members of the Honduran military forcibly tried to claim land that had already been awarded to the peasant organization Anach in 1976. In May 1991, violence initiated by members of the Honduran military resulted in the deaths of eight farmers.
Relatively high interest rates and a complicated investment law have also inhibited the foreign-dominated manufacturing sector from taking off. The government-sponsored Puerto Cortés Free Zone was opened in 1976.
Beginning in late 1979, as insurgency spread in neighboring countries, Honduran military leaders enthusiastically came to support United States policies in the region.
Favorable bilateral trade arrangements between Honduras and the other former CACM partners were subsequently negotiated, however. A political shift in the 1980s had strong and unexpected repercussions on the country's economic condition.
Honduran defense spending rose throughout the 1980s until it consumed 20 to 30 percent of the national budget.
Before the military buildup began in fiscal year (FY) 1980, United States military assistance to Honduras was less than US$4 million.
Tiny Honduras soon became the tenth largest recipient of United States assistance aid; total economic and military aid rose to more than $200 million in 1985 and remained at more than $100 million for the rest of the 1980s. The increasing dependence of the Honduran economy on foreign aid was aggravated by a severe, regionwide economic decline during the 1980s.
Private investment plummeted in 1980, and capital flight for that year was $500 million.
At the end of the 1980s, however, Callejas had few remaining vehicles with which to pull the country out of the deep regionwide recession of the 1980s.
But the expectation for low inflation made the reality of high inflation that much worse and created additional pressures on the government for action when inflation soared in 1990. == Unemployment== Between 1980 and 1983, 20 percent of the workforce was unemployed—double the percentage of the late 1970s.
Job creation remained substantially behind the growth of the labor force throughout the 1980s.
By 1993, 50 to 60 percent of the Honduran labor force was estimated to be either underemployed or unemployed. The government's acceptance of foreign aid during the 1980s, in lieu of economic growth sparked by private investment, allowed it to ignore the necessity of creating new jobs.
Honduras's GDP showed reasonable growth throughout most of the 1980s, especially when compared to the rest of Latin America, but it was artificially buoyed by private consumption and public-sector spending. Mainstay agricultural jobs became scarcer in the late 1970s.
For those with jobs, the buying power of their wages tumbled throughout the 1980s while the cost of basic goods, especially food, climbed precipitously. ==Role of government== Throughout the 1960s and most of the 1970s, the military-led governments of Honduras ran a state-sponsored and state-financed economy.
Additional price and trade liberalization measures and fewer government regulations became part of his ongoing reforms. Budget Throughout the 1980s, the Honduran government was heavily financed by foreign assistance.
As unemployment soared throughout Central America in the 1980s, more and more people were forced to rely on their own ingenuity in order to simply exist on the fringes of Honduran society. As for the informal sector, research has shown that evidence of child labor has been observed mostly in the Honduran agricultural sector.
That laxity increased at the beginning of the 1980s.
Banana workers continued at the top of the wage scale in the 1990s; however, in the 1980s, as banana production became less labor-intensive, the companies had decreased their investment and workforce.
In the late 1980s and early 1990s, however, the CGT leadership developed close ties to the National Party of Honduras (Partido Nacional de Honduaras—PNH), and several leaders served in the Callejas government.
From 1975 through the 1980s, illegal occupations of unused land increased once again.
Honduras's traditional system of independent banana producers, who, as late as the 1980s, sold their crops to the international banana companies, was eroded in the 1990s.
Honduras, in fact, consistently produced more than its international quota until growers began to withhold the crop in the 1980s in an attempt to stimulate higher prices.
With the aid of affordable loans from foreign investors, more and more Honduran coffee growers are learning to produce high-value organic coffee for today's economy. The outlook for the sugar industry, which had boomed during the 1980s when Honduran producers were allowed to fill Nicaragua's sugar quota to the United States, seemed bleak in 1993.
Nontraditional exports require the ability to get fresh produce from the fields to distant markets rapidly. ===Livestock=== In the early 1980s, the cattle industry appeared to have the potential to be an important part of the Honduran economy.
Cattle production grew steadily until 1980–81 but then declined sharply when profits fell because of high production costs.
The dairy industry was further handicapped by the difficulties of trying to transport milk over poor roads in a tropical country, as well as by stiff competition in the domestic market from subsidized foreign imports, mostly from the United States. ===Fishing=== Honduras significantly developed its shrimp industry during the 1980s and in the Latin American market was second only to Ecuador in shrimp exports by 1991.
Honduras continued to lose about 3.6 percent of its remaining forests annually during the 1980s and early 1990s.
The New York and Honduras Rosario Mining Company (NYHRMC) produced $60 million worth of gold and silver between 1882 and 1954 before discontinuing most of its operations. Mining's contribution to the GDP steadily declined during the 1980s, to account for a 2 percent contribution in 1992.
The average annual growth rate of value added to the economy from the financial sector for the 1980s was the second-highest in Latin America, averaging 4 percent.
Overall investment as a percentage of GDP declined dramatically during the 1980s, from about 25 percent in 1980 to a meager 15 percent in 1990.
The solutions relied on in the past—traditional export crops, the maquiladora assembly industry, and the 1980s' development schemes—appear unlikely to provide enough new jobs for a rapidly growing population.
Military aid more than doubled to reach just under US$9 million by FY 1981, surged to more than $31 million by FY 1982, and stood at $48.3 million in FY 1983.
Military aid more than doubled to reach just under US$9 million by FY 1981, surged to more than $31 million by FY 1982, and stood at $48.3 million in FY 1983.
Exchange controls had been introduced in 1982, resulting in a parallel currency market (black market) and several confusing official exchange rates operating simultaneously.
Military aid more than doubled to reach just under US$9 million by FY 1981, surged to more than $31 million by FY 1982, and stood at $48.3 million in FY 1983.
Funds from the multilateral lending institutions, which eventually would help fill the gap left by the reduction of United States aid, were still under negotiation in 1989 and would be conditioned first on payment of arrears on the country's enormous external debt. Between 1983 and 1985, the government of Honduras—pumped up by massive infusions of external borrowing—had introduced expensive, high-tech infrastructure projects.
But the expectation for low inflation made the reality of high inflation that much worse and created additional pressures on the government for action when inflation soared in 1990. == Unemployment== Between 1980 and 1983, 20 percent of the workforce was unemployed—double the percentage of the late 1970s.
The government also pledged to return to peasants land that had been confiscated by the Honduran military in 1983. An Agricultural Modernization Law, passed in 1992, accelerated land titling and altered the structure of land cooperatives formed in the 1960s.
Nontraditional vegetables and fruit produced $23.8 million in export revenue in 1990, a figure that was almost double the 1983 figure.
Nontraditional agricultural crops represented 4.8 percent of the value of total exports in 1990, compared to 2.8 percent in 1983. Some development experts argue that government protection of corn, bean, and rice production by small farmers is a futile effort in the long-term goal of poverty reduction.
Tiny Honduras soon became the tenth largest recipient of United States assistance aid; total economic and military aid rose to more than $200 million in 1985 and remained at more than $100 million for the rest of the 1980s. The increasing dependence of the Honduran economy on foreign aid was aggravated by a severe, regionwide economic decline during the 1980s.
Funds from the multilateral lending institutions, which eventually would help fill the gap left by the reduction of United States aid, were still under negotiation in 1989 and would be conditioned first on payment of arrears on the country's enormous external debt. Between 1983 and 1985, the government of Honduras—pumped up by massive infusions of external borrowing—had introduced expensive, high-tech infrastructure projects.
Even greater injections of foreign assistance between 1985 and 1988 kept the economy afloat, but it soon became clear that the successive governments had been borrowing time as well as money. Foreign aid between 1985 and 1989 represented about 4.6 percent of the gross domestic product (GDP).
Hondurans had been accustomed to low inflation (3.4 percent in 1985, rising to 4.5 percent by the end of 1986), partly because pegging the lempira to the dollar-linked Honduras's inflation rate to inflation rates in developed countries.
Unemployment grew to 25 percent by 1985, and combined unemployment and underemployment jumped to 40 percent in 1989.
External financing—mostly bilateral credit from the United States—rose dramatically until it reached 87 percent of the public deficit in 1985, rising even further in subsequent years.
Most land under cultivation in 1992 was planted in bananas, coffee, and specialized export crops such as melons and winter vegetables. ===Agricultural policy=== The agricultural sector's output showed little or no growth between 1970 and 1985.
Cohdefor generally granted licenses to private lumber companies with few demands for preservation, and it had little inclination or incentive to enforce the demands it did make. With encouragement from the United States Agency for International Development (AID), the Honduran government began to decentralize Cohdefor beginning in 1985.
A mammoth hydroelectric plant, the 292-MW project at El Cajón, began producing electricity in 1985 to help address the country's energy needs.
After 1985, however, the sector began to grow rapidly.
By 1985 Honduras had twenty-five financial institutions with 300 branch offices.
Honduran commercial banks held 60 percent of the financial system's assets in 1985 and nearly 75 percent of all deposits.
In 1985 there were two government-owned development banks in Honduras, one specializing in agricultural credit and the other providing financing to municipal governments. At the behest of the International Monetary Fund (IMF) and World Bank, Honduras began a process of financial liberalization in 1990.
Hondurans had been accustomed to low inflation (3.4 percent in 1985, rising to 4.5 percent by the end of 1986), partly because pegging the lempira to the dollar-linked Honduras's inflation rate to inflation rates in developed countries.
The Honduran Congress assumed authority for setting electric prices beginning in 1986 but then became reluctant to increase rates.
By 1987 about 750,000 hectares of Honduran land had been seriously eroded as a result of misuse by cattle ranchers and slash-and-burn squatters who planted unsuitable food crops. The Honduran government and two banana companies—Chiquita Brands International and Dole Food Company—owned approximately 60 percent of Honduras's cultivable land in 1993.
Only about 14 percent of cultivated land was irrigated in 1987.
As late as 1987, livestock composed 16 percent of the value-added agricultural sector but the industry continued to decline.
In 1987 Honduran households consumed approximately 60 percent of total energy used, transportation and agriculture used about 26 percent, and industry used about 14 percent.
The World Bank estimates that only about 36 percent of the Honduran population had access to electricity (20 percent of the rural population) in 1987.
Despite these problems, the number of visitors arriving in Honduras rose from fewer than 200,000 in 1987 to almost 250,000 in 1989.
Even greater injections of foreign assistance between 1985 and 1988 kept the economy afloat, but it soon became clear that the successive governments had been borrowing time as well as money. Foreign aid between 1985 and 1989 represented about 4.6 percent of the gross domestic product (GDP).
Dissident FUTH member formed the FITH, which was granted legal status in 1988.
In 1964 forests covered 6.8 million hectares, but by 1988 forested areas had declined to 5 million hectares.
The economy had deteriorated rapidly, starting in 1989, as the United States Agency for International Development (AID) pointedly interrupted disbursements of its grants to Honduras to signal displeasure with the economic policies of the old government and to push the new government to make economic reforms.
Funds from the multilateral lending institutions, which eventually would help fill the gap left by the reduction of United States aid, were still under negotiation in 1989 and would be conditioned first on payment of arrears on the country's enormous external debt. Between 1983 and 1985, the government of Honduras—pumped up by massive infusions of external borrowing—had introduced expensive, high-tech infrastructure projects.
Even greater injections of foreign assistance between 1985 and 1988 kept the economy afloat, but it soon became clear that the successive governments had been borrowing time as well as money. Foreign aid between 1985 and 1989 represented about 4.6 percent of the gross domestic product (GDP).
Unemployment mushroomed, and private investment withered. By 1989 president Callejas's broad economic goal became to return Honduran economic growth to 1960–80 levels.
Real growth between 1989 and 1993 translated to mostly negative or small positive per capita changes in the GDP for a population that was growing at close to 4 percent annually. President Callejas attempted to adhere to conditions of desperately needed new loans.
Despite his all-out effort to reduce the public-sector deficit, the overall ratio of fiscal deficit to the GDP in 1990 showed little change from that in 1989.
Unemployment grew to 25 percent by 1985, and combined unemployment and underemployment jumped to 40 percent in 1989.
By 1989 and the election of president Callejas, however, a heavy toll had been taken by regionwide economic recession, civil war in neighboring countries, the drying up of most external credit, and capital flight equaling more than $1.5 billion. Callejas began to shift economic policy toward privatizing government-owned enterprises, liberalizing trade and tariff regulations, and encouraging increased foreign investment through tax and other incentives.
Scheduled amortization payments of an average $223.2 million per year, however, guaranteed that Honduras's gross funding requirements would remain large indefinitely. The government of Honduras projected that overall tax revenues would increase from 13.2 percent of GDP in 1989 to about 15.7 percent in 1991.
The need for land reform was addressed mostly by laws directed at granting titles to squatters and other landholders, permitting them to sell their land or to use it as collateral for loans. Despite declarations by the Callejas government in 1989 of its intent to increasingly address social issues, including land tenure and other needs of small farmers, the early 1990s were jolted by increased conflicts between peasants and the Honduran security forces.
Agricultural credit and government support increasingly favored export crop producers at the expense of producers of basic food crops. The Honduran land reform process under President Callejas between 1989 and 1992 was directed primarily at large agricultural landowners.
Strikes by producers at harvest time in 1991 forced the closure of the Choluteca refinery for a short time but had little effect on the depressed long-term outlook for the industry. ===Nontraditional crops=== While the total value of export merchandise fell in 1990 and 1991 and had still not recovered in 1993 to its 1989 level, the overall agricultural sector output has grown somewhat because of growth in the sale of winter vegetables and shrimp.
Despite these problems, the number of visitors arriving in Honduras rose from fewer than 200,000 in 1987 to almost 250,000 in 1989.
The government's daunting task then became how to create an economic base able to compensate for the withdrawal of much United States assistance without becoming solely dependent on traditional agricultural exports. In the 1990s, bananas were booming again, particularly as new European trade agreements increased market size.
Small banana producing cooperatives lined up in the 1990s to sell their land to the commercial giants, and the last banana-producing lands held by the government were privatized.
Like most of Central America, Honduras in the 1990s began to woo foreign investors, mostly Asian clothing assembly firms, and it held high hopes for revenue to be generated by privatizing national industries.
Despite his all-out effort to reduce the public-sector deficit, the overall ratio of fiscal deficit to the GDP in 1990 showed little change from that in 1989.
Overall inflation for 1990 had reached 36.4 percent—not the hyperinflation experienced by some Latin American counties—but still the highest annual rate for Honduras in forty years.
But the expectation for low inflation made the reality of high inflation that much worse and created additional pressures on the government for action when inflation soared in 1990. == Unemployment== Between 1980 and 1983, 20 percent of the workforce was unemployed—double the percentage of the late 1970s.
In the agricultural sector (which in 1993 still accounted for about 60 percent of the labor force), unemployment has been estimated to be far worse than the figures for the total labor force. Honduran urban employment in the early 1990s has been characterized by underemployment and marginal informal-sector jobs, as thousands of former agricultural workers and refugees have moved to the cities seeking better lives.
President Callejas, a US-trained economist, brought new professionalism and technical skills to the central government as he began the arduous task of long-term economic reform. The official exchange rate of the lempira, pegged at US$1=L2 since 1918, was dramatically devalued in 1990.
Some of those rates were legally recognized in 1990 when President Callejas introduced a major series of economic policy reforms, which included reducing the maximum import tariff rate from 90 to 40 percent and getting rid of most surcharges and exemptions. The value of the lempira was adjusted to US$1=L4, with the exception of the rate for debt equity conversions, which remained at the old rate of US$1=L2.
Total outstanding external debt as a percentage of GDP fell from 119 percent in 1990 to 114 percent in 1991 and to 112 percent in 1993.
When they occurred, minimum wage adjustments generally did not keep up with the cost of living increases. After a major currency devaluation in 1990, average Honduran workers were among the most poorly paid workers in the Western Hemisphere.
Banana workers continued at the top of the wage scale in the 1990s; however, in the 1980s, as banana production became less labor-intensive, the companies had decreased their investment and workforce.
Consequently, fewer workers were employed as relatively well-paid agricultural wage earners with related benefits. President Callejas responded to the severe poverty by implementing a specially financed Honduran Social Investment Fund (Fondo Hondureño de Inversión Social—FHIS) in 1990.
That increase was in addition to raises of 50 and 22 percent set, respectively, in January and September 1990.
There were forty-eight strikes in the public sector alone in 1990, protesting the government's economic austerity program and layoffs of public-sector workers.
More than 4,000 public-sector employees from the Ministry of Communications, Public Works, and Transport were fired in 1990.
However, the government largely made good its pledge to trim that number by 8,000 to 10,000 throughout 1991 as part of its austerity program. In the private sector, 1990 saw 94 strikes in 64 firms, as workers fought for wage increases to combat inflation.
In the late 1980s and early 1990s, however, the CGT leadership developed close ties to the National Party of Honduras (Partido Nacional de Honduaras—PNH), and several leaders served in the Callejas government.
The FITH consisted of fourteen unions claiming about 13,000 members in the early 1990s. ==Agriculture and land use== In 2018, Honduras produced 5.5 million tons of sugar cane, 2.5 million tons of palm oil, 771 thousand tons of banana and 481 thousand tons of coffee, these being its main crops.
The need for land reform was addressed mostly by laws directed at granting titles to squatters and other landholders, permitting them to sell their land or to use it as collateral for loans. Despite declarations by the Callejas government in 1989 of its intent to increasingly address social issues, including land tenure and other needs of small farmers, the early 1990s were jolted by increased conflicts between peasants and the Honduran security forces.
An agrarian pact, signed by landowners and peasant organizations in August 1990, remained underfunded and largely unimplemented.
Honduras's traditional system of independent banana producers, who, as late as the 1980s, sold their crops to the international banana companies, was eroded in the 1990s.
Despite the efforts of the growers, coffee prices plunged on the international market from a high of more than $2.25 per kilogram in the mid-1970s to less than $0.45 per kilogram in the early 1990s.
Strikes by producers at harvest time in 1991 forced the closure of the Choluteca refinery for a short time but had little effect on the depressed long-term outlook for the industry. ===Nontraditional crops=== While the total value of export merchandise fell in 1990 and 1991 and had still not recovered in 1993 to its 1989 level, the overall agricultural sector output has grown somewhat because of growth in the sale of winter vegetables and shrimp.
Nontraditional vegetables and fruit produced $23.8 million in export revenue in 1990, a figure that was almost double the 1983 figure.
Nontraditional agricultural crops represented 4.8 percent of the value of total exports in 1990, compared to 2.8 percent in 1983. Some development experts argue that government protection of corn, bean, and rice production by small farmers is a futile effort in the long-term goal of poverty reduction.
Honduras continued to lose about 3.6 percent of its remaining forests annually during the 1980s and early 1990s.
El Cajón also developed costly structural problems requiring extensive maintenance and repairs. Officials estimated that the government's decision to provide free service to public-sector institutions contributed to a 23 percent increase in publicsector consumption in 1990.
Under pressure from the World Bank, it did agree to a 60 percent increase in 1990, with additional increases in 1991.
By 1990 an additional five free zones were in operation in Omoa, Coloma, Tela, La Ceiba, and Amapala.
The Honduran Temporary Import Law permits companies that export 100 percent of their production to countries outside the CACM countries to hold ten-year exemptions on corporate income taxes and duty-free import of industrial inputs. Analysts continue to debate the actual benefits of the shift away from the import-substitution industrialization (ISI) policies of the 1960s and 1970s toward a new focus on free zones and assembly industries in the 1990s.
In 1985 there were two government-owned development banks in Honduras, one specializing in agricultural credit and the other providing financing to municipal governments. At the behest of the International Monetary Fund (IMF) and World Bank, Honduras began a process of financial liberalization in 1990.
With inflation hitting 33 percent in 1990, there was, in fact, a negative real interest rate, but this situation reversed in 1991 when rates were high relative to inflation.
Bankers argued for further liberalization, including easing of controls in the housing and nonexport agricultural sectors. A Honduran stock exchange was established in August 1990 with transactions confined to trading debt.
Small ecotourism projects, in particular, are considered to have significant potential. ==Trade== In the early 1990s, the United States was by far Honduras's leading trading partner, with Japan a distant second.
Overall investment as a percentage of GDP declined dramatically during the 1980s, from about 25 percent in 1980 to a meager 15 percent in 1990.
Dole Food Company and Chiquita Brands International together have invested heavily in Honduran industries as diverse as breweries and plastics, cement, soap, cans, and shoes. As Honduras enters the 1990s, it faces challenging economic problems.
The total public-sector deficit actually grew to 8.6 percent of the GDP, or nearly L1 billion, in 1991. The 1993 deficit expanded to 10.6 percent of GDP.
In fact, GDP growth was 3.3 percent in 1991, 5.6 percent in 1992, and an estimated 3.7 percent in 1993.
Solving the most immediate crisis frequently took precedence over long-term goals. Inflation By 1991 President Callejas had achieved modest success in controlling inflation.
Only one of ten Honduran workers were securely employed in the formal sector in 1991. In the mid-1980s, the World Bank reported that only 10,000 new jobs were created annually; the low rate of job creation resulted in 20,000 people being added to the ranks of the unemployed every year.
By 1991 the public-sector deficit was entirely financed with net external credit.
That financing permitted the government to reduce the demand for internal credit and, therefore, to maintain its established exchange rate. In 1991 Callejas managed to give the appearance of having reduced the overall fiscal deficit, a requirement for new credit.
During 1991, loan negotiations with multilateral and bilateral lending institutions brought Honduras $39.5 million in United States development assistance, $70 million in balance-of-payments assistance in the form of cash grants, and $18.8 million in food aid. Honduras country also negotiated $302.4 million in concessional loans from the multilateral lending institutions.
Total outstanding external debt as a percentage of GDP fell from 119 percent in 1990 to 114 percent in 1991 and to 112 percent in 1993.
Scheduled amortization payments of an average $223.2 million per year, however, guaranteed that Honduras's gross funding requirements would remain large indefinitely. The government of Honduras projected that overall tax revenues would increase from 13.2 percent of GDP in 1989 to about 15.7 percent in 1991.
Those firms employ approximately 16,000 workers in 1991. About one-third of the Honduran labor force was estimated to be working in the service or "other" sector in 1993.
As a continuing part of the social pact, and even more as the result of a fierce union-government battle, President Callejas announced in 1991 a 27.8 percent increase over a minimum wage that the government had earlier agreed upon.
Despite those concessions, the minimum daily rate in 1991 was only $1.75 for workers employed by small agricultural enterprises and $3.15 for workers in the big exporting concerns; most workers did not earn the minimum wage. ===Labor unions=== Honduras has long been heavily unionized.
About 70,000 unionized workers remained in the faltering public sector at the beginning of 1991.
However, the government largely made good its pledge to trim that number by 8,000 to 10,000 throughout 1991 as part of its austerity program. In the private sector, 1990 saw 94 strikes in 64 firms, as workers fought for wage increases to combat inflation.
Furthermore, violence erupted as discharged members of the Honduran military forcibly tried to claim land that had already been awarded to the peasant organization Anach in 1976. In May 1991, violence initiated by members of the Honduran military resulted in the deaths of eight farmers.
Strikes by producers at harvest time in 1991 forced the closure of the Choluteca refinery for a short time but had little effect on the depressed long-term outlook for the industry. ===Nontraditional crops=== While the total value of export merchandise fell in 1990 and 1991 and had still not recovered in 1993 to its 1989 level, the overall agricultural sector output has grown somewhat because of growth in the sale of winter vegetables and shrimp.
By 1991–92, beef exports accounted for only 2.9 percent of the value of total exports. Sales of refrigerated meat were the third or fourth highest source of export earnings in the mid-1980s, but like other Honduran agricultural products, beef yields were among the lowest in Central America.
The dairy industry was further handicapped by the difficulties of trying to transport milk over poor roads in a tropical country, as well as by stiff competition in the domestic market from subsidized foreign imports, mostly from the United States. ===Fishing=== Honduras significantly developed its shrimp industry during the 1980s and in the Latin American market was second only to Ecuador in shrimp exports by 1991.
The industry was dependent, however, on larvae imported from the United States to augment its unstable natural supply. Technicians from Taiwan were contracted by large producers in 1991 to help develop laboratory larvae, but bitter feuds developed between independent shrimpers and the corporations.
Despite decentralization and the sale of government assets, Cohdefor's remaining debt was $240 million in 1991.
In 1991 Honduras consumed about of oil daily.
Honduras spent about $143 million, or 13 percent of its total export earnings, to purchase oil in 1991.
Under pressure from the World Bank, it did agree to a 60 percent increase in 1990, with additional increases in 1991.
Asian-owned firms dominated the sector, with twenty-one South Korean-owned companies in export processing zones located in the Río Sula valley in 1991. The maquiladoras employed approximately 16,000 workers in 1991; another nine firms opened in 1992.
Membership in the Honduran Association of Small and Medium Industry (Asociación Hondureña de Empresas Pequeñas y Medianas) declined by 70 percent by 1991, compared to pre-maquiladora days, foreshadowing the likely demise of most of the small shops. Honduran domestic manufacturers also suffered from increased Central American competition resulting from a trade liberalization pact signed in May 1991 by Honduras, El Salvador, and Guatemala.
A value of $195 million to the Honduran economy from assembly industries in 1991—when the value of clothing exports was greater than that of coffee—was a compelling argument in favor of the shift, however. ===Construction=== High interests rates, particularly for housing, continued to hurt the Honduran construction industry in 1993, but danger from high rates was partially offset by some public-sector investment.
Beginning in late 1991, Honduran banks were allowed to charge market rates for agricultural loans if they were using their own funds.
By law, the banks had to report their rates to monetary authorities and could fix rates within two points of the announced rate. In 1991 commercial banks pressured the government to reduce their 35 percent minimum reserve ratio.
Prior to liberalization measures, the Central Bank of Honduras (Banco Central de Honduras) maintained interest rate controls, setting a 19 percent ceiling, with the market lending rate hovering around 26 percent in late 1991.
With inflation hitting 33 percent in 1990, there was, in fact, a negative real interest rate, but this situation reversed in 1991 when rates were high relative to inflation.
Nine companies were registered with the exchange in 1991; in 1993 this number had grown to eighteen.
The Honduran government's medium-term economic objectives, as dictated by the IMF, were to have generated real GDP growth of 3.5 percent by 1992 and 4 percent by 1993.
In fact, GDP growth was 3.3 percent in 1991, 5.6 percent in 1992, and an estimated 3.7 percent in 1993.
The Honduran government and the IMF had set an inflation target of 12 percent for 1992 and 8 percent for 1993.
The actual figures were 8.8 percent in 1992 and an estimated 10.7 percent for 1993.
By 1992 only 55 percent of the Honduran population continued to live in rural areas.
Most land in Honduras is covered by mountains, giving rise to the country's nickname, "the Tibet of Central America." Nevertheless, the Honduran economy has always depended almost exclusively on agriculture, and in 1992 agriculture was still the largest sector of the economy, contributing 28 percent to the GDP. Less than half of Honduras's cultivable land was planted with crops as recently as the mid-1980s.
Most land under cultivation in 1992 was planted in bananas, coffee, and specialized export crops such as melons and winter vegetables. ===Agricultural policy=== The agricultural sector's output showed little or no growth between 1970 and 1985.
Agricultural credit and government support increasingly favored export crop producers at the expense of producers of basic food crops. The Honduran land reform process under President Callejas between 1989 and 1992 was directed primarily at large agricultural landowners.
The government also pledged to return to peasants land that had been confiscated by the Honduran military in 1983. An Agricultural Modernization Law, passed in 1992, accelerated land titling and altered the structure of land cooperatives formed in the 1960s.
In 1992, bananas and coffee together accounted for 50 percent of the value of Honduran exports and made the biggest contribution to the economy.
In 1992 shrimp and lobster jumped to 12 percent of export earnings.
Shrimp contributed $97 million in export sales to the economy in 1992—an increase of 33 percent over the previous year.
The government also assumed continued financial responsibility for the construction of a new airstrip in the area of timber extraction, upgrading facilities at Puerto Castilla and Puerto Lempira, and providing electricity at reduced prices to lumber concerns as part of the privatization package. Major legislation was passed in 1992 to promote Honduran reforestation by making large tracts of state-owned land more accessible to private investors.
The New York and Honduras Rosario Mining Company (NYHRMC) produced $60 million worth of gold and silver between 1882 and 1954 before discontinuing most of its operations. Mining's contribution to the GDP steadily declined during the 1980s, to account for a 2 percent contribution in 1992.
The country's total capacity in 1992 was 575 megawatts (MW), with 2,000 megawatt-hours produced.
To offset these increased rates for residential users, the National Congress initiated a system of direct subsidies that ran through 1992. == Secondary and tertiary industries== ===Manufacturing=== The country's manufacturing sector was small, contributing only 15 percent to the total GDP in 1992.
Asian-owned firms dominated the sector, with twenty-one South Korean-owned companies in export processing zones located in the Río Sula valley in 1991. The maquiladoras employed approximately 16,000 workers in 1991; another nine firms opened in 1992.
Construction contributed 6.0 percent to the GDP in 1992. ===Banking=== The Honduran financial sector is small in comparison to the banking systems of its neighbors.
United States exports to Honduras in 1992 were valued at US$533 million, about 54 percent of the country's total imports of $983 million.
Despite its status as a beneficiary of both the Caribbean Basin Initiative (CBI) and the Generalized System of Preferences (GSP)--both of which confer duty-free status on Honduran imports to the United States—Honduras has run a long-standing trade deficit with the United States. Total exports of goods and services by Honduras in 1992 was $843 million, of which about 52 percent went to the United States.
In 1993 average annual per capita income remained depressingly low at about $580, and 75 percent of the population was poor by internationally defined standards. Traditionally, Honduran economic hopes have been pinned on land and agricultural commodities.
As the November 1993 presidential elections drew closer, the political fallout of austere economic measures made their implementation even less likely.
Any hope for his party's winning the 1993 election was predicated on improving social programs, addressing employment needs, and appeasing a disgruntled, vocal public sector.
Real growth between 1989 and 1993 translated to mostly negative or small positive per capita changes in the GDP for a population that was growing at close to 4 percent annually. President Callejas attempted to adhere to conditions of desperately needed new loans.
The total public-sector deficit actually grew to 8.6 percent of the GDP, or nearly L1 billion, in 1991. The 1993 deficit expanded to 10.6 percent of GDP.
The Honduran government's medium-term economic objectives, as dictated by the IMF, were to have generated real GDP growth of 3.5 percent by 1992 and 4 percent by 1993.
In fact, GDP growth was 3.3 percent in 1991, 5.6 percent in 1992, and an estimated 3.7 percent in 1993.
The Honduran government and the IMF had set an inflation target of 12 percent for 1992 and 8 percent for 1993.
The actual figures were 8.8 percent in 1992 and an estimated 10.7 percent for 1993.
By 1993, 50 to 60 percent of the Honduran labor force was estimated to be either underemployed or unemployed. The government's acceptance of foreign aid during the 1980s, in lieu of economic growth sparked by private investment, allowed it to ignore the necessity of creating new jobs.
In the agricultural sector (which in 1993 still accounted for about 60 percent of the labor force), unemployment has been estimated to be far worse than the figures for the total labor force. Honduran urban employment in the early 1990s has been characterized by underemployment and marginal informal-sector jobs, as thousands of former agricultural workers and refugees have moved to the cities seeking better lives.
The official conversion rate of the lempira fell to US$1=L7.26 in December 1993.
Total outstanding external debt as a percentage of GDP fell from 119 percent in 1990 to 114 percent in 1991 and to 112 percent in 1993.
Most Honduran workers in 1993 continued to be employed in agriculture, which accounted for about 60 percent of the labor force.
Fifty-five percent of the farming population subsists on less than two hectares and earns less than $70 per capita per year from those plots, mostly by growing subsistence food crops. In 1993 only about 9–13 percent of the Honduran labor force was engaged in the country's tiny manufacturing sector—one of the smallest in Central America.
Those firms employ approximately 16,000 workers in 1991. About one-third of the Honduran labor force was estimated to be working in the service or "other" sector in 1993.
In 1993 approximately 15 to 20 percent of the overall formal workforce was represented by some type of union, and about 40 percent of urban workers were union members.
By 1987 about 750,000 hectares of Honduran land had been seriously eroded as a result of misuse by cattle ranchers and slash-and-burn squatters who planted unsuitable food crops. The Honduran government and two banana companies—Chiquita Brands International and Dole Food Company—owned approximately 60 percent of Honduras's cultivable land in 1993.
With the aid of affordable loans from foreign investors, more and more Honduran coffee growers are learning to produce high-value organic coffee for today's economy. The outlook for the sugar industry, which had boomed during the 1980s when Honduran producers were allowed to fill Nicaragua's sugar quota to the United States, seemed bleak in 1993.
Strikes by producers at harvest time in 1991 forced the closure of the Choluteca refinery for a short time but had little effect on the depressed long-term outlook for the industry. ===Nontraditional crops=== While the total value of export merchandise fell in 1990 and 1991 and had still not recovered in 1993 to its 1989 level, the overall agricultural sector output has grown somewhat because of growth in the sale of winter vegetables and shrimp.
The country's one small refinery at Puerto Cortés closed in 1993. Various Honduran governments have done little to encourage oil exploration, although substantial oil deposits have long been suspected in the Río Sula valley and offshore along the Caribbean coast.
(Petróleos de Venezuela, S.A.--PDVSA), Cambria Oil, and Texaco expressed interest in the construction of a refinery at Puerto Castilla in 1993, with production aimed at the local market. Gasolineras Uno is a Honduran gas stations company that has expanded its presence to include stores in most of Central America and in South America. Fuelwood and biomass have traditionally met about 67 percent of the country's total energy demand; petroleum, 29 percent; and electricity, 4 percent.
A value of $195 million to the Honduran economy from assembly industries in 1991—when the value of clothing exports was greater than that of coffee—was a compelling argument in favor of the shift, however. ===Construction=== High interests rates, particularly for housing, continued to hurt the Honduran construction industry in 1993, but danger from high rates was partially offset by some public-sector investment.
This rate remained standard until June 1993 when the minimum requirement was temporarily lifted to 42 percent.
Rates of 35 to 43 percent in 1993 were well above the inflation rate of 13 to 14 percent.
Nine companies were registered with the exchange in 1991; in 1993 this number had grown to eighteen.
As a result of favorable weather and market conditions beginning in 1995, however, the agricultural sector grew at a rate of 2.6 percent annually, slightly above the average for Latin America during that period.
Bananas, formerly the country's second-largest export until being virtually wiped out by 1998's Hurricane Mitch, recovered in 2000 to 57% of pre-Mitch levels.
These figures are impressive yet reflect production losses suffered by banana producers and the withholding of coffee exports from the market in an effort to fight steep price declines. Another major blow to Honduran agriculture came from Hurricane Mitch and its aftermath in 1998 and 1999.
The Honduran economy grew 4.8% in 2000, recovering from the Mitch-induced recession (−1.9%) of 1999.
Inflation, as measured by the consumer price index, was 10.1% in 2000, down slightly from the 10.9% recorded in 1999.
Using alternative statistical measurements in addition to the gross domestic product can provide greater context for the nation's poverty. The country signed an Enhanced Structural Adjustment Facility (ESAF) – later converted to a Poverty Reduction and Growth Facility (PRGF) with the International Monetary Fund in March 1999.
These figures are impressive yet reflect production losses suffered by banana producers and the withholding of coffee exports from the market in an effort to fight steep price declines. Another major blow to Honduran agriculture came from Hurricane Mitch and its aftermath in 1998 and 1999.
Bananas, formerly the country's second-largest export until being virtually wiped out by 1998's Hurricane Mitch, recovered in 2000 to 57% of pre-Mitch levels.
The Honduran economy grew 4.8% in 2000, recovering from the Mitch-induced recession (−1.9%) of 1999.
The Honduran maquiladora sector, the third-largest in the world, continued its strong performance in 2000, providing employment to over 120,000 and generating more than $528 million in foreign exchange for the country.
Inflation, as measured by the consumer price index, was 10.1% in 2000, down slightly from the 10.9% recorded in 1999.
The country's international reserve position continued to be strong in 2000, at slightly over US$1 billion.
Remittances from Hondurans living abroad (mostly in the US) rose 28% to $410 million in 2000.
Honduras (as of the about year 2000) continues to maintain stable macroeconomic policies.
In July 2000, Honduras reached its decision point under the Heavily Indebted Poor Countries Initiative (HIPC), qualifying the country for interim multilateral debt relief. Land appears to be plentiful and readily exploitable, but the presence of apparently extensive land is misleading because the nation's rugged, mountainous terrain restricts large-scale agricultural production to narrow strips on the coasts and to a few fertile valleys.
The Lempira (currency) was devaluing for many years but stabilized at L19 to the US dollar in 2005.
6.3% in 2007) reflected the general downturn in the world economy that year.
The Banco Central de Honduras (central bank) named the debilitation of global demand, and loss of dynamism in final consumer demand, as important factors in the slowing of Honduras's economic growth in 2008. The table here shows the slowing of growth in 2008 versus 2007 in various economies. ==World development indicators== The above graph reflects Honduras performance in the World Development Indicators since 2008 up to 2013.
1.00 (1980) The slowed rate of growth in 2008 (4%, vs.
The Banco Central de Honduras (central bank) named the debilitation of global demand, and loss of dynamism in final consumer demand, as important factors in the slowing of Honduras's economic growth in 2008. The table here shows the slowing of growth in 2008 versus 2007 in various economies. ==World development indicators== The above graph reflects Honduras performance in the World Development Indicators since 2008 up to 2013.
As of 2012 both industries are on the upswing.
The economy of Honduras is based mostly on agriculture, which accounts for 14% of its gross domestic product (GDP) in 2013.
The Banco Central de Honduras (central bank) named the debilitation of global demand, and loss of dynamism in final consumer demand, as important factors in the slowing of Honduras's economic growth in 2008. The table here shows the slowing of growth in 2008 versus 2007 in various economies. ==World development indicators== The above graph reflects Honduras performance in the World Development Indicators since 2008 up to 2013.
The information was extracted from the World Bank Data webpage ==See also== Poverty Reduction Strategy in Honduras Honduras and the World Bank ==References== ==External links== Coffee from Honduran Honduras Since the Coup: Economic and Social Outcomes, November 2013, report from the Center for Economic and Policy Research Tariffs applied by Honduras as provided by ITC's |ITCMarket Access Map, an online database of customs tariffs and market requirements. Honduras
The current amount exported by Honduras as of 2017 is $8.675 billion (USD$), with 34.5% of the said exports now going to the United States. ===Linkages to the United States=== As with most Latin American countries, Honduras's economy is closely tied to the US.
The FITH consisted of fourteen unions claiming about 13,000 members in the early 1990s. ==Agriculture and land use== In 2018, Honduras produced 5.5 million tons of sugar cane, 2.5 million tons of palm oil, 771 thousand tons of banana and 481 thousand tons of coffee, these being its main crops.
All text is taken from Wikipedia. Text is available under the Creative Commons Attribution-ShareAlike License .
Page generated on 2021-08-05