The Determinants of Economic Growth in the Northern Triangle from Central America: Preliminary Empirical Evidence

Abstract

This paper applies the foundations of economic growth theory to identify key macroeconomic determinants leading the economic growth in Guatemala, El Salvador and Honduras. These three countries are known as the Central America’s Northern Triangle. The motivation relies on the context of the implementation of the Plan for the Alliance of the Prosperity of the Northern Triangle due to the migratory crisis of child unaccompanied by parents that were found illegally in the board of the United States. The main findings suggest that population is the main driver of economic growth. This means that loss of human capital represents a huge loss of potential increase in economic growth. In addition, capital formation, openness of the economy, government expenditure and domestic savings were found as significant and huge determinants on economic growth.