OVERVIEW
Over the past decade, El Salvador has experienced low economic growth relative to other countries in the region. Lack of competitiveness has been driven by burdensome commercial regulations, and widespread violent crime. Foreign direct investment (FDI) has declined significantly over the past few years. Reflecting these challenging economic conditions, El Salvador has fallen sharply in major global economic rankings in the past years.
DESCRIPTION
USAID’s economic activities in El Salvador are aligned with the Alliance for Prosperity (A4P), the U.S. Strategy for Engagement in Central America (CEN) and Plan El Salvador Seguro (PESS)to address El Salvador's leading constraints to economic growth: crime and insecurity, and low productivity in international trade. USAID supports broad based economic growth designed to expand business employment and education opportunities to the most vulnerable populations in high-risk municipalities as identified by the Salvadoran governement. With cooperation from the private sector, USAIDs Higher Education for Economic Growth project is building alliances between industry and universities to promote research, innovation and a curriculum that addresses the needs of industry. By supporting quality higher education and establishing job training programs that align workforce skills with productive sector needs, USAID is helping to bolster the Salvadoran labor market.
USAID works with the Government of El Salvador and the private sector to create a favorable business environment that encourages investment and growth, improves the ability to take advantage of market opportunities and increases the production of exports - particularly for Small and Medium Enterprises (SMEs).
USAID promotes the adoption of sustainable production of agro-tradables to expand exports specifically focusing on cacao, a traditional crop from the region. The adoption of these practices will also help the country to mitigate the impact of global climate change. USAID actively builds public-private alliances with civil society, community organizations and the private business sector to sustain economic growth program efforts.
USAID fiscal policy programs help the Salvadoran government increase revenues by improving the efficiency of tax collection and by strengthening and professionalizing tax collection authorities. Finally, to address the causes of migration by youth, USAID projects are promoting new economic opportunities in future growth sectors of the economy and increasing workforce readiness as well as vocational opportunities. Increased employment and education for vulnerable citizens will strengthen efforts in security and promote safer and more prosperous societies.
USAID assistance:
- Increases government revenues for social investments through improved tax administration and greater transparency
- Improves effectiveness of business and export development services and helps Small and Medium Enterprises (SMEs) become more productive and competitive.
- Increases access to market information, business management, and technical skills training
- Encourages increased investment by the private sector which will foster broad-based economic growth
- Promotes trade facilitation under existing free trade agreements
- Promotes transport and border/customs integration
- Increases the production of key exportable agricultural commodities using sustainable production methods, including a national cacao value-chain to increase cacao exports.
- Improves workforce training and professional education to develop industry standards in the skills and competencies needed by private industry
- Strengthens the ability of higher education Institutions to develop a workforce that is responsive to private sector needs with relevant, high quality educational programs that contribute to economic growth.
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