El Salvador - Industry

Industry

The creation of the CACM fostered development of industry in El Salvador during the 1960s by reducing intraregional trade barriers, which increased aggregate demand for manufactured goods. The Salvadoran and Guatemalan manufacturing sectors benefited from and conversely suffered the most when the CACM lost momentum after the 1969 Salvadoran-Honduran war. During the 1980s, however, industrial output, affected by guerrilla attacks on power plants and by reduced investor confidence, also suffered declines by an average of 0.7 percent each year between 1980 and 1986.

Manufacturing of consumer goods predominated in the industrial sector. About 50 percent of manufactured goods produced were either food products or beverages. Intermediate goods, such as chemicals and pharmaceuticals, increased in importance during the 1970s but still constituted only about 15 percent of manufacturing output in 1986. El Salvador also had small industries that produced tobacco products, petroleum products, clothing, textiles, wood products, and paper products. Construction was the second leading contributor to the industrial sector, but its contribution to GDP was considerably less than that of manufacturing.

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