El Salvador - Industry

The leading industrial region is the department of San Salvador. Other industrial centers are La Libertad, Santa Ana, San Miguel, Usulutan and San Vicente. There are coffee-processing plants, sugar mills, bakeries; and plants making petroleum products, vegetable oils, fats, confectionery, dairy products, tobacco, soap, candles, matches, shoes, furniture, light metals, cement, and organic fertilizers.

Large-scale industry was introduced in the 1960s, relying mostly on imports of crude materials. In 1963, an oil refinery at Acajutla began processing Venezuelan crude oil; most of the output is consumed locally (in 2002, production capacity was 22,000 barrels per day). During the early 1970s, the greatest increase in value of manufacturing occurred in chemicals and textiles. Civil war during the 1980s hurt industrial production, with an average annual decline of 6% between 1977 and 1987.

Following the attainment of civil peace in the 1990s, the Salvadoran economy boomed. This growth was sustained by the recovery of the agricultural sector, and expansion of the construction and manufacturing sectors. Boosted by the rapid growth and development of its MAQUILA Zones, the economy became the most industrialized and best-performing in the Central American region.

Growing at a rate of 4.5% in 2000, the manufacturing sector is one of the largest contributors to GDP, and, along with construction, led the economy in 2001–02. The same basic problems persist from decade to decade: the low purchasing power of the local population and the difficult financial and political situation of other Central American countries on which El Salvador depends for export markets. Nevertheless, El Salvador received substantial amounts of foreign direct investments in the industrial sector in 2001.