The Economic, Environmental, and Political Strategies of Central American Economic Groups (completed)
Central America is going through a profound process of transnationalization of its economy involving the increased penetration of transnational companies (TNCs) in Central America, but also the transnationalization of several Central American companies.
About the project
This project focuses on how the process of transnationalization affects the strategies of the Central American economic groups (CAEGs), and what they will mean for the sustainable development of the region. More specifically the purpose of the proposed project is to study:
- What are the strategies of the CAEGs confronted with transnationalization?
- What can explain the different strategies?
- To what extent do these strategies contribute to sustainable development of the region, or deepen patterns of inequality, unsustainable use of resources, and political exclusion.
The project has three components: The first component focuses on the economic strategies of the CAEGs: their goals and strategies of transnationalization, and the impact of these. The second component focuses on the environmental strategies of the CAEGs: to what extent environmental management is an integral part of their operations, as well as their involvement in the regional environmental agenda. The third component focuses on the political strategies of the CAEGs confronted with the new challenges, aiming to understand the rationale for different strategies as well the degree to which they contribute to exclude other social forces.
The project is conducted in collaboration with the Norwegian Institute for Foreign Affairs (NUPI) and Universidad Nacional (UNA) in Costa Rica. Benedicte Bull at SUM is project leader and leads the work on the third component. Senior researcher Fulvio Castelacci at NUPI and Dr. Alexander López at UNA will lead the work on the first and second component respectively.
The literature and public debate about this is divided on the consequences of this transnationalization. Some argue that transnational companies cause destructive competition, expel local firms, and prevent new establishments, while the traditional powerful groups maintain their stronghold by diversifying their economic activities and enter into alliances with foreign capital. The result is a region characterized by deepening inequality and social exclusion.
Others, however, argue that this transnationalization involves a modernization of the Central American companies that can bring about modern, socially responsible businesses that contribute to the sustainable development of the region. They argue that foreign companies give an economic impetus to the local economy in terms of employment and production, with a potential for creating constructive competition, and that linkages with local firms have the potential of significant learning and technology transfer.