Honduras

Honduras is Central America’s
second-largest country with a population of more than 8
million and a land area of about 112,000 square kilometers.
The 20th century witnessed a profound economic
transformation and modernization in Honduras. Honduras’
persistent poverty is the result of long-term low per capita
growth and high inequality, perpetuated by the country’s
high vulnerability to shocks. First, over the past 40 years
the country has experienced modest growth rates marked by
considerable volatility. Second, high levels of inequality
have weakened the ability for growth to reduce poverty by
limiting the extent to which a large segment of the
population is able to fully access physical and human
capital. Third, a large share of the population is
vulnerable and exposed to regular shocks - both large and
small which has exacerbated poverty by destroying or slowing
asset accumulation. This systematic country diagnostic (SCD)
explores the drivers of these development outcomes in
Honduras, and reflects on the policy priorities that should
underlie a development strategy focused on eradicating
poverty and boosting shared prosperity. After identifying a
number of critical factors affecting the country’s
development outcomes, the SCD concludes that there is a need
for a comprehensive agenda that tackles simultaneously the
problems that have kept the country in a low development
equilibrium for many decades, as well as emerging challenges
that have the potential not only to prevent progress but
also worsen the current situation. The SCD also argues that
the policy agenda needs to be ambitious and move away from
marginal interventions in order to move Honduras from a
situation where its economic potentials are just potentials
to another where they become actuals.