Honduras has traditionally had a limited industrial capability, relying primarily on agricultural exports like bananas and coffee for the bulk of its foreign exchange. In the 1990s this began to change as Honduras made aggressive moves to shore up its economy by diversifying exports and broadening its industrial base. The services sector was also targeted for growth, resulting in the rapid expansion of the tourist industry.
Honduras is thought to have extensive mineral deposits which have yet to be exploited, indicating the potential for growth in the mining industry. Seeking to capitalize on the situation, the Flores administration passed legislation to increase foreign investment in the sector. However, some of Honduras's most fertile mining grounds are located near the Nicaraguan border and, as land disputes between the nations are common, this has led to political complications and has stifled industry expansion.
Growth in the manufacturing sector, led by the expansion of the maquila (offshore assembly for re-export ) industry, has been most pronounced. The re-export business was one of the few areas of the economy to escape Hurricane Mitch virtually unscathed.
Agricultural activity, which registered substantial declines after Hurricane Mitch, is not expected to fully