ABSTRACT
Economic cooperation is vital if the region is to accomplish the twin tasks of negotiating a durable peace settlement and revitalizing internal and external trade. Since intra-regional trade (IRT) is the main indicator of the state health of Central American economic integration, the chapter begins with a review of some hypotheses explaining the decline of such trade. It argues that adjustment policies based largely on non-tariff barriers to trade have resulted not only in trade contraction but also in a new geographical pattern of trade in which those countries whose share in total IRT has risen are those which were least committed to economic integration. In the 1980s, the integration process has shown a remarkable ability to survive despite the fact that the region has experienced one of the most convulsive periods in its history. But the setbacks experienced in the first half of the 1980s imply that the crisis is no longer merely one of expectations.
