Price elasticity of Central American agricultural exports

The economies of the Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua) are largely dependent on four major traditional export products: bananas, coffee, cotton and sugar. The share of these products in total Central American exports, which is still close to 50%, only started to decline in the late 1980s. This paper explores the determinants of these four products’ production trends, and the importance of non-price-related economic and social factors and of man-made and natural disruptions is fully acknowledged. However, an attempt is made to use the ECLAC-Mexico database to estimate the supply price elasticities for the four products over the 1960-1990 period, testing simplified linear regression models which include only output prices as the relevant explanatory variables.