Running Head: COUNTRY PROFILE - El Salvador
BUSA 3200
Country Profile Report: El Salvador
Jay Tamayo & Jasani Byrd
Georgia Gwinnett College
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Running Head: COUNTRY PROFILE - El Salvador
Table of Contents
Country Profile Report
Cover Letter
Table of Contents
Cover
Introduction
Culture
Administration and Government
Geography
Economics
Conclusion
Appendix
References
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Running Head: COUNTRY PROFILE - El Salvador
Cover Letter
Student Name
Jasani Byrd
Student Name
Jay Tamayo
The company’s name
Global Businesses Services
Business description (what
does it do?)
Global Businesses Services is the first and most experienced
company in digital asset security for the entertainment
industry. Global Businesses Services builds powerful tools for
music artists where they can accept Bitcoin payments and
where individuals can fund their music projects with digital
assets.
Anything I need to know
about it to help me
understand what it is
about?
GDP (2021): 28.7 Billion
Types of customers: Government & Financial Institutions
Country Name
El Salvador
What interests you about
the country? Why did you
pick it?
El Salvador has stood out among the Central American
countries as it became the first country in the world to approve
Bitcoin (BTC) as a legal tender recently in 2021. We are
interested in researching how this new digital money system
will impact the growth of the entertainment industry.
Is there anything about the
country I need to know
about upfront?
Anything else I need to
know?
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Running Head: COUNTRY PROFILE - El Salvador
Introduction
El Salvador is the smallest country in Central America surrounded by the Pacific Ocean
on the south, Guatemala on the West, and Honduras on the East. The current leader of El
Salvador is president Naybib Bukele who runs a democratic republic government with a
legislative assembly. The country has an estimated population to be 6.5 million ian021 (CIA,
2022). Most of the individuals have a median age of 27 years of age where males average 26.2
years and females 29.3. The median age group of 25-54 accounts for 40% of the Salvadoran
population according to the CIA World Factbook. Further, at least 20% of El Salvador's
population lives abroad where the head of households work abroad and send their earnings back
home. The remittances they send home to their families account for close to 20% of El
Salvador’s gross domestic product (GDP).
Currently, El Salvador has stood out among the Central American countries as it becomes
the first country in the world to approve Bitcoin (BTC) as a legal tender (The Associated Press,
2021). The recent legalization of digital assets has triggered economic professionals like the
professor at John Hopkins University Applied Economics, Steve H. Hanke, as he warns that
these red flags will cause international financial regulatory institutions such as the International
Monetary Fund (IMF) to impose sanctions on the country. Although the recent legalization of
digital assets as legal tender has been criticized, it has also been seen as an experiment on a
global international level to examine if Bitcoin can successfully operate as a currency. The usage
of Bitcoin has a potential massive upside to the success of our non-fungible tokens (NFTs)
products because it only requires the usage of a cellular device and an internet connection.
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Running Head: COUNTRY PROFILE - El Salvador
Global Business Service will utilize Bitcoin as a low barrier to entry for our digital
tourism assets. Global Business Services is a digital asset security provider that utilizes nonfungible tokens (NFTs) to create live digital concerts and collectibles for music entrepreneurs.
Global Business Services builds powerful tools for music artists where they can accept
consumer-based Bitcoin investments to fund their NFT digital assets. Global Business Services
eliminates the intermediary demand of companies such as Sony, Capitol Records, and Universal
Records. El Salvador would be a suitable country to expand business due to its fiscal
compatibility with Bitcoin. In a country where Bitcoin is legally accepted, it opens the gates for
NFT projects and communities to flourish. NFT’s have several types of utility that consumers
can use including but not limited to: digital collectibles, digital performances, meet and greets,
and asset authentication.
El Salvador has been investing to expand their resources in electrification around the
country. Around 99% of urban areas have access to electricity compared to 93% in rural areas
(CIA World Factbook). Access to electricity in El Salvador is critical when it comes to the recent
legalization of Bitcoin. To mine Bitcoin requires energy-intensive computers that typically driveup electricity costs. Since 2020, some aspects of the telecom sean ctor have experienced a
downturn, particularly in mobile device production; progress towards 5G implementation has
resumed, as well as upgrades to infrastructure; consumer spending on telecom services has
increased due to the surge in demand for capacity and bandwidth; the essential nature of telecom
services as a tool for work and school from home is still evident, and the spike in this area has
seen growth opportunities for the development of new tools and increased services. Recent news
from Euronews has reported that El Salvador is using volcanoes to generate geothermal energy
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Running Head: COUNTRY PROFILE - El Salvador
that produces a rich clean source of energy. This electricity is now being used to generate Bitcoin
mining in a new pilot project for the Central American country.
Culture
El Salvador in English means “The Savior”. El Salvador was originally composed of two Indian
states. The native people in this land were called “Pipil”. Like many regions in Latin America,
Latin America was colonized under the Spanish Conquest. The Indian states were captured in
1525, which led to years of injustice, marginalization, and civil wars. Considering its dark
history, El Salvador has rich traditions, culture, and attributes. El Salvador is a vibrant Latin
American country that holds rich history and traditions. Currently, El Salvador has a dense
population that holds over 6.5 million residents. This country suffers from overcrowding due to
its population density. Most of their family homes are made up of brick and cement and are
close in proximity to each other. Structures such as townhouses are utilized to consolidate the
limited space within the region. El Salvadorans are noted to have diligence, honesty, and family
as their core values are very similar to North American culture. Although they are hard-working,
they take pride in their appearance by making showering a part of their daily routine, Evenrural
Salvadorians, without access to running water make showering a necessity for their appearance.
El Salvadorians greet each other with either a firm handshake or by kissing each other on the
cheek, in urban areas. In rural areas, cheek kissing is only done by the opposite sex. Shaking
hands is considered customary to all guests, including children. Salvadorans use daily greetings
such as Buenos Dias, Buenas Noches, and Hasta Luego to greet each other at different times of
the day. El Salvadorans hiss to get the attention of strangers and friends. This gesture isn’t
considered rude unlike North American culture. Since family is a core value of El Salvadorians,
they often visit each other throughout the year without giving a heads-up. Guests and family
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Running Head: COUNTRY PROFILE - El Salvador
members often bring gifts such as pastries and fruit. The most common frequency of visiting
occurs on weekends and holidays. It’s also not uncommon for family members to leave El
Salvador as almost 20% leave the country to live abroad to send money back to their families,
hoping their families can retire. Most of the families in El Salvador have a nuclear family and
often live with or are very close. Although El Salvadorians have close-knit families, single
mothers are very common. Catholicism has influenced this nation heavily and contraceptives are
not proudly discussed in their culture, Catholicism is the majority religion, with Protestantism
leading behind it. There is a separation of church and state with policies stating clergy members
can not hold public office. Salvadorans enjoy a diet of hearty staples such as rice, red beans,
eggs, and thick corn tortillas. They also eat together rather than alone compared to North
American culture. Salvadorans begin their meals by saying “Buen provecho” meaning enjoy
your meal in English. Guests often give thanks and compliments to the hosts and are offered
multiple helping until they are content. It is important to note, rural Salvadoran families typically
have less food so it’s best to be mindful before asking for seconds to ensure the family has
enough to suffice themselves. Arts are an essential aspect of El Salvador. Illobasco is the mecca
for culture and arts in the middle of El Salvador. You can find hand-baskets, blankets, and
hammocks along with, sopresas. Sopresas are ovular-shaped scenes that depict everyday life
within El Salvador. The xylophone is the national instrument of El Salvador Cumbia and
Reggaeton is the most prominent music within the region. American music is also very
commonly to be listened to in El Salvador. The most famous Salvadoran artists are Pescozada,
Mecate, and Crooked Stilo with over 100,000 monthly listeners on Spotify. Reggaeton is mostly,
listen to by the younger generations while Cumbia is listened to by all.
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Running Head: COUNTRY PROFILE - El Salvador
Administration and Government
El Salvador runs a democratic republic government with a legislative assembly. The
current leader of El Salvador is president Naybib Bukele, where the president serves as head of
state and head of government. In 2019 the economist intelligence unit rated El Salvador as a
“flawed democracy.” El Salvador is also a member of the World Trade Organization (WTO) that
is pursuing free regional trade agreements. The WTO is an international governmental
organization that regulates and facilitates international trade.
El Salvador's current government is supporting foreign direct investment in its new pilot
project, Bitcoin City. As the presidential house of El Salvador made an announcement
incentivizing foreign investors with 0% income tax, 0% capital gains, 0% property tax, and 0%
municipal tax all through Bitcoin investments, appendix model 3 includes a detailed infographic
highlighting some key features of the country. As previously mentioned, institutions such as the
International Monetary Fund are urging El Salvador to end its embrace of Bitcoin as it cites the
risk of using Bitcoin as a legal tender. The IMF included “risks such as financial stability, as
banks and institutions are exposed to massive price fluctuations. Financial integrity, as a digital
asset has been used and is known as a door to illicit activities. Consumer protection, where its
citizens could lose their hard-earned wealth through large price swings. Lastly, the IMF warns
about fiscal liabilities such as the volatility of Bitcoin could deplete the resources if Bitcoin were
to plummet in price.” Overall, the current government faces polarization between its current
political party “Nuevas Ideas” translating to “New Ideas” and the previous traditional methods.
“The government has failed to prosecute human rights abusers or address the social injustices.
Many Salvadorans, especially rural peasants, do not trust the nation's political leaders.”
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Running Head: COUNTRY PROFILE - El Salvador
Geography
El Salvador shares a border on the Pacific Ocean with Guatemala and Honduras. This is roughly
the size of Israel or New Jersey with a bustling population of over 6.5 million citizens. El
Salvador is commonly referred to as the “Land of Volcanoes” having 20 extinct and active
Holcane Volcanoes. Volcanoes and hurricanes within the region have the power to create
earthquakes, floods, and mudslides. The emergence of volcanoes has made El Salvador’s land
extremely arable to grow fruits and vegetables such as mangos, papayas, and jocate. El Pital is
the highest peak in El Salvador which reaches 8,957 feet. Since El Salvador has much arable
land, deforestation has occurred which has resulted in the loss of endangered species of plants
and animals. Efforts have arrived in El Salvador to restore reforestation within the region.
Currently, El Salvadoran citizens are skeptical of the government’s use of energy and climate
change policies. El Salvador has a tropical climate that averages 85 degrees Fahrenheit. Within
the plateau regions, the humidity and temperatures decrease. From May to October El Salvador
has a rainy season and a dry season subsequently following. Currently, coffee is the most
lucrative crop in the region with 14 families owning 40% of the arable land. This leaves limited
land to grow other crops within the region such as sugar cane, sugar, and cotton. Bitcoin mining
requires a lot of energy in order to operate. Currently, within El Salvador, over 99% of the urban
areas have access to electricity and 93% of the rural area have access to electricity. Most of their
energy comes from hydroelectricity and oil. Earlier this year El Salvador’s President Nayib
Bukele, tweeted about the geothermal power plant he is creating to help circumnavigate the
country's contribution to greenhouse gases and global warming. Due to the country's growing
interest and demand for renewable energy the President of El Salvador has committed to utilizing
a 100% clean, renewable, and zero-emission energy source: volcanoes. Bitcoin uses hash rates
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Running Head: COUNTRY PROFILE - El Salvador
which refers to how quickly the digital miners can solve math problems to unlock new sets of
coins. Bitcoin mining is extremely exhausting of energy resources, resorting to a rapidly rising
footprint that is almost reaching the carbon footprint of 8.9 million cars. When El Salvador made
the official policy to invest in bitcoin to be a legal tender the value of the bitcoin dropped from
$52,000 to $43,000. The President plans to use the geothermal energy of the 20 active volcanoes
to boil water to make steam that would power turbines. Due to the Salvadoran Bitcoin
investment plummeting the current administration is actively looking for ways to make a return
on their investment. The El Salvadoran government is already incentivizing with a wallet app
called Chivo. People who download this banking app are rewarded with $30 worth of bitcoin.
Currently, 2.1 million are using the Chivo app. Utilization of geothermal energy would create the
new Neo - Digital-Industrial Revolution. Countries such as Iceland are using the same techniques
to create new bitcoin. We plan to have our headquarters in El Salvador's capital and the largest
city is San Salvador. This is 20 minutes away from the cultural hearth of El Salvador, Obelisco.
El Salvador has newly paved roads with well-maintained main roads. Within the rural areas of El
Salvador within the region, roads are prone to flooding and river roads. The country has one
main airport called El Salvador International Airport AKA: SAL. We plan to use these methods
of infrastructure to import miners and raw materials for mining infrastructure.
Economics
El Salvador has the fourth largest economy in the region with an inflation rate of 0-1%
since 2017. Further, El Salvador is still attracting foreign investment through the tax incentives
that the president has imposed on greenfield projects in tourism. According to
BuyBitcoinWorldwide El Salvador ranks third among the top countries owning Bitcoin, where
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Running Head: COUNTRY PROFILE - El Salvador
the top two countries owning Bitcoin are Finland and Switzerland. As of July 21, 2022, El
Salvador has purchased 2,381 bitcoins at an average price of $43,357, that’s a total investment of
$103 million, which now calculates to a current loss of (-44%), with a current value of
$45,231,561 as of October 2022. Even though El Salvador is standing at a current loss through
its Bitcoin holdings the country has still managed to increase tourism, exports, and international
connections. According to “Estimate of the effects of Currencies Unions on Growth”1 It was
reported that countries who share a common currency increase international trade by more than
340%. A recent article also showed how El Salvador has partnered with the Swiss city of Lugano
to promote Bitcoin adoption, which shows how a common currency does increase international
trade. Appendix model 1 includes a detailed infographic highlighting some key attributes
affecting change in international trade.
The recent adoption of Bitcoin in El Salvador has raised international interest among the
Bitcoin community where the tourism industry has increased by more than 30%, and 60% of
those tourists come from the United States. The adoption has overall increased El Salvador's
gross domestic product (GDP) by 10% according to the president, Naybib Bukele.
In order to transition into a digital monetary system individual, need a mobile cellular
device and access to the internet to transact value. According to World Development Indicators,
as of 2021 only 36% of El Salvador’s population has access to a bank account, whereas there are
about 10 million mobile cellular subscriptions. This means that 74% of El Salvador's population
without access to a financial institution can now access some type of financial service from their
mobile cellular device with access to the internet. More than 50% of the population already uses
1
Jeffrey Frankel and Andrew Rose, “An Estimate of the Effects of Currency Unions on Growth” May 2000
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Running Head: COUNTRY PROFILE - El Salvador
the internet and has steadily been increasing every year by 8-10%. Appendix model 2 includes a
detailed infographic highlighting some key statistics of the country's mobile cellular
subscription, population, and internet usage.
Conclusion
Despite being one of the smallest nations in Central America, El Salvador has overall
shown progression for its people by becoming the first nation in the world to legalize the digital
asset Bitcoin as legal tender. Even though the recent legalization has been criticized by global
institutions such as the IMF, it is still early to determine if the Bitcoin experiment will ultimately
succeed or fail the small nation due to the limited research data and information on how it has
impacted the country. It is safe to say that as the first nation, El Salvador has taken initial steps
towards decentralization by becoming less reliant and dependent on the United States Dollar.
As Global Business Services it would make sense to expand into the country with the
speculation that the digital asset will ultimately succeed in the future. NFTs continues to grow
among young users while families living abroad can reap the benefits of Bitcoin through
remittances. The best mode of entry to El Salvador would be by manufacturing digital asset
applications or products that will connect Salvadorans living abroad and those living in the
country. Education will also serve as a foundation and an integral part of the adoption of digital
assets.
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Running Head: COUNTRY PROFILE - El Salvador
Appendix
Appendix Model 1
Appendix Model 2
Appendix Model 3
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Running Head: COUNTRY PROFILE - El Salvador
References
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Central Intelligence Agency. (n.d.). Central Intelligence Agency. Retrieved November 13, 2022,
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0cross%2Dborder%20payments
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World: Finland to sell confiscated bitcoin worth 75 million to support Ukraine's war effort.
(2022, May 02). Asia News Monitor Retrieved from
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