Introduction
President of El Salvador, Nayib Bukele, has single-handedly transformed the country from one of the world’s most dangerous countries to one of the safest. In addition to making it safer, he has brought significant economic changes to El Salvador. Bukele took control of the country in 2019 and started his presidency using a rather aggressive approach to reduce crime rates and introduce reforms to stabilize the economy. He also took the initiative to incorporate the currency of Bitcoin into the economy, which, in addition to the crime reduction, has led him to be known worldwide. Even though Bukele has done so many positive things for the country, however, he has still been faced with criticism. This piece will examine the major shifts El Salvador has endured under Bukele’s leadership, the future of the country and its economy moving forward, and its impact on the United States.
President of El Salvador, Nayib Bukele, has single-handedly transformed the country from one of the world’s most dangerous countries to one of the safest.
Crime Reduction
When Bukele took office, his primary focus was to crack down on the crime and gang-related violence that was terrorizing the country and its people. Bukele cut down the gang population by issuing a state of emergency in the country, which was approved on March 27, 2022. He then sent out about 16,000 officers and soldiers to arrest gang members. As a result, the number of murders committed in the country dropped from 495 in 2022 to only 154 in 2023—a homicide rate of 2.4 per every 100,000 people, which Gustavo Villatoro, the Justice and Security Minister, said was the lowest in the Americas apart from Canada, according to U.S. News. Bukele also constructed El Centro de Confinamiento del Terrorismo, or CECOT, a high-security prison that houses those gang members. Through these decisive actions, Nayib Bukele set an example
for all world leaders on how to address safety issues in their own countries—which has also helped stabilize his country’s economy.
Economic Stability
Lowering crime rates allows El Salvador to open up to international businesses and investors. Bukele’s decision to make Bitcoin legal tender in the country was implemented in the hope that it would be a step towards modernizing and boosting financial inclusion. Cryptocurrency is highly attractive to tech-savvy investors and allows El Salvador to be a global leader in digital finance. Although Bitcoin has not been popular within the country, Bukele and his administration have introduced initiatives such as the Chivo wallet—a digital wallet created by El Salvador’s government that allows users to send and receive both Bitcoin and USD—Bitcoin ATMs, and plans to build ‘Bitcoin City,’ a city that would be located at the base of a volcano and powered by geothermal energy from the volcano. These initiatives are pushing the usage of Bitcoin within the country and its citizens.
Ties to the U.S. Economy
The U.S. economy has played a crucial role in the stability of El Salvador’s economy. El Salvador first switched to the U.S. dollar as the country’s currency in 2001, and a large portion of El Salvador’s GDP comes from money orders made by Salvadorans living in the United States. The funds sent from Salvadorans in the U.S. account for about 24% of El Salvador’s GDP. Bukele, however, has been looking for other ways to diversify the economy through digital innovation and foreign direct investment from the United States. To achieve this, Bukele has traveled worldwide and promoted how safe the country is now, showcasing projects and economic reforms. All of this comes in an attempt to make the country look more business-friendly, with manufacturing, tourism, and technology all on the rise.
Future of Work
Even with the economy on the rise under Bukele, the country still struggles with work. It struggles because the need for skill is critical in acquiring a job, and according to the World Bank Group, jobs in El Salvador are 22% less intensive in knowledge tasks than in Costa Rica, Panama, and the Dominican Republic. Another challenge that El Salvador faces with the work is low technological adoption. With only 8% of workers effectively using technology compared to 27% in the U.S., this low percentage affects productivity and limits global competitiveness. To address this, the Salvadoran government launched the National Digital Agenda to expand internet access, enhance digital literacy, and create a structure for technology and innovation. Legislative moves like the Digital Assets Law and the Promotion of Innovation and Manufacture of Technology Law promote Bitcoin and encourage further innovation. These initiatives have addressed concerns over Bitcoin’s adoption as legal tender and positioned El Salvador to build a dynamic digital economy and drive sustainable growth.
Why is this important?
Aside from El Salvador's promising future, the economy is important because of its ties to the United States. The United States is the leading trade partner for El Salvador, and El Salvador is a highly attuned market to U.S. products and services. According to the International Trade Administration, in 2022, U.S. exports to El Salvador totaled $4.9 billion, which made up about 30% of El Salvador’s imports. El Salvador’s exports to the U.S. were 2.8 billion in 2022; this made up 39% of El Salvador’s exports. Some U.S. companies benefit from exporting to El Salvador because of the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). This agreement eliminates trade barriers, and the companies do not have to pay any tariffs on their products. The goods that El Salvador frequently exports to the United States are articles of apparel—The United Nations COMTRADE database on international trade states that in 2022, El Salvador exported a total of $1.65 billion worth of articles of apparel. Hence, the United States is vital in helping El Salvador continue down this path of prosperity.
Conclusion
Under Bukele’s leadership, El Salvador’s economy has experienced significant changes. His aggressive approach to crime reduction has lowered the crime rate significantly and made the country one of the safest in the world. This has also helped the economy, as Bukele has since been able to modernize it by implementing Bitcoin as a currency in the country, allowing El Salvador to enter into new and exciting territory in its history. This decision has helped Bukele advocate for foreign investments with the U.S. as he tries to build a strong and diverse economic foundation for the country. However, despite the improvements in multiple areas, El Salvador faces challenges in developing and implementing technology in the workforce. Bukele and his administration have introduced educational reforms to address this gap, looking to prepare the next generation to be more tech-savvy. The path El Salvador, Bukele, and his administration are on will continue to help the country grow, especially when it reaches the point where more U.S. companies would like to invest their funds into an increasingly prosperous country like El Salvador.
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