ABSTRACT
In this case study; John A. Booth looks at the impact of foreign investment and economic growth on inequality in Central America. He briefly traces the economic history of the five nations that are the subject of his investigation, placing particular emphasis on the role of the Alliance for Progress and the Central American Common Market as stimulators of foreign investment and growth. In three of the countries, Booth is led to conclude, wealth was transferred out of the hands of the poor during the course of economic growth. In the other two, however; some redistribution in favor of the lower income sectors occurred. The principal difference between these two outcomes of development, argues Booth, is governmental policy. In those cases where the poor benefited from development, public policies had been implemented to promote that goal. Booth’s evidence reinforces the argument made by Adel man and Taft in Chapter 15 that public policy can mitigate the pernicious impact of development on the poor. Moreover, it suggests that dependency does not invariably foster inequality, but only does so when governments do not implement redistributive programs. Finally; the chapter makes a direct connection between the exacerbation of inequality on the one hand and the social unrest, violence, and revolution that have emerged in the region on the other.
