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Special Forum on Economic Policy Studies: Policy Reform and Income Distribution: The Case of Honduras

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Honduras is one of the poorest countries in the Western hemisphere. At the same time, income and wealth are highly concentrated. The policy reforms carried out during past decades promised to reduce poverty and inequality by promoting the productive use of the most abundant asset of the poor – labour (World Bank 1990: 61). If one accepts the assumptions underlying the neoliberal reforms, the 1990s offered bright prospects: Honduras experienced a massive inflow of foreign direct investment (FDI), a surge in labour-intensive exports and an unprecedented growth of manufacturing employment. However, poverty remained widespread, per capita income stagnated, and workers’ share in income fell. The article explores explanations from both orthodox and heterodox economic theories for the changes in relative income shares of labour and capital in Honduras during the past few decades.

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