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The Socioeconomic Implications of Dollarization in El Salvador

Published online by Cambridge University Press:  02 January 2018

Marcia Towers  and
Silvia Borzutzky
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Abstract

This study argues that the costs associated with El Salvador's dollarization clearly outweigh the benefits and that the decision to dollarize was prompted not only by the need to promote economic growth, but also by the impluse to serve the interests of the financial sector and the large entrepreneurs who control the ruling ARENA party. Although the policy facilitates investment and international financial transactions, it has a negative effect on the poor by increasing inequality. To develop this argument, the authors discuss the socioeconomic and political situation in El Salvador at the time of dollarization, examine the Law of Monetary Integration, and analyze die effect of the dollarization policy on the poor.

Type
Research Article
Information
Latin American Politics and Society , Volume 46 , Issue 3 , Autumn 2004 , pp. 29 - 54
Copyright
Copyright © University of Miami 2004

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