A lack of corporate transparency and a paucity of firm-level data frustrate researchers who study business dynamics in the economies of Central America. Nevertheless, the heroic efforts of Bull, Castellacci, and Kasahara have produced some fascinating and often disquieting findings. Contrary to the optimistic hopes of those who support free trade in Central America, opening the region to global commerce has not severed the chummy relations between governments and business groups controlled by powerful families, nor has it generated more competitive and productive business management practices. Although there are important exceptions, many of the region’s leading investors have not chosen to fund export-oriented industries and agricultural innovation but rather have opted for the easy money of retail malls, tourist hotels, and local banking. And despite the evident need for public spending on human capital and physical infrastructure, the idea of paying taxes remains anathema to Central America’s wealthy elites. Meanwhile, frustrated by poorly performing public institutions, voters have been turning away from the traditional political parties, which are heavily influenced by business elites, in favor of antiestablishment candidates. Responding to heightened political risks, corporate conglomerates have diversified their portfolios by investing in several countries simultaneously. And although reliable data on capital flight are hard to come by, it also seems likely that companies are moving some of their money out of the region altogether.
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