Study title

Central America has traditionally been dominated by strong local economic actors - often economic groups with ownership interests in varoius sectors - in different alliances with states and transnational companies (TNCs). The opening and liberalization of the Central American economies (most recently through a free trade agreement with the United States and an association agreement with the European Union) has changed the political economy of the region signficantly. While it has engendered increased presence of foreign transnational companies it has also induced the Central American companies to internationalize themselves through a variety of strategies: by becoming regional rather than national companies, by entering into alliances with foreign TNCs and by searching for markets outside of the region. The choice of strategies has clear implications for the economic development of the region. The changing context also demands different environmental and political strategies of the same economic groups. This project has joined together a multi-disciplinary team with extensive experience from economic, environmental and political research in the region to study the strategies pursued by the Central American economic groups and their implications for the sustainable development of the region. It will have three components, each studying one aspect of the strategies of the groups through a combination of quantiative research and comparative case research. The main goal is not only to produce newknowledge about the actual strategies of the Central American economic groups and the implications of these, but also to understand the prospects for a sustainable development in the region and the conditions for development of local firms in developing countries in the context of a transnational economy.