El Salvador Economy and History

By | September 22, 2021


The vegetation is that typical of the Isthmian area, but the natural mantle, essentially savannah, is very small in such a populous country. In fact, since the beginning of the twentieth century, many green areas have been demolished to make way for human settlements: at the beginning of the year 2000, 12.79% of the national territory remains covered by forests and deforestation continues to constitute an environmental problem of national interest. In the surviving forest strips of the coastal strip there are ebony, mahogany, cedar, various species of palms and the balsam of Peru (Myroxylon pereirae) while mangrove forests are found near the lagoons and mouths; Once a very widespread and exploited plant was Indigofera anil, from which indigo is extracted. Oaks, pines and cedars appear at various altitudes in the tierras templadas. Numerous birds populate the coastal areas and forests: herons, toucans, pelicans, quetzals, hummingbirds, various species of the genus Dendroica; among the reptiles there are four species of turtles considered at risk: the green turtle (Chelonia mydas), the hawksbill turtle (Eretmochelys imbricata), the olive turtle (Lepidochelys ulivacea) and the leatherback turtle (Dermochelys coriacea)); there are numerous species of butterflies while among the mammals it is possible to observe spider monkeys, anteaters, possums, porcupines, agutes and ocelots. The two national parks, the El Imposible National Park and the Montecristo National Park, are located in the northern region; there are also 60 protected areas at municipal and private level; overall, however, the protected areas cover only 2.151% of the territory.


Industries essentially concern the processing of local products. Although they are among the most dynamic in Central America, they contribute only 27.3% to the production of GDP (2018); the secondary sector employs 21.7% of the active population. According to allcountrylist, the main industry is the food industry; other important plants, after the factories, are the textile ones (cotton mills), to which are added establishments for the processing of coffee, breweries, oil mills, sugar factories, tobacco factories, then shoe factories, cement factories. There are small chemical (especially for the production of fertilizers) and petrochemical (refinery) factories. Alongside these industries, maquiladoras have spread, activities focused on the assembly of products made abroad and financed by foreign capital. § Mineral resources are practically nil (apart from small quantities of gold and silver, in the Montecristo area); the electricity produced derives mainly from water plants, of which the largest is that of the Río Lempa. The subsoil is mainly explored for the search for geothermal energy fields (in 2007, in Berlin, a plant built in collaboration with the Italian company ENEL was inaugurated).


The foreign trade movement takes place mainly with the United States, then with some Central American countries such as Honduras, Guatemala, Nicaragua and Mexico. Exports mainly concern commercial crops, such as coffee, cotton (fiber and textiles), sugar and fish, while imports are essentially made up of raw materials and large-scale industrial products. The trade balance is negative and feeds a now chronic deficit: exports cover only just over half of imports. Overall, the tertiary sector accounts for 66.3% of the national GDP (2018). § As regards internal communications and commercial traffic, the country is crossed by a network of roads that in 2011 covered only 7,298 km, consisting mostly of the Salvadoran section of the Carretera Panamericana and of which only one fifth is asphalted; this makes the road network entirely viable only during the dry season. The railways extend for a few hundred km (555 in 2006) and connect the main centers, crossing the entire national territory. Among the ports, we remember Acajutla, Puerto de la Union, Punta Gorda. Air traffic is mainly managed by the airport of San Salvador (Aeropuerto Internacional de Cuscatlán or Aeropuerto Internacional de Comalapa. In June 2021, El Salvador gave legal tender to the bitcoin cryptocurrency, becoming the first state in the world to make this choice.


Inhabited by the Chorotegas population, El Salvador was occupied by the Spaniards during the expansion phase that characterized their Conquest after the successes achieved by Hernán Cortés in Mexico. The city of San Salvador was founded by Pedro de Alvarado around 1525; the Central American sector was incorporated into the Capitanía General of Guatemala, in turn dependent on the Viceroyalty of New Spain and the latter followed the fate until the emancipation from colonial rule. In 1823 Central America proclaimed its independence through a federative bond that linked five countries (Guatemala, Costa Rica, Nicaragua, Honduras and El Salvador). When, in 1839, this union broke up and each of the members acquired their own individuality, El Salvador saw the same land oligarchy that had directed it under the Spanish crown confirmed in power. Few families held all the resources; the greatest proceeds were offered by coffee and other products of the earth. This socio-economic structure, which kept Indios on the lower rungs while offering intermediate possibilities to mestizos, it found its political counterpart in corrupt and authoritarian governments. The bipartisanism instituted by liberals and conservatives resulted in a compromise of form. However, the conservatives came to power in 1865, after the death of the liberal president Gerardo Barrios, and they remained there until 1932.

El Salvador Economy