ECONOMIC CORRIDORS TO PROMOTE TRADE AND
AUGUST 2022
i
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
MOBILITY AND TRANSPORT CONNECTIVITY SERIES
ECONOMIC CORRIDORS TO PROMOTE
TRADE AND SUSTAINABLE DEVELOPMENT
IN CENTRAL AMERICA
Aiga Stokenberga, Eric Lancelot, Ana Silvia Aguilera,
Gonzalo Martinez Torres, and Ignacio Miro
ii MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
© 2022 Transport Global Practice
International Bank for Reconstruction and Development / The World Bank
1818 H Street NW, Washington DC 20433
Internet: http://www.worldbank.org/transport
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iii
Contents
Foreword................................................................................................................................................................................. vi
Acknowledgments...........................................................................................................................................................viii
Executive Summary............................................................................................................................................................xi
1. The Unrealized Trade Potential of Central America........................................................................................ 1
Regional Trade Profile................................................................................................................................................................................................. 2
Trade Costs and Barriers............................................................................................................................................................................................. 4
Potential for Intraregional Trade Growth................................................................................................................................................................. 6
2. Economic Corridors......................................................................................................................................................10
The Concept................................................................................................................................................................................................................ 11
The Economic Benefits.............................................................................................................................................................................................. 14
Identification of Economic Corridors in Central America...................................................................................................................................... 16
Economic corridors.................................................................................................................................................................................................... 19
Agricultural corridors ............................................................................................................................................................................................... 22
Quality of Transport and Logistics in the Identified Economic Corridors........................................................................................................... 26
3. Exposure of the Identified Economic Corridors to Climate and Seismic Risks...............................53
4. Addressing the financing aspects of regional corridor development.................................................59
Macroeconomic and Fiscal Context......................................................................................................................................................................... 60
Global Experience with Financing and Structuring of Corridor Projects............................................................................................................ 60
Financing and Structuring of Infrastructure Projects in Central America........................................................................................................... 61
Global Experiences of Innovation in Mobilizing Private Capital........................................................................................................................... 63
5. The way forward: strategic priorities for Regional Economic Corridor
Development in Central America..........................................................................................................................65
iv MOBILITY AND TRANSPORT
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Box
Box 1.1. Priority Intraregional Value Chains................................................................................................................................................................... 7
Figures
Figure E.1. The Economic/Development Corridor Path............................................................................................................................................... xii
Figure E.2. Methodological Approach to Identify Cross-Border Economic and Agricultural Corridors in Central America.............................. xiii
Figure 1.1. Central America: Total Exports..................................................................................................................................................................... 3
Figure 2.1. Elements of Transport Corridors versus Economic Corridors................................................................................................................ 11
Figure 2.2. The Economic/Development Corridor Path.............................................................................................................................................. 12
Figure 2.3. Key Institutional Steps for Economic Corridor Development in Central America................................................................................ 13
Figure 2.4. Methodological Approach to Identify Cross-Border Economic and Agricultural Corridors in Central America.............................. 19
Figure 2.5. Crop Production Volumes in the Identified Agricultural Corridors across Central America............................................................... 24
Figure 2.6. The Proposed Development Pole of Liberia in Costa Rica along the Managua–Guanacaste Route................................................. 25
Figure 2.7. Industrial Free Trade Zones and Service Parks of El Salvador................................................................................................................ 32
Maps
Map E.1. Main Identified Cross-Border Economic Corridors in Central America...................................................................................................... xv
Map E.2. Main Identified Cross-Border Agricultural Corridors in Central America.................................................................................................. xv
Map 2.1. Nighttime Light Intensity (Production Intensity Indicator) and Density of All Companies in Production
Sectors in Central America.............................................................................................................................................................................. 18
Map 2.2. Main Identified Cross-Border Economic Corridors in Central America..................................................................................................... 20
Map 2.3. Intensity of Cash Crop Production and Density of Enterprises in the Agricultural and Food
Production Sectors in Central America.......................................................................................................................................................... 22
Map 2.4. Main Identified Cross-Border Agricultural Corridors in Central America................................................................................................. 23
Map 2.5. Road Infrastructure of the Puerto Barrios–Puerto Cortés–San Pedro Sula–Metapán–Tegucigalpa Economic Corridor.................... 27
Map 2.6. Road Infrastructure of the Guatemala City–San Salvador Economic Corridor......................................................................................... 31
Map 2.7. Road Infrastructure of the Gulf of Fonseca Economic Corridor................................................................................................................. 35
Map 2.8. Road Infrastructure of the Tegucigalpa–Estelí–Jinotega–Matagalpa Economic Corridor ...................................................................... 37
Map 2.9. Road Infrastructure of the El Progreso / Zacapa / Izabal–Santa Barbara /
Cortes / Yoro / Atlántida / Colon Agricultural Corridor............................................................................................................................... 40
Map 2.10. Road Infrastructure of the Escuintla / Santa Rosa / Jutiapa–Ahuachapán / Sonsonate Agricultural Corridor................................... 43
Map 2.11. Road Infrastructure of the El Paraíso / Choluteca–Chinandega / Estelí Agricultural Corridor............................................................. 45
Map 2.12. Road Infrastructure of the Managua / Carazo / Masaya / Granada / Rivas–Guanacaste Agricultural Corridor................................ 47
Map 3.1. Illustrated Differences in the Risk Exposure of the Identified Economic Corridors in Central America............................................... 57
Tables
Table E.1. Qualitative Assessment of the Future Intervention Priorities for Each of the Economic Corridors in Central America.................. xvii
Table 3.1. Summary of Hydrometeorological and Seismic Risk Affecting the Identified Economic Corridors.................................................... 55
Table 5.1. Qualitative Assessment of the Future Intervention Priorities for each of the Economic Corridors in Central America................... 70
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
v
Foreword
vi MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
The trade patterns of countries in the Central America percent after taking into account free trade agreements,
region have evolved over the years, both in terms of nontariff barriers to trade mean, on average, Central
what they trade and who they trade with. The share of American imports pay an additional tariff of close to 18
intraregional trade—or trade within Central America percent. Trade costs for the region’s countries exceed
itself—has fluctuated since the beginning of the first sig- those in some of the most remote and landlocked
nificant regional integration agreements in the 1960s, African countries and represent a particularly high share
but has generally increased. Today, Central America is of the non-value-added business expenditures in the
its own second biggest trade market, after the United most transport-dependent sectors, such as agriculture
States. However, although intraregional trade is high in and food products, which are the core source of liveli-
some sectors, it is below its potential by an estimated hoods for millions of Central Americans. The transport
30 percent. We also recognize an opportunity to shift to sector must rethink delivery of regional connectivity in
higher value-added products and more regionally inte- Central America in a more efficient, resilient, and region-
grated value chains, away from the primary goods and ally coordinated manner and be more strategic about
basic manufactures that have continued to dominate which regional transport corridors to invest in for the
Central America’s internal trade despite some broaden- biggest impact.
ing of the spectrum in recent years.
This report offers a fresh perspective on the transport
Regional integration offers larger markets and allows and logistics connectivity and trade facilitation priorities
small open economies, such as those in Central America, in Central America, by applying the concept of regional
to reach a bigger pool of consumers and intermediate economic corridors as a comprehensive approach for
goods suppliers, supporting increased specialization promoting intraregional trade and priority value chains,
and economies of scale. The importance of strengthen- and by leveraging innovative “big” data and spatial
ing regional trade integration via improved transport analysis tools to identify the corridors with the biggest
connectivity and a complementary set of spatially potential economic and poverty reduction benefits. In
coordinated investments is yet further magnified in the doing so, the report provides detailed policy recommen-
context of the COVID-19 recovery. The global health dations regarding the needed transport and logistics
and economic crises showed the vulnerability of supply infrastructure, trade facilitation and customs policies,
chains across not only Latin America, but also many and other complementary policies, including reforms
high-income regions; they have also demonstrated needed in the trucking sector and interventions that can
regional markets can serve as an important alternative help improve road safety and security.
and safety cushion in a context of temporary shocks in
global demand. We hope the report’s findings will help guide many
future World Bank operations across a number of
Transport connectivity is critical for economic recovery sectors and look forward to working closely with Central
from the pandemic and the region’s overall economic American governments, other development partners,
growth over the long term, and yet transport costs and and the private sector to deliver solutions that will help
nontariff trade barriers in Central America remain high. unlock the full potential of the region’s cross-border
While the average applied tariff in the region is only 2 economic development poles.
Franz Frees-Gross Michel Kerf
Regional Director, Infrastructure Country Director
Latin America and the Caribbean Central America Countries
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
vii
Acknowledgments
The preparation of the World Bank study was led by Aiga Stokenberga (Senior Transport Economist, and Global
Co-Lead, Economic Corridors and Regional Integration Solution Area) and Eric Lancelot (Program Leader), with
extensive inputs provided by the following colleagues: Ana Silvia Aguilera (Consultant), Gonzalo Martinez Torres
(Financial Sector Specialist), and Ignacio Miro (Consultant). Overall guidance was provided by Michel Kerf (Country
Director), Franz Drees-Gross (Regional Director), and Nicolas Peltier (Practice Manager). Administrative assistance
was provided by Patricia De la Caridad Marrero (Team Assistant).
The study was prepared in close coordination with the Secretariat for Central American Economic Integration
(SIECA), in particular, Roberto Salazar, Cesar Castillo Morales, Jose Vinicio Martinez Ardon, and Eduardo Espinoza.
The team received written and verbal input and endorsement of the adopted methodological approach from
the Ministries of Transport and other institutional stakeholders of Costa Rica, El Salvador, Honduras, Guatemala,
Nicaragua, and Panama, as part of a series of high-level and technical workshops held between November 2020 and
December 2021.
The analysis also benefited from parallel ongoing analytical and advisory work conducted by World Bank and IFC
colleagues, including Daniel Benitez (Senior Transport Economist), Abel Lopez Dodero (Senior Transport Specialist),
Mayra Del Carmen Alfaro De Moran (Senior Operations Officer), and Pedro Rodriguez (Program Leader). The team
would also like to thank the valuable feedback received from peer reviewers Anne Cecile Souhaid (Senior Transport
Specialist), Muneeza Mehmood Alam (Senior Transport Economist), Olivier Hartmann (Senior Private Sector
Specialist), and Gylfi Palsson (Lead Transport Specialist).
viii MOBILITY AND TRANSPORT
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Abbreviations and acronyms
AADT average annual daily traffic IDB Inter-American Development Bank
CA Central America IFC International Finance Corporation
CABEI Central American Bank for Economic Integration IFPRI International Food Policy Research Institute
CAF Development Bank of Latin America IMF International Monetary Fund
CAPTAC-DR Regional Technical Assistance Center for Central LAC Latin America and the Caribbean
America, Panama and the Dominican Republic LAICA Agricultural and Industrial Sugar Cane League
CAT-DDO catastrophe deferred drawdown option (Costa Rica)
CAUCA Central American Uniform Customs Code LPI logistics performance index
CCRIF Caribbean Catastrophic Risk Insurance Facility MAG Metropolitan Area of Guatemala
CEPA Autonomous Executive Port Commission MCLI Maputo Logistics Corridor Initiative
(El Salvador) MDB multilateral development bank
CEPREDENAC Coordination Center for Natural Disaster
Prevention in Central America MIDEPLAN Ministry of National Planning and Economic
Policy (Costa Rica)
COMIECO Council of Ministers of Economic Integration
MSME micro, small, and medium enterprise
DEI Executive Directorate of Revenue (Honduras)
PCS port community system
DRM disaster risk management
PGA peak ground acceleration
DUCA Central American Single Customs Declaration
PIERS Port Import/Export Reporting Service
ECLAC Economic Commission for Latin America (U. S. Customs)
and the Caribbean PIF Border Integration Program
EIB European Investment Bank
PiP Infrastructure Pension Platform
EPN National Ports Company (Nicaragua) (United Kingdom)
ESG environmental, social, and governance PPP public-private partnership
EU European Union PNLOG national freight logistics plans
FDI foreign direct investment SENASA National Agricultural Health Service (Honduras)
FAUCA Central American Single Customs Form SIECA Secretariat for Regional Economic Integration
FOMPRODUCE Agency for Productive Development, Innovation SICA Central American Integration System
and Value-Added (Costa Rica) SSS short sea shipping
FONADIN National Infrastructure Fund (Mexico)
TEU twenty-foot equivalent unit
FYDUCA Central American Single Customs Declaration
and Invoice TIFIA Transportation Infrastructure Finance Innovation
Act (United States)
GDP gross domestic product
TIM International Customs Transit of Goods
GVC global value chains
ZEDE employment and economic development zones
ICT information and communications technology
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
Executive Summary
x MOBILITY AND TRANSPORT
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The Central America (CA) region1 has continuously attracting investment and generating economic activi-
pursued regional trade integration efforts, marked ties and knowledge spillovers, supported by an efficient
by important steps such as the establishment of the transport and logistics system. First conceptualized in
Central American Uniform Customs Code (CAUCA) in regions such as East and South Asia, economic corri-
1963 and, more recently, the approval of the Regional dors are developed on the basis of spatially clustered
Framework Policy on Mobility and Logistics (2017). Yet, economic activity or potential and are not necessarily
despite these efforts and the progress achieved, trade confined to specific transport routes. While transport
integration remains below its potential, and several of corridors physically connect areas of a region, economic
the region’s countries continue to export mostly low val- corridors also integrate the region’s economic activi-
ue-added final products. CA is also less well integrated ties by linking together production and consumption
into global value chains (GVCs) than other countries with centers. The production centers— often manufacturing
similar levels of foreign direct investment (FDI). One of and industrial goods oriented—produce goods both for
the main factors that has hampered such integration consumption in the surrounding region and for inter-
are the high trade costs, which also contribute to low national trade. In a fully functioning economic corridor,
competitiveness of the CA’s products in global markets. development is not only concentrated in the large cities;
instead, it spreads to smaller cities and underdeveloped
In 2018, the CA countries decided to prioritize the devel- areas in the broad corridor vicinity. Thus, the transfor-
opment of a series of regional value chains, such as mation of transport links into trade-creating economic
food products, plastics, and other manufactures, which corridors implies the “widening” of the corridors: By
were prioritized according to a multicriteria index with expanding and completing the infrastructure base (for
the objectives of (1) strengthening the countries’ trade example, rural access roads in addition to the main
and productive complementarities, and (2) promoting trunk corridors), establishing multimodal and inter-
CA’s competitive insertion in international markets (see modal transport facilities and promoting logistics devel-
CEPAL et al. 2018). To strengthen regional value chains, opment, as well as more intensive development of the
it is necessary to improve several aspects that allow area around the corridors, with capacity and productivity
companies to produce goods and transport them across enhancing activities in productive economic centers.
borders between the different points of production and
value transformation and, finally, consumption. This is Beyond the immediate user benefits, such as vehicle
where a comprehensive regional “economic corridors” operating cost and travel time reductions, economic
approach can make a difference, by ensuring producers corridor development aims to contribute to economic
in promising value chains as well as their consumers growth and improved welfare of entire regions or
are connected by efficient transport and logistics infra- countries at large. While some of these benefits may
structure and services and benefit from complementary appear in the short run, others take time to materialize.
investments and policies that help to further integrate In the more manufacturing oriented economic corridors,
the regional market. the main benefits accrue from economies of scale,
knowledge spillovers, and the linking of complementary
Economic corridors—or, in their most sophisticated value chains to be able to produce higher value-added
stage, development corridors (see figure E.1)—are goods. Similarly, the development of agriculture
spatially oriented development initiatives aimed at production focused economic corridors (“agricultural
1 Defined in this study as consisting of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
xi
Figure E.1. The Economic/Development Corridor Path
Transport corridor Logistics corridor Trade corridor Economic corridor Development
Transportation Transport corridor Logistics Commercial corridor
infrastructure + + logistics corridor + trade corridor + other Economic corridor +
transportation coordination facilitation economic coordination of
services dimensions noneconomic elements
Source: Adapted from Gálvez Nogales 2014.
corridors”) is motivated by the fact that the economic strategic document—for instance, a Whiter Paper—that
benefits from developing integrated transport, logis- provides a complementary perspective to the planning
tics, and services—such as cold storage or processing initiatives already taking place in the region, such as
facilities—will be greater in areas where they will serve the Master Plan for Logistics and Mobility supported by
a critical mass of producers. Moreover, the introduction the Japan International Cooperation Agency (JICA). The
of such value-added services can also provide a first methodology is first and foremost based on identifying
step for low-productivity family farms to shift to more concentrations of high economic activity and potential,
market-oriented production. rather than taking specific transport routes as a starting
point. First, the analysis identifies the existing contig-
In the Greater Mekong Subregion (GMS) in Southeast uous areas characterized by above-average nighttime
Asia, where the economic corridor approach was light intensity (a common proxy for economic activity)
adopted in the late 1990s, intra-GMS merchandise trade crossing borders or near borders and their locations
increased nearly 20 times between 2000 and 2017, and vis-à-vis major cities (demand centers). Second, the
the corridor development had a particularly strong economic importance of the identified high-intensity
poverty reduction impact in the previously less well areas is confirmed by overlaying the geo-located data
connected GMS countries. In the case of China’s Belt of firms in production sectors, in particular in the prior-
and Road Initiative (BRI), which connects many countries itized intraregional value chains; firms exporting to the
in Central Asia, the economic corridor development is United States; and intraregional trade consignee firms,
expected to result in real income gains of between 1.2 thus also characterizing the specific production profile
and 3.4 percent, depending on the country. The eco- of each corridor area. Third, a review of existing gov-
nomic corridor approach has also been adopted in other ernment strategies and plans was conducted to confirm
regions where the World Bank is assisting governments whether the identified potential economic corridors
in prioritizing transport and logistics interventions and have already been formally prioritized. The identification
complementary policies. of “agricultural corridors”—economic corridors with a
focus on high-intensity agricultural activity and associ-
Developed in close partnership with the CA countries ated sectors such as food production—follows a similar
and the Secretariat for Central American Economic process, as illustrated in figure E.2. Finally, the identified
Integration (SIECA), the current study explores the cross-border corridors were also validated with SIECA
potential for developing cross-border economic corri- and the country government representatives through
dors in the CA region. The study is not intended as a several technical workshops held in 2020 and 2021.
detailed elaboration of investment needs but rather as a
xii MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Figure E.2. Methodological Approach to Identify Cross-Border Economic and Agricultural Corridors in Central America
Economic corridors
Identify contiguous areas Overlay geolocated data of Review existing
characterized by above-average firms in production sectors (in government strategies
nighttime light intensity particular, the prioritized and plans to under-
crossing borders or near intraregional value chains), stand whether the
borders, vis-à-vis locations of exporters to the United States, identified economic
demand centers and intraregional trade corridors have already
been formally
prioritized; discuss with
SIECA and government
Agricultural corridors counterparts
Identify contiguous areas Overlay geolocated data of
characterized by above-average firms in agriculture and food
intensity of agricultural production sectors, exporters
production in border regions to the United States, and
vis-à-vis locations of demand intraregional trade consignees
in agricultural and food
production sectors
Source: Original figure produced for this publication.
The potential economic corridors detected in CA appear Specifically, the study identifies eight cross-border
to take one of the following forms: corridors of high intensity production: four general
production economic corridors and four agricultural
• A contiguous high-intensity production area of at corridors (see maps E.1 and E.2).
least 75 to 100 kilometers in length extending across
at least one border: this seems to be more the case The four identified economic corridors differ quite
for agricultural production, but also to some extent strongly in their land size, total population, and also
for the paper sector; their production profile. For example, the apparel sector
is represented by a particularly high share of firms in
• A contiguous area of high production intensity in one the Gulf of Fonseca and the HN–NI corridors, while tex-
country, but with a large urban pole just across the tile production is more characteristic to the GT–HN–ES
border: this is the case of the food processing and and GT–ES corridors. In all four corridors, food produc-
milling sectors, among others; or tion is a key sector, represented by between 21 percent
(GT–ES) and 67 percent (HN–NI) of all firms in production
• Production being almost entirely concentrated in sectors. The GT–HN–ES corridor hosts by far the largest
individual urban centers, in which case the intra- number of major consignee companies in the prioritized
regional value chain between these centers could intraregional value chains, such as plastics, milling
be established through short sea shipping services products, and dairy. The Gulf of Fonseca corridor area
or cargo flights; this appears to be the case for the also overlaps with one of the priority Employment and
plastics sector.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
xiii
Economic Development Zones that have been identified The GT–HN–ES economic corridor and the GT–HN and
in Honduras’ Country Vision 2032, the National Plan HN–NI agricultural corridors show a higher preva-
2010–22, and other national strategies. lence of poverty—especially in municipalities located
in Honduras—than the other identified corridors.
All four of the identified regional agricultural corridors Therefore, further developing these areas holds greater
produce significant quantities of cash crops, although potential for poverty mitigation, although further ana-
the specific crops differ slightly. For example, the GT–HN lytical work is needed to quantify the expected poverty
agricultural corridor produces significant quantities of reduction benefits and other wider economic benefits
tropical fruits, bananas, oil palm and fresh vegetables. (for example, employment generation, real income
In the GT–ES agricultural corridor, sugarcane is the gains) of developing each specific corridor area.
dominant crop. Besides their role in cash crop produc-
tion, the identified corridors also support intraregional Finally, the study summarizes the future priority inter-
commodity trade. The GT¬–HN agricultural corridor ventions for the eight corridors in terms of transport
corresponds to one of the main trade routes for corn and logistics infrastructure, Customs and trade facilita-
flour, wheat flour and processed foods within CA (with tion, and complementary policies, while also considering
Puerto Cortes in Honduras as the main dry cargo port), the climate and seismic risk profiles of each of them.
which are also used for rice imports from the United The consideration of climate risk in the corridor area is
States. by maritime transport. Similarly, part of the HN– important not only for planning the associated infra-
NI agricultural corridor is a key trade route for corn and structure needs but also for thinking about the climate
wheat flour, and the corridor in general is a key route (adaptation) co-benefits that would be associated with
for rice imports into the region from the United States making the infrastructure more resilient and, thus, the
and for regional trade in processed foods. extent to which climate finance instruments could be
mobilized for project financing. The analysis draws on
Finally, the NI–CR agricultural corridor is an important numerous published reports, such as the countries’ own
intraregional corn flour trade route, which follows the transport master plans and analytics prepared by mul-
Pacific Highway in both countries. In Costa Rica, the tilateral development banks (MDBs), complemented by
same road corridor is also widely used to transport a qualitative assessment of the “hard” and “soft” inter-
wheat and rice, which Costa Rica imports by sea from vention priorities provided to the team by the countries’
the United States. Moreover, the NI–CR agricultural Ministries of Transport.
corridor on the Costa Rican side of the border corre-
sponds to one of the 11 development poles proposed
in the Territorial Economic Strategy for an Inclusive and
Decarbonized Economy 2020–50 Costa Rica. Similarly,
on the Nicaraguan side of the border, the area corre-
sponding to the detected agricultural corridor has also
been identified as a key area for tourism promotion,
according to Nicaragua’s National Sustainable Tourism
Development Plan (2011–20).
xiv MOBILITY AND TRANSPORT
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Map E.1. Main Identified Cross-Border Economic Corridors in Central America
Puerto Cortez
G La Ceiba
Puerto Barrios G
G Choloma
San Pedro Sula
G
G
Coban G La Lima
G GEl Progreso 1 Guatemala–Honduras–El Salvador:
A corridor consisting of two “branches”:
G
Puerto Barrios–Puerto Cortes–San
G
San Pedro Ayampuc
G Mixco
Pedro Sula–Metapán–Comayagua–
G
G GG
Amatitlan Petapa
G GG Comayagua
Tegucigalpa
GGG San Jose Pinula G
Escuintla Metapán
G G
G Lucia Cotzumalguapa
Santa
Santa Ana G
Tegucigalpa
2 Guatemala–El Salvador: Guatemala
Tacuba G
GG NejapaApopa City–Santa Ana–Sonsonate–San
G Soyapango
Sonsonate GG Ilopango
G
G
Acajutla GG
G
G
G
GG
Mejicanos
GG G
GSan Vicente
Salvador
Zacatecoluca San Miguel
G G
Usulután Ciudad Choluteca
G
El Salvador–Honduras–Nicaragua:
G
G Cities (>50,000)
La Union
Esteli Jinotega 3
G G
Matagalpa Gulf of Fonseca
Corridor GT - ES - HN G
ChinandegaEl Viejo
Corridor HN - NI
Honduras–Nicaragua:
GG
Leon 4
Corridor GT - ES G
Tipitapa Tegucigalpa–Estelí–Jinotega–Matagalpa
Kilometers G
Ciudad SandinoManagua
Corridor ES - HN - NI 0 15 30 60 90 120 G G
+ Air or sea connections between major
G G
Source: Original map produced for this publication.
cities concentrating all production in
individual priority value chains
Map E.2. Main Identified Cross-Border Agricultural Corridors in Central America
Puerto Cortez La Ceiba
Puerto Barrios
G G
G Choloma
Coban G
Huehuetenango G
G La Lima
El Progreso
GG
G
5 Guatemala–Honduras: El Progreso /
G
GG
Totonicapan
G Zacapa / Izabal–Santa Barbara / Cortes /
Quetzaltenango G G Mixco
G
Petapa
G
GG
G
G
G
G
GG
Amatitlan Metapán
Comayagua Yoro / Atlántida / Colon
Escuintla G
G G G
Santa Lucia Cotzumalguapa
Tegucigalpa
AhuachapánTacuba
Guatemala–El Salvador: Escuintla /
G
G
GG
GAcajutla
GG
Apopa
Nejapa 6
Santa Rosa / Jutiapa–Ahuachapán /
G G
GG
GG
GGG
Nahuizalco GG
G Santa TeclaIlopango
G
G Usulután
G
Zacatecoluca Ciudad Choluteca
G G
Esteli Jinotega
G Matagalpa
Sonsonate
G
G
ChinandegaEl Viejo
G
G
G
Leon
7 Honduras–Nicaragua: Choluteca–
Tipitapa
ManaguaG
G G Masaya GJuigalpa Chinandega / Estelí
Ciudad Sandino
G GGranada
La Union
G Cities (>50,000) Nueva Guinea
Nicaragua–Costa Rica: Managua–
G
Corridor GT - HN 8
Carazo / Masaya / Granada /
Corridor GT - ES
Liberia
Rivas–Guanacaste
Corridor HN - NI G
Kilometers
Corridor NI - CR 0 25 50 100 150 200
G
Source: Original map produced for this publication.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
xv
The assessment shows that each of the corridors have A key priority in terms of financing regional corridor
their own distinct needs, partly related to their spe- projects in CA is increased coordination with stakehold-
cific economic production profiles—that is, intensive ers, including private sector financiers, for structuring
manufacturing activity versus agricultural activity. bankable projects. Given the size of the typical projects
Nonetheless, improvement of the trunk road infrastruc- and the experience with public-private partnerships
ture and access roads is considered a high priority in the (PPPs) to date, a regional infrastructure fund may be an
case of all of eight corridors, despite appropriate solution, in lieu of several national ones,
some differences between the countries involved, such allowing for more investment opportunities and diver-
as in the case of the NI–CR agricultural corridor, where sification as well as generating economies of scale by
the road improvement on the Nicaraguan side is more aggregating a larger amount of resources to finance the
urgent. Common to many of the border crossings serv- funds’ operations. Similarly, the creation of a coordina-
ing the identified economic and agricultural corridors tion mechanism for project structuring at the regional
is the need to introduce separate access for passenger level should be considered. Government support will be
versus cargo vehicles. Along all of the identified corri- needed to address the financial risks that are difficult for
dors, infrastructure needs to be developed to support the private sector to absorb, such as some of the more
trucking service providers, such as parking lots and complex construction or community risks. In developing
secure rest areas tailored to the traffic volumes. regional, large scale corridor projects, product innova-
tion—such as liquidity lines, guarantees, infrastructure
In the case of the economic corridors that include some funds and take-out facility instruments—will be essen-
of CA’s major metropolitan areas, infrastructure and tial. Harmonization of the regulatory frameworks for
services are needed for truckers in the urban perimeter instruments such as project bonds or infrastructure
zones that are usually subject to hourly restrictions for investment funds will be key to mobilizing long-term
heavy vehicle circulation; congestion problems on the private capital.
main roads connecting to these large demand centers
need to be addressed through investment in bypasses.
In the case of some corridors, the improvement of the
multimodal nodes is also identified as very important.
For example, improving the efficiency of the Port of
Acajutla is a high priority for the economic and agricul-
tural corridors connecting Guatemala to El Salvador.
The assessment, presented in table E.1 and to be
refined through more targeted corridor-specific studies,
provides a basis for structuring specific future regional
economic corridor projects.
MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Table E.1. Qualitative Assessment of the Future Intervention Priorities for Each of the Economic Corridors in Central America
Infrastructure and facilities Customs and trade Complementary Direct economic
facilitation policies beneficiaries and potential
poverty impact
GT: Reinforce several bridges. Improve the border post to reduce GT–HN: Implement Improve public safety by Combined population:
delays. Improve loading and unloading processes at Puerto Barrios dedicated lanes for enhancing police patrols ~5.8 million
and Santo Tomás de Castilla by providing the necessary equipment FYDUCA at Aguas Calientes (especially on C13 in HN);
Combined GDP:
and adequate parking areas. Invest in facilities for users, parking and Corinto crossings train drivers transporting
US$22.3 billion
areas, driver rest areas, restrooms, showers, canteens, etc. To with FYDUCA
HN: Improve foreign
improve safety, improve road signage, place metal fenders at Main value chains: food
trade processes at Ramón HN: Introduce compulsory
strategic points, illuminate crossings in towns. Invest in dedicated production/processing;
GT–HN–ES: Puerto Barrios–Tegucigalpa
V. Morales airport liability insurance,
logistics centers.
driver certification cultivation of agricultural
ES: Expand and pave roads in the border area of Metapán. Expand system; develop specialized products; manufacturing of textile
to four (4) lanes Troncal del Norte Highway Apopa–Frontera El Poy logistics services products
Section and CA08–Cerro Verde–El Congo–Coatepeque–RN09–
Interventions would directly
CA12–Anguiatú. Invest in trucker rest stops and overnight service
benefit ~25,000 firms across
centers, amenities, parking, and other services.
all sectors, of which ~2,600 in
HO: Invest in trucker rest stops and amenities, parking, etc. Expand production sectors
the capacity of ramps for the gauging of goods at Aguas Calientes
Poverty mitigation: High
and Corinto border crossings; improve infrastructure (parking,
potential impact, given the “very
storage for refrigerated cargo) at El Poy crossing. Invest in dedicated
high” level of poverty in parts of
logistics centers. Address capacity and equipment constraints at
the corridor in HN
Toncontín International Airport, including at its warehouses.
Financing needed: +++
Climate co-benefits/relevance of climate finance: +++
GT: Rehabilitate several subsections of the CA-1 Oriente and CA-8, Streamline customs Train drivers transporting Combined population:
reinforce bridges along the route, and improve road infrastructure processes, improve pre- with FYDUCA; improve ~8.7 million
at the border posts (border bridges). Invest in parking areas, payment, and implement control of crime along
Combined GDP:
refrigerated cargo handling, rest areas for drivers. To improve specific lanes, such as the routes through police
US$62.5 billion
safety, invest in horizontal and vertical road signage, placement empty vehicle passage patrols, placement of
GT–ES: Guatemala City–San Salvador
of metal fenders, lighting in populated areas. Invest in dedicated cameras at strategic Main value chains: cultivation
logistics centers. Build bypasses around MAG. points, implement security of agricultural products; food
equipment in trucks production/processing; print-
ES: Improve sections of CA01, esp. in Ahuachapán and Sonsonate:
ing-related activities; apparel;
construct a viaduct and widen CA01W Los Chorros section and ES: Introduce a PCS at
manufacturing of metal products
expand CA01W to 4 lanes. Invest in border crossing facilities (includ- Puerto Acajutla
ing bridges) at Las Chinamas to increase handling capacity. Invest Interventions would directly
in trucker rest stops and amenities, parking, etc. Modernize Port of benefit ~940,000 firms across
Acajutla and expand its facilities. The connection between Acajutla all sectors, of which ~72,000 in
and departments of San Salvador and Sonsonate is a priority section production sectors
in the future Pacific Train project.
Poverty mitigation:
Financing needed: +++ Moderate potential impact
(higher in GT than ES)
Climate co-benefits/relevance of climate finance: ++
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
Infrastructure and facilities Customs and trade Complementary Direct economic
facilitation policies beneficiaries and potential
poverty impact
ES: Rehabilitate CA01E; expand to 4 lanes RN18E; expand CA01E; Standardize border cross- ES: Improve logistics Combined population:
improve tertiary roads; build a bridge on the border with Honduras ing schedules between services provided at Puerto ~1.9 million
in Victoria municipality. Construct the Pacific Airport in the Eastern country pairs; introduce La Unión
Combined GDP:
zone of El Salvador; construct the Pacific Train (currently in feasibility single window
Improve services for users US$9.92 billion
stage). Invest in trucker rest stops and amenities, parking, etc.
HN–NI: Separate and carriers; operationalize
Improve landside access to Puerto La Unión. Main value chains benefit:
procedures for passenger the Trinational ferry in the
ES–HN–NI: Gulf of Fonseca
food production/processing;
NI: Expand road capacity (widen NIC24/12 southeast from and cargo vehicles at El Gulf of Fonseca (ES–NI);
apparel; furniture manufacturing;
Chinandega to Leon and El Tamarindo); improve connectivity with Guasaule crossing take actions to reduce
manufacturing of metal products
multi-modal nodes (e.g., Corinto and Sandino ports); improve robberies of vehicles
ES–HN: Introduce a
equipment, including cranes, at Corinto. traveling on CA2 and CA1 Interventions would directly
separate lane for TIM
benefit ~29,000 firms across
HO: Invest in dedicated logistics centers. Rehabilitate CA1. Improve (International Customs
all sectors, of which ~4,500 in
the facilities at El Guasaule border crossing and expand its parking Transit of Goods) access at
production sectors
area. Improve support infrastructure (such as parking for heavy Amatillo crossing
vehicles, screening areas, temporary and short-term storage spaces Poverty mitigation:
for refrigerated cargo) at Amatillo border crossing. Moderate potential impact
(higher in HN)
Financing needed: +++
Climate co-benefits/relevance of climate finance: ++
HO: Build bypasses around Tegucigalpa to reduce congestion on Introduce separate lanes Improve services for users Combined population:
C06; Invest in dedicated logistics centers. for passengers and cargo and carriers ~2.5 million
at Las Manos crossing
NI: Rehabilitate NIC38/NIC51 and upgrade NIC15; invest in the Combined GDP:
modernization of Las Manos and El Espino border crossings (for US$7.51 billion
example, weighing facilities, and cargo axle inspection station).
Tegucigalpa–Matagalpa
Main value chains: food
Financing needed: +/++ production/processing; apparel;
furniture manufacturing;
Climate co-benefits/relevance of climate finance: +
manufacturing of wood products;
manufacturing of metal products
Interventions would directly
benefit ~25,000 firms across
all sectors, of which ~5,500 in
production sectors
Poverty mitigation:
Moderate potential impact
(higher in HN)
MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Infrastructure and facilities Customs and trade Complementary Direct economic
facilitation policies beneficiaries and potential
poverty impact
GT: Widen CA09 to four (4) lanes, reinforce several existing bridges Implement policies to Address crime issues and Combined population:
and build the parallel bridge; rehabilitate several sections of CA13. allow for more agile tax the high levels of robberies ~4.76 million
Invest in facilities for users, parking areas, services for pilots (rest clearance and payment; on CA09 (GT) and CA13
Combined GDP: US$21 billion
areas, restrooms, showers, canteens, and others). Improve rural implement easier advance between Puerto Cortes and
access roads, especially in Izabal. Improve loading and unloading payment processes San Pedro Sula (HN) Main agricultural crops: tropical
processes at seaports by providing the necessary equipment and (online); fruit, banana, vegetables, oil
HN: Improve foreign
adequate parking areas. To enhance road safety, to improve road palm, maize
implement dedicated trade processes at Ramón
GT–HN: El Progreso–Colon
signs, install metal fenders and lighting in urban areas. Invest in
lanes for FYDUCA at V. Morales International Total production (mt/year):
dedicated logistics centers in the port vicinity. Improve loading and
Corinto crossing Airport Cash crops: 1.8 million; staple
unloading processes at Puerto Santo Tomás de Castilla. Upgrade
crops: 0.14 million
facilities and import/export docks at Puerto Barrios to support
agricultural value chains. Poverty mitigation: High
potential impact (higher in HN)
HO: Rehabilitate CA04 and CA13 north of San Pedro Sula.
Improve road connectivity to Puerto Castilla. Develop a network of
agricultural storage/consolidation centers and drying facilities near
agricultural production areas (for example, for white and yellow
maize and wheat).
Financing needed: ++/+++
Climate co-benefits/relevance of climate finance: +++
GT: Perform maintenance on CA02 and expand its capacity. Expand GT: Implement more GT: Improve container Combined population:
road access to Puerto Quetzal. Improve rural access roads, including agile customs, immigra- inspection and weighing at ~2.64 million
to the ag. collection and distribution centers. Strengthen bridges on tion and phytosanitary the exit of Puerto Quetzal
Combined GDP:
the main roads; improve border bridges and access to border posts. control procedures;
ES: Introduce a PCS at US$15.74 billion
Address the lack of truck parking areas, driver rest areas, restrooms, introduce specialized
Puerto Acajutla
showers; warehouses, cargo transfer facilities, cold storage, lanes, such as the empty Main agricultural crops:
packaging, and other needs. Implement processes to facilitate vehicle lanes Improve police surveillance sugarcane, banana, tropical fruit,
interconnection with other modes of transport at the terminal to prevent theft of maize
points. Improve road signs (horizontal and vertical), implement merchandise
GT–ES: Escuintla–Sonsonate
Total production (mt/year):
metallic defenses at dangerous points, lighting in town crossings,
Cash crops: 21.6 million; staple
and other improvements.
crops: 0.51 million
ES: Rehabilitate and expand CA02W; construct a viaduct and widen
Poverty mitigation:
CA01W; expand to four (4) lanes CA01W Santa Ana-San Cristobal;
Moderate potential impact
improve tertiary roads. Improve the border crossing facilities at Las
(higher in GT than ES)
Chinamas, including increase the border bridge capacity to be able
to handle the flow of vehicles that pass through it. Invest in trucker
rest stops and amenities, parking, etc. The connection between
Acajutla and departments of San Salvador and Sonsonate is a in the
future Pacific Train project. Invest in storage facilities for agricultural
produce (such as corn and beans).
Financing needed: +++
Climate co-benefits/relevance of climate finance: +++
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
Infrastructure and facilities Customs and trade Complementary Direct economic
facilitation policies beneficiaries and potential
poverty impact
NI: Widen the main road corridors—NIC12 and NIC49; rehabilitate Separate procedures for Improve services for users Combined population:
NIC12A and secondary collector roads around the cocoa and basic passenger and cargo and carriers ~1.61 million
grains production areas in Nueva Segovia, Madriz and Estelí; vehicles at El Guasaule
NI: Improve police patrols Combined GDP: US$4.39
improve connectivity from the corridor area to Puerto Corinto. Invest crossing
and systems to improve billion
in the modernization of El Espino border crossing. Improve cargo
HN–NI: El Paraíso–Estelí
security on NIC24
handling facilities at Puerto Corinto. Main agricultural crops:
sugarcane, maize, coconuts
HO: Rehabilitate CA3. Develop a network of agricultural storage/
consolidation centers near agricultural production areas. Improve Total production (mt/year):
the facilities at El Guasaule border crossing and expand its parking Cash crops: 3.33 million; staple
area. crops: 0.1 million
Financing needed: +/++ Poverty mitigation: High
potential impact, given “very
Climate co-benefits/relevance of climate finance: +++
high” poverty in parts of the
corridor in HN
NI: Rehabilitate NIC1 between Puerto Sandino and Paso Real de Standardize schedules Improve physical security Combined population:
Ochomogo and expand its capacity; improve connectivity from the between NI and CR at and road safety at Peñas ~2.64 million
corridor area to the Sandino and San Juan del Sur ports. Build a Peñas Blancas Blancas; improve road
Combined GDP:
bypass around Managua to reduce congestion on NIC4. safety along the corridor;
US$16.1 billion
implement logistics activity
CR: Expand Puerto Caldera to avoid reaching unacceptable levels
NI–CR: Managua–Guanacaste
platforms close to the Main agricultural crops:
of congestion. Develop rail infrastructure to improve intermodal
main multimodal nodes, sugarcane, tropical fruit, rice,
conditions for freight transport; provide the ports with the necessary
adapted to the needs of the banana, coconuts, maize
infrastructure for intermodal activities. In the vicinity of the port and
private sector
Daniel Oduber airport, develop logistics activity zones. Establish Total production (mt/year):
weigh stations in the corridor and parking areas. Invest in facilities Cash crops: 4.45 million; staple
for transport users, such as secure parking areas with restaurant crops: 0.4 million
areas, rest areas, among others. Expand the capacity of available
Poverty mitigation: Low-
storage of cargo and cold containers.
to-moderate potential impact
Financing needed: +++ (higher in NI)
Climate co-benefits/relevance of climate finance: +
Source: Original table produced for this publication, including analysis based on the qualitative assessment received from Ministries of Transport of Costa Rica, El Salvador, Honduras,
Guatemala, and Nicaragua.
xx MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Reference
CEPAL, CENPROMYPE, SIECA, and SICA. 2018. “Articulación productiva y cadenas regionales de valor: Una propuesta
metodológica para la región SICA.” Naciones Unidas, Ciudad de Mexico. https://www.sieca.int/index.php/news/
articulacion-productiva-y-cadenas-regionales-de-valor-una-propuesta-metodologica-para-la-region-sica/.
Gálvez Nogales, E. 2014. Making Economic Corridors Work for the Agricultural Sector. Agribusiness and Food Industries
Series No. 4, FAO (Food and Agricultural Organization of the United Nations), Rome. https://www.fao.org/filead-
min/user_upload/AGRO_Noticias/docs/MAKING%20ECONOMIC%20CORRIDORS%20WORK%20FOR%20THE%20
AGRICULTURAL%20SECTOR.pdf.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
1. The Unrealized Trade Potential
of Central America
2 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Regional Trade Profile
Since the 1960s, Central America (CA) has advanced CA’s participation in global value chains (GVCs) is above
toward regional integration of Costa Rica, El Salvador, average for the Latin American region, but below
Guatemala, Honduras, Nicaragua and, more recently, that of other comparator economies, such as Eastern
Panama.1 CA’s regional efforts began with the develop- Europe and Central Asia or East Asia and the Pacific; CA’s
ment of a common market, followed by the Tegucigalpa trade integration is especially strong with the United
Protocol and the creation of the Secretariat for Regional States. Measured by the share of domestic value added
Economic Integration (SIECA) in 1991. Since then, in exports in 2015, textiles and apparel is the most
much progress has focused on reducing tariffs and integrated sector, reflecting maquila industries in CA’s
intraregional trade barriers. In addition, the region northern countries (Guatemala, Honduras, El Salvador).
established the Central American Uniform Customs This sector is followed by agriculture, electrical goods
Code (CAUCA) and in 2014 signed the Declaration of and machinery, and food and beverages. CA’s share
Punta Cana during the XLIII Ordinary Meeting of Heads of GVCs expanded significantly during this decade,
of State and Government of the Member Countries of especially in the case of Panama. However, the region
the Central American Integration System (SICA), which exports mostly final products, largely of low sophisti-
cemented a political commitment to facilitate trade cation, with little scope for the domestic value added
in the region (World Bank Group 2019). The Regional needed to boost productivity and create employment.
Framework Policy on Mobility and Logistics, approved by The foreign content of CA exports declined between
the SICA heads of state and government in 2017, has as 2005 and 2015 in almost all sectors, except for re-ex-
its main objective to harmonize, systematize and unify ports from Panama. The region also attracts reason-
the six countries in terms of mobility and logistics at the able amounts of foreign direct investment (FDI), but
regional level (JICA 2019). With its approval, the region compared to other regions with similar levels of FDI, its
agreed to promote a multimodal vision to ensure agile, connection to GVCs is weaker, suggesting underutiliza-
safe, efficient and reliable mobility for the movement of tion of FDI, possibly due to distortions in factor markets
cargo and people, in order to make this region a world- and lower integration with the global economy (World
class logistics hub. Bank 2021).
The Customs Union was strengthened with the imple- In the case of small countries such as those in CA, for
mentation in May 2019 of the Central American Single industries to develop and be competitive, they must
Customs Declaration (DUCA), which unifies the three be regional in scale and serve the regional consumer
main customs declarations that cover the trade of market. The main industries linked to regional value
goods in CA. The Guatemala-Honduras Deep Integration chains in CA are chemicals, pharmaceuticals, agriculture,
Process and its extension to El Salvador, reducing bor- yarn, paper and paperboard, electronics, and telecom-
der wait times from 48 hours to less than 15 minutes, munications equipment. More recently, the spectrum
uses the FYDUCA (Central American Single Customs has broadened to include steel and metal-mechanics.
Declaration and Invoice) as the trade document between According to the Economic Commission for Latin
these countries (JICA et al. 2019). Assuming that the America and the Caribbean (ECLAC), CA’s intraregional
Customs Union were complete, including the six CA trade has fluctuated since the beginning of its integra-
countries, the effects on ad valorem tariffs would be, on tion, but has generally increased. As shown in figure 1.1,
average, 30 percent lower than they are today (Arteaga CA countries exported US$11.43 billion worth of goods
Velásquez and Salazar Recinos 2019). and services to the rest of the region in 2019, below
1 The analysis considers “Central America” to include these six countries.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
3
exports to the United States (US$19.34 billion), but dou- percent (Arteaga Velásquez and Salazar Recinos 2019).
ble exports to the European Union (EU), its third largest Intraregional trade costs equivalent to the tariff are
trading partner. CA’s total imports, which are more than highest between Panama and El Salvador and Honduras
double its exports, have a similar profile. and El Salvador. By product, the administrative costs of
ad valorem intraregional trade are by far the highest
for textiles and apparel2 and footwear (43 percent) and
Figure 1.1. Central America: Total Exports agricultural products and fish (32 percent), but are also
substantial for manufactured goods and food products
US$, millions (>17 percent) (Martinez Piva 2019). Thus, despite the
high share of intraregional trade in CA’s overall trade
70,000
profile, the region is far from its potential compared to
60,000 other better integrated countries in Latin America, such
50,000 as MERCOSUR, whose intraregional trade is 57 percent,
CARICOM (41 percent) and the EU (67 percent), accord-
40,000
ing to World Bank and UN COMTRADE data.
30,000
20,000 Regional integration offers larger markets and allows
10,000 member countries to increase intraregional trade. The
countries that joined the EU in 2004 are an example of
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 this, as they have seen their exports grow exponentially
Other countries Dominican Rep. Canada China
since then. According to ECLAC, intraregional trade
Mexico European Union Central America United States proved to be a good alternative for CA to compensate
for the decline in global demand after the 2008 crisis.
Source: Atlas of Economic Complexity (https://atlas.cid.harvard.edu/about-data), which pulls
data from the United Nations Statistical Division (COMTRADE) and the International Monetary
Fund Direction of Trade Statistics Database. Despite the industrialization processes that CA has
undergone over the years, that has allowed it to incorpo-
rate greater value added to its exports, its main export
products to external regions continue to be commod-
However, although intraregional trade is high in some ities such as fruits and commodities (bananas, sugar,
sectors, it is below its potential, due to high trade coffee). According to ECLAC, although CA’s exports of
costs, which also contribute to low competitiveness primary products decreased significantly between 1986
of the region’s products in extra-regional markets. and 2013 (from 78 percent to 18 percent), since then
Intraregional trade could exceed its current level, the share of this type of goods has increased again, to
especially in low- and medium-technology products and almost 30 percent in 2017. On the other hand, CA’s intra-
natural resource-based manufactures, by an estimated regional trade has been based on basic manufactured
30 percent, if administrative and other nontariff trade goods, with manufactures constituting approximately 90
barriers were eliminated (Durán and Lo Turco 2010). percent of CA’s intraregional exports. Thus, there is an
While the average applied tariff in the region is only 2 opportunity in intraregional trade to gradually shift to
percent after taking into account free trade agreements, higher technology and value-added products.
nontariff barriers to trade mean that, on average,
CA imports pay an additional tariff of close to 18
2 The maquila and garment industry is linked to the free trade zones, and, in the case
of Honduras, is the second largest contributor to gross domestic product (GDP) after
remittances.
4 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Trade Costs and Barriers
According to some estimates, transportation costs rep- The global logistics performance index (LPI) ranks CA
resent, on average, 2.6 percent of non-value-added busi- countries in the third (Costa Rica and Honduras) and
ness expenditures in CA, with Guatemala and Honduras fourth (El Salvador and Guatemala) quintile among
having the highest costs, and are highest in the most the 169 countries analyzed in 2018. As an exception,
transport-dependent sectors, such as agriculture and Panama, with a ranking of 38, is in the second quintile
food products (World Bank 2021). The cost of transport- and ranks as the fourth best-ranked middle-income
ing a ton of product per kilometer in CA is US$0.17, eight country globally. While the components in which CA
times higher than in the U.S. and 55 percent higher countries are best rated are logistics and shipping,
than in landlocked Burundi (COMITRAN, COSEFIN, and those that represent the greatest obstacles to interna-
COMIECO 2017). Freight transport costs account for half tional trade are infrastructure and customs. In the same
of the logistics costs of freight transport activity; within vein, a World Bank study analyzing the logistics chain for
the cost structure, the cost of fuel and personnel are various products and destinations found transportation
particularly high, but also costs related to safety are not and customs costs are the highest cost components for
insignificant. Another element contributing to the high exporters, especially for smaller producers. For example,
costs in the region are the short distances covered and for a small tomato producer exporting from Costa Rica
the waiting times for loading and unloading, which must to Nicaragua, transportation costs represent 23 percent
be paid for in the form of wages, insurance, deprecia- and customs account for 11 percent (World Bank 2012).
tion and other fixed costs (Barbero and Guerrero 2017).
A 10 percent decrease in intraregional transport costs The regional logistics system is composed of ship-
could boost intraregional trade by 5 percent and the ping lines, traders and consignees; transport and
region’s gross domestic product (GDP) by 0.3 percent by logistics service providers; policies and regulations of
2030 (World Bank 2021). Marcelo Gordillo et al. (2010) regional and national institutions; and transport and
identified the impact of physical barriers to trade within communication infrastructure. CA countries have a
CA using an Augmented Gravity Model, finding that the greater disadvantage in road connectivity compared
effect of distance on export flows in CA is more negative to maritime and air connectivity, according to the
than in the EU15, with the “distance-exports” elasticity in global competitiveness index for 2019; however, most
the range of 1.3 to 3. On average, distance in CA takes intraregional trade is by land. CA has a road network
60 percent longer to cover than in Europe. The authors of 126,000 kilometers of which 6,525 kilometers form
also showed that CA countries experience less “gravita- the CA regional road system. About 43 percent of CA’s
tional pull” from nearby economies than EU countries, network is in good condition and the rest is in fair or
intuitively, due to poorly established trade linkages, an poor condition, including unpaved stretches (JICA et al.
atomized shipping industry, little information sharing 2019). The region’s investment in infrastructure is low
on cargo and backhaul, and relatively little choice and compared to other regions: only 1.1 percent of regional
competition for shipping (that is, absence of coastal GDP in 2017, below the Latin and Central America (LAC)
shipping and rail services). The cost of purchasing man- regional average of 1.5 percent and significantly below
ufactured goods imported from CA countries in another the estimated 6.2 percent needed to meet medium-term
CA country is between 46 and 85 percent higher than infrastructure demand (World Bank 2021). Guatemala
in the producing country, and the cost of purchasing and Honduras have low road connectivity both between
agricultural products imported from CA countries in CA major cities and between cities and rural areas. The
is between 75 and 154 percent higher.3 CA’s trade costs quality of transport infrastructure in CA is another major
are more than double those of the neighboring Mexico. challenge to the countries’ competitiveness, preventing
3 Excluding Panama costs, as they are not of recent date.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
5
the full exploitation of trade potential. With fluctuating seven times longer for imports (World Bank 2018). Long
investments in port and airport infrastructure, their waiting times in cross-border processes directly affect
quality has generally deteriorated over the past decade, trade, can damage products, especially perishable goods,
with the exception of Panama and the ports of Costa force traders to invest capital in larger inventories, and
Rica4 and Nicaragua. Although the quality of road infra- make products more expensive for the end consumer.
structure has improved in several countries, it generally
ranks low compared to other countries worldwide. This Across the region, it is often the case that Customs
is despite the fact that CA countries, with the exception receive support from institutions such as the
of Guatemala, have increased their investment in road International Monetary Fund (IMF)’s Regional Technical
infrastructure as a percentage of GDP in recent years, Assistance Center for Central America, Panama and the
according to Infralatam (http://infralatam.info/en/ Dominican Republic (CAPTAC-DR), or have budget alloca-
home/), data for 2008–19. tions to modernize operations. However, other smaller
institutions at the border, such as food and agriculture
However, variations in the quality—such as type and safety agencies, are left behind, creating an unbalanced
surface condition—of existing roads serving the region’s adoption of electronic means to facilitate transactions.
trade corridors can only explain a portion of overall Unless these agencies receive support, the electronic
logistics and transportation prices, and then only indi- tools uptake may not happen (World Bank Group 2019).
rectly, through travel speeds (Osborne, Pachón, and
Araya 2014). The impacts of the pandemic on inter- As already noted, CA countries have worked hard on
national trade highlight the importance of resuming their internal Customs integration, and progress has
the agenda of modernization and standardization of generally been made, albeit interrupted by unilateral
processes and systems in CA countries, which facilitate country provisions, sometimes temporary, such as
trade and information exchange and contribute to mobility limitations during the COVID-19 pandemic.
economic integration. The region has signed a large Customs processes in CA are usually carried out at the
number of free trade agreements (FTAs). However, there border of each country, which increases border crossing
is still limited progress in the areas of trade facilitation, times. However, groups of countries, with support
due to regulatory and procedural constraints, lack of from SIECA and the Inter-American Development Bank
efficient and interoperable systems, and logistical and (IDB), have implemented pilot border processes in
transportation barriers, which have limited the gains juxtaposed and integrated customs that have shortened
from FTAs (World Bank Group 2020). these times, as has the recent deep integration process
between Guatemala, Honduras, and El Salvador in the
Customs processes and requirements continue to form of a customs union. As a result, border crossing
represent a major bottleneck to the growth of intra- times have been reduced from several hours to a few
regional trade, and border crossing management is minutes. Carballo et al. (2021) estimate the trade effects
one of the factors that most affect CA’s logistics perfor- of the transit system upgrading that streamlined border
mance. Border processing costs in CA countries are, on processing (the International Customs Transit of Goods,
average, double the costs in Organisation for Economic or TIM), combining transaction level export data from
Co-operation and Development (OECD) countries, and El Salvador with unique data that distinguishes export
border procedures in CA take three times longer than flows that were processed in the transit system. Their
processes in OECD countries for exports and nearly results indicate that the new transit system lowered
4 Costa Rica’s airport infrastructure has remained at an acceptable level, although there are many areas of opportunity. In terms of port infrastructure, the entry into operation of the APM
terminal in Moín, Limón, with an investment of US$1 billion, and the modernization projects of Caldera represent significant advances.
6 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
regulatory border costs and raised route-level export of return loads and drive up transport prices (IDB 2013).
flows by about 44 percent, as a result of an increase in Although there are many trucking companies, including
the number of exporters, product scope, and average small and somewhat informal operators, the degree of
export values. With respect to the progress made in cus- competition varies by route due to national restrictions
toms and border integration, it is also important to note on competition and the prohibition of international
the progress shown by the Border Integration Program competition on domestic routes. In turn, routes served
(Programa de Integración Fronteriza, PIF), financed with by fewer companies show higher prices, even when
IDB funds and executed between 2017 and 2024, which differences in costs and demand are taken into account.
covers infrastructure improvement at border posts, Based on a survey of trucking firms operating on the
improvement and coordinated management of systems region’s main trade corridors, Osborne, Pachón, and
and processes, socioenvironmental management, Araya (2014) found that, while improving cost efficiency
administration, auditing, and evaluation. could reduce prices by 3 cents per ton-kilometer
(ton-km), increasing competition on domestic routes
The road transport sector in the region is characterized would reduce prices by a significantly larger propor-
by a high proportion of internationally oriented services, tion, given that imperfect competition accounts for at
weak operational performance, a high accident rate, and least 35 percent of average prices on domestic routes.
slow progress in safety and environmental protection Although foreign-registered companies may engage in
regulations (Arteaga Velásquez and Salazar Recinos cross-border freight transport, cabotage—the provision
2019). Among the characteristics of weak operating of services on domestic routes by a foreign-registered
performance are high travel times and low number truck—is prohibited. In addition to being associated with
of kilometers traveled per year; high rates of empty reduced competition, these barriers to entry make it dif-
returns; an aging fleet with insufficient renewal due to ficult to achieve cost efficiencies: for example, they seg-
financial and credit risk, which implies higher operating ment the market and decrease fleet utilization, thereby
costs and environmental impact; cost overruns due to reducing economies of scale and scope. Reduced fleet
insecurity problems on the routes; high informality; utilization, in turn, makes it less cost-effective to invest
and limited adoption of information and communica- in fuel-saving practices and technologies, including
tion technology (ICT), which inhibits the development newer, more fuel-efficient trucks, which involve higher
of traceability practices. Substantial progress has financing and depreciation costs. Market segmentation
been made in terms of connectivity; however, there also appears to be associated with low truck utilization,
are latent challenges related to the incorporation of which raises average costs. The average annual truck
technology and innovation, institutional capacity and utilization is only 59,000 kilometers driven among CA
the mobilization of resources for strategic sectors. carriers, which is only half the level of countries such as
National regulations show little progress in the training South Africa, Pakistan, and the United States.
requirements for truck drivers, resulting in a low level of
professionalization of the sector and quality of service.
Foreign carriers’ access to domestic markets is restricted
by protectionist measures, which hinder the acquisition
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
7
Potential for Intraregional Trade Growth
In CA’s intraregional trade, the demand for many regional value chains, it is necessary to improve a series
products exceeds supply. The potential for intraregional of aspects that allow companies to produce goods and
trade growth has been identified as particularly high in transport them across borders between the different
goods such as soaps, bakery products, food prepara- points of production and value transformation and,
tions, pharmaceuticals, beverages, and iron and steel finally, of consumption in the region. This is where a
castings. In goods such as plastics and plastic products, comprehensive regional “economic corridors” approach
milk and dairy products, eggs and honey, and paper and can make a difference, by ensuring value chain produc-
paperboard, CA has already been more successful in ers and, in addition, consumers are connected by effi-
responding to demand growth. cient transport and logistics infrastructure and services
and benefit from complementary economic and spatial
To increase CA’s international and intraregional trade, investments and policies that help to further integrate
the main recommendation of many of the existing the regional market and tap existing economic potential.
studies is that CA should diversify its export products,
introducing more value, technology and innovation, to
enter higher growth markets. Pursuing a strategy of Box 1.1. Priority Intraregional Value Chains
more developed and diversified regional value chains
would help countries not only to increase their intra-
regional trade, but also to position themselves better 1. Flour and milling products (S24)
in international trade. Regional integration can catalyze 2. Food preparations (S45)
the development of regional value chains, through the 3. Cosmetics and essential oils (S56)
integrated market and intraregional complementarities. 4. Paper products (S59)
The challenge is to create and/or strengthen more 5. Dairy and dairy products (S7)
regional value chains that increase intraregional flows 6. Plastics (S85)
and add value to existing ones. 7. Bottled water (S46)
8. Salt (S51)
In this regard, the creation of the CA highway network 9. Videogames (S82)
in the 1960s as a result of an agreement between the 10. Vegetable fats and oils (S11)
region’s ministers of economy and transportation,
within the framework of the economic integration
process allowed regional trade to increase from about Source: CEPAL et al. 2018.
US$30 million to almost US$10 billion in 2020.
Through previous collaborative work and analytical
studies, such as that of CEPAL et al. (2018), CA countries
have agreed to support the strengthening of a series of
specific regional value chains, prioritized according to a
multicriteria index with the objectives of (1) strengthen-
ing the countries’ trade and productive complementarity
patterns, and (2) promoting CA’s competitive insertion
in international markets (see box 1.1).5 To strengthen
5 In addition to the top ten products listed in box 1.1, a number of agricultural products have been prioritized, such as bananas, pineapples, and other fruits and their preparations, that
require a robust cold chain network.
8 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
References
Arteaga Velásquez, G., and N.J. Salazar Recinos. 2019. “Conectividad para el desarrollo regional: La experiencia de
Mesoamérica.” NOTA TÉCNICA No IDB-TN-1801. BID, Washington, DC. http://dx.doi.org/10.18235/0002050.
Barbero, J., and P. Guerrero. 2017. “El transporte automotor de carga en América Latina: Soporte logístico de la
producción y el comercio.” NOTA TÉCNICA No IDB-TN-1877. BID, Washington, DC. https://publications.iadb.org/
es/el-transporte-automotor-de-carga-en-america-latina-soporte-logistico-de-la-produccion-y-el-comercio.
Carballo, J., A. Graziano, G. Schaur, and C. Volpe Martincus. 2021. “The Effects of Transit Systems on International
Trade.” CESifo Working Paper No. 9353. CESifo, Munich. https://www.cesifo.org/en/publikationen/2021/
working-paper/effects-transit-systems-international-trade.
CEPAL, CENPROMYPE, SIECA, and SICA. 2018. “Articulación productiva y cadenas regionales de valor: Una propuesta
metodológica para la región SICA.” Naciones Unidas, Ciudad de Mexico. https://www.sieca.int/index.php/news/
articulacion-productiva-y-cadenas-regionales-de-valor-una-propuesta-metodologica-para-la-region-sica/.
COMITRAN, COSEFIN, and COMIECO. 2017. “Política Marco Regional de Movilidad y Logística de Centroamérica.
ANEXOS: Ejes de la Política Marco Regional.” https://web-sieca.s3.ca-central-1.amazonaws.com/movilidad
%20y%20logistica/02%20Anexos%20PMRML.PDF.
Durán, J., and A. Lo Turco. 2010. “El comercio intrarregional en América Latina: Patrón de especialización y cálculo
de potencial exportador.” In Los impactos de la crisis internacional en América Latina: ¿hay margen para el diseño de
políticas regionales? M. Terra y J. Durán (coords.), Montevideo: Red MERCOSUR de Investigaciones Económicas.
https://idl-bnc-idrc.dspacedirect.org/bitstream/handle/10625/45162/IDL-45162.pdf.
IDB (Inter-American Development Bank). 2013. “Trucking Services in Belize, Central America, and
the Dominican Republic: Performance Analysis and Policy Recommendations.” Technical Note
No. IDB-TN-511, IDB, Washington, DC. https://publications.iadb.org/en/publication/11843/
trucking-services-belize-central-america-and-dominican-republic-performance.
JICA (Japan International Cooperation Agency). 2019. “Proyecto para el Fortalecimiento de las Capacidades en la
Elaboración del Plan Maestro Regional Indicativo de Movilidad y Logística para el Desarrollo Económico Regional
Sostenible en el Marco de la Integración Centroamericana.”
JICA, SIECA, SICA, COMITRAN, COMECO, and COSEFIN. 2019. “Política Marco Regional de Movilidad y Logística y su
Plan Maestro: Situación Actual y Principales Acciones a Desarrollar Hacia el Año 2035.” http://web-sieca.s3.ama-
zonaws.com/movilidad%20y%20logistica/JICA.pdf.
Marcelo Gordillo, D., Aiga Stokenberga, and Jordan Schwartz. 2010. “Understanding the Benefits of
Regional Integration to Trade: The Application of a Gravity Model to the Case of Central America.”
World Bank, Washington, DC. https://documents.worldbank.org/en/publication/documents-reports/
documentdetail/633361468239125634.
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SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
9
Martinez Piva, Jorge Mario, ed. 2019. Logros y desafíos de la integración centroamericana:
Aportes de la CEPAL. Santiago de Chile: CEPAL. https://www.cepal.org/es/
publicaciones/44590-logros-desafios-la-integracion-centroamericana-aportes-la-cepal.
Osborne, Theresa, Maria Claudia Pachón, and Gonzalo Enrique Araya. 2014. “What Drives the High Price of Road
Freight Transport in Central America.” Policy Research Working Paper 6844. World Bank, Washington, DC.
https://documents.worldbank.org/en/publication/documents-reports/documentdetail/364161468212970549/.
World Bank. 2018. Doing Business 2018: Reforming to Create Jobs. Washington, DC: World Bank. http://hdl.handle.
net/10986/28608.
World Bank. 2012. Agro-Logistics in Central America: A Supply Chain Approach. Washington, DC: World Bank. http://hdl.
handle.net/10986/27227.
World Bank. 2021. Unleashing Central America’s Growth Potential. Washington, DC: World Bank. https://openknowl-
edge.worldbank.org/handle/10986/35503.
World Bank Group. 2019. Regional Central American Project to Support the Implementation of the Trade Facilitation
Agreement (ID: P156050), Activity Completion Summary. Internal Document.
World Bank Group. 2020. “Trade and COVID-19 Guidance Note.” World Bank, Washington, DC. https://openknowl-
edge.worldbank.org/bitstream/handle/10986/33633.
MOBILITY AND TRANSPORT
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2. Economic Corridors
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
The Concept
s i st ated in fig e t anspo tation co ido s provided by a road corridor, is only one dimension of a
ph sica connect a eas of a egion hi e econo ic egion s integ ated de e op ent cono ic co ido s
co ido s integ ate the egion s econo ic acti ities need a comprehensive approach to be successful. The
cono ic co ido s s a ha e th ee co p e enta enefits of econo ic co ido de e op ent a ise fi st
components: a transportation corridor, production from improvements within one dimension, but as the
centers, and cities. The transportation corridor is the co ido de e ops the inte di ensiona enefits ta e
ac one of the econo ic co ido it oad defines e ect transportation corridor physically connects an
the geog aphic space of the co ido and faci itates the a ea o a egion logistics corridor focuses not only on
o of goods and se ices od ction cente s often the ph sica connection t a so on ho the o and
an fact ing and ind st ia goods o iented p od ce sto age of f eight and the o e ent of peop e in the
goods oth fo cons ption in the s o nding egion co ido is opti ized n a ogistics co ido the instit -
and fo inte nationa t ade ities connected the co - tiona f a e o ta es on a eading o e pa t eca se
ridor represent important markets for consumption and o de c ossings a e often the ott enec in ogistics
a so p o ide a c itica so ce of a o techno og and co ido s and the e cienc of a ogistics co ido is
inno ation that is necessa to d i e econo ic g o th determined by its weakest part.
it a et a h sica connecti it s ch as that
Figure 2.1. Elements of Transport Corridors versus Economic Corridors
Labor,
Transport corridor Economic corridor
technology,
commerce
Urbanization and
Rail/road
skill upgrading
improvement
Industrial Urban Improve industrial
production centers infrastructure
Rail/road
Trade improvement
facilitation
Access to Transport Access,
Investor-
markets, corridor distribution,
friendly policies
gateways consumption
Node/ Industrial Transport Area of
city center linkage influence
Source: ADB 2014a.
12 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Finally, in an economic corridor, development is not only (2014), in their more mature stage, corridors function
concentrated in the large cities along the transport as true development corridors, also encompassing the
corridor, but investment and economic development spatial coordination of noneconomic elements, policies,
spreads to smaller cities and underdeveloped areas in and investments (figure 2.2).
the broad vicinity of the corridor.
In summary, economic corridors are geographically
Thus, the transformation of transport links into oriented development initiatives aimed at attracting
trade-creating economic corridors requires the “wid- investment and generating economic activity within
ening” of the corridors: by expanding and completing a contiguous region, based on an efficient transpor-
the infrastructure base, establishing multimodal and tation system. Economic corridors are not necessarily
intermodal transport facilities and promoting logistics equivalent to specific roads or highways. Instead, they
development as well as more intensive development of represent geographic areas that encompass a high
the area around the corridors, with capacity building in density or flow of economic activities and rely on the
productive economic centers. transportation and transit connectivity of the corridors
to also promote spatial transformation, agglomera-
Analysis of the experiences of successful economic tion and economic diversification (ADB 2014b). They
corridors around the world suggests that economic encompass a constellation of connected markets which,
corridors necessarily evolve over time—from a transpor- in turn, could be linked to other markets outside the
tation corridor, to a corridor with logistical and trade region; the clustering of economic activities, therefore,
facilitation elements, to an economic or growth corridor. makes it possible to benefit from economies of scale
As pointed out in some studies, such as Gálvez Nogales (Brunner 2013).
Figure 2.2. The Economic/Development Corridor Path
Transport corridor Logistics corridor Trade corridor Economic corridor Development
Transportation Transport corridor Logistics Commercial corridor
infrastructure + + logistics corridor + trade corridor + other Economic corridor +
transportation coordination facilitation economic coordination of
services dimensions noneconomic elements
Source: Adapted from Gálvez Nogales 2014.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
13
Figure 2.3. Key Institutional Steps for Economic Corridor Development in Central America
Developing Acquiring Developing trunk Developing urban Developing industrial
master plans land infrastructure infrastructure infrastructure
Focus on land zoning Acquisition or pooling Development of Development Development of
and specification of of land to support supporting and of urban productive
land end-use to ensure development of connectivity infrastructure infrastructure in the
planned industrial and requisite industrial and infrastructure outside in the urban identified zones
urban development urban infrastructure the identified zones centers
Investment promotion and facilitation:
Marketing of the corridor to potential investors and processing of registrations or licenses for investors
Source: Source: ADB. Unpublished. “Southwest Bangladesh Economic Corridor Comprehensive Development Plan.” Cited in: Hong, S. C. 2018. “ADB Briefs: Realizing the Potential of Bangladesh
through Economic Corridor Development.” Asian Development Bank, Manila. http://dx.doi.org/10.22617/BRF189712-2.
Global experiences in corridor development underscore people and goods (JICA 2014). In recent years, the tools
the need to establish a dedicated institution or insti- and strategies of economic corridors have changed
tutions at the corridor and/or node level for planning, significantly. While older approaches focused primarily
conceptualization, development, and monitoring of on public infrastructure development, recent corridor
corridor and node projects (see figure 2.3). Aside from developers have adopted broader strategies that also
establishing a corridor management authority, which take into account the dynamic evolution of private
is one of the options adopted by the existing economic investment and global value chains (GVCs) (Gálvez
corridors in other parts of the world, integrated eco- Nogales 2014). Indeed, it is difficult to conceive of suc-
nomic corridor planning typically requires a multi-tier cessful economic corridor development based on public
institutional framework involving all concerned gov- investment alone; the role of the public sector and
ernment agencies, with oversight by a high-ranking public investment in economic corridor development is
authority at the central and regional levels. Aside from preferably focused on maximizing the multiplier of pri-
infrastructure development, the coordination of related vate investment per unit of public investment. An effec-
development initiatives along the identified economic tive partnership with the private sector, in turn, requires
corridors will be essential, yet surely challenging, as extensive consultation between the public and private
there is a wide range of institutional factors to consider sectors, both upstream and downstream, in planning
in any economic corridor that involves more than one and in implementation (ADB 2014b). Economic corri-
country. An institutional framework that will provide the dors are about cooperation between public agencies,
vital coordination in planning, prioritizing, and develop- between the public and private sectors, and between
ing corridor infrastructure projects among government private sector companies. Multisectoral representation
ministries and agencies should be present to ensure and private sector participation are sine qua non con-
harmonization in project commissioning. A central ditions for the success of trade and transport corridors.
corridor planning and development agency, if one is There are many types of institutional and administra-
created, should be duly empowered and tasked with the tive arrangements for corridors; some are voluntary,
overall development and management of the corridor others are legally binding commitments between the
and its production nodes. authorities of the countries through which the corridor
passes. The ideal arrangement is one in which each of
The success of a corridor will depend on its ability to the parties involved has the same level of willingness,
attract investment, which in turn depends on adequate commitment, power, and influence over developments
infrastructure and policies to facilitate the movement of and interventions (Kunaka and Carruthers 2014).
MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Since the construction of an economic corridor can
in o e i ense financia cost its i p e entation st The Economic Benefits
be carefully evaluated from an economic perspective to
sti ate the desi ed g o th s econo ic co ido s
p o ife ate and spatia de e op ent p anning athe s a fi st o de e ect the i p o e ent of t anspo t co -
than po itica o nda ies inc easing defines econo ic ridors of sing the t ans-
boundaries, there will naturally be winners and losers. port system, as measured by the reduction in vehicle
ade net o and agg o e ation e ects a disad an- ope ating costs s and t a e ti es o e a p e
tage a eas ith o capacit nne he efo e interurban road improvement projects implemented in
hen onito ing and e a ating the de e op ent of the egion o e the ast th ee decades ith financ-
economic corridors, it is important to favor approaches ing f o ti ate a de e op ent an s s ha e
that e a ine ho s ch de e op ents can e ade es ted in an a e age edian of pe cent ed ction
inc si e o e a p e connecting pe iphe a and ag- in s and pe cent ed ction in t a e ti e on the
ging egions th o gh ph sica co ido s to cent a a eas p o ect oads as eas ed co pa ing the conditions
e i es the i p e entation of eas es that ind ce st efo e the sta t of the oad o s and ithin si
the st ct a changes needed to apid inc ease the onths afte co p etion to en e ga and gita
di e sit and co petiti eness of agging a eas in o de hese cost and ti e sa ings cont i ted to a edian
to a oid the o t ig ation of econo ic eso ces to g o th of pe cent in t a c o es on the p o ect
cent a a eas enco aged na o foc sed accessi- oads in the afte s efo e pe iod a tho gh the
bility investments. In addition, the development of eco- g o th as a so d i en othe conte t a a ia es
nomic corridors should also aim to address the social, s ch as pop ation and inco e g o th in the p o ect
environmental and other potentially adverse impacts of eneficia a eas
increased connectivity.
e ond the i ediate se enefits co ido de e -
opment aims to contribute to g
. Transport corridor can become a
Economic corridors can be tool for spatially balanced and sustainable economic
de e op ent in the co ido egion hi e so e of these
National: For example, India’s east coast economic corridor enefits a appea in the sho t n so e ta e ti e to
ate ia ize o e e co ido de e op ent can e ace -
Regional: Such as the Greater Mekong Sub-region
ate spatia ine a it ithin co nt ies despite o e a
International: For example, China’s New Eurasian Land Bridge positi e a e age i pacts s ggesting the i po tant o e
for complementary policies to itigate the t ade o s that
is the opti a t anspo t co ido inte ention pac age
will include complementary interventions that com-
Economic corridors can focus on pensate potentia ose s and oost a e age enefits
o e ts et a
Land connections: For instance, the China–Pakistan Economic
Corridor, New Eurasian Land Bridge
Maritime connections: The Japan–India Asia–Africa Growth
Corridor aims to develop new maritime routes between Africa and
Southeast Asia
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
15
In the Greater Mekong Subregion (GMS), the economic to increase trade by between 2.8 and 9.7 percent for
corridor approach was adopted in the late 1990s as a the connected economies. Time-sensitive sectors, such
means of achieving transport, energy, and telecom- as fresh fruits and vegetables, or sectors requiring
munications infrastructure connectivity.1 The GMS time-sensitive inputs (electronics, chemicals and others
corridor approach planned infrastructure by taking into integrated in GVCs) will benefit the most. FDI inflows
account the economic potential of the areas around the are expected to increase by 7.6 percent for the low-in-
transport links. The corridors are mainly transport and come corridor economies, and real income gains are
trade corridors with a focus on cross-border physical estimated at between 1.2 and 3.4 percent. BRI transport
infrastructure, logistics coordination, and trade facilita- projects could contribute to lifting 7.6 million people out
tion. In addition, they include elements like in-vestment of extreme poverty‚ In purchasing power parity (PPP), of
promotion in special economic zones (SEZs), private less than US$1.90 a day—and 32 million people out of
sector development, and human resource development. moderate poverty (less than US$3.20 a day), mostly in
More recently, noneconomic elements, such as urban the corridor economies.
develop¬ment and environmental issues, have been
added. Studies have in particular stressed the impact In the West Africa context, World Bank (2019b) tested
of the “soft” aspects of trade facilitation that improved several scenarios to assess the expected impacts on real
transit times and trade service costs. Intra-GMS mer- income growth in Burkina Faso as a result of improving
chandise trade expanded from US$26 billion in 2000 to the main corridor connecting the country to a major
US$483 billion in 2017. The impact of the corridors on gateway port (Lomé in Togo). Four of the scenarios
incomes and poverty reduction has been the highest focused exclusively on corridor infrastructure improve-
in the previously least well connected countries, mainly ment. The final two scenarios also considered the effect
Cambodia, followed by Lao PDR and Myanmar, and in of halving the transport fixed costs, such as through
the growth peripheries of Thailand and Vietnam. Cross- improved competition and transparency in the trucking
border agricultural clusters have become im¬portant services market, and the halving of international border
drivers of regional development and boosted the clus- and port costs, such as through improved port efficiency
tering of industries along the corridors; this has resulted that reduces the truck turnaround times when picking
in improvement in trade performance for agricultural up cargo. The study found that, while improving the
products and a positive impact on smallholder farmers, Ouagadougou–Lomé road corridor infrastructure would
raising their incomes by 20 percent. increase Burkina Faso’s real income by about 0.12
percent, complementary interventions that make the
In the case of China’s Belt and Road Initiative (BRI), transport sector more efficient and reduce border and
which covers many countries and multiple economic port costs would substantially amplify the income gains,
corridors, World Bank (2019a) estimated that substantial resulting in real income growth in the order of 1.3 to
improvements in trade, foreign direct investment (FDI), 1.4 percent. Importantly, the real income gains would
and living conditions for citizens of the participating be significantly higher in those Burkina Faso districts
countries could be expected—but only if China and the that have high potential to produce tradable goods and
other connected countries adopt deeper policy reforms those that are well-connected to the main transport
that increase transparency, expand trade, improve debt corridor via secondary roads.
sustainability, and mitigate environmental, social, and
corruption risks. BRI transport projects are estimated
1 For information on the economic corridor approach in the Greater Mekong Subregion (GMS), see https://www.greatermekong.org/content/economic-corridors-in-the-greater-me-
kong-subregion.
16 MOBILITY AND TRANSPORT
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Alam et al. (2019) reviewed the transport corridor lights. The review found that the effect of the supported
projects financed by the Asian Development Bank (ADB), corridor projects on local economic was very heterog-
Japan International Cooperation Agency (JICA), and the enous and significantly depended on certain project
World Bank across 16 countries in the 1990s and 2000s characteristics such as better engagement with the
to understand their impacts on local economic activity, private sector.
as measured by the geocoded intensity of nighttime
Identification of Economic
Corridors in Central America
The six Central America (CA) countries have logistics border security. That same year, the ministers of econ-
plans and/or national transportation plans that promote omy, transportation, and finance of Central America
27 priority logistics corridors and more than 120 short-, agreed to establish a regional mobility and logistics
medium-, and long-term projects, of which around 10 framework policy, seeking to focus public action on the
percent have already been implemented. The National movement of people and goods, instead of an isolated
Freight Logistics Plans (PNLOG) are long-term strategic vision of the modes of transportation.
planning instruments that emerged from the close
collaboration between the Inter-American Development Some countries have also recently developed con-
Bank (IDB) and the authorities of each country, and are crete strategies to move beyond logistics corridors
focused on improving the performance and maturity to true economic—or development—corridors. In
of the national logistics system, boosting foreign trade, Costa Rica, as a result of the actions of the Ministry of
and improving the quality of the national logistics National Planning and Economic Policy (MIDEPLAN),
system (Arteaga Velásquez and Salazar Recinos 2019). the Governing Body of the National Planning System,
The plans are based on the principle that freight logis- a long-term framework and vision has been developed
tics is a cross-cutting layer of planning, and are intended for the first time to guide the policies, programs and
to define a strategic orientation that serves as a basis projects of public entities, the private sector and other
for prioritization (IDB 2016a). At the regional level, the stakeholders in a comprehensive manner. Among other
Central American Strategy for Trade Facilitation and things, the country’s Territorial Economic Strategy for
Competitiveness with emphasis on coordinated border an Inclusive and Decarbonized Economy 2020–50 is
management, adopted by the Council of Ministers of centered around 11 development poles and 6 logistics
Economic Integration (COMIECO) in October 2015, corridors, whereby economic activity and development
addresses the area of trade facilitation and border is more evenly distributed along major highways rather
reform, covering eight components: adoption of than being “hyper-concentrated” in the San Jose met-
international standards, information interoperability, ropolitan area (capital). The strategy also envisions the
comprehensive risk management, reliable operators, decentralization of innovation for a decarbonized future
quarantine control, integration of procedures and con- through the generation of advanced secondary urban
trol, infrastructure and equipment, and community and centers (GeoAdaptive and MIDEPLAN 2021).
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
17
These and other examples of planning instruments in information across the region and also detects infor-
the region illustrate the growing consensus among mal economic activity (see Henderson et al. 2012)
national governments on the need for a comprehensive
and spatially oriented approach to trade integration • High-resolution data on agricultural production
and economic development, prioritizing mobility and
logistics investments and policies in ways that explicitly • Geolocated firm data for the six countries from offi-
reflect the spatial distribution of existing economic cial business registries and a Secretariat for Regional
potentials and development needs. Economic Integration (SIECA) database of the largest
firms in each production sector
As already mentioned, globally, economic corridors
tend to be anchored in urban centers, which represent • Geolocated data on the location of major intra-
the main poles of consumption and recipients of trade regional trade consignee firms
flows, but also supply knowledge, skills, and labor. In
CA, the presence of urban centers that could serve as • Data on the origins (places of production) of extra-re-
anchors for economic corridors can be inferred from gional trade flows from CA to the United States,
spatial data on a number of different indicators, such as recorded in U.S. customs records (via the Port
as the distribution of population density, the presence Import/Export Reporting Service, or PIERS, a division
of cities with significant population size (>50,000) and of IHS Markit), and the value and volume of associ-
the proportion of urbanized land within each adminis- ated exports.
trative area.
In the current analysis, cross-border “economic corri-
Most of the region’s current population densities are dors” in CA are identified by: first, detecting contiguous
centered around the Pacific and Atlantic transportation areas characterized by above-average nighttime light
corridors. However, urbanized areas are expanding intensity crossing borders or near borders, overlayed
rapidly in eastern Nicaragua, northern Costa Rica, and with the spatial location of cities (demand centers); sec-
most of Guatemala, potentially representing new con- ond, confirming the economic importance of the iden-
sumption anchors for the economic corridors, even if tified high-intensity areas by overlaying the geolocated
existing urban poles along the Pacific and Pan-American data of firms in production sectors (in particular in the
corridors have seen the greatest increase in population prioritized intraregional value chains), firms exporting
density over the last decade (in other words, urbanization to the United States., and intraregional trade consignee
has contributed mostly to the growth of existing cities). firms, thus also characterizing the specific production
profile of each corridor area; and, third, consulting
On the other hand, the generators of current and existing government strategies and plans to confirm
potential trade flows, or production centers, are whether the identified economic corridors have already
inferred from the triangulation of multiple data been formally prioritized. The identification of “agricul-
sources, in order to obtain as accurate a picture as tural corridors” follows a similar process, as illustrated in
possible of the location of economic densities in the figure 2.4. Finally, the initially identified corridors were
region. These include: also validated with SIECA and the country government
representatives through several technical workshops
• Nighttime light intensity data (see map 2.1), a held in 2020 and 2021.
commonly used indicator for inferring the location
of economic activity that provides comparable
18 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Map 2.1. Nighttime Light Intensity (Production Intensity Indicator) and Density of All Companies in Production Sectors in Central America
!
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Firms per 100 sq-km
km2
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0 62.5125 250 375 500
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Source: Company records; nighttime light data from Goodman et al. 2019; consignee data geolocated from SIECA database; exporters to the United States geolocated from U.S. Customs data
(via PIERS/IHS Markit).
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
19
Figure 2.4. Methodological Approach to Identify Cross-Border Economic and Agricultural Corridors in Central America
Economic corridors
Identify contiguous areas Overlay geolocated data of Review existing
characterized by above-average firms in production sectors (in government strategies
nighttime light intensity particular, the prioritized and plans to under-
crossing borders or near intraregional value chains), stand whether the
borders, vis-à-vis locations of exporters to the United States, identified economic
demand centers and intraregional trade corridors have already
been formally
prioritized; discuss with
SIECA and government
Agricultural corridors counterparts
Identify contiguous areas Overlay geolocated data of
characterized by above-average firms in agriculture and food
intensity of agricultural production sectors, exporters
production in border regions to the United States, and
vis-à-vis locations of demand intraregional trade consignees
in agricultural and food
production sectors
Source: Original figure produced for this publication.
Economic corridors
According to previous studies, more than 80 percent of Sula account for 68 percent of the country’s economic
CA’s GDP is concentrated in the largest cities, although activity, with 38 percent and 29 percent, respectively, of
secondary cities have grown significantly and represent the country’s GDP (Augustin et al. 2017).
between 15 and 65 percent of national urban systems,
contributing almost two-thirds of urban population Also, the analysis conducted as part of the current
growth in Nicaragua and Guatemala over the last study suggests that, like the demand centers, economic
decade. With the exception of Honduras, more than activity and firms in CA are mostly concentrated along
two-thirds of the total nighttime luminosity is currently the main north–south corridors, with the exception of
concentrated in the capital cities, reaching 82 percent another detectable belt of activity along the border
in the case of San José, Costa Rica. In Honduras, the between Honduras and Nicaragua. Depending on the
existence of a large economic pole outside the capital— underlying production value chains, the economic
in San Pedro Sula—is reflected in the more balanced corridors of production detected in CA appear to take
light distribution between the country’s two largest one of the following forms:
urban centers. Together, Tegucigalpa and San Pedro
20 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
• A contiguous high-intensity production area of at • Production is almost entirely concentrated in indi-
least 75 to 100 kilometers in length extending across vidual urban centers, in which case the intraregional
at least one border: this seems to be more the case value chain between these centers could be estab-
for agricultural production, but also to some extent lished through short sea shipping services or cargo
for the paper sector (between Guatemala and El flights. This appears to be the case for the paper and
Salvador). plastics sectors.
• A contiguous area of high production intensity in one Specifically, the following high-intensity cross-border
country, but with a large urban pole just across the production corridors have been identified in the region,
border: this is the case for the food processing and as illustrated in map 2.2.
milling sectors.
Map 2.2. Main Identified Cross-Border Economic Corridors in Central America
Puerto Cortez
G La Ceiba
G
Puerto Barrios
Choloma
G
1 Guatemala–Honduras–El Salvador:
San Pedro Sula
A corridor consisting of two “branches”:
G
Coban G La Lima
G G GEl Progreso
Puerto Barrios–Puerto Cortes–San
Pedro Sula–Metapán–Comayagua–
Tegucigalpa
G
San Pedro Ayampuc
G
G Mixco
G
G GG
Amatitlan Petapa
G GG Comayagua
G
GGG San Jose Pinula
Escuintla
G
Metapán G
2 Guatemala–El Salvador: Guatemala
Santa
City–Santa Ana–Sonsonate–San
G Lucia Cotzumalguapa
Tegucigalpa
Santa Ana
Salvador
G
Tacuba G
GG NejapaApopa
G Soyapango
Sonsonate GG Ilopango
GG G G
G GG
Acajutla GGG Mejicanos
G
GSan Vicente
G
G
Zacatecoluca
G
San Miguel
3 El Salvador–Honduras–Nicaragua:
Usulután
G
La Union
G
Ciudad Choluteca
Gulf of Fonseca
G Cities (>50,000) G
Esteli
G
Jinotega
Matagalpa
Corridor GT - ES - HN G
4 Honduras–Nicaragua: Tegucigalpa–
Corridor HN - NI
ChinandegaEl Viejo
GG Estelí–Jinotega–Matagalpa
Leon
Corridor GT - ES G
Tipitapa
Corridor ES - HN - NI
Kilometers G
Ciudad SandinoManagua + Air or sea connections between major
0 15 30 60 90 120 G G
G G cities concentrating all production in
Source: Original figure produced for this publication. individual priority value chains
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
21
Among the identified economic corridors, the GT–HN–ES according to CEPAL et al. (2018), such as plastics, milling
corridor occupies the largest total area of about 27,000 products, and dairy. In contrast, there are relatively few
square kilometers, while the GT–ES corridor combines such consignees in the Gulf of Fonseca corridor.
the largest population (almost 9 million) and by far the
largest GDP (US$63 billion in 2017) and number of com- The governments of Honduras, Nicaragua, and El
panies in production sectors. The HN–NI corridor occu- Salvador have signed a series of agreements for the
pies the smallest total area, but hosts a disproportion- development and progress of the Gulf of Fonseca.
ately large number of firms in production sectors. While Under these agreements, several international donors
the identified corridor areas correspond to high overall are supporting the implementation of projects aimed
economic activity, some of them are also important for at economic development, including the promotion of
trade in food and agricultural products specifically. For value chains and rural businesses in the region, with
example, in the GT–ES corridor, corn and wheat flour specific focus areas such as fisheries, agro-industry,
processed in El Salvador is exported to Guatemala and sustainable tourism and renewable energy (Fioravanti
Honduras. There is also a significant flow of rice from et al. 2019). The Gulf of Fonseca corridor also overlaps
Honduras to El Salvador (JICA 2020). with one of the priority employment and economic
development zones (“ZEDE”) that have been identified
The identified corridors differ significantly in their in Honduras’ Country Vision 2032, the National Plan
production profile. For example, the apparel sector 2010–22 and other national strategies, with the objective
is represented by a higher proportion of companies of facilitating the country’s insertion into international
located in the Gulf of Fonseca and HN–NI corridors markets, while seeking to attract investment, generate
compared to the other two corridors. On the other employment and develop services and infrastructure.
hand, textile production is more represented in the GT– Among others, the ZEDE would serve to develop inter-
HN–ES and GT–ES corridors. In particular, the San Pedro national logistics centers, special agro-industrial zones
Sula area in Honduras is an important textile production and special investment districts. The master plan for the
center, accounting for about one third of Honduran ZEDE of the Gulf of Fonseca was prepared a few years
manufacturing (IDB 2016b). ago and describes the area’s potential for logistical
growth in support of the agricultural, aquaculture and
In all four corridors, food production/processing is a key maquila industries. The Gulf of Fonseca also concen-
sector, represented by between 21 percent (GT–ES) and trates Honduras’ shrimp production and shrimp packing
67 percent (HN–NI) of all firms in the production sectors. industries (IDB 2016b).
For example, the HN–NI and Gulf of Fonseca corridors
are home to a large number of firms operating in the The GT–HN–ES and HN–NI corridors show a higher prev-
milling sector, while the GT–ES corridor also has a large alence of poverty—especially in municipalities located in
number of firms in the high-priority plastic and paper Honduras—than the other two corridors. Poverty is the
products value chains. The GT–HN–ES corridor hosts by least prevalent in the GT–ES, which connects two large
far the largest number of major consignee companies in metropolitan areas, Guatemala City and San Salvador.
value chains identified as priorities for intraregional trade
22 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Agricultural corridors
Spatial analysis conducted by the current study suggests In other words, as shown in map 2.3, while staple crop
that, since 2000, land under cultivation has expanded and livestock production is more concentrated along
significantly along the Pacific Corridor in Guatemala and the Pacific coast and the main transport corridors, in
in the Atlantic coastal areas of Honduras and Nicaragua. the case of cash crops, intensive production areas are
At present, agricultural production is mainly concen- also observed along the so-called Atlantic corridor in
trated along the main north–south corridors; however, Nicaragua and Honduras. Large volumes of banana and
there is also a clearly detectable corridor of high pro- pineapple are produced in Costa Rica, the country being
duction density along the Atlantic coast, crossing the the third and the first largest producer of these crops,
Honduras-Guatemala border. This is especially the case respectively, in the world, with a significant impact on
for cash crops, such as coffee, cocoa and fresh fruit, the cargo volumes at the country’s ports.
which are also more relevant for cross-border trade.
Map 2.3. Intensity of Cash Crop Production and Density of Enterprises in the Agricultural and Food Production Sectors in Central America
Empresas
Firms perpor 100
100 km2
km 2
! !
1 - 25
( 26 - 50
(
!
51 - 100
(( (
( (
!
(
!
!
!
( !
!
!
!
( 101 - 900
((( ( ( ! !
(
!
(( Cash crop production
! !
Producción de cultivos comerciales
((
!
(( (( ( (
(
!
!
(
(
!
Mt/per 100 km2
!
mt / sq-km
! !
! !
!
(
! ! !
(
!
(
!
!
! !
! !
!
( ! ! 0 - 50
51 - 100
!
!
! ! !
( !
(
! !
( 101 - 200
( !
!
201 - 300
(
!
301 - 500
((
!
(
!
!
501 - 77,154
( !
!
!
!
!
((
!
!
(( !
!
!
!
! ! !
!
$
!
(
!
( (
!
!
!
((
!
Kilometers
!
0 62.5125 250 375 500
Source: Agricultural data from International Food Policy Research Institute (IFPRI); company data from business registers and exporter data from PIERS/IHS Markit.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
23
Significant quantities of regional and global cash crops fruits, as well as corn, are also produced in the corridor
are produced in the four identified cross-border agri- area. The corridor also produces significant quantities of
cultural corridors (map 2.4), although the specific crops coffee beans, exceeding 100,000 tons annually.
differ slightly. For example, the GT–HN agricultural
corridor (El Progreso¬–Colón) produces significant Sugarcane and corn dominate production in the HN–NI
quantities of tropical fruits, bananas, oil palm, and fresh agricultural corridor as well. The production profile
vegetables, and its total volume of cash crop production of the Managua–Guanacaste corridor is dominated
amounts to about 1.8 million metric tons per year, in by sugarcane, tropical fruits (oranges) and rice, but
addition to about 160,000 tons of staple crops such as significant quantities of peanuts and bananas are also
rice and corn. produced in the area. The Escuintla–Sonsonate and El
Progreso–Colón corridors are not only important agri-
The GT¬–ES agricultural corridor produces by far the cultural production corridors, but also represent some
largest total volume of agricultural crops among all the of the highest densities of overall exports of goods of all
identified corridors. Sugarcane is the dominant crop in types to the United States in terms of volume.
this corridor, with about 20 million tons produced annu-
ally; however, large volumes of bananas and tropical
Map 2.4. Main Identified Cross-Border Agricultural Corridors in Central America
Puerto Cortez La Ceiba
Puerto Barrios
G G
G Choloma
Coban G
Huehuetenango G
G La Lima
El Progreso
GG
G
5 Guatemala–Honduras: El Progreso /
G
GG
Totonicapan
G Zacapa / Izabal–Santa Barbara / Cortes /
Quetzaltenango G G Mixco
G
PetapaGG
G
G
G
GG
Amatitlan
Comayagua Yoro / Atlántida / Colon
G
Escuintla G Metapán G
G G G
Santa Lucia Cotzumalguapa
Tegucigalpa
AhuachapánTacuba
Guatemala–El Salvador: Escuintla /
G
6
G Apopa
GG
G GGNejapa
Acajutla
Santa Rosa / Jutiapa–Ahuachapán /
G G
GG
GG
GGG
Nahuizalco GG
G Santa TeclaIlopango
G
G Usulután
G Ciudad Choluteca
Zacatecoluca
G G
Esteli Jinotega Sonsonate
G G Matagalpa
G
ChinandegaEl Viejo
G
G
Leon 7 Honduras–Nicaragua: Choluteca–
G
ManaguaG
Tipitapa
G G Masaya GJuigalpa
Chinandega / Estelí
Ciudad Sandino
G GGranada
La Union
G Cities (>50,000) Nueva Guinea
G
8 Nicaragua–Costa Rica: Managua–
Corridor GT - HN
Carazo / Masaya / Granada /
Corridor GT - ES Rivas–Guanacaste
Liberia
Corridor HN - NI G
Kilometers
Corridor NI - CR 0 25 50 100 150 200
G
Source: Original map produced for this publication.
24 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Figure 2.5. Crop Production Volumes in the Identified Agricultural Corridors across Central America
metric tons per year
Staples Cash crops
20,000,000
15,000,000
10,000,000
5,000,000
-
GT-ES NI-CR HN-NI GT-HN
Source: International Food Policy Research Institute (IFPRI) agricultural production data.
Source: International Food Policy Research Institute (IFPRI) agricultural production data.
Existing studies suggest that, for corn and corn prod- seafood, Panama is an important exporter to El Salvador
ucts, the average import rate in CA is slightly below and Costa Rica; Honduras exports a good amount to
50 percent but exceeds 80 percent in Costa Rica and Guatemala; and Nicaragua is an important exporter to
Panama. For rice and wheat, CA countries El Salvador and Costa Rica. Finally, in the case of dairy
products and eggs, the largest trade flows are from
rely on imports for about 50 percent and 100 percent, Nicaragua to El Salvador and from Costa Rica to the rest
respectively, of their overall consumption volume (JICA of the region, especially Guatemala (JICA 2020).
2020). Corn production is concentrated in northern
CA, particularly in the Pacific coast of Guatemala and Indeed, as illustrated in figure 2.5, in addition to their
El Salvador. Honduras and Nicaragua also produce role in cash crop production, the agricultural corridors
corn, as do parts of Panama. Guatemala, Honduras, identified in the current study also support intraregional
Nicaragua, and Costa Rica import corn flour from El commodity trade. The GT–HN agricultural corridor
Salvador. El Salvador and Nicaragua import corn flour corresponds to one of the main trade routes for corn
from Honduras. Rice production is concentrated in flour, wheat flour, and processed foods within CA (with
the southern CA countries; Nicaragua is the largest Puerto Cortes in Honduras as the main dry cargo port),
producer. Bean production areas are similar to those which are also used for rice imports from the United
of corn, where much of the production is in the three States by sea transport (JICA 2020). Similarly, part of
northern countries, but also in the central areas of the HN–NI agricultural corridor (CA3 in Honduras) is
Nicaragua (JICA 2020). Dried beans are exported from a key trade route for corn and wheat flour, and the
Nicaragua to Honduras, El Salvador and Costa Rica, and corridor in general is a key route for rice imports into
to a much lesser extent to Guatemala. In the case of the region from the United States and for regional trade
vegetables, the largest trade corresponds to the route in processed foods. There is also a significant trade flow
from Guatemala to El Salvador and from Honduras of rice from Nicaragua to Honduras. Finally, the NI–CR
to El Salvador. The largest volumes of intraregional agricultural corridor is an important intraregional corn
fruit flows are from Guatemala to El Salvador, from flour trade route, which follows the Pacific Highway in
Nicaragua to Costa Rica and from Honduras to El both countries. In Costa Rica, the same segment of the
Salvador. The largest volumes of meat are transported road corridor is also widely used to transport wheat and
to the rest of the region from Nicaragua: to El Salvador, rice, which Costa Rica imports by sea from the United
followed by Guatemala and Costa Rica. As for fish and States (JICA 2020).
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
25
In addition to its importance as a de-facto agricultural marine research, fisheries, sustainable tourism and
corridor, the NI–CR corridor on the Costa Rican side of blue biotechnology; and to diversify the tourism cluster
the border corresponds to one of the 11 development toward knowledge-based economic activities.
poles proposed in the Territorial Economic Strategy for
an Inclusive and Decarbonized Economy 2020–50 Costa Similarly, on the Nicaraguan side of the border, the area
Rica (figure 2.6). The specific area is part of the Northern corresponding to the detected agricultural corridor has
Chorotega Coastal Triangle, with the canton of Liberia also been identified as a key area for tourism promo-
as the main urban node. The idea behind the proposed tion, according to Nicaragua’s National Sustainable
logistics corridors in the Costa Rica strategy is to gener- Tourism Development Plan (PNDTS-2011/2020).
ate logistics and value-added opportunities for produc- Eventually, once the diplomatic relations between Costa
tion and imports and to expand areas where innovation Rica and Nicaragua are stabilized, it can integrate the
activities currently exist (Liberia, La Cruz, and the Gulf of area of San Juan del Sur (NI), with the tourism pole
Nicoya), thus helping to decentralize economic devel- Salinas–Cuajiniquil–Santa Rosa National Park–Papagayo
opment away from the capital. The long-term vision for (CR) and take advantage of the Liberia International
these clusters is for a major research, development, and Airport in Costa Rica as an entry point for tourists. An
innovation hub in manufacturing (high-tech and aero- idea has also been proposed to promote a tourist ferry
space) in the development and export of services, and in between Puerto Soley (Salinas Bay, CR) and San Juan del
the field of renewable energy; to make it a major coastal Sur (Rivas, NI).
hub activating the potential of the “blue economy” in
Figure 2.6. The Proposed Development Pole of Liberia in Costa Rica along the Managua–Guanacaste Route
Source: GeoAdaptive and MIDEPLAN 2021.
26 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Quality of Transport and Logistics in
the Identified Economic Corridors
Having identified the locations of potential cross-border • Presence of transport standards and service
economic corridors from economic activity and popula- provision
tion data and published government plans, this section
assesses the extent to which these corridors already • Presence of multimodal connections
function as transportation and logistics corridors.
Specifically, for each economic/agricultural corridor, the • Security aspects
section identifies the current situation:
• Presence of logistics platforms or services
• Quality of road infrastructure
• Borders and trade facilitation
Economic corridors
1 Guatemala–Honduras–El Salvador: Puerto Barrios–Puerto
Cortes–San Pedro Sula–Metapán–Tegucigalpa
Road infrastructure: The economic corridor is sup- has an average annual daily traffic (AADT) of some
ported by the so-called Atlantic (road) corridor, as 5,000 to 10,000 (PRONACOM 2019) and congestion is
shown in map 2.5). A long stretch of the road corridor considered low (JICA et al. 2019). In Guatemala’s Road
between San Pedro Sula along the HN–GT border Development Plan 2018–32, the country’s Road Action
(CA11) and the segment of the CA04 from Santa Rosa de Prioritization Model (MOPAV) classifies the CA13 section
Copán (HN) leading to the border with El Salvador are toward the border with Honduras as a high priority
in poor condition, although the condition of the other corridor and a key logistical corridor, in need of major
“branch”—to Tegucigalpa (CA05)—is good to fair (JICA maintenance works. There is also work to be done on
2020). No major road connects the El Poy border cross- the highways in the municipal capitals to ensure contin-
ing (HN–ES) with Metapán, the main urban center on uous mobility on the main routes used mainly by heavy
the Salvadoran side. The section of the CA05 between transport (PRONACOM 2019). In the El Salvador part of
Comayagua and Tegucigalpa (HN) is a particularly high the corridor—national Highway 12 around the city of
volume road and is highly congested, while the section Metapán—most of the main road is paved, according
between San Pedro Sula and Santa Cruz de Yojoa is of to a December 2019 news item posted on the website
medium volume and is characterized by a medium level of FOVIAL, an El Salvador-based road conservation fund
of congestion (JICA et al. 2019). The lack of detours to (https://www.fovial.com). In Santa Ana province overall,
ensure the fluidity of goods movements on the CA05 in in which Metapán is located, over 37 percent of the
Honduras, and the application of timetables for entry to entire length of paved roads were in poor condition in
urban areas, especially San Pedro Sula, are constraints 2017, up from 26 percent in 2013 (MOP 2018).
to the movement of long-distance goods (IDB 2016b).
Customs and trade facilitation: The border crossings
The short portion of the corridor inside Guatemala, from located in the area are Corinto and Aguas Calientes (GT–
Puerto Barrios to the border with Honduras (CA13), HN), El Poy (ES–HN), and Anguinatú (GT–ES).
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
27
Map 2.5. Road Infrastructure of the Puerto Barrios–Puerto Cortés–San Pedro Sula–Metapán–Tegucigalpa Economic Corridor
50
Puerto Cortes Kilometers
! Puerto Cortez
( Tela
G La Ceiba Intl
Puerto Barrios Puerto Barrios !
(
Puerto Santo !
(
!
( La Ceiba
(G
! !
(
G
!
( Choloma
Tomas de Castilla £
¤
CA13
£
¤
CA9 G San Pedro Sula
Corinto
La Lima Ramon V. Morales Intl
G
!
(
G El Progreso
GUATEMALA £
¤
CA4 G
£ £
¤
CA5
¤
CA4
£
¤
CA11
Aguas Calientes
£
¤
CA11A
Anguinatú £
¤
CA10
HONDURAS £
¤
CA5
Comayagua
£
¤
CA4
G
Metapán El Poy
£
¤G
12
£
¤
CA5
Tegucigalpa Toncontin Intl
Santa Ana (G
!
G EL SALVADOR
G Nejapa Apopa
G GG
G GG GGG G
Source: Original map produced for this publication.
Facilities: The Aguas Calientes border crossing (GT–HN) delays at the entry/exit feeder. The single lane in and
is located on route CA10, with the Control Center and out of the customs compound results in periodic bottle-
Facilitation Center facilities located at the crossing. The necks at checkpoints in both countries and in the space
control center manages the Central American Single between checkpoints. The enclosure has little space for
Customs Declaration and Invoice (FYDUCA)2 office, and physical inspections by customs and quarantine, which
the Facilitation Center handles single and consolidated causes delays because the user must wait for availabil-
FYDUCAs. Both facilities are located in Honduran terri- ity. The facility does not have adequate ramps for the
tory. Customs agents work Monday through Friday from gauging of goods (World Bank 2018).
8:00 a.m. to 5:00 p.m. and Saturdays from 8:00 a.m. to
1:00 p.m.; outside these hours, customs procedures are The Corinto border post (GT–HN) facilities are located
almost completely curtailed. Many vehicles arrive at the on the CA13 route. The control center handles the Oficio
border without having paid the taxes and can wait for FYDUCA, and the facilitation center handles the simple
days to pay them. There is no banking service on the and consolidated FYDUCAs. Both facilities are located
Honduran side of the crossing. Because there are no in Honduran territory. The key issues at the crossing are
dedicated channels for FYDUCA, bottlenecks can create the same as at the Aguas Calientes crossing.
2 The electronic legal document used to document transfers (formerly exports) and acquisitions (formerly imports) of goods with free circulation, traded between VAT taxpayers in
Guatemala and El Salvador and ISV Sales Tax in Honduras.
28 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
At the El Poy (HN–ES) crossing, there is only limited to pay taxes to the Customs Agency. At the Corinto
support infrastructure on the Honduran side (such as crossing in 2018, under FYDUCA, it took 4 minutes to
parking for heavy vehicles, screening areas, temporary cross the border in the direction from Guatemala to
and short-term storage spaces for refrigerated cargo) Honduras and 3 minutes in the opposite direction. In
(IDB 2016b). With an investment of US$1 million, El comparison, under FAUCA the time was almost 2 hours
Salvador remodeled the border post in 2018–19, includ- and 2 hours and 24 minutes, respectively.
ing flow modifications and improvement of lighting
throughout the customs area. Equipment and regulations for the provision of services:
There is a clear need to train drivers transporting with
At Anguinatú (GT–ES), El Salvador’s Ministry of Public FYDUCA. They should be instructed on the activities to
Works and Transportation is making progress in the be carried out before, during and after passing through
construction of new border enclosures. The project rep- the border post. Topics should include immigration,
resents an investment of US$15 million and is currently customs, quarantine, police and FYDUCA activities. Many
more than 50 percent complete. The new facilities will issues arise from this lack of training (World Bank 2018).
include two main buildings, a scanner area, parking lots,
customer service areas, control booths, and an electrical The formal supply of road transport services in
plant, among others. Honduras is particularly limited, so inland cargo flows
to ports are organized by shipping companies through
Facilitation: The “deep integration process” between long-term contracts with carriers. There is no registra-
Guatemala and Honduras seeks to establish a Customs tion system for domestic transporters, no compulsory
Union and achieve the free movement of people, among liability insurance, and no driver certification system
others, by allowing the presentation of electronic (IDB 2016b).
documents to trade between the two countries, partic-
ularly using FYDUCA, which was introduced in March User and carrier services: Guatemala does not have
2018. In effect, FYDUCA eliminated customs formalities dedicated logistics centers; existing capacity is located
at the border for 80 percent of products. El Salvador in industrial zones and especially in free trade zones.
legally joined the Customs Union in 2018, thus linking One of the existing active free trade zones is located
its border crossings to the Customs Union (World Bank in Puerto Barrios (although categorized as a “logistics
Group 2019). shelter”) (IDB 2016a). There are no formal support areas
for carriers (truck stations and rest areas) (World Bank
FYDUCA has contributed to reducing the costs associ- 2021b). Honduras also lacks quality logistics centers,
ated with trade, including indirect costs faced by the even in key foreign trade hubs such as ports and
private sector in terms of transportation or administra- airports. Honduran ports do not have logistics activity
tive procedures. Procedural changes have led to a sharp zones, nor does the Toncontín International Airport,
reduction in time at border crossings. At the Aguas which also lacks a loading center and cold storage
Calientes crossing, the border can be crossed in about facilities (IDB 2016b). San Pedro Sula, the industrial
10 to 13 minutes with FYDUCA, compared to several capital, has developed a dedicated industrial park to
hours with FAUCA3 2018. By far the majority of the time attract major global players (Augustin et al. 2017).
spent at the border under FYDUCA is due to wait times In general, Honduras lacks a network of agricultural
3 DUCA integrates the Central American Single Customs Form (FAUCA), used for intraregional trade of originating goods; the Declaration for International Land Customs Transit, known as
DUT, used for international land transit of goods in Central America; and the Goods Declaration, also known as DUA or DM, used for trade with third countries outside the region. In this
context, FAUCA refers to trade within the framework of the agreement.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
29
storage/consolidation centers distributed in a balanced the cold chain (IDB 2016b). Puerto Cortés is operated
manner and close to the production areas; however, the by the National Ports Company. In 2013, the Philippine
limited supply that does exist is mostly located in the multinational ICTSI obtained a 30-year concession for the
area of the current economic corridor, in Comayagua. general cargo and container terminal at Puerto Cortés,
The supply of specialized logistics services in Honduras with an obligation to invest US$624 million over 14
is incipient, with value-added services such as packaging years. Part of these investments will be used to expand
or labeling rarely outsourced to third-party logistics the wharf, dredge the access channel to a depth of 14.5
service providers (IDB 2016b). In El Salvador, there is a meters, and purchase two new super post-Panamax
lack of transportation service centers that offer security cranes (Netherlands Enterprise Agency 2018).
during nighttime hours (Fioravanti et al. 2019).
Issues at Puerto Cortés include congestion due to
Security: Supply chain security is essential for business restrictions on the urban access road—especially gate
competitiveness, and in CA the costs of security mea- 14—and the use of off-port facilities for container opera-
sures can reach up to 22 percent of the freight value, tions; obsolete technology used in surveillance systems
forcing companies to take out cargo insurance. Of the (gamma rays); capacity issues at pier 6 and, in particular,
main road corridors that cross the economic corridor at the concessioned bulk terminal. Ongoing actions to
area, a high incidence of security threats, such as robber- address these issues include: expansion of the port’s
ies, is reported for the CA13 in Honduras on the segment container terminal by gaining land to the sea; conces-
between Puerto Cortés to San Pedro Sula (IDB 2013). sion of terminal 3 for bulk solids and fuels; and creation
of a preport on port land for preliminary checks, along
Multimodal nodes and connections: The economic with a truck citation system to address congestion (IDB
corridor has four Atlantic ports: Puerto Barrios and 2016b). In the 2020 Container Port Performance Index,
Santo Tomás de Castilla (GT) and Puerto Cortés and Tela Puerto Cortes ranks 131st out of 351 ports worldwide
(HN). Puerto Santo Tomás de Castilla (GT) is primarily according to the statistical evaluation approach and
a container port, managed by the private sector, and 149th according to the administrative approach (World
is used for coffee and cardamom exports, as well as Bank Group/IHS Markit 2021).
for about 85 to 90 percent of Guatemala’s exports to
the United States of textiles and light manufactures. It The corridor is also served by Puerto Barrios airport
handles 42 percent of Guatemala’s containerized cargo (GT), Ramón V. Morales international airport (HN) and
and is the most efficient port in the national port system, Toncontín international airport (HN). Morales interna-
accessible from CA09. However, the port is beginning to tional airport and Toncontín international airport (HN).
experience congestion problems due to the movement Ramón V. Morales (San Pedro Sula) functions as the
of nickel (IDB 2016a). Puerto Cortés is by far the largest main air cargo logistics hub for Honduras, handling 72
port in Honduras, as it can receive Panamax vessels and percent of total air cargo and having a total of 6,500
handle 86 percent of all containers that Honduras moves square meters of cargo facilities (warehouses for
by sea (570,000 twenty-foot equivalent units, or TEUs, general cargo, miscellaneous, hazardous materials,
per year) and 77 percent of the weight of general cargo. cold storage or cold room, and container facilities). The
It handles bananas, coffee, melons, pineapples and other airport’s main challenge is its inability to operate at full
fruits for which it has adequate equipment to maintain capacity due to deficiencies in foreign trade processes.
30 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Toncontín International Airport handles 22 percent of cargo flights. The SWISSPORT warehouse at Toncontín
Honduras’ air cargo and has 4,000 square meters of also presents capacity problems. Both the Ramón V.
facilities dedicated to cargo. Certain conditions affect Morales Airport and Toncontín International Airport are
air cargo movements. These include the lack of a characterized by insufficient equipment and personnel
national airport development plan and a comprehensive for non-intrusive inspections (customs) (IDB 2016b).
institutional model for the sector as well as capacity
(and location) constraints and the difficulty in serving The economic corridor also has one of the few operating
important cargo-generating areas in the center and railroad sections in CA, on the CA05 near San Pedro Sula
south of the country. Toncontín is also characterized by (although it is only 6 kilometers long) (JICA 2019); how-
infrastructure restrictions (short runway) and location in ever, there are no cross-border rail services.
an area of high urban pressure, which limit the supply of
Economic corridors
2 Guatemala–El Salvador: Guatemala City–San Salvador
Road Infrastructure: Illustrated in map 2.6, the eco- Sonsonate (176 kilometers, or 53 percent), compared to
nomic corridor is located mainly along CA01 and CA08 45 percent in La Libertad and 37 percent in Santa Ana
(GT) and 1 and 8 (ES). CA01 is generally in fair to good (MOP 2018).
condition, in need of minor maintenance (PRONACOM
2019), while a relatively large stretch of El Salvador’s The economic corridor also includes large metropolitan
Highway 1, starting at the Guatemalan border, is in areas, such as the Metropolitan Area of Guatemala
poor condition (JICA 2020) although is paved, similarly to (MAG), Guatemala’s most important urban center. Like
Highway 8. Guatemala’s Road Action Prioritization Model most large cities, it has high congestion and very low
(MOPAV) classifies CA01 as a high priority corridor and a speeds. There is an absence of bypasses (the country’s
key logistics corridor, with a need for capacity expansion main highways intersect in the city) and a significant
on the section from Guatemala City to approximately flow of freight transport in the city (World Bank 2021b).
Cuilapa and a need for major or minor maintenance The absence of bypasses accounts for approximately 12
for the remaining length toward the border with El percent of transit time on routes through Guatemala
Salvador. According to Guatemala’s Road Development City (Augustin et al. 2017). The stretch of the corridor
Plan 2018–32, improvements have recently been made from MAG to about halfway to the border with El
to several relevant road sections, such as the widening Salvador is very congested, with more than 40,000 vehi-
of CA08 near Valle Nuevo to improve accessibility to the cles per day, and the situation is similar for the entire
border with El Salvador. part of the corridor from the border to San Salvador
(JICA et al. 2019).
In Guatemala, rural access to roads in the corridor area
is relatively high, generally exceeding 60 percent in all Customs and Trade Facilitation: Two border crossings
municipalities. In El Salvador, of all the departments are located in the economic corridor area on the GT–ES
crossed by the economic corridor area, the highest border: Valle Nuevo–Las Chinamas (on CA08/8) and San
proportion of paved roads in poor condition is found Cristóbal (CA01/1).
in Ahuachapán (118 kilometers, or 72 percent) and
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
31
Facilities: Both border crossings are integrated border incoming and outgoing traffic (IDB 2016a). Investments
crossing points (World Bank 2021b). At the San Cristóbal are also needed to improve the crossing facilities at
border, the volume of vehicles and traffic jams is Las Chinamas, as the border bridge does not have the
high—occasionally with queues of up to 20 kilometers— necessary capacity to handle the flow of vehicles that
and hourly windows have had to be set up to handle pass through it (JICA et al. 2019).
Map 2.6. Road Infrastructure of the Guatemala City–San Salvador Economic Corridor
San Pedro Ayampuc
G
Chinautla
G
Chimaltenango G
Mixco
G G
Guatemala City GLa Aurora International
GG!
(
Petapa
San Jose Pinula £
¤
18
G
Amatitlan
HONDURAS
G G G Villa Canales
£
¤14
£
¤
CA9
Metapán
Escuintla
G G
G £
¤
CA1
EL SALVADOR
£
¤
CA1
£
¤
CA8 San Cristobal
Valle Nuevo £
¤
1
Santa Ana
£
¤ 8
G
Boayas de
San Jose
GUATEMALA Tacuba
Quetzal
G G Ahuachapán Nejapa Apopa
Nahuizalco £
¤ 1
GG San Martin
G Sonsonate Soyapango
£
¤ 8
GG G Ilopango
G Airport
G
G GG !
G
Mejicanos G IlopangoG
(
Acajutla G
Santa Tecla
G £
¤ 2
Acajutla £
¤4
50 G
El Salvador Intl
Kilometers La Libertad !
(
Source: Original map produced for this publication.
32 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Facilitation: The deep integration process between Libertad there are several free trade zones that offer
Guatemala and Honduras, later joined by El Salvador, various logistics and value-added services (see figure
represents an important step in significantly reducing 2.7). However, the latest National Freight Logistics Plan
border crossing times. While recent evaluations (for highlights the lack of transportation service centers that
example, World Bank 2018) did not cover border cross- offer security during nighttime hours. The plan also
ings specific to the Guatemala–El Salvador border, it is notes that the supply of specialized logistics services in
likely that crossing times under FYDUCA will experience El Salvador is still incipient, with outsourcing of services
significant improvement. predominantly used only by large companies (Fioravanti
et al. 2019).
Equipment and regulations for the provision of services:
There is a clear need to train drivers transporting with Security: Both CA01 (GT) and Highway 1 (ES) are gen-
FYDUCA, as in the case of the Guatemala–Honduras–El erally considered safe, although security incidents are
Salvador economic corridor. occasionally reported (IDB 2013).
User and carrier services: As already noted, Guatemala Road safety: In order to modernize roads and improve
generally lacks dedicated logistics centers and formal safety, work is pending to widen CA01 in Guatemala
rest areas for trucks. In the El Salvador part of the to four lanes. CA01 has a high accident rate, account-
economic corridor, there are both Industrial free trade ing for 13 percent of all accidents in Guatemala
zones and a service park; in the department of La (PRONACOM 2019).
Figure 2.7. Industrial Free Trade Zones and Service Parks of El Salvador
Source: Fioravanti et al. 2019.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
33
Multimodal nodes and connections: The economic if more direct access could be created between it and
corridor has one medium-sized port (Acajutla) and one the airport, there would be the possibility of developing
smaller port (La Libertad), both in El Salvador. Of these, a second cargo line in this area and optimizing cargo
only Acajutla handles containers and bulk cargo. It operations by relying on physical traceability systems
has a total area of 15.8 hectares, a bay depth ranging and a deconcentrated primary cargo area. However, the
from 8.23 to 14.93 meters, and 8 berths distributed in problem of airport capacity limitations at La Aurora goes
two multipurpose docks and one dock specialized in beyond the cargo area, as the airport has restrictions
handling bulk solids. The port is equipped to receive for expansion, and even for maintaining its certification,
tankers of up to 12-meter draft that supply several since the runways and taxiways are very close to each
refineries. The container yard has a capacity of 3,400 other, which prevents an increase in flight frequency
TEUs; bulk solids and containerized cargo predominate (IDB 2016a).
in the total volume. However, because it was originally
conceived as a bulk port, Acajutla has limitations for The San Salvador San Óscar Arnulfo Romero I.A.
handling containerized cargo (Fioravanti et al. 2019) has a specialized cargo terminal with a built-up area
due to container yard congestion (theoretical capacity is of ~10,300 square meters, through which all of the
65,000 TEUs, but in reality 180,000 TEUs are received); country’s air cargo moves. The airport mainly moves
the lack of an appointment system/port community products from the maquiladora clothing industry. The
system (PCS), which impedes the optimization of port growing saturation of its terminals and its positioning
reception and logistics; and the fact that bulk carriers as a regional hub for Avianca-Taca generates pressure
have priority over short container vessels, which causes on the facilities. The airport is currently being remod-
delays and encourages shipping lines to unload at eled: three-level building, five boarding gates with
nearby ports. Through CEPA, two new multipurpose boarding bridges, waiting rooms, circulation corridors,
cranes for container unloading were acquired in 2019 commercial area, security inspection area, and vehicular
and the expansion of its facilities is contemplated. In the traffic lanes, with the objective of increasing capacity
2020 Container Port Performance Index, Acajutla ranks from 2.1 to 3 million passengers per year. Finally, the
249th out of 351 ports globally and the lowest among Illopango airport, located near downtown San Salvador,
CA container ports (World Bank Group/IHS Markit 2021). across from the San Bartolo free trade zone, is currently
used only for military aviation and charter flights (no
The corridor area also has two international air cargo) and has no warehouse and storage facilities
airports: La Aurora International Airport (GT) and El (Fioravanti et al. 2019).
Salvador International Airport (ES), as well as a small
airport, Ilopango (ES). The cargo area at La Aurora inter- The economic corridor area does not have any oper-
national airport is managed through a public-private ational rail service. However, the connection between
partnership (PPP) contract, and there is a warehouse Acajutla and the departments of San Salvador and
operated by DHL. The main cargo handled at the airport Sonsonate is considered a priority section in the future
is pharmaceuticals and electronics, but agricultural railway project, “Tren del Pacífico” (Pacific Train).
cargo is increasing significantly. Despite optimization
efforts, the cargo area suffers from severe capacity con-
straints. La Aurora is adjacent to an industrial zone and,
34 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Economic corridors
3 El Salvador–Honduras-Nicaragua:
San Miguel–Choluteca-Chinandega–Leon (“Gulf of Fonseca”)
Road Infrastructure: Illustrated in map 2.7, the cargo inspection site to the customs counter, are
economic corridor is supported by the Pan-American concentrated in a single-story main building to ensure
Highway within El Salvador and Honduras (Highway integrated customs clearance; processing of cargo
1 and CA01 respectively), as well as Highway 2 in El vehicles typically takes 2 to 2.5 hours to complete.
Salvador, CA3 in Honduras, and NIC24/12 in Nicaragua. Customs users, cargo vehicles, cross-border buses, and
A significant length of 1/CA01 is in poor condition, pedestrians pass through the same route for customs
especially within Honduras (JICA 2020), where the aver- clearance from the highway. Traffic is one-way on both
age speed of traffic varies only between 16.7 and 18.4 the Nicaraguan and Honduran sides until the customs
kilometers per hour (kph), depending on the quarantine clearance facility in the center. Procedures for passen-
status of the transported goods (SIECA/SICA 2019). The ger and cargo vehicles are not currently separated.
estimated speed in the NIC24/12 in Nicaragua is much Although there is parking on the east and west side,
higher, more than 60 kph, although the speed survey there is insufficient capacity and, therefore, many cargo
data is more than seven years old (JICA 2014). Most vehicles are parked on the road, and there is significant
of the length of the corridor in the three countries is parking congestion. The restaurants and restrooms at
characterized by a medium level of congestion, with the border crossing are in poor condition (JICA 2014).
an average of over 10,000 vehicles per day (JICA et al.
2019). A significant portion of NIC24/12—the entire At El Amatillo, on the Honduran side, limited support
road southeast from Chinandega city to Leon and El infrastructure exists (such as parking for heavy vehicles,
Tamarindo—is scheduled to be widened, according screening areas, and temporary and short-term storage
to Nicaragua’s National Transportation Plan, although spaces for refrigerated cargo) (IDB 2016b). On the
the surface is paved and in good condition. The access Salvadoran side, the infrastructure at Amatillo is not wide
roads around the sugar cane and hydroelectric power enough to allow for adequate passage of vehicles, which
production areas in Chinandega and León have been is aggravated by the establishment of informal busi-
in poor condition (JICA 2014); however, Nicaragua has nesses in the adjacent area. There is no segregated lane
recently made progress in improving the roads to León for access to the International Customs Transit of Goods
and is currently expanding accesses to Chinandega. (TIM), no nonintrusive equipment for cargo screening,
and no space for the one-stop shop. Therefore, the
Customs and trade facilitation: The economic corri- Ministry of Public Works is moving forward with the
dor is supported by two border crossings: El Amatillo construction of a new border crossing point (US$15.3
(ES–HN) and El Guasaule (HN¬–NI). Approximately 60 million), which is more than half complete. It includes
percent of the cargo passing through El Guasaule is the construction of three buildings that will be used
cargo to/from Puerto Cortés in Honduras, and more for: (1) administration and management; (2) physical
than twice as much volume is transported through the inspection of means of transportation; and (3) restrooms
border crossing from Honduras to Nicaragua compared for officials, cafeteria, and public restrooms. The project
to the opposite direction (in 2013, some 1.83 million and includes furnishings and technology (online manage-
732,000 tons respectively). ment of procedures, use of scanners, radio-frequency
identification of merchandise transportation, license
Facilities: El Guasaule border is located on route CA3/ plate reading, and control cameras, among others).
NIC24. Customs clearance functions, from the vehicle
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
35
Map 2.7. Road Infrastructure of the Gulf of Fonseca Economic Corridor
El Amatillo
San Vicente £
¤
RN112
HONDURAS
G
£
¤
CA5
San Miguel £
¤
1
£
¤
EL SALVADOR
CA1
G £
¤
G CA1
Usulután £
¤
1
Ciudad Choluteca
G La Union
G
La Uni�n
£
¤2
£
¤
RN46
El Guasaule
£
¤
CA3
G
£
¤
3
£
¤
NICARAGUA
12
£
¤
50
£
¤ 24
El Viejo
Chinandega
G
G
£
¤ 3
Leon
Corinto G
£
¤
3
100 Sandino
Kilometers G
Source: Original map produced for this publication.
Facilitation: The average waiting time at the El El Salvador and Nicaragua have improved the publica-
Guasaule border in 2014 was 12 hours (JICA 2014). tion of easily accessible information on import, export,
Nicaragua is not part of the deep integration process and transit procedures, fees, regulations and other
taking place among Guatemala, Honduras, and El elements relevant to trade, and Nicaragua made efforts
Salvador. However, Nicaraguan Customs authorities to publish this information online (World Bank Group
have introduced pre-arrival processing, which has 2019). At El Guasaule and El Amatillo there is a TIM
helped reduce clearance times from 64 to 32 hours. Still, office, and it is planned to introduce a single window
according to a 2020 World Bank survey, most companies system separating customs clearance for pedestrians,
in the region perceive that, as of May 1, 2020, border passengers, and cargo vehicles (JICA 2014).
crossing times have increased at several border points,
including El Guasaule (eastbound), possibly due to a lack Equipment and regulations for service provision:
of standardization of schedules between country pairs In Nicaragua, a roadside service station is planned for
or movement restrictions for private sector users (World installation on NIC24, on a segment directly south of El
Bank Group 2020a). Guasaule border crossing, according to the Nicaraguan
National Transportation Plan (JICA 2014).
36 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Services for users and transporters: On the El Salvador pre-arrival processing to all imported goods, which
side of the economic corridor, there is both an industrial helps reduce clearance time from 8 to 4 days (World
free trade zone and a service park, both located along Bank Group 2019).
route 1 (see figure 2,7, earlier). However, there is a
lack of service centers for transporters that offer them Puerto Sandino has much more limited capacity to
security during nighttime hours (Fioravanti et al. 2019). receive large vessels, given its shallow access channel
(3 meters). It only handles liquid and dry bulk cargo.
Security: Serious security threats—robberies, assaults— The third port in the corridor area, Puerto de la Unión
are common on routes CA02 and CA01 (ES), and (ES), only handles containers (JICA et al. 2019). Originally
occasional incidents are reported on a section of NIC24 conceived as a regional port, it has a depth of 15 meters
(NI); major roads in the economic corridor area within and can receive container ships of up to 7,500 TEUs,
Honduras are generally considered safe (IDB 2013). including third-generation (Post-Panamax) vessels;
however, the need for dredging is increasing to improve
Multimodal nodes and connections: In Nicaragua, the access to the port. El Salvador’s Autonomous Executive
main ports are under the jurisdiction of the National Port Commission (CEPA) is exploring alternative models
Ports Company (EPN), while other ports are managed for the port concession, while simultaneously working
by local government or the private sector. There are on the implementation of a development plan for the
six international ports, of which three are located Gulf of Fonseca that proposes the specialization of
along the Pacific coast, including Puerto Corinto and the area as a production and distribution center for
Puerto Sandino, which support the specific economic agricultural and fishing products. The issues specific to
corridor. A third port, Puerto de la Union, is located in Puerto La Unión are the low level of utilization, which
the El Salvador section of the economic corridor. Puerto has generated revenue problems that prevent adequate
Corinto is considered a medium-sized port by inter- maintenance; the low quality of land access; and poor
national standards and can handle Panamax vessels, auxiliary logistics (Fioravanti et al. 2019).
while Puerto Sandino and La Union are small ports.
Puerto Corinto is located about 160 kilometers from Rivers, canals, and waterways are important for the
Managua, near the city of Chinandega. It has a deep mobility of people and goods in Nicaragua, although
access channel (14.6 meters) and capacity to handle all less so on the Pacific side where road transport is more
types of cargo at its various berths (10.0 to 12.2 meters developed. However, the lack of a clear delimitation
deep), including general cargo, containers (including regarding the management of river transport between
refrigerated), liquid bulk, gas, diesel, roll-on/roll-off and municipalities hinders the development of internal
also passengers. However, the port is experiencing a river transport. Budget formulation for water transport
number of problems with major implications for the services and facilities is not well executed at the national
country’s international trade. These include lack of space level, and there are no subsidies for water transport
immediately behind the port for future expansion, lack service providers (JICA 2014).
of capacity to meet future cargo demand, and shortage
of cargo handling facilities. The port has three termi- The economic corridor area does not have any major
nals: one for general cargo, one for containers and one airports. Within the Nicaraguan territory there is one
for liquid cargo. While focusing on cargo, it also receives airport of national importance, Chinandega, and it can
the second largest number of cruise ships in the coun- only accommodate small aircraft (<4.2 tons).
try. Although it is the largest port in Nicaragua, it does
not have any operational cranes and must rely on cargo The economic corridor does not have any rail
ships. At Puerto Corinto, customs authorities now apply connectivity.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
37
Economic corridors
4 Honduras–Nicaragua:
Tegucigalpa–Estelí–Jinotega–Matagalpa
Road Infrastructure: The economic corridor is supported however, almost half of the length of the main road
by CA06 (HN) and NIC15 and NIC1 (NI), as shown in map corridor within Honduras—from Tegucigalpa toward
2.8. The road on both sides of the border is considered the Nicaraguan border—is characterized by AADT above
to be one of the main transportation routes for food 40,000 and high congestion (JICA et al. 2019), which,
products for the entire CA region and is generally in fair among other things, is due to insufficient bypasses
to good condition (JICA 2020). However, some works around the Honduran capital. A new bridge is needed
are planned in the vicinity of the main road corridor, at at NIC38 and NIC1 (crossing the Quebrada Jamaili River)
least in the Nicaraguan territory, such as the rehabili- (JICA 2014).
tation of a part of NIC38/NIC51 and the upgrading of
the functional classification of NIC15, both intersecting Cargo weighing stations to check and regulate
with NIC1. Average travel speeds on NIC1 are generally overloaded vehicles are located in only 10 locations
high, exceeding 60 kph according to a 2014 survey. throughout Nicaragua; however, some of them are
There is no discernible congestion along most of the within the corridor area, such as on NIC1 near the
length of the corridor, especially in Nicaraguan territory; border (JICA 2014).
Map 2.8. Road Infrastructure of the Tegucigalpa–Estelí–Jinotega–Matagalpa Economic Corridor
G
50
Kilometers
£
¤
CA5
HONDURAS
Toncontin Intl
!
(G Tegucigalpa £
¤ CA6
£
¤
CA5 Las Manos
£
¤
CA6
£
¤
6
NICARAGUA
£
¤
51
£
¤ 1
Ciudad Choluteca £
¤ 38
G
El Espino £
¤1
Esteli Jinotega
G G
£
¤3
£
¤
1 Matagalpa
£
¤
3 G
G
G
Source: Original map produced for this publication.
38 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Customs and trade facilitation: The economic corridor Facilitation: Nicaragua is not part of the deep integra-
is supported by one main border crossing, Las Manos, tion process taking place in the northern countries of
located on NIC15/CA06, on the border of El Paraíso the CA region. Thus, the facilitation issues are broadly
(HN) and Nueva Segovia (NI). It is characterized by very similar to those as in the case of the Gulf of Fonseca
uneven flows by direction in terms of cargo weight, with corridor.
approximately 178,000 tons transported from Honduras
to Nicaragua per year but only 25,000 tons in the oppo- Equipment and regulations for the provision of services:
site direction (JICA 2014). As in the case of El Guasaule Within the economic corridor area, the installation of a
crossing, at Las Manos most of the cargo travels to or road service station is planned on NIC1 on a segment
from Puerto Cortés in Honduras. adjacent to the NIC15 intersection, according to the
Nicaraguan National Transportation Plan (JICA 2014).
Facilities: The Nicaragua border zone at Las Manos is
very small and consists of six facilities, in poorly main- Security: Security incidents (robberies, assaults) are not
tained buildings dating back to 1967. With mountains common on the main roads that support the economic
on both sides of the border facilities, it is geographically corridor area, neither in Honduras nor in Nicaragua
difficult to expand the customs clearance area (currently (IDB 2013).
25,000 square meters). The small customs clearance
area hinders traffic flow and there are always traffic Multimodal nodes and connections: The economic
jams on both sides of the border due to limited parking corridor is located entirely inland and has no major port
capacity. All import and export customs formalities for or airport. In the Nicaraguan territory of the corridor,
cargo vehicles are separate from those for passengers, several bus terminal stations are planned along NIC1
although passenger and cargo vehicles have to pass (JICA 2014). The corridor area does not have a rail service.
through the same route. There are no weighing facilities
or cargo axle inspection station. The duty payment
section is separate, outside the compound.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
39
Agricultural corridors
5 Guatemala–Honduras:
El Progreso / Zacapa / Izabal–Santa Barbara / Cortes / Yoro / Atlántida / Colon
Road infrastructure: Some of the main roads in the User and carrier services: Guatemala generally lacks
economic corridor area (see map 2.9) have recently dedicated logistics centers to support ports, airports,
been upgraded, such as the CA05 section between San and urban distribution; this also includes the specific
Pedro Sula and Chamelecón (14.3 kilometers), which economic corridor area. There are also no formal
is considered a key road in terms of food security (JICA support areas for transporters (truck stations and rest
2020). The overall condition of the main road corridors areas) (World Bank 2021b). Although some products
in the area is good to fair on the Guatemalan side of the exported by land from Guatemala must be tempera-
border, except for a segment of CA09 in southern Izabal ture-controlled, their share is low (Honduras is the
that is in poor condition. According to Guatemala’s Road second most important intraregional destination for
Development Plan 2018–32, CA09 and the section of this type of goods, after El Salvador). A large proportion
CA13 toward the Honduran border are classified as high of perishable fresh produce is transported by transport
priority/key logistics corridors, with a need for capacity units owned by the intermediaries or exporters of
expansion on CA09 and major maintenance works on such products. Although there are some examples in
CA13. On the Honduran side, almost the entire length of Guatemala of the use of dedicated infrastructure (for
the CA04 is in poor condition, as is a section of the CA13 example, melon value chains use their own dedicated
just north of San Pedro Sula (JICA 2020). cold storage), these practices are not common (IDB
2016a).
In terms of access to rural roads, there are also gaps in
the Guatemalan part of the economic corridor, as only Security: High rates of security incidents (robberies,
40 to 60 percent of the rural population in the southern assaults) are reported on a portion of the CA09 (GT) as
part of the municipality of Izabal (bordering Honduras) well as on the CA13 (HN) between Puerto Cortés and
has access to an all-season road (World Bank 2021b). San Pedro Sula (IDB 2013).
Work remains to be done on the roads in the municipal
capitals to ensure continuous mobility on the main roads Road safety: To improve road safety conditions, work
used mainly by heavy transport (PRONACOM 2019). is pending to widen CA09 (GT) to four lanes, which is
characterized by a high accident rate, accounting for 12
Customs and trade facilitation: The economic corridor percent of all accidents in the country (PRONACOM 2019).
is supported by the Corinto border crossing between
Guatemala and Honduras, located on CA13 on both sides Multimodal nodes and connections: The corridor
of the border. See discussion on Corinto and GT–HN trade area is served by a number of multimodal logistics
facilitation provided earlier in chapter 2, in the section on nodes, including several major ports and airports. On
the Guatemala–Honduras–El Salvador economic corridor. the Guatemalan side, ports include Puerto Barrios and
Puerto Santo Tomás de Castilla. On the Honduran side,
Equipment and regulations for service delivery: To they include Puerto Cortés, Tela, La Ceiba, and Puerto
ensure that sufficient food reaches full sales markets Castilla. Ports that handle containers include those in
or national food supplies, storage infrastructure for Guatemala, as well as Puerto Cortés and Puerto Castilla
white and yellow maize and wheat needs to be installed in Honduras. The same ports also handle bulk cargo
or improved in Honduras, especially at the local level. (JICA et al. 2019).
Drying facilities are also needed to maintain grain
quality throughout the value chain (JICA 2020).
40 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Map 2.9. Road Infrastructure of the El Progreso / Zacapa / Izabal–Santa Barbara / Cortes / Yoro / Atlántida / Colon Agricultural Corridor
200
Kilometers
Mundo Maya Intl
!
(
Juan Manuel Galvez
GUATEMALA !
(
Puerto Castilla
Puerto Santo Tomas
de Castilla Puerto Cortez
!
(
!
(
Puerto Barrios Puerto BarriosG
Tela La Ceiba La Ceiba Intl
!
( !
Choloma ( !
( G
!
( £
!
(G£¤
CA13 £
¤ G
CA13
£
¤ CA13
¤ CA13
£
¤
CA10
Coban La Lima Ramon V. Morales Intl
G G!
(
Corinto San Pedro Sula GG El Progreso
£ £
¤
CA4
£
¤
¤
CA9
RN23
£ £
¤
CA5
¤
CA10
G
G San Jose Pinula
GG
!
( Comayagua
G GG
GG Metapán HONDURAS G
G
Tegucigalpa Toncontin Intl
Santa Ana
Ahuachapán Tacuba !
(
G
G
GG
G GG
GGG
Source: Original map produced for this publication.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
41
The Port of Santo Tomás de Castilla (GT) is mainly a (IDB 2016b). All ports serving the economic corridor are
container port and, in terms of agricultural products, considered small by international standards, and all
is used for the export of coffee and cardamom. See ports, both in Guatemala and Honduras, are connected
more information about Santo Tomás de Castilla earlier in by route CA13, which is paved along its entire length,
chapter 2, in the discussion of the Guatemala–Honduras–El except between the Corinto border crossing and Puerto
Salvador economic corridor. Barrios, according to 2018 data collected from the
Global Road Inventory Project (GRIP) database (https://
Puerto Barrios, a private port, also accessible from CA9, www.globio.info/download-grip-dataset).
was originally built as a banana port and is also used
for melons and watermelons, mostly in containers and The corridor area is served by the relatively small air-
through charter services (PRONACOM 2019). In this ports of Puerto Barrios (GT) and La Ceiba International
segment, transportation is door-to-door and shipping (HN), as well as the larger Ramon V. Morales
companies handle inland transportation in a vertically International Airport (HN). Due to its proximity to major
integrated service model. Port facilities and import/ tourist attractions (Bay Islands), La Ceiba serves as an
export docks need to be upgraded to support agricul- important connection point. The Ramón V. Morales
tural value chains (Solano Garrido and Ochoa 2019). International Airport functions as the main air cargo
logistics hub for Honduras, and its infrastructure is
Puerto Cortes is by far the largest port in Honduras. considered to be of high quality. The airport’s main
See discussion of Puerto Cortes earlier in chapter 2, under challenge is its inability to operate at full capacity due
economic corridor no. 1, Guatemala–Honduras–El Salvador. to deficiencies in trade processes. It also lacks sufficient
equipment and personnel to perform non-intrusive
Like Puerto Cortés, Puerto Castilla (HN) can also receive inspections (IDB 2016b).
Panamax vessels.4 It handles about 14 percent of
Honduras’ total maritime container flows and 7 percent The corridor also has one of the few operating railroad
of general cargo by weight. The port is especially active sections in Central America, on the CA05 near San Pedro
in the export of bananas, African palm oil, pineapple, Sula (albeit only 6 kilometers long) (JICA 2019). However,
melons, and watermelons. Puerto Castilla’s problems no cross-border rail service is in place.
include connectivity issues with the country’s national
road network. As a dedicated port, it does not have
permanent personnel from the Executive Directorate of
Revenue (DEI) or the National Agricultural Health Service
(SENASA), which restricts imports. Puerto La Ceiba is
dedicated to fruit exports through the Standard Fruit
Company. While located in an agricultural production
zone, it has recently been certified to receive cruise
ships. Its access channel has a depth of between 4.2
and 6 meters (IDB 2016b). The port is characterized by
a high level of general deterioration; ongoing actions
(as of 2016) include the remodeling of the pier and the
construction of a promenade for tourism purposes
4 The latter has a depth of 12 meters (natural) on the dock side and 30 to 40 meters in
the bay, according to the National Ports Company.
42 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Agricultural corridors
6 Guatemala–El Salvador:
Escuintla / Santa Rosa / Jutiapa–Ahuachapán / Sonsonate
Road infrastructure: As seen in map 2.10, the no formal trucking centers or rest areas (World Bank
main roads serving this agricultural corridor are 2021b). To specifically support the agricultural sector,
CA02(GT)/2(ES) and CA08 (GT) / Acajutla Hwy (ES). The Guatemala’s Ministry of Agriculture and Livestock
condition of CA02 in El Salvador is considered poor, has built several collection and distribution centers in
while on the Guatemalan side of the border the condi- various areas of the country, including the departments
tion is fair (JICA 2020), with many sections deteriorated of Escuintla, Santa Rosa, and Jutiapa, through which the
and in need of maintenance (PRONACOM 2019). agricultural corridor passes, some of which have cold
Guatemala’s Road Development Plan 2018–32 classifies storage facilities. However, their optimal use is nega-
CA02 as a high priority logistics corridor with a need tively affected by the difficulty producers face in getting
for capacity expansion along most of its length. The their products out due to the deficiency of the tertiary
entire length of the CA02/2 within the corridor area is road network, and the distrust among buyers, sellers,
characterized by a medium level of congestion (JICA et and intermediaries (IDB 2016a).
al. 2019). The overall travel speed on the Pacific Corridor
in Guatemala averages only 12.5 to 16.5 kph depending In El Salvador, although food production and imports
on commodity classification, the lowest of any part of are sufficient, not enough food reaches the markets due
the Pacific Corridor (SIECA/SICA 2019). Access to all-sea- to insufficient storage facilities and equipment, and an
son access roads in the agricultural corridor area on estimated more than 8 percent of the white corn and
the Guatemalan side is below 60 percent in individual 6 percent of the beans produced nationally are wasted
municipalities (World Bank 2021b). There is also work (JICA 2020). As already mentioned, the country also lacks
to be done on the highways in the municipal capitals transportation hubs that offer adequate security during
to ensure continuous mobility on the main roads used nighttime hours (Fioravanti et al. 2019).
mainly by heavy transport (PRONACOM 2019).
Security: The agricultural corridor is characterized by
Customs and trade facilitation: The Pedro Alvarado–La a high or very high concern for security along almost
Hachadura and Valle Nuevo–Las Chinamas (GT–ES) the entire length of the underlying major road corridors
border crossings are located in the corridor area, both (IDB 2013).
of which are intended to function as integrated border
posts within the Customs Union formed by Guatemala, Multimodal nodes and connections: The agricultural
Honduras, and El Salvador. Pedro Alvarado-La corridor area has several large ports by CA standards:
Hachadura is one of the two most important border Quetzal (GT) and Acajutla (ES), which handle both
crossings for Guatemala (among its 15 total crossings containers and bulk cargo, as well as the smaller Boayas
with neighboring countries), highlighting the importance de San José (GT), which specializes in bulk cargo. Puerto
of regional trade through the Pacific Corridor (World Quetzal is Guatemala’s most important bulk port,
Bank 2021b). The deep integration process between especially for sugar exports, and also handles almost
Guatemala, Honduras and El Salvador has significantly one-third of all containers. It suffers from congestion
reduced border crossing times, including (presumably) problems in its road access, which affects imports
the border between Guatemala and El Salvador. of inputs and sugar exports, and there is a need to
install an inbound and outbound flow control booth
User and carrier services: Guatemala lacks dedicated (PRONACOM 2019) and to complete the concession of
logistics centers, as mentioned above, and there are the Escuintla–Quetzal section from Guatemala City to
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
43
segregate cargo traffic to the port from urban traffic the 14 fixed scales that exist in the port are not certified
(IDB 2016a). Recent improvements at Puerto Quetzal by the transit control authorities, and the calibration is
include dredging to 14 meters, new cold storage to not consistent inside and outside the port (IDB 2016a).
meet the growing demand for fruit exports, increased Inspections at the port take about 8 days if the assigned
terminal storage space, investments in port security, channel is red and 4 days if it is green. The implementa-
a new container terminal and a new pier. Phase 1 of tion of a receipt and dispatch yard is expected to reduce
the Quetzal Container Terminal was planned to have a the time of the latter to 2 hours (IDB 2016a). The Port
350-meter pier and a capacity of approximately 340,000 of Acajutla (ES) has a bay depth ranging from 8.23 to
TEUs per year, while the final phase will have a 540- 14.93 meters and is equipped to receive tankers up to
meter berth and an estimated capacity of 700,000 TEU 12-meter draft. However, the port faces several chal-
per year. It will have cranes for post-Panamax vessels lenges, such as the lack of a PCS (Fioravanti et al. 2019).
up to 8,000 TEUs. The original master plan of Puerto
Quetzal foresees a second breakwater and the construc- On the Guatemalan side of the agricultural corridor,
tion of terminals with a depth of 16 meters. Regarding Lake Atitlán is also used to transport both cargo and
the processes at Puerto Quetzal, there is a practice of passengers to the interior of the country (IDB 2016a).
overloading containers at the port’s exit, given the lack
of efficient control. There is no control at origin, since No railway service is present in the corridor area.
Map 2.10. Road Infrastructure of the Escuintla / Santa Rosa / Jutiapa–Ahuachapán / Sonsonate Agricultural Corridor
G G G
Totonicapan
G Quetzaltenango San Pedro Ayampuc
San Juan Sacatepequez G
Chinautla
ChimaltenangoG G
Mixco
G G G
Guatemala City La Aurora International
!
( San Jose Pinula
GG G G
Petapa
Amatitlan
G G Villa Canales
Santa Lucia Cotzumalguapa Metapán
Escuintla
G £
¤ G
£
¤
CA2 G CA1
£
¤
CA2
£
¤ CA1
¤ GUATEMALA
£CA8
£
¤
CA9A
£
¤
CA9
Valle Nuevo-
Las Chinamas Santa Ana
£
¤CA2
£
¤ 8
G
Tacuba
Boayas de Quetzal G G Ahuachapán
San Jose
Nahuizalco
EL SALVADOR G
Pedro Alvarado- Sonsonate
La Hachadura
£
¤
2 G
Acajutla
G
Acajutla
100
Kilometers
Source: Original map produced for this publication.
44 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Agricultural corridors
7 Honduras–Nicaragua:
El Paraíso / Choluteca–Chinandega / Estelí
Road Infrastructure: Illustrated in map 2.11, he main cocoa and basic grains production areas in the prov-
road corridor supporting the agricultural corridor area inces of Nueva Segovia, Madriz, and Estelí (JICA 2014).
is the CA3 (HN) from the department of Choluteca and
the city of Choluteca (population ~95,000) to El Guasaule Customs and trade facilitation: The main border
border crossing, after which it becomes the NIC24 crossing serving the agricultural corridor is El Guasaule
within Nicaragua. In the department of Chinandega (HN–NI). Approximately 60 percent of the cargo pass-
(NI), the main roads supporting the agricultural corridor ing through the crossing is cargo to and from Puerto
are NIC12, NIC24 and NIC26, which connect to the city Cortés (HN), with significantly more cargo transported
of Chinandega in the south. In addition, NIC49 leads in the direction of Nicaragua than in the direction of
to the department of Esteli and connects to the city of Honduras. In addition, the El Espino border crossing at
Esteli. Also, the Pan-American Highway—CA01 (HN) and CA1/NIC1 is located on the outer edge of the agricultural
NIC1 (NI)—could be considered within the agricultural corridor.
corridor area, although it mostly veers along the outer
edge of the identified high-density agricultural produc- Facilities: See the discussion on El Guasaule provided
tion area. Traffic volumes on the Nicaraguan side of the above in the section on the Gulf of Fonseca economic
border are highest in the western part of the corridor corridor.
area, with NIC12 carrying an estimated 7,000 vehicles
per day, compared to 1,000 to 5,000 on the other main The El Espino border post is located on the border of the
roads in the area (JICA 2014). In the corridor area overall, Department of Choluteca (HN) and the Department of
traffic is highest on CA3 in Honduras between Choluteca Madriz (NI). The infrastructure and facilities are old, dat-
and the Nicaraguan border, with over 10,000 vehicles ing back to 1970; however, they are generally in good
per day (JICA et al. 2019). condition. However, the parking lot at the quarantine
station is small, the scale is old and inadequate, and the
While most of the main roads in the corridor area in restrooms are in poor condition. The main, single-story
Chinandega (NI) are paved, this is less the case in Estelí building is centrally located and integrates all customs
(NI), while in Choluteca (HN) only CA3 is paved, accord- procedures, from baggage inspection to the customs
ing to 2018 data collected from the GRIP database counter for cargo vehicles, excluding fumigation, police,
(https://www.globio.info/download-grip-dataset). CA3 and cargo axle inspection. The customs office is shared
is in poor condition, while the rest of the main roads with the cargo inspection and warehouse. All customs
that support the agricultural corridor area are in fair to formalities are carried out in the compact facility and it
good condition (JICA 2020). According to the Nicaraguan takes 1.0 to 1.5 hours for a cargo vehicle to complete
National Transportation Plan (2014), some sections of this process. As at the other border crossings, passen-
the main roads in the area are planned to be upgraded, ger and cargo vehicles take the same route without
such as the segment of NIC12 to the city of El Viejo and being separated, which is inefficient (JICA 2014).
NIC49/49A to Estelí. The dirt/gravel pavement is in poor
condition on some sections of NIC12A. The surface of Facilitation: The average waiting time at El Guasaule
the sections in poor condition needs to be repaired border was 12 hours in 2014 (JICA 2014) and may not
(JICA 2014). Access roads in poor or fair condition in have improved much since then, given that Nicaragua is
Nicaragua include secondary collector roads around the not part of the deep integration process. However, there
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
45
is an International Customs Transit of Goods (TIM) office Multimodal nodes and connections: The agricultural
at the border crossing and an intention to introduce a corridor has access to the port of Corinto (NI), connected
single window system separating customs clearance by the NIC24A to the city of Chinandega. Corinto is
for pedestrians, passengers, and small and large cargo capable of handling all types of cargo. However, the
vehicles (JICA 2014). port is experiencing a number of issues, such as lack of
space immediately behind the port for future expansion,
Equipment and regulations for service provision: A lack of capacity to meet future cargo demand, shortage
roadside service station is planned for installation on of cargo handling facilities. The port is home to three
NIC24, on a section directly south of El Guasaule border terminals: one for general cargo, one for containers,
crossing (JICA 2014). Another road service station is and one for liquid cargo. Although it focuses on cargo,
planned on NIC12, southeast of the city of Chinandega, it also receives the second largest number of cruise
and another on NIC38, near the intersection with NIC49. ships in the country. The port has no operational cranes
(Netherlands Enterprise Agency 2018).
Security: Occasional security incidents (robberies,
assaults) are reported on route NIC24 in Nicaragua, The corridor area does not have a rail service.
while the rest of the main roads in the area are gener-
ally considered safe (IDB 2013).
Map 2.11. Road Infrastructure of the El Paraíso / Choluteca–Chinandega / Estelí Agricultural Corridor
G
Tegucigalpa Toncontin Intl
!
(G £
¤CA6
HONDURAS
G EL SALVADOR £
¤
CA5 El Espino
San Miguel
G £
¤CA1
Usulután
Ciudad Choluteca
G ( La Union
! G £
¤
1
£
¤
RN148
£
¤ CA3
Esteli Jinotega
G G
El Guasaule
G
£
¤ 3
£
¤12
£
¤
50
Chinandega
El Viejo
NICARAGUA
G
G
£
¤ 3
75
Puerto Corinto Leon
Kilometers !
( G
Source: Original map produced for this publication.
46 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Agricultural corridors
8 Nicaragua–Costa Rica:
Managua / Carazo / Masaya / Granada / Rivas–Guanacaste
Road infrastructure: The agricultural corridor is sup- Facilities: With technical assistance from the World
ported by the Pacific Highway (CA01/NIC1) on both sides Bank Group, Costa Rica has established a border
of the border, as shown in map 2.12. The section of coordinator at the Peñas Blancas customs office, and
the road corridor on the Costa Rican side, from La Cruz videoconferencing equipment and barcode readers
to Liberia (~60 kilometers) was rehabilitated in 2017. have been purchased and put into operation (World
Routine maintenance work has also been carried out on Bank Group 2020b). On the Nicaragua side, as part of
Route 21, which connects Liberia with important agricul- the modernization process of all Nicaraguan borders,
tural sites on the Nicoya Peninsula. On the Nicaraguan the implementation of a modern border control post
side, the priority segment of the NIC1 for improvement was completed in mid-2019. The 16-block infrastructure
is between Puerto Sandino and Paso Real de Ochomogo will serve trucks with cargo, buses, light vehicles, pas-
(~99 kilometers), with road works already planned (JICA sengers on foot and will have support and containment
2020), and there are plans to expand the capacity of facilities for sanitary and security risks. In addition,
most of the road corridor from Managua to the border processes were reformed, putting in place a one-stop
(JICA 2014). Investment has been made in road expan- review, which already according to initial assessments
sion between Nejapa and Nandaime. had led to a reduction in crossing times from 36 hours
to 89 minutes (Sandino 2019). However, 65 percent of
Given that Nicaragua’s domestic consumption is concen- businesses responding to a 2020 World Bank survey
trated in Managua, the flow of cargo in and out of the said they feel affected by border schedules, which slow
city is crucial. Traffic volume at the Managua gateway down border crossings. In addition, the perception
(NIC4) significantly exceeds the road’s capacity. The is that, as of May 1, border crossing times at Peñas
volume is high also on the other gateways (NIC1 and Blancas have increased (in both directions). Possible
NIC28). The direct entry of large freight vehicles into the causes have been identified as the lack of standard-
city center is one of the causes of traffic congestion. It ization of schedules between the two countries or
is necessary to regulate the entry of these vehicles and movement restrictions for private sector users (customs
build a bypass (JICA 2014). The overall average speed on agencies, processors) (World Bank Group 2020a).
the Pacific Highway between the El Guasaule (HN–NI) and
Peñas Blancas (NI–CR) border crossings was estimated Facilitation: Neither Costa Rica nor Nicaragua are part
at only 16.8-17.9 kph according to a 2018 survey (SIECA/ of the deep integration process of the northern CA.
SICA 2019). Cargo weighing stations to check and regu- However, Costa Rica no longer requires paper copies
late overloaded vehicles are present on NIC1 (JICA 2014). of documents submitted online for border clearance,
and Nicaraguan customs authorities have introduced
Customs and trade facilitation: The agricultural corri- pre-arrival processing, which helps to reduce clearance
dor is connected by the Peñas Blancas border crossing, times (World Bank Group 2019). TIM, one of the main
located on the national highway linking Cardenas in tools for trade facilitation, customs control, and border
Nicaragua and La Cruz in Costa Rica. Approximately 70 security for the entire region, has been implemented at
percent of the cargo passing through Peñas Blancas is Peñas Blancas (IDB 2013). The inspection and sampling
cargo to/from Puerto Limón in Costa Rica. According to processes for animal products have recently been
a 2013 study, the total annual cargo volume flowing to improved, for example, by extending the hours of the
Costa Rica amounts to about 407,000 tons, compared laboratories providing testing services. The World Bank
to more than twice as much (1.062 million tons) in the Group also plans to conduct a Time Release Study
direction of Nicaragua JICA 2014). Plus (TRS+) at the border, comprehensively measuring
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
47
the total time it takes to satisfy regulatory and trade Equipment and regulations for the provision of
requirements that apply prior to the arrival of goods services: A roadside service station is planned to be
at the border and the time it takes at the port and the installed at NIC1, on a segment bordering Costa Rica
terminal (World Bank Group 2020b). (JICA 2014).
User and carrier services: There is a lack of facilities Security: The main roads that support the agricultural
for users, such as safe parking areas, easily accessible corridor area are generally considered safe; assaults or
restaurants, rest areas, internet access areas for faster robberies are not commonly on either the Nicaraguan
procedures, among others. or Costa Rican side (IDB 2013). Some security issues are
reported at the Peñas Blancas border post.
Map 2.12. Road Infrastructure of the Managua / Carazo / Masaya / Granada / Rivas–Guanacaste Agricultural Corridor
GG
Leon
!
( G
Corinto
£
¤
Tipitapa
1
!
(
Ciudad Sandino
G El Rama
! Augusto C Sandino Intl
( Managua
G G!
( Juigalpa
Sandino
Masaya
G
G G Granada
£
¤1
£
¤ 4 Nueva Guinea
G
£
¤
NICARAGUA
1
Costa Esmeralda
!
( Lago Cocibolca
!
( £
¤
16
San Juan del Sur
£
¤
Tamarindo
CA1
! £ ¤ CA4
Peñas Blancas (
COSTA RICA
£
¤
CA1
D. Oduber Quiros Intl
G
!
( Liberia
£
¤
CA6
£
¤
CA21
£
¤
CA1
100 Punta Morales
Kilometers Caldera Puntarenas
!
( G
Source: Original map produced for this publication. !
(!( !
( !
(
48 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Road safety: At the Peñas Blancas border post, it is On Lake Managua, the ports of Granada (45 kilometers
considered unsafe for passenger buses to cross the from Managua) and San Jorge (in Rivas) could be part
national road to the customs clearance facilities on the of the Nicaragua–Costa Rica agricultural corridor.
opposite side of the road (JICA 2014). However, the depth of the lake is only 4.2 meters
(Granada) (JICA 2014).
Multimodal nodes and connections: Puerto Sandino
(NI) in the department of Leon is the second most Consideration should be given to the logistics activity
important port in that country and handles bulk cargo. platforms suggested by the PNLOG, in proximity to the
The agricultural corridor also includes the port of San main multimodal nodes. These should be adapted to the
Juan del Sur (NI), a small port by world standards. In needs of the private sector.
Costa Rica, the port of Puntarenas, located south of
the Nicoya Peninsula, is currently used only for cruise The agricultural corridor area does not have rail
ships. Punta Morales is a sugar port located in the Gulf connectivity.
of Nicoya. It is administered by the Agricultural and
Industrial Sugar Cane League (LAICA) and is used exclu-
sively for the transport of sugar, albeit very low cargo
volumes. Puerto Caldera, also in the Gulf of Nicoya, does
have facilities for intermodal transport of cargo and bulk
cargo. The port plays an important role in the national
and regional market, being Costa Rica’s main Pacific port
and handling very large cargo volumes.
Several airports are located in the agricultural corridor
area, including the relatively small airports of Costa
Esmeralda (NI) and Tamarindo (CR), closer to the border,
and the larger D. Oduber Quiros International Airport
(CR) in the southwestern part of the agricultural corridor.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
49
Short-haul air or sea connections between major cities that concentrate all production in individual
priority value chains, such as between San Salvador (El Salvador) and San José (Costa Rica)
Due to the scarce land infrastructure, sea transport in Corridor and support the use of multimodal trans-
some cases has a comparative advantage; transport port, the World Bank Group is providing assistance to
between two points that are more than 1,000 kilo- customs, immigration, and the seaports of Costa Rica
meters apart is often cheaper by ship than by truck and El Salvador to develop an integrated procedure
(Netherlands Enterprise Agency 2018). Some studies for the operation of a multimodal (land transport/
have pointed out that international freight transport ferry) service between Puerto de la Union (ES) and
within CA is characterized by distances too short and Puerto Caldera (CR).5 At present, the former only
cargo volumes too small to consolidate a dense short handles containers, while the latter—containers and
sea shipping (SSS) network. However, according to an bulk cargo. Caldera has high levels of congestion and
IDB study, the SSS potential in Mesoamerica for 2030 does not have sufficient space for the parking of the
on the Pacific coast is nearly 300,000 TEUs per year, articulated vehicles that travel on the ferry; however,
while on the Atlantic coast it is nearly 130,000 TEUs per it is planned to resolve this deficiency with an invest-
year. Maritime transport is more feasible in the short ment programmed for the year 2022. The planned
term on the Pacific coast, as no new investments or multimodal transport service will save time and
major modifications to existing ports are necessary. The simplify logistics procedures by avoiding land transit
validation workshops held in 2014 and 2015 allowed through two countries (Honduras and Nicaragua)
the definition of a roadmap for the implementation of and would constitute a first step toward moving to a
SSS that facilitates the market of potential SSS service containerized cargo transport system, more efficient
operators, establishes regulatory and port conditions, and with a higher capacity than a roll-on/roll-off cargo
including border processes and integration with land system for articulated cargo vehicles.
modes that allow for self-sustainable operation (IDB
2016b). Some products going from Guatemala to Costa The Central American Bank for Economic Integration
Rica and Panama already use SSS on regular liner ships (CABEI) has financed the formulation of the Master Plan
(IDB 2016a). for Investment and Economic Development Projects
for the Gulf of Fonseca. Among others, it includes
Actions supported by an ongoing World Bank-funded investment plans for the Puerto La Unión (ES)–Puerto
activity (see World Bank Group 2020b) to promote SSS Corinto (NI) Tri-national Ferry (for logistics and tour-
and air cargo within CA are focused on: ism activities) and the La Unión (ES)–Potosí (NI) Ferry
(Fioravanti et al. 2019). The ferry services would also
• El Salvador’s trade facilitation agenda. The World add a multimodal alternative to the Gulf of Fonseca
Bank Group is providing technical assistance to sev- economic corridor identified in this study.
eral activities, including, among others: planning to
improve air cargo (interconnection between customs The intention to develop SSS-based freight transit
and CEPA); and mapping and reengineering of the is also outlined in the most recent Panama National
customs logistics processes of the Port of Acajutla. Logistics Strategy 2030 (Gabinete Logístico República
de Panamá 2018).
• Cargo ferry service between Costa Rica and El
Salvador. To help improve transit on the Pacific
5 The Port of Golfito is planned as an alternate port in case the ferry is unable to dock in Caldera.
50 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
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ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
3. Exposure of the Identified
Economic Corridors to Climate
and Seismic Risks
54 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
The region’s geographic location makes it highly prone flooding due to a precarious drainage system and lack
to natural disasters such as hurricanes, droughts, floods, of maintenance due to a limited budget. In Guatemala,
earthquakes, and El Niño-Southern Oscillation. Over the rainfall is abundant, and the orientation of the slopes
last 50 years, the number of recorded natural phenom- and the altitude cause rainfall of 3,000 millimeters
ena has increased considerably, affecting all countries. annually in some areas: in the Sierras de Santa Cruz,
Earthquakes, hurricanes, and major floods cause most Altos de Cuchumatanes, the central sector of Cordillera
of the economic losses in the region, especially in urban Volcanica, etc. Atlantic hurricanes can occur from June
areas. Meteorological catastrophes have caused the to November, although Honduras tends to be more
greatest economic losses, while earthquakes, despite affected (PRONACOM 2019).
their lower frequency, have recorded the highest number
of casualties. The increasing concentration of population Disruptions imply losses in terms of business pro-
and economic activity in high-risk areas has increased ductivity, household consumption, and welfare. The
vulnerability to catastrophic natural events. Between interruption of infrastructure services affects businesses
1970 and 2010, major catastrophes in Central America through reduced capacity utilization rates, lost sales,
(CA)—including earthquakes, hurricanes, and major supply and delivery delays (direct costs); increased
floods—caused more than US$80 billion in damage and inventories; more expensive location choices (coping
losses. Average annual losses from natural catastrophes costs); and higher barriers to market entry and lower
represent between 1.5 and 2.6 percent of national gross investment; bias toward labor-intensive production;
domestic product (GDP) in Nicaragua and Honduras. inability to provide services and goods on demand; and
lower competitiveness in international markets (indirect
Capital cities in all CA countries account for a large share costs). Based on analysis of firm-level data, CA countries,
of the total value of assets exposed to risk, ranging from especially Nicaragua, have some of the highest average
21 percent in Honduras to 54 percent in Costa Rica. country utilization rate losses due to electricity, water
The average annual losses due to seismic risk in urban and transportation infrastructure disruptions (Hallegatte
areas are particularly high in Costa Rica and El Salvador, et al. 2019). For example, tropical storms Amanda, Eta,
amounting to US$327 million and US$232 million and Iota damaged roads and bridges throughout CA,
respectively (Augustin et al. 2017), although in Costa negatively impacting regional food transport (JICA 2020).
Rica, overall, the losses due to landslides and floods
are generally even higher than those caused by seismic Regulatory and policy frameworks for disaster risk
events. Honduras is the only country that concentrates management (DRM) exist at the national level, but the
most of its catastrophic risk in rural areas, and where establishment of municipal and sectoral responsibil-
the risk of hurricanes is higher than that of earthquakes. ities for DRM remains underdeveloped. Conceptual
The high vulnerability of the country’s road network and methodological frameworks aimed at integrating
to natural phenomena (climatic, geological, others) disaster risk considerations into public investments
impedes the continuity of routes, especially during the have been developed and promoted in CA, particularly
winter season, such as transport of timber from logging for pre-investment cost-benefit analysis. These efforts
areas to sawmills (IDB 2016b). have been promoted by intergovernmental organi-
zations such as the Coordination Center for Natural
In El Salvador, the need to reinforce the road network Disaster Prevention in Central America (CEPREDENAC)
against climatic effects is well documented. Rainy within national public investment systems, but without
seasons affect the network, especially the stability and significant participation by municipal planning units. In
reliability of road bridges, as current road standards Costa Rica, these issues have crystallized in a regulatory
need to be updated to take into account current drain- reform, making risk analysis a mandatory aspect of
age problems and flood ponds. In Nicaragua, only 20 public investment processes.
percent of roads are paved, and roads are vulnerable to
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
o e n ents in the egion ha e st engthened financia po tfo ios a ong co nt ies to ed ce the cost of
echanis s fo in ecent ea s n the accessing inte nationa ins ance a ets espite
o d an a nched the fi st oan of this t pe ca ed ecent p og ess in the adoption of financia p otection
atast ophe efe ed a do n ption inst ents go e n ents contin e to add ess the
and osta ica eca e the fi st co nt to o tain it financia e ects of catast ophes on an ad hoc asis
ince then othe co nt ies ha e a so accessed Panama, the only country to do so, has adopted the
di e ent contingent c edit faci ities ana a has de e - t ategic a e o fo isaste is inancing and
oped a coinsurance scheme to transfer the risk of public ns ance a g iding f a e o fo fisca is anage-
assets n co itted to oin the a i ean ment in the event of disasters related to the impact of
atast ophic is ns ance aci it hich a o s nat a haza ds g stin et a
is to e agg egated into a ge and o e di e sified
Table 3.1. Summary of Hydrometeorological and Seismic Risk Affecting the Identified Economic Corridors
GT–HN–ES: Puerto Floods: Risk of fluvial flooding1 mainly affects the San Pedro Sula area (in particular, roads CA13 and CA5), where
Barrios–Puerto maximum water depths in the 50-year return period2 exceed 2 meters in specific areas. Parts of CA11 (HN) are also
Cortes–San Pedro affected. Pluvial flooding3 affects approximately the same areas, but with lower maximum water depths.4
Sula–Metapán– Landslides: The susceptibility to landslides is “medium” or “high” in most of the corridor area, although few sections
Tegucigalpa of the main roads are directly exposed. 5
Seismic: Seismic risk, as measured by peak ground acceleration (PGA), is highest in the southeastern part of the eco-
nomic corridor area, around Metapán (ES) and Ocotepeque (HN), where the PGA in a 100-year return period exceeds
250 Newtons per kilogram (N/kg). The main roads exposed to the highest risk are CA10 and CA4 (HN) and roads 3
and 12 (ES). The PGA for the entire eastern branch of the economic corridor, from Puerto Barrios to Tegucigalpa, is
generally less than 150 N/kg.6
GT–ES: Guatemala Floods: Flood risk, both fluvial and pluvial, is quite limited in scope and severity, concentrated mainly around Escuintla
City–San Salvador and Amatitlán (GT) and along Highway 8 between Sonsonate and San Salvador (ES).
Landslides: Given the slopes in the corridor area, susceptibility to landslides is high in large parts of the corridor area
in Guatemala, especially northeast of Guatemala City, as well as along the coastal part of Highway 2 in El Salvador.
Seismic: Seismic risk is high or very high throughout the corridor area, with a PGA greater than 250 N/kg throughout
the corridor area except in its most northeastern part, in Guatemala.
ES–HN–NI: San Floods: The risk of river flooding is more frequent in the Honduran part of the corridor and around Highway 2 in El
Miguel–Choluteca– Salvador. In Nicaragua, fluvial flood risk affects the coastal zone between NIC24A and NIC3. The risk of pluvial flooding
Chinandega–Leon is more widespread and affects almost the entire area of the corridor in all three countries, although with maximum
(“Gulf of Fonseca”) water heights of less than 1 meter.
Landslides: The risk of landslides is relatively limited, affecting mainly the area north of CA1 in Honduras and the area
surrounding Highway 2 in El Salvador.
Seismic: High seismic risk affects almost the entire area of the corridor within El Salvador and Nicaragua, while the
portion within the territory of Honduras is exposed to a seismic risk of lesser severity (except in very coastal areas), with
a PGA generally below 200 N/kg.
1. Flooding that occurs when the water level of a river, lake or stream rises and overflows onto the surrounding land.
2. A flood of a 50-year return period magnitude has a 2 percent probability of occurring in a given year.
3. Flooding that occurs when the intensity of rainfall exceeds the capacity of natural and artificial drainage systems.
4. Global Flood Hazard Data collected using a World Bank license.
5. Data collected from the following Global Facility for Disaster Reduction and Recovery (GFDRR) database: https://www.geonode-gfdrrlab.org/layers/hazard:ls_nasa_rc.
6. Data collected from the following GFDRR database: https://www.geonode-gfdrrlab.org/layers/hazard:es100krigclip
MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
HN–NI: Floods: Both pluvial and, above all, fluvial risk in the corridor area is relatively limited, and only some areas of the two
Tegucigalpa–Estelí– countries are expected to have a positive water level in the 50-year return period. The areas southeast of Tegucigalpa
Jinotega–Matagalpa (HN) are the most affected.
Landslides: Landslide risk in the corridor area is quite extensive, both in terms of the area affected and the magnitude
of the risk, with large areas in both countries characterized as risk level 3 or 4 on a scale of 1 (low) to 4 (high).
Seismic: Seismic risk in the corridor area is relatively limited, especially within Honduras. Of all the main roads, NIC1
on both sides of Esteli (NI) and NIC3 southeast of Matagalpa are the most at risk, with PGA between 150 and 200 N/kg.
GT–HN: El Progreso / Floods: The risk of fluvial and pluvial flooding is mainly concentrated around San Pedro Sula and along RN23 (HN);
Zacapa / Izabal–Cortes however, areas around CA9 (GT) are also affected.
/ Yoro / Atlántida / Landslides: Much of the corridor area is exposed to a medium-high risk of landslides, especially in the more inland
Colon areas away from the Atlantic coast.
Seismic: The corridor area within Honduras is exposed to low to medium seismic risk (PGA < 150 N/kg), while the
area within Guatemala is characterized by a PGA between 150 and 250 N/kg.
GT–ES: Escuintla Floods: The risk of flooding, both pluvial and, above all, fluvial, affects large areas of the corridor, especially in
/ Santa Rosa / Guatemala (south of the CA2 along its entire length).
Jutiapa–Ahuachapán / Landslides: The high landslide risk mainly affects large areas around CA1 in Guatemala (east of Guatemala City), but
Sonsonate also west of El Salvador, including around Highway 8.
Seismic: Almost the entire area of the corridor is exposed to a high seismic risk (PGA>250 N/kg), with the exception of
the north easternmost corner located in the territory of Guatemala, where the PGA is more moderate.
HN–NI: El Paraiso Floods: Both types of flood risk are concentrated in the southern part of the corridor area, especially on both sides of
/ Choluteca– the border in the Delta del Estero Real Natural Reserve and around El Viejo/Chinandega (NI).
Chinandega / Estelí Landslides: Landslide risk is minimal in the southwestern part of the corridor area, but is quite high in most of the
corridor within the territory of Honduras, as well as around Estelí (NI). The main roads that are in medium to high
landslide risk zones are NIC1/CA1 (NI/HN) and CA6 (HN).
Seismic: Medium-high seismic risk affects the southern half of the economic corridor area, including CA3/NIC3 (HN/
NI) and NIC12 and NIC24 (NI). The northern half of the corridor (located mainly in Honduras) is less affected, with a
(PGA) of less than 150 N/kg.
NI–CR: Managua– Floods: Flood risk, both fluvial and pluvial, is mainly confined to the southern end of the economic corridor, around
Carazo / Masaya highways 1 and 21 south of Liberia (CR). However, pluvial flooding also affects areas northeast of Managua and parts
/ Granada / of NIC1 (NI).
Rivas– Guanacaste Landslides: Landslide risk in the corridor area is fairly low, with only individual areas characterized as medium or high
risk. These are mainly concentrated north of Tipitapa and around Managua (NI), in Santa Rosa National Park (CR) and
east of Highway 1 (CR) in the southernmost part of the corridor.
Seismic: Seismic risk is high or very high throughout the corridor.
Source: Original table produced for this publication.
Note: Colors describe the overall level or prevalence of risk as: [low/limited] [medium] [high/extensive].
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
57
As summarized in table 3.1 and illustrated in map 3.1, economic corridor is characterized by the lowest overall
the identified economic corridors differ significantly risk (although with a medium level of landslide risk
in their exposure to hydrometeorological and seismic specifically). The corridors affected by the highest or most
risk, although only some are characterized by limited extensive seismic risk include the GT–ES economic and
overall risk, either in terms of extent or magnitude; most agricultural corridor, the Gulf of Fonseca economic cor-
of the corridor areas are exposed to at least medium ridor, and the NI–CR agricultural corridor. Due to topog-
level of risk in more than one dimension (floods, land- raphy and rainfall patterns, landslide risk is the greatest
slides, earthquakes). Of the eight corridors, the GT–ES concern for the GT–HN–ES economic corridor, the GT–ES
agricultural corridor is the only one assessed with high economic and agricultural corridors, the GT–HN agricul-
or extensive risk in all three dimensions; the HN–NI tural corridor, and the HN–NI agricultural corridor.
Map 3.1. Illustrated Differences in the Risk Exposure of the Identified Economic Corridors in Central America
Guatemala–Honduras agricultural corridor Nicaragua–Costa Rica agricultural corridor
Susceptibility to landslides—low (1) to high (4)
G
GChinandega
0 20 40 80 120
Kilometers
160
de bajo (1) a alto (4)
Leon
1 G
Tipitapa
1.01 - 2 G
Ciudad Sandino
2.01 - 3 G
G
Managua Juigalpa
G
3.01 - 4 Masaya
GGranada
G
Nueva Guinea
G
NICARAGUA
Puerto Cortez
G La Ceiba
Puerto Barrios G
G
G
Choloma NICARAGUA
Coban San Pedro Sula
G G La Lima
G GEl Progreso
GUATEMALA
COSTA RICA
G
G de bajo (1) a alto (4) Liberia
G San Jose Pinula G
G
GG G HONDURAS G
Comayagua
1
Metapán
G 1.01 - 2
Tegucigalpa
2.01 - 3
Santa Ana G Kilometers
Tacuba G EL SALVADOR
G GAhuachapán Nejapa 3.01 - 4 0 10 20 40 60 80
G GG
G GGGG G
G
Seismic risk: Peak ground acceleration over a return period of 50 years in Central America
G
GChinandega
Kilometers
0 20 40 80 120 160
< 100
Leon
100 - 150 G
150 - 200 G
Tipitapa
Ciudad Sandino
G Managua Juigalpa
G G
Masaya
GGranada
G
Nueva Guinea
G
NICARAGUA
Puerto Cortez
G La Ceiba
Puerto Barrios G
G
G
Choloma NICARAGUA
Coban San Pedro Sula
G G La Lima
G GEl Progreso
GUATEMALA
G COSTA RICA
G Liberia
G San Jose Pinula G
G
GG G
Metapán
HONDURAS G
Comayagua
G
Santa Ana
Tegucigalpa 200 - 250
Tacuba G EL SALVADOR
G
Kilometers
G GAhuachapán Nejapa > 250 0 10 20 40 60 80
G GG
G GGGG G
G
Source: Landslide Hazard Assessment for Situational Awareness (LHASA) model, Global Facility for Disaster Reduction and Recovery; World Bank’s Probabilistic Risk Assessment (CAPRA) Program
of the Latin-America and the Caribbean region (2015) based on data from RESIS II.
58 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
References
Augustin, Maria, Jose Luis Acero, Ana I. Aguilera, and Marisa Garcia Lozano, eds. 2017. Central America Urbanization
Review: Making Cities Work for Central America. Directions in Development—Countries and Regions. Washington,
DC: World Bank. http://hdl.handle.net/10986/26271.
Hallegatte, S., J. Rentschler, and J. Rozenberg. 2019. Lifelines: The Resilient Infrastructure Opportunity. Sustainable
Infrastructure Series. Washington, DC: World Bank. https://documents.worldbank.org/en/publication/
documents-reports/documentdetail/775891600098079887.
IDB (Inter-American Development Bank). 2016b. “Plan Nacional de Logística de Cargas–PNLOG–Honduras, 2015–
2030.” IDB, Washington, DC. http://www.scgg.gob.hn/sites/default/files/2020-06/38.%20Plan%20Nacional%20
Log%C3%ADstica%20Cargas.pdf.
JICA (Japan International Cooperation Agency). 2020. “Proyecto para el Fortalecimiento de las Capacidades en la
Elaboración del Plan Maestro Regional Indicativo de Movilidad y Logística para el Desarrollo Económico Regional
Sostenible en el Marco de la Integración Económica Centroamericana.” Informe Final sobre Estudios Adicionales.
PRONACOM. 2019. “Reformulación y actualización del Plan de Desarrollo Vial 2018–2032.” Press Release. April 4,
2019. https://www.pronacom.org/wp-content/uploads/library/comunicados_pronacom_apoya_la_mejora_de_la_
competitividad_a_traves_del_pdv_2018-2032.pdf.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
4. Addressing the financing
aspects of regional corridor
development
60 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
by governments in a coordinated manner and struc-
Macroeconomic and tured by the infrastructure agencies of each country, as
Fiscal Context for example the Chile–Brazil bioceanic corridor. In some
cases, the corridors may be designed by a supranational
entity, such as the European Union’s logistics corridors,
The fallout of the COVID-19 pandemic has led to a which for CA would involve the creation of a suprana-
deterioration of the fiscal space of countries in Central tional entity or agreement for project selection, award-
America (CA), implying a greater need for private capital ing and administration procedures, but with rather
mobilization to finance the infrastructure gap. The fragmented financing.
COVID-19 emergency has led fiscal deficits to increase
to 7.15 percent of gross domestic product (GDP) The success of the economic corridors has been based
across the region in 2020, while debt to GDP will be fundamentally on the understanding of them as a sum
increasing to 59.2 percent in 2024 (IMF 2021),1 reducing of highly complex projects, coordination with various
the governments’ infrastructure investment capacity. players—especially the private sector—and access to
This unfavorable situation is also evident in the credit capital from various sources. Corridors should not be
ratings, which consider a greater number of variables.2 seen as individual projects, but as the sum of different
The region ranges from BBB/Baa2/BBB- for Panama to projects of various transportation modes, each with
B-/B3/B- for El Salvador and Nicaragua;3 all countries its own risks. This means that financing will not be the
except Honduras have a negative outlook.4 These fiscal same for each project. Coordination with various stake-
constraints make it necessary to identify innovative holders, such as line ministries, subnational govern-
instruments to mobilize private sector capital for infra- ments, infrastructure agencies, sponsors, the academic
structure financing. sector, and above all users—especially businesses—is
key to incorporate the different needs of stakeholders. It
is especially important to have the perception of project
users in order to estimate potential demand over time.
Global Experience with This coordination should be both vertical, from govern-
Financing and Structuring ments with the different stakeholders, and horizontal,
among the different stakeholders. Finally, the channels
of Corridor Projects for accessing sources of capital should be as broad as
possible, since different projects in each corridor have
different needs. Thus, allowing access to capital from
Regional corridors globally have been developed and institutional investors, local and international banks,
financed under different modalities, from a segmented multilateral agencies and private equity funds is key,
structuring and execution in the different countries which implies having a financial regulation that under-
to implementation by a supraregional body. Projects stands the modalities of infrastructure financing and
structured completely at the supranational level are facilitates the entry and exit of capital from each country.
rare, generally being developed at the conceptual level
1 GDP-weighted average of the six SIECA countries.
2 A description of the different methodologies and rating scales can be found in the following websites—S & P: https://disclosure.spglobal.com/ratings/en/regulatory/ratings-criteria;
Moody’s: https://www.moodys.com/researchandratings/methodology/003006001/rating-methodologies/methodology/003006001/003006001/-/0/0/-/0/-/-/en/global/rr; and
FitchRatings: https://www.fitchratings.com/criteria.
3 Ratings correspond to those of S & P/Moody’s/FitchRatings.
4 If a change occurs in the near future, the rating would be upgraded in the case of a positive rating and downgraded in the case of a negative rating.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
61
The Maputo Corridor between Mozambique and South The North Sea–Baltic Logistics Corridor, one of the
Africa is an example of these lessons, with diverse nine strategic logistics corridors in Europe, is highly com-
sources of financing. Coordination with the private plex and therefore needs to be understood as several
sector took place through the Maputo Corridor Logistics projects. This corridor project includes 402 subprojects
Initiative (MCLI), bringing together 170 members, includ- covering roads, rail, waterways, airports, and ports (PwC
ing logistics and infrastructure providers and the public and Atlantic Council 2017). Coordination with stake-
sector, to function as a discussion forum to channel the holders is fragmented at the subregional level given the
needs of the private sector to the various authorities. magnitude of the corridor. Access to capital is secured
A minimum of demand was secured with the interest through loans from the European Investment Bank
of MOZAL, an aluminum producer in Mozambique, and (EIB), loans from the private sector, guarantees from
the Tande and Temane gas fields. However, the lack of the EIB, stand-by loans provided by the private sector,
clarity about the corridor’s port and rail projects pre- and grants from the European Commission for €2,731
vented demand from diversifying, maintaining depen- million for the sections in need. While institutional
dence on the mining sector. The road component of this coordination was managed at the European level, the
corridor obtained financing in its initial structure from corridor required financing and coordination with the
the Southern African Development Bank, several South private sector at the subregional level due to its size. The
African banks, and the South African miners’ pension variety of funding sources and high level of coordination
fund, among others, totaling US$297 million. The capital was in part due to the high level of regional integration
structure was 20 percent equity and 80 percent debt. in the European Union, with established supranational
institutions (European Commission, EIB, etc.).
The Brazil-Chile Bioceanic Corridor is an example of
a corridor that is more fragmented, by country, in its
structuring and financing. This corridor has ongoing
dialogue between the countries and with the private Financing and Structuring
sector although led by the public sector and therefore
subject to political changes. At the same time, there are of Infrastructure Projects
no financing agreements between the countries, each
following a different scheme. For example, Argentina
in Central America
used budgetary resources in their entirety, in contrast
to Paraguay, which for a 227-kilometer road section Infrastructure investment in the region is mainly public,
obtained capital market financing for US$732 million. at low levels, with a relatively low capacity to mobilize
This was done with 15-year bonds issued in a private private capital and a predominant role played by inter-
placement in New York (144A/REG S regime) at 5.375 national and multilateral development banks (MDBs).
percent5 or 1.2 percent above the sovereign. The The weighted average of investment in the region is
Moody’s rating was Ba2, equal to that of the govern- 1.74 percent of GDP, below the level needed to close the
ment. Additionally, this project has a US$42 million infrastructure gap. Moreover, even the countries that do
revolving credit facility from local banks.6 The difference mobilize significant amount of private capital do so in
between the countries in access to capital explains the small proportions to total investment, such as Costa Rica
fragmentation in structuring and financing. and Panama, with 12 percent and 27 percent of total
5 See the LexLatin online article, dated May 30, 2019 (in Spanish): “Actualización: SPV asociado al Corredor Vial Bioceánico oferta bonos para financiar proyecto en Paraguay.” Available
online: https://lexlatin.com/noticias/actualizacion-spv-asociado-al-corredor-vial-bioceanico-oferta-bonos-para-financiar
6 For further details on the bioceanic corridor project, see the May 15, 2019, article published online (in Spanish): “BKM Berkemeyer asesora a Consorcio Vial Bioceanico en financiamiento
con bono internacional por 430 millones de dólares.” Available online: https://abogados.com.ar/bkm-berkemeyer-asesora-a-consorcio-vial-bioceanico-en-financiamiento-con-bono-inter-
nacional-por-430-millones-de-dolares/23443
62 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
investment, respectively, according to their own esti- is relatively isolated from the political cycle of each
mates. Private financing in projects with private capital country. In turn, the regional market interacts with
participation comes mainly from international banks the electricity market of each country according to the
(55.8 percent of the total), according to the IJGlobal capacities of each one, so that the difference in partici-
database (https://www.ijglobal.com/data), followed by pation between countries does not affect the market as
multilateral entities (29.8 percent)—CABEI, the IFC and a whole. The financing of the line and interconnection to
the IDB in most cases. Local banks occupy third place the company that owns the network—whose sharehold-
with 6.6 percent, while institutional investors play a ers are the energy companies of the countries, mostly
marginal role. public—originated from various sources, with the Inter-
American Development Bank (IDB) contributing US$240
Road conservation funds such as FOVIAL in El Salvador million, CABEI US$109 million, and CAF US$16.7 million
(https://www.fovial.com) have been used for road (EPR 2014).
operation and maintenance, but with limited capital
because of the low amount of revenues collected. These Local banks have limited capital, with moderate long-
funds depend on budget revenues, such as fuel taxes, term funding, as well as a lack of confidence in the qual-
to maintain roads. The limited focus prevents them ity of projects and little infrastructure experience. The
from being used for construction and their pooled fund capital of local banks in most countries limits potential
characteristic does not make it easy to prioritize the use exposure to infrastructure projects, while local currency
of their capital. funding in the form of deposits is largely inconsistent
with the maturities required by infrastructure projects.
The Mesoamerica Corridor is somewhat fragmented in In the same vein, banks often have doubts about the
its coordination and financing. This corridor, essentially timeliness and payment capacity of some countries and
a road corridor with related activities, is based on a dia- the quality of project structuring, which makes them
logue at the government level with financing assistance perceive project risk as too high. This results in local
from various multilateral institutions but does not reach banks preferring to cofinance with MDBs, usually under
the details of specific projects.7 Its financing is mostly New York law, in order to have greater security in case
through public works and loans from MDBs, especially of defaults. Finally, there are few banks with experience
for large projects. Private sector participation has been in lending to infrastructure projects. All of this limits
limited to start-up projects (operation and maintenance their role, resulting in international players partially
in many cases paid for by road funds), turnkey projects, supplying this market.
and public-private partnerships (PPPs) on some sections.
The use of capital markets has been limited in CA, so
The Central American Electricity Interconnection System far observed in only two of the countries, thus missing
(SIEPAC) is an example of supranational institutional out on an important source of long-term financing. Ten
development, benefiting from significant amounts transactions have been financed with bonds, all of them
of financing. The regional electricity market and the high profile. In Costa Rica, San José’s Juan Santamaria
market regulator are supranational and are not subject airport issued a US$127 million 10-year bond and
to the jurisdiction of each country but are governed by Highway 27 issued two bonds for US$300 million and
a framework treaty (ECA 2010). In this way, the project US$50.75 million for 14 and 10 years, respectively. In
7 The dialogue between countries of the Mesoamerica project is at the governmental level, with a permanent executive directorate and CABEI’s presence in the executive committee.
However, the structuring of projects takes place within the ministries or agencies of each country, separating the financial conditions in each segment and preventing greater uniformity
that would attract larger investors if private capital were sought.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
63
Panama, the Tocumen airport has had three issues
between US$225 million and US$650 million at 10 and Global Experiences of
30 years, while the bridge over the Panama Canal was
financed with a US$400 million 20-year bond issued by Innovation in Mobilizing
the Canal Administration Company, a quasisovereign.
In addition, the Corredor Sur Highway, also in Panama,
Private Capital
has made a series of short-term issues. With respect
to infrastructure funds, Clifford Capital of Singapore Subordinated contingent liquidity facilities are credit
financed the expansion of the Rodman port in Panama supports. These facilities seek to mobilize resources
with US$150 million. from senior lenders by taking a long-term subordinated
position giving the project the opportunity to repay
There is a diversity of players and restrictions for pen- senior creditors first. This reduces the probability of
sion funds; for example, in Guatemala, only one relevant default to senior lenders. A key criterion for the decision
fund exists, IGSS, and it can only invest in government to lend is the financial viability of the project, which must
bonds, while in Costa Rica pension funds can only invest be present without the liquidity line or, failing that, must
in listed investments, and in Honduras they can make become viable as a result of this line. Additionally, the
direct loans. In addition to the shallowness of the capital institutions that grant these lines must have sound gov-
market and the limited institutional investor base, ernance and teams from a technical point of view. Three
the regulatory framework in many cases prevents the relevant examples of these lines are the Transportation
development of financial innovations for investment by Infrastructure Finance Innovation Act (TIFIA) in the
the main institutional investors in the region. United States, the EIB , and National Development
Finance (FDN) in Colombia.
PPPs are not extensively applied in practice in the
region: they have been used successfully in Costa Rica Infrastructure funds are an option for channeling
and Panama and occasionally in Honduras, though with capital from institutional investors, which in the case
credibility problems, while in the rest of the countries of CA would make more sense at the regional level.
they have not reached financial closure. The criteria These funds, which can be debt or equity funds, seek
for the use, approval, and awarding of projects differ to generate economies of scale by aggregating several
between the countries, which limits its use for regional funds and sharing expenses while outsourcing invest-
corridors. For example, the criteria for awarding a ment management to a specialized team, avoiding
project in Costa Rica are defined in the law, but projects having to build a costly investment team internally.
are awarded at the agency level, as is the case in most Consequently, these funds would be more profitable
countries. In contrast, projects to be structured must if they operated on a regional basis, and could also
be approved by Congress in El Salvador, Honduras, and diversify their investments. Examples of their use exist
Guatemala, slowing down project awarding and intro- in the United Kingdom (Infrastructure Pension Platform,
ducing a political component in the decision. PiP) for £700 million and in Colombia (CAF-Ashmore) for
US$400 million.8 In the region, CABEI is implementing a
similar fund with a target of US$500 million to mobilize
international investors.
8 These funds have the structure of private equity funds with a general investor active in the investment with moderate capital and several limited investors with larger investments and a
guiding or rather passive role in investment decisions.
64 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Debt retirement instruments (take-out facility) help Financing through land value capture is another way
banks to renew their capacity to lend to the sector. of raising funds for infrastructure financing. This
Under this scheme a development finance institution instrument seeks to ensure that the increase in land
buys infrastructure loans allowing the bank selling the value generated by the infrastructure investment
loan to originate new loans. This scheme requires the partly finances the infrastructure itself. Value capture
bank selling the loan to have already identified a new can be done through various schemes: contribution
project to lend to so that it can sell the loan and thus for improvements, levies and charges for construction
prevent the resources from being used for other needs. rights, tax increment financing, or land readjustment
This scheme is used by the Indian Infrastructure Finance schemes. This mechanism tends to be used in areas
Company, for example. where the impact of infrastructure will be high, such as
urban areas, which limits its potential for large eco-
Asset recycling allows optimizing public resources nomic corridors. Land value capture instruments have
and channels their returns to finance new infrastruc- not yet been widely applied in the CA region, but all six
ture. This modality consists of monetizing existing countries have at least some of them defined in their
infrastructure assets by selling or leasing them, and regulatory frameworks, and individual countries have
investing these resources in new infrastructure. Under experiences with their implementation. In order to make
this modality, roads under government control are the implementation of land-based financing instruments
often used to finance new roads or roads under private effective, it is necessary to establish and technically
management about to revert to the government to strengthen the institutions in charge of infrastructure
obtain resources. The best known example in the Latin construction and for the calculation and implementation
America region is the National Infrastructure Fund of the associated contributions. The CA region faces
(FONADIN) in Mexico. the challenge of maintaining updated land value data-
bases, multifunctional cadaster systems, and valuation
methodologies that allow for the eventual application of
land-based infrastructure financing instruments.
References
ECA (Economic Consulting Associates). 2010. “Central American Interconnection System (SIEPAC): Transmission
and Trading Case Study.” Energy Sector Management Assistance Program (ESMAP) Briefing Note 004/10,
World Bank, Washington, DC. https://www.esmap.org/sites/esmap.org/files/BN004-10_REISP-CD_Central%20
American%20Electric%20Interconnection%20System-Transmisison%20&%20Trading.pdf.
EPR (Empresa Proprietaria de la Red S. A.). 2014. “Informe General 2013: Antecedentes estado actual y perspectivas
del Sistema de Interconexión Eléctrica de los países de América Central (SIEPAC),” EPR, San José, Costa Rica.
http://www.eprsiepac.com/pdf/informe_general__linea_siepac_dic13.pdf.
PwC and Atlantic Council. 2017. “The Road Ahead CEE Transport Infrastructure Dynamics.” PwC, Warsaw, Poland.
https://www.pwc.pl/pl/pdf/the-road-ahead-raport-pwc-atlantic-council.pdf.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
5. The way forward: strategic priorities
for Regional Economic Corridor
Development in Central America
66 MOBILITY AND TRANSPORT
CONNECTIVITY SERIES
Developing the full potential of the regional economic • Infrastructure and facilities: Considering the
corridors identified in this study will require a holistic, current asset condition and level of disaster risk
comprehensive approach that includes investment in exposure, assessment of the relative importance of
“hard” infrastructure (roads, border crossing facilities, investing in the main roads, secondary and tertiary
ports, airports, logistics platforms) as well as policy roads connecting to the main roads (“last mile”), park-
interventions in the “soft” issues, such as transport and ing areas, weighing stations, border crossing facili-
logistics services, security and road safety, and trade ties, multimodal nodes (ports, airports, inter-modal
facilitation. In addition, building a true “development” terminals), logistics centers, storage facilities, cold
corridor will eventually require also other complemen- chain facilities, truck rest stops, and other facilities.
tary economic, social, and environmental policies to be
put in place, in order to enhance the skills of the work- • Customs and trade facilitation: Customs pro-
force, attract private sector investment to the corridor cesses, trade facilitation
area, and mitigate any environmental externalities asso-
ciated with increased economic activity; these policies • Complementary policies: Policies aimed at improv-
will need to be coordinated between the countries that ing transport and logistics services, road safety,
are connected by the particular development corridor. physical security, among others.
As the data presented in chapters 2 and 3 suggest, the In the discussion on the infrastructure needs, a
identified cross-border economic corridors in Central qualitative assessment is also made as to the relative
America (CA) each have their own distinct challenges magnitude of the required investment and the expected
and investment needs. Some of these differences stem climate cobenefits (in terms of climate resilience/adapta-
from the specific economic production profiles of the tion in particular) and, thus, relevance of climate finance
corridors—that is, intensive manufacturing or industrial instruments. Finally, table 5.1 provides a summary of
activity versus agricultural activity. For example, cold the main economic beneficiaries from corridor devel-
chain infrastructure would be of higher priority for the opment, given the corridors’ production profile and the
agricultural activity-based corridors. potential for poverty mitigation.
Based on this earlier analysis and the overall qualitative
assessment provided by several of the countries’ own Infrastructure
Ministries of Infrastructure and Transport, this final
chapter of the study provides a summary of the needed The improvement of the corridor infrastructure and
interventions—but not yet underway/do not yet have access roads is a high priority in most cases, although
secured financing—to fully develop the economic and differences exist between the countries involved, such
trade potential; presents specific recommendations as in the case of the Nicaragua–Costa Rica agricul-
regarding the needed policy actions; and describes tural corridor, where the road improvement on the
the magnitude of the expected economic impact. This Nicaraguan side is more urgent. However, ensuring
summary assessment (table 5.1) provides a sense of goods reach those corridors will also require significant
the components and points of emphasis of a potential investment in the access roads. For example, half of the
future operational project that could be implemented main collector roads in Nicaragua are in poor or accept-
to develop a specific regional economic corridor. The able condition due to insufficient maintenance, mostly in
intervention needs are grouped in several broader the western region where the identified economic and
categories: agricultural corridors are located.
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
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67
Along all of the identified economic corridors, infra- Solving the pressing issues at the main ports and
structure needs to be developed to support trucking airports is of particularly high priority for the GT–ES
service providers, such as parking lots and secure rest agricultural corridor. According to previous analyses
areas tailored to the traffic volumes. In the case of the (see IDB 2016a), the landlord model could improve
economic corridors that include some of the region’s the operations of the region’s public ports, such
major metropolitan poles (Guatemala City, San Salvador, as in Guatemala, to improve efficiency and level of
Managua, San Pedro Sula, and Tegucigalpa), infrastruc- investment.
ture and services are needed for truckers in the urban
perimeter zones usually subject to hourly restrictions for The three integrated land border posts between
heavy vehicle circulation. Guatemala and Honduras have generated a dramatic
reduction in border crossing time. Nonetheless, to fully
There is a need to address congestion problems in exploit the benefits, there remain many challenges that
the main cities of the region, such as in Guatemala the countries will still need to overcome, including invest-
City, San Salvador, and Managua, all of which are part ments in high-cost information technology (IT) systems,
of at least one of the identified economic corridors. The special lanes for perishable goods or for cargo under
lack of bypasses and the characteristics of the entry and free circulation, and cold warehouses, among others.
exit roads currently generate high vehicle operating
costs, deterioration of infrastructure, noise, and traffic
accidents. Multimodal platforms for cargo transfer are Customs and trade facilitation
needed to improve distribution systems in not only
these but also other key urban centers, and bypasses The scope of the Customs Union between Guatemala
are needed to prevent heavy vehicles from passing and Honduras should be extended also to the more
through the main cities. peripheral posts, and the discussion reactivated on the
incorporation of the other countries into this process. A
The railroad sector has little relevance to food secu- common need in nearly all of the border crossings serv-
rity in CA for the time being, since the railroad is not ing the identified economic and agricultural corridors
used for food transport, and very few of the identified is the need to introduce separate access for passenger
economic corridors have any functioning rail service. versus cargo vehicles.
However, rail freight transport could provide a viable
alternative—and redundancies—on the agricultural
goods and food products transport routes. For example, Complementary policies
rehabilitation of the railroad line between San José and
Caldera and operationalization of freight rail service Key actions to improve trucking services—applicable
would help reduce logistics and transportation costs to all of the identified cross-border corridors and the
of agricultural products between the Nicaragua–Costa region’s freight sector in general—include, among
Rica agricultural corridor and the Central Valley of Costa others: deregulating the sector to improve the level of
Rica. However, the potential benefits of developing rail competition on individual routes; creating a regional
connectivity need to be weighed against the challenges network of truck centers along the main economic
associated with the region being characterized by a corridors and implementing a regional freight pool to
mountainous terrain, which generates high construction increase fleets’ productivity and efficiency in facilitating
and operating costs. return cargo, and foster integrated fleet management.
68 MOBILITY AND TRANSPORT
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The region’s large export industries (commodities and Business support mechanisms in CA tend to be
textiles) own their own fleet of trucks and are vertically scattered across multiple agencies and departments
integrated with the shipping lines; however, small of national governments, with the exception of
exporters that produce nontraditional goods and con- Costa Rica, which has made progress in streamlining
tribute to the diversification of the countries’ intra- and the process through the creation of the Agency for
extraregional trade are neglected by the sector’s supply, Productive Development, Innovation and Value-Added
since they need more sophisticated operators that not (FOMPRODUCE). Both Costa Rica and Nicaragua also
only provide the transportation phase, but also val- have well-performing investment promotion institu-
ue-added services. At present, there are no collaborative tions. Nicaragua’s PRONICARAGUA is recognized by its
logistics initiatives in CA, as there are in South America. efficiency in responding to the requests of international
Thus, government intervention must go beyond simply investors, and the Costa Rican lnvestment Promotion
supporting the consolidation of port hubs and create Agency (CINDE) has excelled in expanding the operations
logistics zones with platforms to support small and of established multinational companies. Scaling up these
medium-sized producers. types of initiatives to the rest of CA will be key to develop-
ing the full potential of the regional economic corridors.
Institutional actions that would help strengthen the
specific prioritized intraregional value chains include,
among others, improved interinstitutional and tech- Financing
nical-administrative coordination across sectors and
among the involved countries; involving the private sec- One of the main priorities identified in terms of financ-
tor both in the steering of related issues at the national ing regional corridor projects in CA is increased coordi-
level and in regional spaces where the interests of nation with stakeholders, including private sector finan-
different countries coincide; and strengthening of the ciers, for structuring bankable projects. Coordination
organizational and institutional environment for private will be needed among project structuring agencies
sector investment in order to be able to introduce more in the region a first step toward achieving regionally
private sector investment in the economic corridor area harmonized projects able to mobilize greater volumes
through public-private investments (PPPs). of private capital. Greater similarity between schemes
in each country would facilitate the role of investors
Addressing security issues and/or improving road by reducing the cost of learning about each scheme. A
safety is a high priority in the case of most of the identi- more uniform approach that incorporates best practice
fied economic and agricultural corridors. would allow enhancing the bankability of structured
projects. Multilateral development banks (MDBs), includ-
Labor market issues need to be addressed to enable ing the World Bank Group, can be relevant in providing
the full potential of the regional economic growth poles an impartial and technically qualified opinion.
to develop. An unskilled workforce hinders economic
development and ties an economy to low-wage indus- In the CA context, a regional infrastructure fund may
tries, as has been the case in Guatemala, El Salvador, be an appropriate solution, in lieu of several national
Honduras, and Nicaragua. Pragmatic policies are ones. Given the size of projects at the national level
needed to bring skills closer to firms, possibly through and PPP schemes that are not always proven or
a joint initiative between central and local governments reliable, there is limited justification for national
or through private businesses. infrastructure funds. Funds at the regional level would
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
69
provide more investment opportunities and diver- Financial regulation of local banks should allow local
sification as well as generate economies of scale by banks to operate throughout the region and should be
aggregating a larger amount of resources to finance commensurate with infrastructure needs. Not all banks
the funds’ operations. Similarly, the creation of a in the region can lend freely outside their countries,
coordination mechanism for project structuring at the which prevents a regional banking market for large
regional level should be considered. loans. Regulatory barriers should also be lowered for
infrastructure investments by the region’s institutional
Close coordination with the private sector should be investors. Pension funds across CA have very different
part of project structuring and management, allowing investment regimes, some restricting investments
for greater standardization of projects (contracts, risk outside the public or financial sector. Countries should
allocation models, and more) and the reduction of infor- work to harmonize investment regimes toward one in
mation asymmetries between infrastructure agencies in which the use of equity in the region is permissible.
each country. The presentation of projects specific to an
economic corridor as regional initiatives would provide Finally, the countries could tap into the opportunity of
them with greater aggregate volume and critical mass, issuing infrastructure themed bonds to broaden the
a key factor for attracting both local and international investor base—for example, environmental, social, and
institutional investors. governance (ESG) bonds. In April of 2020, Guatemala
issued two sovereign ESG bonds for US$500 million and
Government support will be needed to address the US$700 million respectively.
financial risks that are difficult for the private sector to
absorb, such as some of the more complex construction
or community risks as well as some degree of foreign
exchange risk for international investors.
In developing regional, large scale corridor projects,
product innovation—such as liquidity lines, guarantees,
infrastructure funds and take-out facility instruments—
will be essential. Complementary support from MDBs
with credit enhancement instruments that mobilize
private capital will be important initially for the creation
of these instruments and for the establishment of a
track record in the use of PPPs. Harmonization of the
regulatory framework for instruments such as project
bonds or infrastructure investment funds (equity and
debt) will be key to mobilizing long-term private capital.
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Table 5.1. Qualitative Assessment of the Future Intervention Priorities for each of the Economic Corridors in Central America
Infrastructure and facilities Customs and trade Complementary Direct economic
facilitation policies beneficiaries and potential
poverty impact
GT: Reinforce several bridges. Improve the border post to reduce GT–HN: Implement Improve public safety by Combined population:
delays. Improve loading and unloading processes at Puerto Barrios dedicated lanes for enhancing police patrols ~5.8 million
and Santo Tomás de Castilla by providing the necessary equipment FYDUCA at Aguas Calientes (especially on C13 in HN);
Combined GDP:
and adequate parking areas. Invest in facilities for users, parking and Corinto crossings train drivers transporting
US$22.3 billion
areas, driver rest areas, restrooms, showers, canteens, etc. To with FYDUCA
HN: Improve foreign
improve safety, improve road signage, place metal fenders at Main value chains: food
trade processes at Ramón HN: Introduce compulsory
strategic points, illuminate crossings in towns. Invest in dedicated production/processing;
GT–HN–ES: Puerto Barrios–Tegucigalpa
V. Morales airport liability insurance,
logistics centers.
driver certification cultivation of agricultural
ES: Expand and pave roads in the border area of Metapán. Expand system; develop specialized products; manufacturing of textile
to four (4) lanes Troncal del Norte Highway Apopa–Frontera El Poy logistics services products
Section and CA08–Cerro Verde–El Congo–Coatepeque–RN09–
Interventions would directly
CA12–Anguiatú. Invest in trucker rest stops and overnight service
benefit ~25,000 firms across
centers, amenities, parking, and other services.
all sectors, of which ~2,600 in
HO: Invest in trucker rest stops and amenities, parking, etc. Expand production sectors
the capacity of ramps for the gauging of goods at Aguas Calientes
Poverty mitigation: High
and Corinto border crossings; improve infrastructure (parking,
potential impact, given the “very
storage for refrigerated cargo) at El Poy crossing. Invest in dedicated
high” level of poverty in parts of
logistics centers. Address capacity and equipment constraints at
the corridor in HN
Toncontín International Airport, including at its warehouses.
Financing needed: +++
Climate co-benefits/relevance of climate finance: +++
GT: Rehabilitate several subsections of the CA-1 Oriente and CA-8, Streamline customs Train drivers transporting Combined population:
reinforce bridges along the route, and improve road infrastructure processes, improve pre- with FYDUCA; improve ~8.7 million
at the border posts (border bridges). Invest in parking areas, payment, and implement control of crime along
Combined GDP:
refrigerated cargo handling, rest areas for drivers. To improve specific lanes, such as the routes through police
US$62.5 billion
safety, invest in horizontal and vertical road signage, placement empty vehicle passage patrols, placement of
GT–ES: Guatemala City–San Salvador
of metal fenders, lighting in populated areas. Invest in dedicated cameras at strategic Main value chains: cultivation
logistics centers. Build bypasses around MAG. points, implement security of agricultural products; food
equipment in trucks production/processing; print-
ES: Improve sections of CA01, esp. in Ahuachapán and Sonsonate:
ing-related activities; apparel;
construct a viaduct and widen CA01W Los Chorros section and ES: Introduce a PCS at
manufacturing of metal products
expand CA01W to 4 lanes. Invest in border crossing facilities (includ- Puerto Acajutla
ing bridges) at Las Chinamas to increase handling capacity. Invest Interventions would directly
in trucker rest stops and amenities, parking, etc. Modernize Port of benefit ~940,000 firms across
Acajutla and expand its facilities. The connection between Acajutla all sectors, of which ~72,000 in
and departments of San Salvador and Sonsonate is a priority section production sectors
in the future Pacific Train project.
Poverty mitigation:
Financing needed: +++ Moderate potential impact
(higher in GT than ES)
Climate co-benefits/relevance of climate finance: ++
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
Infrastructure and facilities Customs and trade Complementary Direct economic
facilitation policies beneficiaries and potential
poverty impact
ES: Rehabilitate CA01E; expand to 4 lanes RN18E; expand CA01E; Standardize border cross- ES: Improve logistics Combined population:
improve tertiary roads; build a bridge on the border with Honduras ing schedules between services provided at Puerto ~1.9 million
in Victoria municipality. Construct the Pacific Airport in the Eastern country pairs; introduce La Unión
Combined GDP:
zone of El Salvador; construct the Pacific Train (currently in feasibility single window
Improve services for users US$9.92 billion
stage). Invest in trucker rest stops and amenities, parking, etc.
HN–NI: Separate and carriers; operationalize
Improve landside access to Puerto La Unión. Main value chains benefit:
procedures for passenger the Trinational ferry in the
ES–HN–NI: Gulf of Fonseca
food production/processing;
NI: Expand road capacity (widen NIC24/12 southeast from and cargo vehicles at El Gulf of Fonseca (ES–NI);
apparel; furniture manufacturing;
Chinandega to Leon and El Tamarindo); improve connectivity with Guasaule crossing take actions to reduce
manufacturing of metal products
multi-modal nodes (e.g., Corinto and Sandino ports); improve robberies of vehicles
ES–HN: Introduce a
equipment, including cranes, at Corinto. traveling on CA2 and CA1 Interventions would directly
separate lane for TIM
benefit ~29,000 firms across
HO: Invest in dedicated logistics centers. Rehabilitate CA1. Improve (International Customs
all sectors, of which ~4,500 in
the facilities at El Guasaule border crossing and expand its parking Transit of Goods) access at
production sectors
area. Improve support infrastructure (such as parking for heavy Amatillo crossing
vehicles, screening areas, temporary and short-term storage spaces Poverty mitigation:
for refrigerated cargo) at Amatillo border crossing. Moderate potential impact
(higher in HN)
Financing needed: +++
Climate co-benefits/relevance of climate finance: ++
HO: Build bypasses around Tegucigalpa to reduce congestion on Introduce separate lanes Improve services for users Combined population:
C06; Invest in dedicated logistics centers. for passengers and cargo and carriers ~2.5 million
at Las Manos crossing
NI: Rehabilitate NIC38/NIC51 and upgrade NIC15; invest in the Combined GDP:
modernization of Las Manos and El Espino border crossings (for US$7.51 billion
example, weighing facilities, and cargo axle inspection station).
Tegucigalpa–Matagalpa
Main value chains: food
Financing needed: +/++ production/processing; apparel;
furniture manufacturing;
Climate co-benefits/relevance of climate finance: +
manufacturing of wood products;
manufacturing of metal products
Interventions would directly
benefit ~25,000 firms across
all sectors, of which ~5,500 in
production sectors
Poverty mitigation:
Moderate potential impact
(higher in HN)
MOBILITY AND TRANSPORT
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Infrastructure and facilities Customs and trade Complementary Direct economic
facilitation policies beneficiaries and potential
poverty impact
GT: Widen CA09 to four (4) lanes, reinforce several existing bridges Implement policies to Address crime issues and Combined population:
and build the parallel bridge; rehabilitate several sections of CA13. allow for more agile tax the high levels of robberies ~4.76 million
Invest in facilities for users, parking areas, services for pilots (rest clearance and payment; on CA09 (GT) and CA13
Combined GDP: US$21 billion
areas, restrooms, showers, canteens, and others). Improve rural implement easier advance between Puerto Cortes and
access roads, especially in Izabal. Improve loading and unloading payment processes San Pedro Sula (HN) Main agricultural crops: tropical
processes at seaports by providing the necessary equipment and (online); fruit, banana, vegetables, oil
HN: Improve foreign
adequate parking areas. To enhance road safety, to improve road palm, maize
implement dedicated trade processes at Ramón
GT–HN: El Progreso–Colon
signs, install metal fenders and lighting in urban areas. Invest in
lanes for FYDUCA at V. Morales International Total production (mt/year):
dedicated logistics centers in the port vicinity. Improve loading and
Corinto crossing Airport Cash crops: 1.8 million; staple
unloading processes at Puerto Santo Tomás de Castilla. Upgrade
crops: 0.14 million
facilities and import/export docks at Puerto Barrios to support
agricultural value chains. Poverty mitigation: High
potential impact (higher in HN)
HO: Rehabilitate CA04 and CA13 north of San Pedro Sula.
Improve road connectivity to Puerto Castilla. Develop a network of
agricultural storage/consolidation centers and drying facilities near
agricultural production areas (for example, for white and yellow
maize and wheat).
Financing needed: ++/+++
Climate co-benefits/relevance of climate finance: +++
GT: Perform maintenance on CA02 and expand its capacity. Expand GT: Implement more GT: Improve container Combined population:
road access to Puerto Quetzal. Improve rural access roads, including agile customs, immigra- inspection and weighing at ~2.64 million
to the ag. collection and distribution centers. Strengthen bridges on tion and phytosanitary the exit of Puerto Quetzal
Combined GDP:
the main roads; improve border bridges and access to border posts. control procedures;
ES: Introduce a PCS at US$15.74 billion
Address the lack of truck parking areas, driver rest areas, restrooms, introduce specialized
Puerto Acajutla
showers; warehouses, cargo transfer facilities, cold storage, lanes, such as the empty Main agricultural crops:
packaging, and other needs. Implement processes to facilitate vehicle lanes Improve police surveillance sugarcane, banana, tropical fruit,
interconnection with other modes of transport at the terminal to prevent theft of maize
points. Improve road signs (horizontal and vertical), implement merchandise
GT–ES: Escuintla–Sonsonate
Total production (mt/year):
metallic defenses at dangerous points, lighting in town crossings,
Cash crops: 21.6 million; staple
and other improvements.
crops: 0.51 million
ES: Rehabilitate and expand CA02W; construct a viaduct and widen
Poverty mitigation:
CA01W; expand to four (4) lanes CA01W Santa Ana-San Cristobal;
Moderate potential impact
improve tertiary roads. Improve the border crossing facilities at Las
(higher in GT than ES)
Chinamas, including increase the border bridge capacity to be able
to handle the flow of vehicles that pass through it. Invest in trucker
rest stops and amenities, parking, etc. The connection between
Acajutla and departments of San Salvador and Sonsonate is a in the
future Pacific Train project. Invest in storage facilities for agricultural
produce (such as corn and beans).
Financing needed: +++
Climate co-benefits/relevance of climate finance: +++
ECONOMIC CORRIDORS TO PROMOTE TRADE AND
SUSTAINABLE DEVELOPMENT IN CENTRAL AMERICA
Infrastructure and facilities Customs and trade Complementary Direct economic
facilitation policies beneficiaries and potential
poverty impact
NI: Widen the main road corridors—NIC12 and NIC49; rehabilitate Separate procedures for Improve services for users Combined population:
NIC12A and secondary collector roads around the cocoa and basic passenger and cargo and carriers ~1.61 million
grains production areas in Nueva Segovia, Madriz and Estelí; vehicles at El Guasaule
NI: Improve police patrols Combined GDP: US$4.39
improve connectivity from the corridor area to Puerto Corinto. Invest crossing
and systems to improve billion
in the modernization of El Espino border crossing. Improve cargo
HN–NI: El Paraíso–Estelí
security on NIC24
handling facilities at Puerto Corinto. Main agricultural crops:
sugarcane, maize, coconuts
HO: Rehabilitate CA3. Develop a network of agricultural storage/
consolidation centers near agricultural production areas. Improve Total production (mt/year):
the facilities at El Guasaule border crossing and expand its parking Cash crops: 3.33 million; staple
area. crops: 0.1 million
Financing needed: +/++ Poverty mitigation: High
potential impact, given “very
Climate co-benefits/relevance of climate finance: +++
high” poverty in parts of the
corridor in HN
NI: Rehabilitate NIC1 between Puerto Sandino and Paso Real de Standardize schedules Improve physical security Combined population:
Ochomogo and expand its capacity; improve connectivity from the between NI and CR at and road safety at Peñas ~2.64 million
corridor area to the Sandino and San Juan del Sur ports. Build a Peñas Blancas Blancas; improve road
Combined GDP:
bypass around Managua to reduce congestion on NIC4. safety along the corridor;
US$16.1 billion
implement logistics activity
CR: Expand Puerto Caldera to avoid reaching unacceptable levels
NI–CR: Managua–Guanacaste
platforms close to the Main agricultural crops:
of congestion. Develop rail infrastructure to improve intermodal
main multimodal nodes, sugarcane, tropical fruit, rice,
conditions for freight transport; provide the ports with the necessary
adapted to the needs of the banana, coconuts, maize
infrastructure for intermodal activities. In the vicinity of the port and
private sector
Daniel Oduber airport, develop logistics activity zones. Establish Total production (mt/year):
weigh stations in the corridor and parking areas. Invest in facilities Cash crops: 4.45 million; staple
for transport users, such as secure parking areas with restaurant crops: 0.4 million
areas, rest areas, among others. Expand the capacity of available
Poverty mitigation: Low-
storage of cargo and cold containers.
to-moderate potential impact
Financing needed: +++ (higher in NI)
Climate co-benefits/relevance of climate finance: +
Source: Original table produced for this publication, including analysis based on the qualitative assessment received from Ministries of Transport of Costa Rica,
El Salvador, Honduras, Guatemala, and Nicaragua.
74 MOBILITY AND TRANSPORT
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Reference
IDB (Inter-American Development Bank). 2016a. “Plan Estratégico Nacional de Logística de Cargas–PENLOG
Guatemala, 2015–2030.” IDB, Washington, DC. https://www.caminos.gob.gt/files/Plan-estrategico-Nacional-
Logistica-Cargas.pdf.
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Mobility and Transport Connectivity series: 2021 reports
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Photo Credits
Cover Page: Gianfranco Vivi, Shutterstock, 1588753174
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