How to Make Good Without the Canal

Wherever the United States decides to locate its new sea-level canal in Central America, the local economy will be dramatically affected-upwards. Virtually 100% of Panama's revenues ($90 million last year) are generated by the present canal. The new canal will unquestionably float similar benefits. But happy though the U.S. might be to see all the Central American nations so well-fixed financially, the new canal can only go in one place, and last week it looked as if that place would again be Panama-barring unforeseen treaty complications and further anti-U.S. riots like those of last Jan. 9.

The new canal will probably bring some fringe benefits to the general area. But the other five Central American republics will have to find their own routes to a rosy economic future. A new report by the Committee for Economic Development (C.E.D.). a private group of U.S. businessmen, suggests some guidelines.

Learning Means Earning. Limiting itself to Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador, the C.E.D. gave them high marks for forming a common market in 1960. "Central America has one of the most advanced movements towards economic integration to be found anywhere in the less developed world," noted the report. From 1950 to 1962 the gross national product in each country increased an average 4.5% each year: exports went up an average annual 5.1%.

Although things are moving, they aren't moving fast enough. Top priority should be given to education. "The only country to approximate the U.S. in the percentage of GNP earmarked for education is Costa Rica," says the C.E.D., with the result that "it has the largest per capita GNP of the region." Education should be pushed particularly on the primary levels. Employers should initiate on-job training programs, a practice not widely enough spread.

In the near future. Central America will remain predominantly agricultural, and while modern methods are used to produce major exports (bananas, coffee), not enough attention is paid to such staples as corn, beans and rice. The most successful farms are on large pieces of land, says the C.E.D., pointing out that 50% of Central America's agricultural output comes from such operations. Counseling against land-reform programs to break up going concerns, the report suggests that land hunger can best be satisfied by opening up unused government-owned lands.

Benefits for Bustlers. The C.E.D. urges the U.S. and other well-developed nations to help Central America by eliminating tariffs on tropical products. Even then, Central Americans will have to find much of their development money at home. Domestic interest rates should be more attractive, says the report, and "improved enforcement of tax laws is needed." Still, cautions the C.E.D., the recommended action "will not float Central America or anyone else along on a flood of rising trade. The opened markets will create an opportunity; the benefits will go to those who take advantage of them."

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