Dbq Essay On El Salvador

“ Of peace and in supreme happiness, El Salvador always nobly dreamed of...to keep...her greatest glory.” Such phrases from El Salvador’s national anthem promising rapture only demonstrates the hypocrisy of a country where, according to the 2007-2008 Human Development Report on this Central American country, 81% of the Salvadoran population earned low wages. Compounding this, Salvadorans lived surrounded by grotesque violence. Source A, FRED’s graph on Real GDP at Constant National Prices for El Salvador, reflect that in 2005, the GDP was $41,000 million and had risen to $45,000 million in 2008. However, between 2008 and 2009 the nation suffered a rough recession with GDP for 2009 falling to $44 million. This downturn was due to governmental

and market failure making it impossible to obtain the optimum mix of output between 2008 and 2009. According to an article by Raul Gutierrez published by Inter Press Service, as a result, during 2008 and 2009, the reality within El Salvador was comprised of, “ Eating less...the only option left to the poorest...in El Salvador.” Within that article, Salvadorans were quoted as saying“...what I used to buy with 200 dollars now costs 300...the money that bought a gallon of milk before only buys half a gallon now.” Such remarks reflected the inflation that occurred during the 2008-2009 recession, meanwhile, wages did not ascend. Rising prices of goods contributed to the economic downturn because the money people owned had little purchasing power, thus causing a decrease in demand for the exorbitantly priced commodities. Having people demand fewer goods caused businesses to start supplying less; reduced production of supply led to job layoffs and a rise in unemployment. Having people laid off bespoke that individuals possessed less money to spend in the market. This scenario reflects Keynes' negative multiplier effect which prevailed within El Salvador between 2008 and 2009.
Reasons behind the growing prices began because of the trade deal between the USA and El Salvador. In an attempt to improve global trade, in 2006, El Salvador signed the CAFTA agreement with the USA. According to a report published by Central America Department and Office of the Chief Economist Latin America and Caribbean Region, “New analysis of the first-order welfare impacts of DR-CAFTA in... El Salvador indicates that the vast majority of households in these countries stand to gain...68 percent of Salvadoran households...were found to be net consumers of the basket of sensitive agricultural commodities who can be expected to benefit from DR-CAFTA-related price changes.” When the CAFTA was implemented, consumers from El Salvador bought goods less expensive goods that were imported into El Salvador, this helped them afford more products.
This dependence on the agreement for El Salvador to export and import goods to and from the USA caused the Salvadoran recession.

Source B, provided by a report published by Central America Department and Office of the Chief Economist Latin America and Caribbean Region, reflects how during the time of El Salvador’s recession of 2008 to 2009, El Salvador was still purchasing necessary goods from the United States. However, the amount of money El Salvador utilized for purchasing imports was not brought back in by revenue from the exports. From source C, provided by Central America Department and Office of the Chief Economist Latin America and Caribbean Region, readers can recognize that during the same time period, the number of goods exported by El Salvador decreased. Since El Salvador stopped exporting to the USA in 2008, El Salvador began to produce less. This resulted in static wages for some and job loss for many others. Those workers who still had jobs now faced reduced purchasing power and those that had been fired had no money to spend in the economy; the negative multiplier effect prevailed causing economic deterioration. The USA stopped demanding goods from El Salvador due to the fact that they were facing a recession too between 2008 to 2009. This resulted in a decline of supply production within El

Salvador.
The Salvadoran government’s failure to fostering economic growth contributed to the sustained deterioration of the recession in 2008.

Since El Salvador endured through a decrease in exports, to remedy this problem El Salvador would have had to begin relying on businesses within the country to foster economic growth. Unfortunately, Justice Rodolfo Gonzalez Bonilla, from the Supreme Court in El Salvador, conveyed to CSIS during an armchair discussion that due to the government's lack of enforcement of the rule of law, businesses could not prosper. Bonilla asserted, that corruption, along with the diminution of hope in waiting for the government to control the proliferation of murder, made citizens doubtful towards their government. Individuals lived apprehensive existences, and to add to the burden, Bonilla stated that business owners were expected to contribute monthly quotas to the preeminent gangs or else these gangs would murder them. The despondency of the people and the fear towards gangs who threatened business owners contributed to the curtailment of incentive within El Salvador to invest in creating and sustaining businesses. This helped cause no economic growth which made it harder for El Salvador to improve economically and escape the

recession.
From this analyzation, readers can discern how the lack of governmental enforcement against dominating gangs, the distrust towards the Salvadoran government, and the rise on prices engendering from the CAFTA agreement led El Salvador’s economy to deteriorate and suffer a recession in 2008. El Salvador’s efforts to vouchsafe the promise of happiness for its’ citizens was not reflected upon the economic recession in 2008.