Honduras

Honduras exists in the narrow Central American corridor where Caribbean trade routes meet Pacific shipping lanes, a geography that has attracted extraction without investment since the Spanish conquest. The Maya civilization's western outposts at Copán flourished here until approximately 900 CE; Spanish colonizers found mineral deposits but little of the gold that drove conquests elsewhere. Honduras became a backwater within the Captaincy General of Guatemala.

Independence in 1821 brought nominal sovereignty but not economic autonomy. By the late nineteenth century, American fruit companies had established the banana enclaves that would define Honduras for generations. United Fruit Company and Standard Fruit Company controlled vast plantations in the northern lowlands, operated their own railroads and ports, and exercised political influence that earned Honduras the original "banana republic" designation. By 1954, approximately 35,000 workers labored on banana plantations—until Hurricane Mitch devastated the industry in 1998.

Coffee overtook bananas as the leading export in the mid-1970s, and Honduras eventually surpassed Guatemala as Central America's top coffee producer by 2011. Today coffee generates approximately 22% of export revenue. But the twentieth century's defining transformation came from maquiladoras: the assembly plants that proliferated around San Pedro Sula and Puerto Cortés beginning in the late 1970s.

The textile and light manufacturing sector became the third-largest maquiladora industry globally, employing over 120,000 workers. CAFTA-DR trade preferences gave Honduras an advantage for nearshoring as companies diversified away from Asian supply chains. The United States receives 70.5% of maquila exports. Industrial parks around San Pedro Sula continue attracting investment from firms seeking proximity to American consumers and preferential market access.

Yet the defining economic flow comes not from exports but from people. Honduras received over $11.1 billion in remittances during the first eleven months of 2025—a 13.9% increase from 2024 and more than 25% of GDP. Over 80% flows from the estimated 1.8 million Hondurans in the United States; Spain contributes another 10.2%. These funds cover food, health, and education expenses for families whose local wages cannot provide basic needs.

The broader economy grew 3.6% in 2024 with inflation controlled at 4.5%, projecting 3.5% growth for 2025. The Central Bank anticipates continued expansion into 2026. But Honduras remains the most impoverished country in Central America, with per capita GDP growth lagging regional peers. Gang violence, political instability, and climate vulnerability—particularly for coffee production—perpetuate the conditions driving emigration.

By 2026, Honduras will likely continue its dual economy: formal exports in coffee, textiles, and palm oil competing for relevance against remittance flows that keep families fed but don't build productive capacity. The maquiladora expansion offers some industrial development, yet the fundamental pattern persists—value extraction flowing north while people follow the same route seeking survival wages that their homeland cannot provide.