The Nicaraguan Economy:
Legacy and Perspectives
IT is now just over two years since the triumph of the Sandinista forces in Nicaragua, a victory which brought to an end nearly half a century of rule by the Somoza family, one of the most corrupt and repressive regimes in Latin America. The military achievement of the Sandinistas can hardly be underestimated; they faced what at the time was considered the best equipped army in Central America, Somoza's infamous Guardia Nacional, which had originally been formed in 1932 under the supervision of the United States of America. By their victory, the Sandinista guerrillas not only paved the way for a genuine change in Nicaragua itself, but gave new hope to revolutionary movements throughout the region, particularly to those in El Salvador and Guatemala. Hower, as the Sandinistas well understood at the time, military victory could only be the first stage of a wider and more decisive battle — that on the economic front. The success of the revolution will ultimately depend on the new regime's ability to establish a pattern of sustained growth which is not narrowly dependent on the United States markets and technology.
Nicaragua is potentially a rich country. Roughly the size of England and Wales, with a population of only two and a quarter millions, the country has an extensive margin of fertile land, abundant hydro-electric resources and a good transport network connecting the major pupulation centres along the Pacific coast. Moreover, the economy experienced a relatively high rate of overall growth an the 1960s and 1970s, even if the majority of the population was excluded from the benefits of that growth. Traditional export activities such as coffee and cattle were supplemented in the early 1960s by the introduction of irrigated cotton, and the extension of sugar-cane. In the field of industrial production, there was considerable expansion of simple import substitution in such lines as food processing, textiles, footwear, and so on, and also of manufacturing exports where, for example, Nicaragua has become a major supplier of chemical sprays for agriculture to neighbouring countries. The development of manufacturing was greatly enhanced by the formation of the Central
*Instilute of Social Studies, The Hague