ABSTRACT
This chapter examines the empirical dimensions of the crisis, the maldistributive nature of the model and its external vulnerability. It explores external assistance requirements are estimated and presents multilateral and bilateral components of European Community (EC) aid towards the region. Economic cooperation between the EC and the five republics has come to focus increasingly on four areas: financial and technical cooperation, support for regional integration, improved trade relations and social and humanitarian aid. Fresh finance is required for the extra-regional import component of renewed Central American Common Market (CACM) trade as well as to help modernize the region's depleted capital stock. The chapter argues that the high growth rates achieved by the CACM countries in the 1960s and early 1970s were largely the result of favorable world market conditions of the time. Performance in the 1980s stands in sharp contrast to that achieved in the first two decades of the CACM and even in the 1950s.
