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Escaping the Governance Trap

Economic Reform in the Northern Triangle

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  • © 2022

Overview

  • Introduces the concept of a “governance trap” in El Salvador, Guatemala, and Honduras
  • Provides tailored macroeconomic and illicit finance policy recommendations to address governance weaknesses
  • Offers advice on how the international community can help address development challenges in the Northern Triangle

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About this book

The COVID-19 pandemic has fundamentally altered the global economic landscape, with the smallest and most vulnerable economies particularly hard hit. In the Northern Triangle countries of El Salvador, Guatemala, and Honduras, the crisis has cost lives and livelihoods. It has impacted both the demand and supply sides of the economy, posing difficult policy tradeoffs. Risks to macroeconomic stability are now growing. Each country will likely exit the crisis with an even greater need for reform.  

Escaping the Governance Trap: Economic Reform in the Northern Triangle provides a framework for understanding the challenges of those three Central American nations, proposing that the lack of governing capacity in each country is a crucial problem. This book argues that economic reforms can help the Northern Triangle countries escape their governance traps and identifies priority areas of economic reform. Sectors covered include fiscal policy, monetary andexchange rate policy, financial access and deterrence, and structural reforms. It also highlights the role that stakeholders like the United States can play to help in these reform efforts, and how those outcomes affect the United States and the global community. All told, Escaping the Governance Trap provides an accessible, direct account of the Northern Triangle’s economic challenges and how to fix them. 

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Table of contents (4 chapters)

Reviews

“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)





“Neil Shenai is both a theorist and realist with respect to economic reform in the Northern Triangle. This is a valuable analysis of the governance trap affecting weak states with contested authority that impedes economic growth and opportunity and also an examination of 3 Central American countries that are geographically and demographically closely tied to the US. It is essential reading for all who endeavor to understand the world and how to make it a better place.” (Richard Farber, former United States Alternate Executive Director at International Monetary Fund and member of the Bretton Woods Committee)

“For over a century, the United States has learned, forgotten, and painfully relearned that the troubles and trials of Central America flow north. Neil Shenai’s Escaping the Governance Trap offers practical economic, political, social, and institutional steps to help El Salvador, Guatemala, and Honduras build security and hope. Shenai combines scholarly research with a practitioner’s feel for sequencing, integrating diverse activities, building support, accepting the imperfect, and showing results―all with the fundamental ingredients of patience and persistence. Those who speak of the ‘root causes’ of the woes of the Northern Triangle need the ideas in this book.” (Robert B. Zoellick, Former President of the World Bank Group, United States Trade Representative, United States Deputy Secretary of State, and author of America in the World: A History of US Diplomacy and Foreign Policy)

“Neil Shenai's Escaping the Governance Trap is an edifying read for policymakers and emerging-markets investors. This book presents a vital perspective on how to analyze and address structural development issues arising from a lack of governing capacity in the Northern Triangle, with lessons applicable to many other developing nations. Shenai’s accessible prose deftly draws on established theories while positing his own novel viewpoint. Notably, the book provides refreshingly clear-eyed prescriptions to support growth and sociopolitical stability in a strategically important region in need of pragmatic policy interventions.” (Tara Hariharan, Managing Director of Global Macro Research at NWI Management L.P., member of the Inter-American Dialogue, 2022 Economic Club of New York Fellow, and Term Member of the Council on Foreign Relations)

“Neil Shenai’s book, Escaping the Governance Trap, is a valuable examination of how the United States and others can help address the ‘root causes’ of migration from Central America. Shenai argues convincingly how sustained economic reforms should be essential tools in helping the ‘Northern Triangle’ countries, Guatemala, El Salvador, and Honduras, to escape the debilitating ‘governance trap,’ which has so long hindered substantial progress in these three countries and fuels the massive outflow of migrants heading to the United States. Shenai persuasively describes how the United States and other ‘stakeholders’ should be prepared for a long and challenging path to bring about the needed changes in these countries. He explains why the investment to help transform these ‘imperfect’ partners is in the strategic interests of the United States and others in the region. Of special value, Shenai shares 10 solid principles that can help guide the United States and others in this work of transforming the realities in the Northern Triangle. This book is a thoughtful and helpful contribution as the United States strives to forge enduring solutions to the large northward flows of migrants from Central America.” (Earl Anthony (Tony) Wayne, Career Ambassador (ret.), United States Foreign Service, Distinguished Diplomat in Residence, School of International Service, American University and Advisory Board Co-Chair, Mexico Institute, Woodrow Wilson Center)

“Central America's Northern Triangle is the source of an endless flow of migrants and subject to demonization for its corrupt politicians and brutal gangs. There is much less serious debate about what policy changes and reforms could bring the region out of cycles of violence and poverty. Neil Shenai’s Escaping the Governance Trap is a great contribution to the debate with its sharp observations and concrete proposals for change in the region’s economic governance. It has the potential of being a much-needed start of a broad debate about the ‘root causes’ and solutions to Central America’s many challenges.” (Benedicte Bull, Professor of Political Science, Centre for Development and the Environment (SUM), University of Oslo)

“In Escaping the Governance Trap, Neil Shenai offers path-breaking solutions to the path-dependent problems of governance in the Northern Triangle of Central America. While the weaknesses of Central American states might appear locked-into domestic submission to powerful elites and international submission to powerful neighbors, opportunities for an alternative equilibrium exist. Shenai offers a set of fiscal, monetary, financial, and macroeconomic reforms chosen not only for their economic impact, but especially for their potential to contribute to democratic state capacity—the ability of the state to penetrate society and provide order and development without descending into autocracy. Of critical importance is the role of external actors, especially the United States government and private sector, which can contribute to path-breaking, rather than path-dependence, when it comes to state capacity in El Salvador, Guatemala, and Honduras.” (Aaron Schneider, Leo Block Professor of International Studies at the University of Denver and author of State-Building and Tax Regimes in Central America)

“This book is clear-eyed about the Northern Triangle’s challenges but not defeatist. Refreshingly, Shenai is parsimonious and practical in his policy advice.” (Benjamin N. Gedan, Deputy Director of the Wilson Center’s Latin American Program)

Authors and Affiliations

  • Washington, USA

    Neil Shenai

About the author

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.

 


    

Bibliographic Information

  • Book Title: Escaping the Governance Trap

  • Book Subtitle: Economic Reform in the Northern Triangle

  • Authors: Neil Shenai

  • DOI: https://doi.org/10.1007/978-3-030-99023-7

  • Publisher: Palgrave Pivot Cham

  • eBook Packages: Economics and Finance, Economics and Finance (R0)

  • Copyright Information: The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022

  • Hardcover ISBN: 978-3-030-99022-0Published: 14 July 2022

  • Softcover ISBN: 978-3-030-99025-1Published: 14 July 2023

  • eBook ISBN: 978-3-030-99023-7Published: 13 July 2022

  • Edition Number: 1

  • Number of Pages: XXIII, 152

  • Number of Illustrations: 13 b/w illustrations

  • Topics: Development Economics, Economic Growth, Political Economy/Economic Systems, Latin American and Caribbean Economics

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