ROLE OF GOVERNMENT
Traditionally, the government has played an important role in
the country's economy. This role increased substantially after
1979, provoking considerable controversy and fueling domestic
political polarization. Economic policy was coordinated among the
central and municipal governments and seventeen decentralized
agencies, which included the Salvadoran Social Security Institute
(Instituto Salvadoreno del Seguro Social--ISSS) and the
Salvadoran Institute for Agrarian Reform (Instituto Salvadoreno
de Transformacion Agraria--ISTA). Nine state-owned companies
provided utility services to the Salvadoran public. In 1980 the
government nationalized the marketing and export of coffee and
sugar, two of El Salvador's most important export commodities.
Since then, Incafe and the National Sugar Institute (Instituto
Nacional de Azúcar--Inazucar) have acted as financial
intermediaries between domestic producers and foreign markets.
These bodies have been widely criticized by coffee and sugar
producers because they imposed heavy export taxes and service
charges that totaled some 50 percent of the sale price abroad.
Although considerable domestic criticism of the government's
economic policy focused on the disincentives and inefficiency of
land reform and the creation of Incafe and Inazucar, some critics
maintained that another drawback of the government's economic
policy was its failure to take into account the counterinsurgency
effort. Many Salvadoran policymakers tended to accept the
conflict as inevitable, calculating its effect only in terms of a
shrinking growth rate. They apparently failed to assess a
project's viability in the context of the civil conflict.
Data as of November 1988