Central America has traditionally been dominated by strong lcoal economic actors - often economic groups with ownership interests in varoius sectors - in different alliances with states and transnational companies (TNCs). The opening and liberalization o f the Central American economies (most recently through a free trade agreements with the United States and a forthcoming association agreement with the European Union) has changed the political economy of the region signficantly. While it has engendered i ncreased presence of foreign transnational companies it has also induced the Central American companies to internationalize themselves through a variety of strategies: by becoming regional rather than national companies, by entering into alliances with fo reign TNCs and by searching for markets outside of the region. The choice of strategies has clear implications for the economic development of the region. The changing context also demands different environmental and political strategies of the same econo mic groups. This project has joined together a multi-disciplinary team with extensive experience from economic, environmental and political research in the region to study the strategies pursued by the Central American economic groups and their implicatio ns for the sustainable development of the region. It will have three components, each studying one aspect of the strategies of the groups through a combination of quantiative research and comparative case research. The main goal is not only to produce new knowledge about the actual strategies of the Central American economic groups and the implications of these, but also to understand the prospects for a sustainable development in the region and the conditions for development of local firms in developing countries in the context of a transnational economy.