Central America has been directly affected by the crisis of US hegemony on a world scale and the global economic crisis. The latter has exacerbated many existing regional problems; for example, rocketing interest rates have had serious impacts on debt payments, and the decline of markets for the area's raw materials has coincided with a rise in protectionist policies in the industrialised West. The result has been to limit the export of industrial goods from Central America on the one hand and to contract investment surpluses, especially in open economies, on the other. Externally, Central America has been defined by the Reagan administration as an arena for recouping US global supremacy through military confrontation and victory. This, in turn, is used to justify the rise in military expenditures and the interventionist behaviour which characterises Washington's New Cold War policy. This article presents a comparative analysis of the United States and Canadian economic interests and state policies with respect to Central America. For the purposes of this article, Central America refers to El Salvador, Honduras, Guatemala and Nicaragua. United States and Central America: the economic dimension Although the internal politics of the Central American region have been fraught with instability, diverse sectors of US capital have had no difficulty adjusting their interests over time. While the types, scope and direction of capital flows have varied-beginning with direct investment in agriculture and mining, followed by manufacturing, financial loan capital, state and international bank capital-there has been no significant rupture or division among them regarding US policy, or their relations with dictatorial regimes. During the post-World War I period, the United States displaced Britain as the dominant economic power in Central America.