Nicaragua's Commercial Policy: Building a Socially Responsive Foreign Trade

Abstract

The Sandinista revolution which ended in July 1979 with the successful overthrow of the Somoza regime entailed high costs in loss of life and productive capacity. Following the war, industrial and agricultural production were seriously affected as some $250 million worth of equipment, factories, and inventories had been destroyed and industrial organization disrupted. The output of such key products as cotton, grains, and cattle fell precipitously. There is little disagreement that the Sandinistas inherited an economy on the verge of collapse. Consequently, the first task was to repair the ravages of war, a reconstruction process which demanded extensive reorganization of both public and private spheres of economic and social life. At the same time, the new leaders did not simply want to reinstitute old methods but to develop a system of economic institutions responsive to the needs of those marginalized by unfettered capitalist institutions. Concern for distributive justice has been central to social policy in education, health and housing, as well as in productive activities where measures have been developed to reorient production in order to meet the new national goals. In pursuit of these ends, the Sandinistas have opted for a mixed economy, seeking to provide social guidance to production. A moderate degree of state ownership of production was attained through the nationalization of Somoza family holdings. This has resulted in a significant public sector role in the economic output: 37 percent of 1980 gross domestic product (GDP) was produced by state-owned industries. These included approximately one-fifth of agricultural production, three-quarters of construction, one-sixth of manufacturing, one-fourth of commerce, and all of mining.