Elsalvador Is a Country with a Mixed Economy and Mixed Emotions About Its Economic Status

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El Salvador is a country with a mixed economy and mixed emotions about its economic status. “A 12-year civil war, which cost about 75,000 lives, was brought to a close in 1992 when the government and leftist rebels signed a treaty that provided for military and political reforms.” (CIA.gov) The United States government played a questionable and decisive role in the war and has remained a major influence in the Central American nation ever since. According to the BBC News, the war was initiated by “gross inequality between a small and wealthy elite, which dominated the government and the economy, and the overwhelming majority of the population, many of whom lived - and continue to live - in abject squalor.” (bbc news) Though the war ended in 1992, and its devastating aftermath remains, the resulting peace agreement brought important political and economic reforms. The economy of El Salvador is based on the U.S. dollar, including an invisible economy—The economy depends heavily on the money sent home by Salvadorans living in the US. “Remittances from Salvadorans working in the United States are an important source of income for many families in El Salvador. In 2010, the Central Bank estimated that remittances totaled $3.5 billion. UN Development Program (UNDP) surveys show that an estimated 22.3% of families receive remittances.” (http://www.state.gov/r/pa/ei/bgn/2033.htm) “On January 1, 2001, the U.S. dollar became legal tender in El Salvador. The economy is now fully dollarized.” (http://www.state.gov/r/pa/ei/bgn/2033.htm) However, cash exchange remains mixed with the Salvadoran colon being used by street vendors, and the U.S. dollar exclusively accepted in all official business and larger retail outlets. The use of the colon is in part a resistance to the U.S. dollar, due to a general distrust of the U.S. government, and the perception that the conversion to the U.S. dollar pushed prices higher overnight. “The colon had been produced in 1, 2, 5, 10, 25,...
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