World Economic Cycles and Central American Political Instability

SINCE the 1950s there has been considerable debate about the impact of international economic forces on political and economic autonomy in the developing world. ¹ On the one hand, theorists of neo-imperialism argued that international capital imposed externally rooted class structures on developing countries to maintain social control of the population and to extract surplus. ² They maintained that this dependent relationship not only inhibited local capital formation, but also heightened political instability as an increasingly impoverished population challenged the dominance of local elites subservient to foreign interests. In contrast, modernization theorists argued that political instability in developing countries was not the result of economic dependence, but rather the consequence of the modernization process itself. ³ They asserted that development triggered instability as the population’s demands grew more rapidly than the capacity of political and economic institutions to meet them.