Escaping the Governance Trap

Chapter 1: Beyond the Governance Trap (4,000 words).  This chapter describes how the Northern Triangle countries are stuck in a sub-optimal political and economic equilibrium in which informality and organized crime thrive, sapping their economic potential.  Much of the region's outbound migration can be explained by these "governance trap" conditions.  The COVID-19 crisis presents a new set of challenges and opportunities for each country, which underscores the importance of escaping this governance trap.

Chapter 2: The real economy (5,000 words).  This chapter explains the major economic sectors of the Northern Triangle economies, why growth has been insufficient to catalyzing economic transformation, and the structural impediments to faster growth. It highlights areas of structural reform in each country, linking structural reform to faster growth, which would have far-reaching positive spillovers to other sectors in the economy.

Chapter 3: Fiscal policy (5,000 words).  This chapter examines the fiscal strengths and vulnerabilities of each country considering COVID-19 and its aftermath.  It argues that tax revenue and mobilization is too low to meet the development needs for each country and thus all three countries face an urgent need to raise revenues while increasing economic formalization.  This chapter looks at the debt and deficit trajectories of each country and studies the similarities and differences in the post-COVID debt stocks. Chapter 4: Monetary and exchange rate policy (4,000 words).  This chapter studies how monetary and exchange rate policy responded to the COVID-19 shock.  It highlights the monetary and exchange rate policy space of each country, including early evidence on Guatemala's experiment with unconventional monetary policy. It also notes the policy limitations and benefits of dollarization in El Salvador and potential strains on this monetary

Neil Shenai served as the U.S. Treasury's Financial Attaché to Mexico and Central America from 2016-2018. He is a Term Member of the Council on Foreign Relations and the author of Social Finance: Shadow Banking during the Global Financial Crisis (Palgrave MacMillan, 2018). He received his PhD from Johns Hopkins University School of Advanced International Studies.

 
    

"The book under review is an interesting contribution to the debate on the immediate future of the region that makes up the so-called Northern Triangle ... . the text is of particular value to policymakers, academics, and NGO and development agency staff." (Salvador Martí i Puig, Latin American Politics and Society, June 9, 2023)

"This book is recommended to academic audiences and policymakers, especially those engaged in economic development and governance issues." (Scott B. MacDonald, Global Americans, theglobalamericans.org, February 7, 2023)

"Shenai, a former U.S. Treasury Department official responsible for Central America, has written a thoughtful study of the vexing problems plaguing the countries of the Northern Triangle ... ." (Richard Feinberg, Foreign Affairs, November-December, 2022)

"Escaping the Governance Trap Economic Reform in the Northern Triangle is a provocative text, exceptionally written by Neil Shenai. This study is a major contribution to the debate about what is going on in the Northern Triangle. ... This perspective distinguishes the work as a book both for scholars and practitioners. Shenai fills a key gap in the literature by providing an economic-reform agenda for Central America that multiple political stakeholders should discuss." (Nahuel Oddone, Latin American Policy, October 13, 2022)

"For readers interested in the Northern Triangle, Escaping the Governance Trap should be a clarion call to explore new approaches to breaking free from the vicious cycles of poor governance typically associated with populism and patronage. Policymakers in the United States, the Northern Triangle, and throughout the Latin American subcontinent should heed this call and benefit from the analysis and recommendations detailed in this ground-breaking book." (David F. Varela, The SAIS Review of International Affairs, September 1, 2022)