THE NICARAGUAN ECONOMY 37 American Common Market (CACOM) in 1961, such that by the late 1960s, industrial activity accounted for a quarter of GDP and nearly a third of export earnings. Moreover, by comparison with other countries in the region, Nicaragua was able to limit multinational involvement in the emerging industrial sector which, in terms of direct ownership, accounted for about one quarter of assets. There are two features of this process which are particularly important in understanding the growth of new political alignments which were to characterize the 1970s. On the one hand, industrialization and agricultural modernization enhanced the position of the bourgeoisie and strengthened the growth of a professional and commercial middle class. On the other hand, agricultural modernization largely displaced traditional peasant cultivation in the Pacific coast region, giving rise to the growth of a new class of rural wage labourers. These processes are reflected in an increasingly inegalitarian distribution of income such that, by the late 1970s, 20 per cent of the population received over 60 per cent of income. Although the historical growth rate of GDP for the 1960s was quite high, averaging just over 7 per cent, Nicaraguan prosperity was already showing signs of strain by the early 1970s, and followiug the earthquake of 1972 and the oil price rise of 1974, growth fell sharply. To some extent, this process can be understood as the joint result of the "saturation" of first stage import substitution and declining international terms of trade. However, in looking at the accumulation process as a whole, what is significant is that the relatively high rate of investment (roughly 20 per cent of GDP) maintained throughout the 1960s was, in the 1970s, increasingly financed by government borrowing, initially in the from of official development assistance, but later in the international commercial market. By the mid-1970s, the government accounted for over 40 per cent of the total investment, and the debt-service ratio had risen to nearly 30 per cent of export earnings. In short, "classical" private capitalist accumulation was giving way to growth underwritten by the state. Resistance to Somoza It is against such a background that mounting resistance to Somoza must be understood. As growth began to slow down in the 1970s, attempts by the Somoza clan to appropriate an ever larger share of income through control of the state and direct ownership of banking and commercial houses,-of important parts of industry and agriculture, generated increasing resentment within some quarters of the bourgeoisie. This, together with the rise of a small organized urban proletariat and growing number of "marginalized" peasants, many of whom drifted to the urban areas and joined the ranks of the unemployed, formed the social basis of the opposition. This process was exacerbated by the flagrant embezzlement of relief