The Organization for Economic Cooperation and Development (OECD) recognized El Salvador’s actions in the digital agenda, the promotion of digital education, and the increase in productivity among micro and small enterprises.
The Organization for Economic Cooperation and Development, in its Latin American Economic Outlook 2025 report, has recognized El Salvador as a country that has been advancing consistently in the design and implementation of public policies that promote productive transformation with the purpose of strengthening the foundations of the economy and making it more resilient and innovative. The OECD added that over time, El Salvador has developed a series of measures that have been able to boost the process of technological adoption, consolidate the digital ecosystem, and increase the competitiveness of the business sector in the country. These actions, the organization specified, are part of the strategy that is known as “promotion and financing of productive transformation in El Salvador” and that the country has been carrying out since 2014. The document, prepared jointly with the Economic Commission for Latin America and the Caribbean (ECLAC), the Development Bank of Latin America and the Caribbean (CAF), and the European Commission, indicates that El Salvador has advanced in the generation of mechanisms that have strengthened its industrial matrix and the productive capacity of micro, small, and medium-sized enterprises (MSMEs).
Digital Agenda 2020-2030: Guidelines for Digitalization
In its report, the OECD highlighted the Digital Agenda 2020–2030, a document that has functioned as a national strategy for guiding the country’s accelerated technological transformation. It added that with this agenda, the Salvadoran state has established milestones that correspond to the pillar “Innovation, Education and Competitiveness,” which is based on three strategic lines of work: the promotion of research in new technologies, the development of digital education to strengthen human capital, and the generation of support mechanisms for start-ups and technological parks. Through the Digital Agenda, the government of El Salvador is seeking to strengthen its enabling environment for innovation-driven economic growth. In this sense, the document also notes that El Salvador is recognizing international best practices to move forward in this area. This is done by ensuring that there is public-private collaboration, the development of digital infrastructure and connectivity, and, finally, the productive transformation in El Salvador must ensure the participation of rural and traditionally excluded communities, among other actions, in order to be able to achieve in the long term productive transformation in El Salvador and make technological advancement the basis for sustainable development.
Increasing MSME Productivity: Generating Inclusive Opportunities
The OECD also recognized that El Salvador has taken important steps in the development of its National Policy for the Development of Micro and Small Enterprises. This public policy seeks to increase productivity, competitiveness, and sustainability in the country’s most dynamic productive sector. The organization noted that MSMEs represent more than 95% of Salvadoran companies and employ a large percentage of the country’s workforce, becoming a key lever for inclusive economic growth. In this sense, the policy being implemented by El Salvador promotes the digitalization of small and microenterprises, access to credit, and technical assistance programs aimed at improving their management and innovation. In this task, the government has been working in alliance with the National Commission for Micro and Small Enterprises (CONAMYPE) in order to broaden training programs in the formalization of businesses, e-commerce, and preparation for exports. In addition, the strategy is supported by financial instruments for linking local entrepreneurs with regional and international value chains. In this way, by incorporating the axes of innovation and sustainability in the development of micro and small enterprises, El Salvador is addressing one of its main structural challenges, low productivity, as well as strengthening its economy’s competitiveness in global markets.
Industrial Development Plan 2025-2029: For a More Diversified and Competitive Economy
Another policy that the OECD report draws attention to is the Industrial Development Plan 2025–2029, which, as the document explains, seeks to transform the country’s productive matrix in 26 industrial sectors. The plan, according to the text, is aimed at strengthening productive diversification through the strengthening of sectors such as agroindustry, pharmaceuticals, textiles, electronics, or renewable energy, among others. The OECD points out that the Plan takes up aspects of two previous frameworks, the Policy for the Promotion, Diversification and Productive Transformation 2014–2024 and the Cuscatlán Plan 2019–2024, which also had as their main axes the promotion of technological modernization and the attraction of investment to the Salvadoran economy. On the other hand, the new industrial policy sets ambitious goals for innovation, industrial clustering and export growth in the next few years, promoting, for example, the incorporation of Salvadoran companies into regional value chains or the use of clean technologies that improve competitiveness. For the OECD, these measures are part of the Salvadoran government’s strategy to achieve productive transformation by moving from a model focused on low-value-added production to one based on knowledge-intensive industries.
Financing mechanisms and strategic alliances
In addition to policies, for the OECD report, financing mechanisms have been central for the Salvadoran government to implement its transformation and modernization agenda. It indicates that the resources of the national budget are being complemented by loans and agreements for co-financing with institutions such as the Inter-American Development Bank (IDB) and the Development Bank of Latin America and the Caribbean (CAF). At the same time, the report acknowledges that El Salvador is strengthening its strategic partnerships with the Central American Bank for Economic Integration (CABEI) and the European Union, in order to access additional financial resources and technical assistance. As an example of this, the report points out that the EU, together with the German government, has offered credit lines and capacity-building programs for MSMEs focused on innovation and sustainability. In this way, the document indicates that these types of alliances are demonstrating how international cooperation is becoming a key factor for El Salvador in the context of the productive modernization process that the country is carrying out.
A Green and Sustainable Transformation
In addition to productive and digital transformation, the OECD report also recognized El Salvador’s efforts to move forward in the generation of actions aimed at achieving the energy transition. In this sense, the country has been advancing in the fulfillment of a memorandum of understanding signed with the European Union, which has implied the generation of technical and financial support for projects that will promote energy efficiency and circular economy models, and the generation of renewable energy in the Salvadoran territory. This effort, the document added, is also supported by the Geothermal Energy for Sustainable and Inclusive Development Project, which is part of the 2023–2027 Partnership Framework signed with the World Bank. This initiative, the document specifies, aims to expand the participation of renewable energy in the electricity matrix while also generating employment and strengthening local capacities in clean technologies. This is not the only initiative in the field, as El Salvador, through the GeoH2Verde Triangular Cooperation Project, has been working together with Colombia, Germany, and Honduras on a strategy to assess the possibility of producing green hydrogen as a potential energy source for the future.
International cooperation and long-term vision
In conclusion, the OECD report stated that international cooperation has become a determining axis for the Salvadoran government in the task of financing productive and sustainable development. By promoting greater participation of multilateral banks, regional and international organizations, and the private sector, the country has managed to expand its access to long-term financing for its productive matrix, reduce its economic dependency on traditional sectors, and support the generation of innovation ecosystems. In the long term, it is the responsibility of the Salvadoran state to incorporate the progress made so far into a comprehensive long-term industrial and digital strategy. For the OECD, this implies the articulation of technological innovation, the search for environmental sustainability, and educational reform as the only way to ensure inclusive and sustainable growth. The OECD concluded by specifying that El Salvador’s ongoing efforts to modernize its production systems, prepare its human capital, and empower innovation and productivity are already beginning to build a clear path towards a sustainable, productive transformation in El Salvador in a resilient economy. In it, the country seeks to position itself as a reference for other Latin American nations on the road to sustainable, technology-driven, and inclusive development.