Opening a Developing Economy in the 21st Century: A Look at the Rural Salvadoran Perspective

Abstract

In recent decades there has been a trend for countries to begin establishing bilateral trade relations with one another, namely, free trade agreements. The result has been open economies that are economically tied to one another. In El Salvador, two policies are highlighted that tie it strongly to the United States: Dollarization and the Dominican Republic Central American Free Trade Agreement (DR-CAFTA). This paper analyzes the policy process, utilizing a mix of the Multiple Streams Framework (MSF) and Neoinsitutionalism; macroeconomic trends that have followed; and the perception of a sample population regarding their quality of life in the past five years. What was discovered was that the government of El Salvador, at the time when the policies were being negotiated, acted in a process that had much to do with a Neoinstitutional approach, while, simultaneously, following along the lines of the MSF. The policies have allowed for El Salvador to have a highly open economy, which has exposed it to being influenced more by the global economy. This exposure has seen increases in food and medicine prices that have affected the rural Salvadoran population. Concentrating on a small, rural sample population, the analysis highlights major worry among participants regarding a deteriorating quality of life.