www.sela.org/news_gen.asp?dd=17&mm=8&aa=2005 -
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Published on: 10/5/2004
Last Visited: 10/7/2005
"El Salvador has made many strong structural reforms in the last 10 years," said Mario Garza of the International Monetary Fund.Nevertheless, "foreign direct investment has been low," he said.Economists who have studied CAFTA's potential impact on the Salvadoran economy say that to see real benefits from the agreement, the country's government must first deal with a host of social challenges.
These issues include a high crime rate, poorly educated workforce and weak infrastructure in some parts of the country, according to a report co-written by Garza and released by the International Monetary Fund last week.The IMF also found that El Salvador needs to develop better oversight of its financial system and increase its national savings.
If CAFTA prompts the Salvadoran government to tackle those issues, the agreement could create a ripple effect that strengthens the country's economy and attracts foreign investment in many industries, economists said.
Industries that stand to gain include light auto-parts manufacturing and niche agriculture focused on food products indigenous to the country, Garza said.
The tourism industry also hopes to benefit from the trade agreement, he said.