History and economic integration in Central America

This paper presents a gravity model for trade flows between the Central American countries, which include the levels of past exports as explanatory variables. Results indicate that past exports are important determinants of current flows. Other gravity equations are estimated including indexes of human capital in place of the corresponding countries' GDP, with results showing the important role human capital exerts on trade flows. Several explanations for this result are explored, in terms of private investment functions and of the role of human capital in promoting trade. The paper ends with a series of considerations on the implications of the effects of past exports on the trajectories of economic disparities among member countries in an economic integration program.