Editing Economy of Honduras (section)

=== 20th century ===
Honduras's international economic activity surged in the early 20th century. Between 1913 and 1929, its agricultural exports rose from $3&nbsp;million ($2&nbsp;million from bananas) to $25&nbsp;million ($21&nbsp;million from bananas). These "golden" exports were supported by more than $40&nbsp;million of specialized banana company investment in the Honduran infrastructure and were safeguarded by US pressure on the national government when the companies felt threatened.

The overall performance of the Honduran economy remained closely tied to [[banana]] prices and production from the 1920s until after the mid-century because other forms of commercial export agriculture were slow to emerge. In addition, until drastically reduced in the mid-1950s, the workforce associated with banana cultivation represented a significant proportion of the wage earners in the country. Just before the banana industry's largest strike in 1954, approximately 35,000 workers held jobs on the banana plantations of the [[United Fruit Company]] (later United Brands Company, then Chiquita Brands International) or the [[Standard Fruit Company]] (later brought by Castle and Cook, then [[Dole Food Company]]).

After 1950 Honduran governments encouraged agricultural modernization and export diversification by spending heavily on transportation and communications infrastructure, agricultural credit, and technical assistance. During the 1950s—as a result of these improvements and the strong international export prices—[[beef]], [[cotton]], and [[coffee]] became significant export products for the first time. Honduran [[sugar]], [[Lumber|timber]], and [[tobacco]] also were exported, and by 1960 bananas had declined to a more modest share (45 percent) of total exports. During the 1960s, industrial growth was stimulated by the establishment of the [[Central American Common Market]] (CACM—see Appendix B).

As a result of the reduction of regional [[trade barriers]] and the construction of a high [[common external tariff]], some Honduran manufactured products, such as soaps, sold successfully in other Central American countries. Because of the greater size and relative efficiency of the Salvadoran and Guatemalan industrial sectors, however, Honduras bought far more manufactured products from its neighbors than it sold to them. After the 1969 [[Soccer War]] with [[El Salvador]], Honduras effectively withdrew from the CACM. Favorable bilateral trade arrangements between Honduras and the other former CACM partners were subsequently negotiated, however.

[[File:SanPedroSula.jpg|thumb|300px|Downtown [[San Pedro Sula]] in 2004.]]
A political shift in the 1980s had strong and unexpected repercussions on the country's economic condition. Beginning in late 1979, as insurgency spread in neighboring countries, Honduran military leaders enthusiastically came to support [[United States]] policies in the region. This alignment resulted in financial support that benefited the civilian as well as the military ministries and agencies of Honduras. Honduran defense spending rose throughout the 1980s until it consumed 20 to 30 percent of the national budget. Before the military buildup began in fiscal year (FY) 1980, United States military assistance to Honduras was less than US$4&nbsp;million. Military aid more than doubled to reach just under US$9&nbsp;million by FY 1981, surged to more than $31&nbsp;million by FY 1982, and stood at $48.3&nbsp;million in FY 1983. Tiny Honduras soon became the tenth largest recipient of United States assistance aid; total economic and military aid rose to more than $200&nbsp;million in 1985 and remained at more than $100&nbsp;million for the rest of the 1980s.

The increasing dependence of the Honduran economy on foreign aid was aggravated by a severe, regionwide economic decline during the 1980s. Private investment plummeted in 1980, and [[capital flight]] for that year was $500&nbsp;million. To make matters worse, [[Economics of coffee|coffee prices]] plunged on the international market in the mid-1980s and remained low throughout the decade. In 1993 average annual per capita income remained depressingly low at about $580, and 75 percent of the population was poor by internationally defined standards.

Traditionally, Honduran economic hopes have been pinned on land and agricultural commodities. Despite those hopes, however, usable land has always been severely limited. Honduras's mostly mountainous terrain confines agriculturally exploitable land to narrow bands along the coasts and to some previously fertile but now largely depleted valleys. The country's once abundant forest resources have also been dramatically reduced, and Honduras has not derived economically significant income from mineral resources since the 19th century. Similarly, Honduras's industrial sector never was fully developed. The heady days of the CACM (mid to -late 1960s), which produced an industrial boom for [[El Salvador]] and [[Guatemala]], barely touched the Honduran economy except to increase its imports because of the comparative advantages enjoyed by the Salvadoran and Guatemalan economies and Honduras's inability to compete.

Bananas and coffee have also proven unreliable sources of income. Although bananas are less subject to the vagaries of international markets than coffee, natural disasters such as [[Hurricane Fifi–Orlene|Hurricane Fifi]] in 1974, drought, and disease have appeared with a regular, albeit random, frequency to take their economic toll through severely diminished [[harvests]]. Moreover, bananas are grown and marketed mostly by international corporations, which keep the bulk of wealth generated. Coffee exports, equally unreliable as a major source of economic support, surpassed bananas in the mid1970s as Honduras's leading export income earner, but international price declines coupled with huge fiscal deficits underlined the vulnerability of coffee as an economic base.