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Multi-dimensional Review of El Salvador

Strategic Priorities for Robust, Inclusive and Sustainable Development

image of Multi-dimensional Review of El Salvador

El Salvador has made significant development progress in the past 30 years. The end of the civil war in 1992 marked the establishment of a liberal democracy and an open export-led development model, which led to a reduction in poverty and inequality. However, with economic growth averaging a modest 2.4% in the years before the COVID-19 pandemic, and productivity growth of 0.1% over the past decade, the post-war model has not generated the economic momentum or the jobs that the country needs. Decisive action is necessary to kickstart more robust, inclusive and sustainable development. Based on a multi-dimensional analysis of development in El Salvador, this report makes four priority recommendations: 1) build the conditions for a productive transformation and modernisation of the economy; 2) increase the quantity, quality and relevance of education; 3) manage water resources better to deliver water and sanitation for all in a sustainable manner; and 4) modernise the State so it can effectively deliver key public goods, from security to education to health, and successfully steer the next stage in the country’s development.

English Also available in: Spanish

Overcoming cross-cutting obstacles to competitiveness and productivity growth in El Salvador

This chapter focuses on selected key issues that constrain productivity and profitability in El Salvador and provides analysis and policy recommendations to address them. First and foremost, it is essential to combat crime, and to mitigate its impact on business. Improving the quality of El Salvador's energy and transport infrastructure would reduce operating costs for private companies. Removing barriers to international trade and further deepening regional integration could stimulate El Salvador's exports. Reducing the country’s lengthy bureaucratic procedures could also boost productivity and private investment. Access to finance remains an obstacle for micro and small enterprises in El Salvador, which constitute the large majority of Salvadoran businesses. Accelerating digitalisation could lead to significant efficiency gains. Finally, innovation could bring benefits to the Salvadoran economy through the creation and diffusion of new and emerging production technologies.

English Also available in: Spanish

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