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Economic Development of Central America Econ. 4200 - Spring 2004 – Dr. Taylor - page 128 / 153

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While in the short run poverty and inequality has become worse, there is a substantial literature suggesting that if the Central American countries can maintain genuine participatory democracy for a sufficient period of time, social reform will gradually appear.

And while your book says something to the contrary on page 234, more recent studies show a strong correlation between “real” democracy and economic growth.

[1] This is because democratic institutions support and strengthen the rule of law; leading to the enforcement of property rights, the protection of individual rights, punishing corruption and increasing the rewards from being entrepreneurial.

Of course this is a long, slow process and the entrenched elites who benefit from the working rules of the old system will resist change, as well as act to subvert change, every step of the way.

Yes, the assumption of “trickle down” economics is flawed yet with FDI, NGO activities, along with public attention to the basic building blocks of a productive life (sanitation, clean water, access to health care and education, reducing hunger) most of the poor can benefit within this framework.

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