ABSTRACT
This chapter is concerned with why Central America was a late industrializer and what forces shaped the Central American Common Market (CACM). It deals with a brief description of the institutional machinery of the CACM and goes on to consider some of the anomalies in the tariff and fiscal arrangements which emerged and their implications for industrial structure. Much research has been carried out on industrial specialization within the CACM from the point of view of intra-regional trade. The Common External Tariff, consolidated and extended during the first decade of the CACM, provided useful protection for investors and eliminated some of the discrepancies between the protective structures of individual countries. A variety of factors helps explain why industrial development took place so late in Central America. A particular feature of Central American industrialization is its close association with the integration process.
