How Globalization Is Impacting El Salvador

EL Salvador Signature Paper 

Globalization has been significantly beneficial because it has made it easier for businesses to access opportunities both locally and in foreign markets. Over the years, world economic growth has attracted attention. From the time explorers tried to locate good land to expand today's resources, the world economy has been significantly globalizing to modern times. Currently, technology is motivational in the economy of world modernization. El Salvador is among the countries that have globalized through various strategies in global business. Implementing these strategies has resulted in immense benefits, such as operating in diverse and international markets to understand the environment of worldwide business and economic growth. For El Salvador to efficiently collaborate with the U.S., there should be the definition of the goals of sorting the concerns of diversity in the two countries, processes of business adaptation into foreign markets, and the creation of collaborative connections

General Country Research 

The country selected for my research in El Salvador. It is a fascinating country of study on globalization based on the fact that it is developing and located in Central America. Another reason for my interest in this country is the country's current fast industrialization and development, thus decreasing its overdependence on coffee and general agricultural dominance (Baloyra, 2018). El Salvador is currently commencing its economic diversification through trade and links to financial development and the manufacturing sector expansion, thus curbing its continued thrives with increasing poverty rates, crime, and inequality.

When exploring a country, there are various systems that one is required to consider. These systems include; economic, cultural, political, and legal. Keeping these in mind will enable one to become aware of the country’s economic resolutions, know its place globally, and search for a collaborative mutual benefit.

The economic system of El Salvador was agriculture-dominated until the 1960s when the country experienced fast-growing industrialization. Regardless of the country’s economy being driven by agriculture, it must also undertake importation. The primary reason for importing food stems from the disproportionate land distribution issues that only favor commercial crops. Therefore, several peasants are forced to go without land and unable to undertake subsistence farming. The 1980-1990 civil wars affected the country by destroying its infrastructure and economy, which saw the U.S. supplying the government with economic aid and military support. The economy was revived from war effects through the signing of the 1992 peace treaty. In the mid-90s, the country had expanded the service sector industry and increased its agriculture exports amounts. Besides, there were several projects of reconstruction of dams for irrigation by the 2000s (Montgomery, 2018). In 2004, El Salvador signed a trade-free agreement with the U.S., which significantly boosted its income. In the late 90s, these developments were impacted by high oil prices, maquiladoras number declining, and natural disasters. These barriers made it difficult for El Salvador to settle its debts externally, and hence the country sought foreign aid. 

Culture is a significant factor in globalization as it determines how goods and services from a particular country adapt and are acceptable in the local market. El Salvador’s institutions of culture are found in the capital. The most important ones are supported by the state, Presidential, and National Theatres (Montgomery, 2018). National Theatre enables works performances by contemporary playwrights. Museums specializing in archeology and history are located in the capital, for example, El Salvador National History Museums and Guzman David National Museum. There are also sports and recreational facilities in the country. Notably, soccer/football is regarded as one of the most popular sports in El Salvador. Other sporting activities include; boxing and baseball. The country also practices numerous adventurous sports such as surfing, hiking, kayaking, Olympic games competitions, and fishing. 

The country also has the judicial system as one of the three constitutional government systems and has its activities overseen by the Supreme Court. Furthermore, the Supreme court is the highest in the land and is concerned with hearing and determining presidential election-related petitions. Other courts fall under the supreme court. El Salvador’s political system has it that universal suffrage is provided for all 18-year-old and above. The country's key political parties are; leftist Farabundo Marti National Liberation Front and Alianza Republicana Nacionalista (Montgomery, 2018). Several other parties exist, and the system of proportional party-list representation is observed in National Assembly elections. In electing the president, the aspirant must gather first-round majority votes to be declared the winner of presidential elections winner. In case the threshold is not met, there is a need for a runoff. The turnout of voters has been low generally, which has seen citizens eligible for about one-half of the population participating. The El Salvador 1983 constitution calls for a government that is representative that is divided into the executive (presidency and cabinet), judiciary (Supreme court and other courts), and legislature (unicameral). 

Advantages as a Global Player 

Globalization has enabled El Salvador, being a developing country, to emulate the industrialized countries by diversification, developing manufacturing, expansion of the economy, and living standards improvement. 

Organizations that outsource from El Salvador improve technology and create jobs and thus economic growth through trade initiatives. 

Social justice advancement through globalization on an international scale through the protection of human rights has been made possible 

Disadvantages 

Globalization is a downturn for the country’s economy as it can negatively impact the nation if the collaborating country’s economy is doing poorly. 

Major squeeze on the economy of the middle-class country, El Salvador. 

Increasing instances of homogenization. 

Country Current Economy Research 

El Salvador has numerous critical drivers of its economy. Hydroelectricity projects are an essential part of the economy as they meet the country's power needs, and power is sold to neighbouring nations. Besides hydropower, the country is also rich in agricultural products such as coffee, maize, cotton, sugarcane, fish, and forestry. Valuable wood is from laurel, mahogany, nispero, which is used in furniture manufacturing. Medical gums and antiseptics are manufactured from balsa tree, which yields resin and lumber for this purpose and fuel. Fishing is commercialized through government regulation, thus creating the earnings on exports for the country.

Industries include:

Manufacturing industry 

The manufacturing industry accounts for a more significant part of El Salvador’s GDP (Gross Domestic Product). Examples of manufacturers in the country are organic fertilizers, cement, canned foods, beverages, pharmaceuticals, leather goods, chemicals, electronics, and petroleum products. 

Trade Industry 

The key partner in trade for El Salvador is U.S. Almost all imports of El Salvador are reexport used especially the maquiladoras produced (Majava, Isoherranen, & Kess, 2013 ). Other imports for this country include; foodstuffs, products of petrol and chemical, parts of machines. 

Services Industry 

The service industry contributes to almost three-fifths of El Salvador GDP. During the civil war in the country, the tourism industry saw a significant decline. Since then, this industry has been rising rapidly, thus contributing to the national income source. El Salvador's economy has relatively experienced GDP growth at a slow rate compared to other developing countries. The U.S. dollar integration hasn’t improved the economy's state as expected (Gwynne, 2017). Income distribution inequalities constitute a significant problem faced by this country. This has left a popular majority below the line of poverty due to aggregated lower incomes. The more affluent class approximately earns ten times as much as the poorest. The nationalization of the US dollar has incorporated interest rates that are more downtrends. This contributes to credit securing for car/house buying. 

Current U.S. Economy Overview 

The U.S. is the largest world economy. The country’s GDP growth rate recorded a negative result of the Coronavirus pandemic, which increased the inequality levels and decreased infrastructural developments, hindering its potential growth. The US's labor markets were primarily affected by the pandemic due to the closure of several industries due to economic strains and thus leading to increased unemployment rates. This also affected the US budget's general deficit that saw it recording a level of about 15% due to the effects of COVID-19 mitigation measures adopted by the country. There has been a recovery in the economic expansion of the country in this year’s third quarter. The economy is booming at a slow rate following the 2020 economic recession. 

The factors that are prominent to the growth of the US economy include: 

Technology- the USA experiences extensive growth in innovation and technology. Technology improves the levels of productivity and contributes to the development and growth of the economy by factories producing more at a relatively lower cost. Technology results in long-run sustained growth. 

Availability of Labor- population growth implies that more employees will be available and thus increased workforce. The US has a relatively higher population labor market. 

Global Collaboration Opportunities 

The foreign boost of the U.S to El Salvador is subjected to the security of the citizens, growth in the economy, government services that are improved, fighting corruption, governance, repatriation support, efforts of reintegration. The two countries co-exist in bilateral economic relations. They’re both members of Unites States-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). CAFTA-DR's main objective is investment and trade facilitation and regional integration enhancement through tariffs and other trade barrier eliminations, reducing services barriers, markets opening, transparency promotion. CAFTA-DR has an investment chapter with similar commitments as stated in the U.S. agreements of investment typically basing on bilateral negotiations (Lyon, 2014). Several organizations belonging to the U.S have established a permanent commercial base in El Salvador or represented by their representatives. El Salvador imports from the US include; aircraft, petrol, cotton, soybeans, and equipment. El Salvador exports to the US involve agriculture products (tea, sugar, and coffee) and apparel (77%). The Salvadorians who work in US remittances contribute up to 21% of El Salvador's GDP. 

One new recommendation for beneficial mutual collaboration between the US and El Salvador would be; short-term establishment of labor markets, particular bilateral office of the coordinator, negotiation of bilateral joint benefiting workforce agreements, and strategy for outreach development for legal migration pathways (Bosworth & Collins, 2010). In the long-term, the two countries should develop new and revised bilateral treaties concerning the global partnership skill model for post-COVID economic recovery facilitation. 

There are several benefits that the two countries could experience through the above-recommended opportunity for mutual collaboration. There is no agency, bureau, or office designated with the policy creation responsibility, projects designing, or execution of developments and migration programs. Establishing the coordinator's labor markets' bilateral particular office will provide for a negotiating internal hub on bilateral workforce treaties in El Salvador's respective ministries. These hubs would coordinate US agencies of government for coherence establishment between priorities on international and domestic policies. Negotiation of bilateral mutual benefiting workforce agreements would foster successful internal cooperation, thus ensuring the impact of workforce markets is evaluated and the connection between the regions externally (Sharif et al., 2020). The strategy for outreach development for legal migration pathways will limit the immigrations that are irregular. Such irregular immigration makes people engage in black market businesses in either of these countries. In the long-term, the two countries should develop new and revised bilateral treaties concerning the model of global partnership skill for the need of post-COVID economic recovery facilitation to sort out the shortages in labor and provision of finance and technology to revive the economies from the impact of the global pandemic, COVID-19. 

The agricultural industries in the U.S stand to benefit from the collaboration that is mutually benefiting between the US and El Salvador. El Salvador mainly produces agricultural products such as coffee, tea, and sugarcane. Exporting these commodities to the US will ensure these industries in the US will benefit. 

Conclusion 

In conclusion, the need for cooperating globally among nations is seen as continuous in the world's economy. The US economy being open has attracted many manufacturers globally. Economic regional corporation integration has resulted in countries being more competitive and efficient due to the shared benefits in economies' different sectors. Developing countries are taking up the opportunity to collaborate with those that are already set to boost their economy, eradicate the inequalities resulting from poverty, and improve their technological developments for increased productivity. El Salvador is a developing country. Its corporation with the US makes it more developed economically by developing its industries, for example, manufacturing, trade, and service. 

References 

Baloyra, E. A. (2018). El Salvador in transition . UNC Press Books.

Bosworth, B., & Collins, S. M. (2010). Rebalancing the US economy in a post-crisis world .

DeLugan, R. M. (2012). Reimagining national belonging: Post-civil war El Salvador in a global context . University of Arizona Press.

Gwynne, R. N. (2017). Industrialization and urbanization in Latin America (Vol. 4). Routledge.

Lyon, S. (2014). Fair Trade Towns USA: growing the market within a diverse economy. Journal of Political Ecology , 21 (1), 145–160.

Majava, J., Isoherranen, V., & Kess, P. (2013). Business collaboration concepts and implications for companies. International Journal of Synergy and Research , 2 (1–2).

Montgomery, T. S. (2018). Revolution in El Salvador: From civil strife to civil peace . Routledge.

Sharif, A., Aloui, C., & Yarovaya, L. (2020). COVID-19 pandemic, oil prices, stock market, geopolitical risk, and policy uncertainty nexus in the US economy: Fresh evidence from the wavelet-based approach. International Review of Financial Analysis , 70 , 101496.