Introduction
Honduras is one of the nations in Central America. Honduras “borders El Salvador to the southwest, Guatemala to the west, and the Pacific Ocean to the south” (Bair and Peters 212). The political and social issues encountered in Honduras have been affecting its economy negatively.
A number of industries support the country’s economy. A good example is the Honduran Garment Industry. The country has several companies that support its industry. Some of the major garment manufacturing companies (GMCs) include “Delta Honduras, Hugger de Honduras, Petralex, Star, and Southern Apparel Contractors” (Platzer 12). This paper analyzes the major issues dictating the success of Honduras’ Apparel Industry.
Honduras: Current Issues
Honduras has been facing different challenges that continue to affect its economy. One of these challenges is the Constitutional Crisis (CC) of 2009. This “crisis forced the country to transfer power to the Head of Congress” (Marcouiller and Robertson 11).
This move affected the country’s political climate. The 2009 election “occurred at a time when there was an ongoing coup” (Bair and Peters 209). The “country also records the highest rate of homicide in the globe” (Marcouiller and Robertson 11). These issues have been affecting the country’s economy.
Government and Economic Stability
Many scholars classify Honduras as a democratic society. The two major political parties in the country include the National Party (PNH) and Liberal Party (PLH). The government has not been supporting the country’s economy. New constitutional changes have dominated the country’s politics within the past ten years. For instance, “the government suspended the major human rights and liberties in 2009” (Platzer 7). The government also “disrupts different utility services such as electricity, gas, and water” (Bair and Peters 209).
The political changes experienced in the country have been critical towards determining its economy. The country has been recording a positive economic growth within the past two decades. However, wealth distribution “is not distributed evenly in the country” (Bair and Peters 215).
Over half of the citizens in Honduras live in poverty. Unemployment rate in the country is over 27 percent (Bair and Peters 216). This situation has made Honduras one of the least developed economies in Latin America. This situation has forced the government to sign new contracts in order to support the country’s economy.
Labor Cost (Per Capita Income)
Labor costs tend to be low in Honduras. The latest statistics show that the country’s economy has been increasing steadily. The country’s Gross Domestic Product (GDP) in 2011 was $17.4 billion. Honduras’ Gross National Income (GNI) per capita in 2011 was $2,250.
Current statistics show that the minimum wage in different industries is between $0.63 and $0.97 per hour. The “total labor per year is about $1,610” (“The Intent of the Honduran EPZ Law” par. 3). Most of the “countries in the region have similar labor costs” (Bair and Peters 209).
Infrastructure
The infrastructure of a country determines the nature of business activities supporting its economy. Proper infrastructures cannot support economic growth. Honduras does not have good infrastructure to support a positive economic growth. To begin with, water supply is uneven across the nation.
Many urban regions have piped water. According to Bair and Peters (204), “modernized water treatment plants and supply systems are common in different urban areas”. However, the quality of water is usually unacceptable due to poor treatment methods. This situation has affected the quality of the above services.
The country has several airports and airstrips. However, “twelve of these airports are paved while the rest are not” (Marcouiller and Robertson 11). The country has seven harbors for sea transportation. The “country has 13,000 kilometers of roadways and 699 kilometers of railways” (Bair and Peters 209).
These infrastructures have been supporting the country’s transportation network. The country’s rural regions lack adequate railways and roadways. This gap has discouraged many entrepreneurs and foreign investors from doing tier businesses in Honduras. This discussion explains why the Ministry of Public Works should consider new strategies towards improving the country’s infrastructure. The approach will be critical towards supporting the country’s economic performance.
Primary Products for Export
Honduras encounters numerous natural disasters such as typhoons and floods. The “country has always remained vulnerable to new changes in commodity prices” (Marcouiller and Robertson 5). These issues continue to affect Honduras’ economic position. However, the country is a leading player in the international business. Honduras trades with different countries such as the United States and Brazil.
The “country exports several commodities such as bananas, apparels, and coffee” (Marcouiller and Robertson 9). The Apparel Industry is currently supporting the country’s economy. This fact explains why new garment manufacturing companies have emerged in the country.
The “current rate of investment in the export processing apparel assembly will support the company’s economy in the future” (Platzer 16). New segments have made it easier for the country to expand its exports. The country “has been exporting new products such as beef, lumber, fruits, palm oil, and seafood” (Platzer 21).
Skill Sets
The “skill sets” available in the country differ from one industry to another. Most of the casual workers in the Export Processing Zone (EPZ) should possess basic skills depending on their duties. Every educated person in the society is encouraged to support the best communication and decision-making skills.
Many companies in the country offer on-job training opportunities in order to become successful. The country offers new opportunities to many workers (Marcouiller and Robertson 6). However, these low wages affects the effectiveness of many employees in the country.
Product Expertise
The country’s exports are useful in other countries. The country produces quality garments that attract many importers. Honduras’ coffee also fetches huge incomes in the global market. According to Platzer (15), “the decision to produce non-traditional products such as palm oil, beef, and seafood has improved the quality of the country’s exports”. However, “the country is experiencing a major deficit due to its heavy-reliance on imported machineries, transport equipment, chemicals, and industrial raw materials” (Marcouiller and Robertson 8).
Concluding Remarks
The above issues explain why Honduras has remained a major player in the region’s economy. The government of Honduras has struggled to promote the best economic activities. However, some political problems and natural disasters are currently affecting the country’s economy.
The apparel industry faces most of these challenges. New strategies and ideas will be critical towards supporting the country’s Apparel Industry. The country offers several advantages for supporting different garment manufacturing companies. Every investor should therefore consider the implications of these issues before starting his or her business in Honduras. This analysis explains why entrepreneurs should examine the opportunities and challenges facing the country. Every investor in the industry should therefore consider the issues discussed in this essay.
Works Cited
Bair, Jennifer and Enrique Peters. “Global Commodity Chains and Endogenous Growth: Export Dynamism and Development in Mexico and Honduras.” World Development 34.2 (2006): 203-221. Print.
Marcouiller, Douglas and Raymond Robertson, 2014. Globalization and Working Conditions: Evidence from Honduras. PDF file. 2014.
Platzer, Michaela. “U.S Textile Manufacturing and the Trans-Pacific Partnership Negotiations.” Congressional Research Service 1.1 (2014): 1-25. Print.
The Intent of the Honduran EPZ Law 2014. Web.