ABSTRACT
The international financial institutions (IFIs), namely the World Bank and the International Monetary Fund (IMF), assumed a prominent role in Central America in the aftermath of a severe and protracted economic crisis, and political and social upheaval of the 1980s. Historically, external actors have had an important role in the region in defining economic opportunities and heavily influencing the policy choices of elites, and thereby impacting on society. In the early 20th century, these export-driven economies relied heavily on export earnings from a limited number of products to sustain growth such as bananas and coffee. As price-takers with little influence on the international market, fluctuations in the terms of trade caused periodic crises in the region (Vilas 1996: 465). Efforts to diversify exports and foment regional integration in the 1960s had stalled by the 1970s, when the region drifted into economic stagnation and social conflict, leading to intense military intervention by the USA (Bulmer-Thomas 1987: 274).
