Honduras: A Territorial Approach to Development presents an innovative approach to address the development challenges of the country. The document first describes the main challenges to inclusive development in Honduras identified by IDB technical staff, which results in a proposal for a Spatial Economic Strategy (SES) developed with the company GeoAdaptive LLC. The Strategy extends across and connects the entire territory, taking advantage of sectoral synergies for enhancing productivity and breaking the established inequality and poverty cycles. This innovative approach seeks to break away from the traditional sector-approach and proposes comprehensive interventions that would enable key stakeholders to maximize synergies and the impact of their actions.

At the 1964 annual meeting of the Inter-American Development Bank (IDB) in Panama, Felipe Herrera, then the President of the institution, argued that Cour institution must continue to demonstrate that, being a bank, it is also more than a bank. What is this institution that had the backing of both Latin American countries and the United States, and that since Herrera many have claimed it is more than a bank? And how did it come into existence?

Honduras: Un enfoque territorial para el desarrollo presenta un enfoque distinto de cómo enfrentar los retos de desarrollo del país. El documento inicia con los principales retos al desarrollo inclusivo en Honduras identificados por el personal técnico del BID, lo que deriva en una propuesta de Estrategia Económica Espacial (EEE) desarrollada en conjunto con la empresa GeoAdaptive LLC. La Estrategia abarca al territorio hondureño en su totalidad, aprovechando sinergias sectoriales para aumentar la productividad y romper con los círculos de pobreza y desigualdad con un enfoque geográfico innovador. Este busca expandir el modelo productivo tradicional a más áreas geográficas, lo que derivaría en un cambio estructural para las oportunidades a las que pueden acceder la población. Este nuevo enfoque tiene como eje fundamental la creación de valor del sector privado y maximiza las posibles sinergias con las acciones del sector público.

Why are so many countries persistently poor, underdeveloped, and unequal? Why does unevenness in resources and capabilities persist within productive sectors, even in developing countries that have managed to sustain handfuls of well-performing firms in modern sectors? The conventional knowledge about this persistence suggests that in the long run, historical institutions are the fundamental cause of economic outcomes, making history determine economic performance through its effect on institutional development patterns (Acemoglu and Robinson, 2001). These studies portray institutions as path-dependent and impervious to change, suggesting a pessimistic expectation for the development possibilities of poor countries. In contrast, this dissertation shows empirically how and why inefficient institutions that tend to persist over time can be altered, leading to unexpected upgrading and inequality reduction even in environments traditionally considered "hopeless" by the literature. Through a mixed methods approach incorporating qualitative methodologies to a traditional poverty trap framework, this work analyzes the effect of institutions on evolving micro-level attitudes towards learning in a complex, technologically-intensive industry plagued by high prices, widespread product safety challenges, and parasitic firm behavior. Using the experience of Brazil's pharmaceutical industry as a main case, with India and Mexico as shadow cases, the study concludes that in the context of extreme technological gaps, political domination by large economic groups, and structural constraints, inegalitarian and inefficient institutions become self-sustaining and make individual learning prohibitively costly for most local firms. This creates secular poverty traps where individual "low road" behaviors become prevalent among firms, resulting in a self-reinforcing intensification of uneven development. In such cases, learning --and escaping the trap-- necessarily becomes a collective action problem, where marginalized firms must cooperate to defray the costs of upgrading.