Economy of Nicaragua

Economy Nicaragua

Economy - overview:

Nicaragua, one of the hemisphere's poorest countries, faces low per capita income, massive unemployment, and huge external debt. Distribution of income is one of the most unequal on the globe. While the country has made progress toward macroeconomic stability over the past few years, GDP annual growth of 1.5% - 2.5% has been far too low to meet the country's need. Nicaragua will continue to be dependent on international aid and debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. Nicaragua has undertaken significant economic reforms that are expected to help the country qualify for more than $4 billion in debt relief under HIPC in early 2004. Donors have made aid conditional on the openness of government financial operation, poverty alleviation, and human rights. A three-year poverty reduction and growth plan, agreed to with the IMF in December 2002, guides economic policy.

GDP:

purchasing power parity - $11.6 billion (2004 est.)

GDP - real growth rate:

2.3% (2004 est.)

GDP - per capita:

purchasing power parity - $2,300 (2004 est.)

GDP - composition by sector:

agriculture: 28.9%

industry: 25.4%

services: 45.7% (2004 est.)

Investment (gross fixed):

28.1% of GDP (2004 est.)

Population below poverty line:

50% (2001 est.)

Household income or consumption by percentage share:

lowest 10%: 0.7%

highest 10%: 48.8% (1998)

Distribution of family income - Gini index:

60.3 (1998)

Inflation rate (consumer prices):

5.3% (2004 est.)

Labor force:

1.91 million (2004 est.)

Labor force - by occupation:

agriculture 42%, industry 15%, services 43% (1999 est.)

Unemployment rate:

22% plus considerable underemployment (2004 est.)

Budget:

revenues: $672.5 million

expenditures: $954.9 million, including capital expenditures of $NA (2004 est.)

Public debt:

125.3% of GDP (2004 est.)

Agriculture - products:

coffee, bananas, sugarcane, cotton, rice, corn, tobacco, sesame, soya, beans; beef, veal, pork, poultry, dairy products

Industries:

food processing, chemicals, machinery and metal products, textiles, clothing, petroleum refining and distribution, beverages, footwear, wood

Industrial production growth rate

The Economy in Nicaragua

Nicaragua’s economy is mainly focused on the agricultural industry. However, as the poorest country in Central America and the second poorest in the hemisphere, has widespread underemployment and poverty. The US-Central America Free Trade Agreement (CAFTA) has been in effect since April 2006 and has expanded export opportunities for many agricultural and manufactured goods. Textiles and apparel account for nearly 60% of Nicaragua’s exports, but increases in the minimum wage during the Ortega administration will likely erode its comparative advantage in this industry

Nicaragua-Industry

Industries: food processing, chemicals, machinery and metal products, knit and woven apparel, petroleum refining and distribution, beverages, footwear, wood
INDUSTRY

Nicaragua Table of Contents

Historically, Nicaragua's small industrial sector has consisted primarily of food processing. Except for one cement plant and one petroleum refinery, agro-processing industries (slaughterhouses, meat packing plants, food processing plants, cooking oil plants, and dairy facilities) and the manufacture of animal by-products (candles, soap, and leather) have been the backbone of Nicaragua's urban industry. The 1960s was a period of rapid growth of the industrial sector, as new external tariffs established by the CACM allowed the growth of import-substitution plants in Nicaragua. Formation of new import-substitution plants slowed in the 1970s, however, and the percentage of GDP derived from industry dropped to only 23 percent in 1978.

Political and economic problems caused the industrial sector to shrink in the years after 1978. The civil war caused manufacturing output to decrease by one-quarter in 1979 alone. In the agro-industries, which represented 75 percent of the total industrial putout, idle capacity became a serious problem after the Sandinista victory in 1979. In the early 1980s, food processing plants were operating at only 50 percent capacity; sugar mills, 49 percent capacity; animal feed processing plants, 70 percent capacity; fruit canning plants, 94 percent capacity; and vegetable oil refineries, 42 percent capacity. The Sandinista government maintained a monopoly on beef processing facilities, but here, too, idle capacity rose from 30 percent in the period between 1977 and 1979 to 85 percent by 1981. Idle capacity in this industry averaged 60 percent in subsequent years. This phenomenon resulted mainly from clandestine slaughter houses, an illegal network of beef distributors, and the withholding of food products by producers.

Although the government-controlled distribution system created shortages, a black market thrived for milk, cheese, chicken, and eggs, as well as livestock by-products such as soap and shoes. In the mid-1980s, Black-market prices soared, and essentials became next to impossible to obtain through legitimate channels. As basic grains and other food became scarcer, beef consumption in Nicaragua rose to the highest level in Central America. Unable to buy corn, Nicaraguans ate beef. Immediately before the imposition of the United States trade embargo in 1985, many ranchers instituted the wholesale slaughter of beef and dairy cows that they were unable to shift across the borders to Costa Rica or Honduras.

The industrial sector, which had grown only sporadically in the early 1980s, declined in the mid- to late 1980s as the Contra war escalated and United States markets dried up. Industrial production dropped an average of 5 percent each year from 1984 to 1989. By 1989 the industrial sector contributed only 19 percent to the nation's GDP and construction accounted for only 4 percent.

By President Chamorro's inauguration in 1990, only about 10 percent of the pre-Sandinista era work force was still employed in the skeletal industrial sector. A few larger-scale industries, including a cement production plant, a chemical plant, a metals processing plant, and a petroleum refinery, were geared toward domestic consumption. Even these suffered badly from shortages of essential imports and the lack of skilled labor.

Agriculture in Nicaragua

How rainwater harvesting is helping Nicaraguan farmers

By Alejandra Martins, BBC Mundo

Prized resource: The aim is to ensure a year-round supply of water

"I've been a farmer for more than 40 years, but I never had an opportunity like this," says Victor Beltran.

Mr Beltran lives in northern Nicaragua, one of the poorest and driest areas of the country, where a pilot project to harvest rainwater is beginning to transform local agriculture and local people's lives.

"Farmers have come from other parts of the country to see what is happening here. I no longer depend on seasonal rainfall. I produce three times more maize and have a surplus to trade," says Mr Beltran.

The project involves building earthen dams to form reservoirs or ponds that can collect surface water run-off from the hills during the rainy season.
Farmer Victor Beltran says the project has changed the way he works
The water is then used for irrigation during periods of drought.

"The problem in Nicaragua and the majority of tropical areas in Latin America is that you have a huge contrast between the rainy and the dry season," says Gonzalo Zorrilla, who is directing the project.

"In Nicaragua's case, you have a lot of rain for six months and then six months when there is practically none."

Catching the rain The idea for the initiative stemmed from work in southern Brazil, Argentina and Uruguay by the Latin American Fund for Irrigated Rice (FLAR) and supported by the International Center for Tropical Agriculture (CIAT).

In these countries, more than 1m hectares (2.5m acres) of rice have been irrigated with water collected by the farmers themselves.
The key to the project is finding the right location to build a dam
"With our partners in Nicaragua, the local rice farmers' association, we thought it could be possible to use the same technology to help small farmers in the tropics," said Mr Zorrilla.

"We convinced a UN agency, the Common Fund for Commodities, CFC, to fund the project."

The idea is to construct the reservoirs as cheaply and simply as possible.

A dam is built between two hillsides to catch the rainwater run-off and create a pool of water.

An outlet tube reinforced with steel bars lies underneath the dam, so all the farmer has to do to irrigate his crops is open the valve.

"If you go anywhere in northern Costa Rica, Panama or Nicaragua, there is massive unemployment during six months of the year. People have no income, no crops, and in severe cases their cattle are dying," says Edward Pulver, agricultural scientist at FLAR.

When the project started, he says, many farmers were not optimistic about their future.

"But as soon as we started mentioning irrigation, their eyes lit up like Christmas tree lights because they had hope.

"They saw they didn't have to be poor, there was a way out. It is incredibly impressive to see that."
Nicaragua is susceptible to floods - and drought
Fourteen dams have been completed or are being built in Nicaragua, and similar projects are under way in Costa Rica and southern Mexico.

"We are getting the same yields of maize in Nicaragua that you get in the Midwest in the US," says Mr Pulver.

"Fresh corn was not available in the dry season. Now, because of irrigation, some farmers sell their whole production as fresh corn for human consumption," says Mr Zorrilla.

This means a potential income of several thousand dollars per hectare, an amount that was "completely unimaginable in the past", according to Mr Zorrilla.

The project has also helped farmers to vary their diet, as some of them have introduced a small fish, tilapia, to the reservoirs.

Farming's future? Many countries in Latin America, including Mexico, Colombia, Ecuador, Bolivia and Costa Rica have the right topography and conditions to harvest water, says Mr Pulver.

"In Latin America we have excess water. Our problem is we have flooding, so if we can just capture this water, store it and plant crops during the dry season, we can feed ourselves very easily.

"This technology can work in the poorest of countries, and the CFC wants us to take the idea to Africa."
Irrigation also means more varied crops can be grown
A key aim of the pilot project, which ends in 2012, is to train local people and officials so they can build their own dams and reservoirs.

"If we finish with just 14 dams in Nicaragua, nothing would have change there because too few farmers would have benefited," says Mr Zorrilla.
"Globally, despite the challenges of growing populations, water is really under used.

"The intelligent, sustainable use of water could give rise to a water revolution, a blue revolution," he says.

One key factor seems already guaranteed: the conviction of the farmers themselves.

"If you expand access to this technology, you can help to lessen the impact drought has in Nicaragua," says Mr Beltran.

"Farmers can have a balanced diet, money for their farm and for their children's education. On my farm, there's now work for four of us.

"This project has really changed the way we think."

Harvesting rainwater is changing some people's views about life on the land

Source: bbc.co.uk

24 November 2011 Last updated at 10:53 GM

Nicaragua-Geography

Geographically Nicaragua is divided into three parts.
Pacific lowlands

The Pacific lowlands extend about 75 kilometers inland from the Pacific coast. Most of the area is flat, except for a line of young volcanoes, many of which are still active, running between the Golfo de Fonseca and Lago de Nicaragua. These peaks lie just west of a large crustal fracture or structural rift that forms a long, narrow depression passing southeast across the isthmus from the Golfo de Fonseca to the Río San Juan. The rift is occupied in part by the largest freshwater lakes in Central America: Lago de Managua (56 kilometers long and 24 kilometers wide) and Lago de Nicaragua (about 160 kilometers long and 75 kilometers wide). These two lakes are joined by the Río Tipitapa, which flows south into Lago de Nicaragua. Lago de Nicaragua in turn drains into the Río San Juan (the boundary between Nicaragua and Costa Rica), which flows through the southern part of the rift lowlands to the Caribbean Sea. The valley of the Río San Juan forms a natural passageway close to sea level across the Nicaraguan isthmus from the Caribbean Sea to Lago de Nicaragua and the rift. From the southwest edge of Lago de Nicaragua, it is only nineteen kilometers to the Pacific Ocean. This route was considered as a possible alternative to the Panama Canal at various times in the past.
Surrounding the lakes and extending northwest of them along the rift valley to the Golfo de Fonseca are fertile lowland plains highly enriched with volcanic ash from nearby volcanoes. These lowlands are densely populated and well cultivated. More directly west of the lake region is a narrow line of ash-covered hills and volcanoes that separate the lakes from the Pacific Ocean. This line is highest in the central portion near the cities of León and Managua.
Because Western Nicaragua is located where two major tectonic plates collide, it is subject to earthquakes and volcanic eruptions. Although periodic volcanic eruptions have caused agricultural damage from fumes and ash, earthquakes have been by far more destructive to life and property. Hundreds of shocks occur each year, some of which cause severe damage. The capital city of Managua was virtually destroyed in 1931 and again in 1972.
Central highlands
The triangular area known as the central highlands lies northeast and east of the Pacific lowlands. This rugged mountains is composed of ridges 900 to 1,809 meters high and a mixed forest of oack and pinne alternatting with deep valleys that drain primarily toward the Caribbean. Very few significant streams flow west to the Pacific Ocean; those that do are steep, short, and flow intermittently. The relatively dry western slopes of the central highlands, protected by the ridges of the highlands from the moist winds of the Caribbean, have drawn farmers from the Pacific region since colonial times a The eastern slopes are among the wettest places in the world, being too wet for agriculture, and are sparsely settlnd are now well settled.ed and have an economy dominated by timber extraction.
Caribbean lowland
The eastern Caribbean lowlands of Nicaragua form the extensive (occupying more than 50 percent of national territory) and still sparsely settled lowland area known as the Costa de Mosquitos (Miskito Coast). The Caribbean lowlands are sometimes considered synonymous with the former department of Zelaya, which is now divided into the North Atlantic Autonomous Region (Región Autonomista Atlántico Norte, RAAN) and the South Atlantic Autonomous Region (Región Autonomista Atlántico Sur, RAAS) and constitutes about 45 percent of Nicaragua's territory. These lowlands are a hot, humid area that includes coastal plains, the eastern spurs of the central highlands, and the lower portion of the Río San Juan basin. The soil is generally leached and infertile. Pine and palm savannas predominate as far south as the Laguna de Perlas. Tropical rain forests are characteristic from the Laguna de Perlas to the Río San Juan, in the interior west of the savannas, and along rivers through the savannas. Fertile soils are found only along the natural levees and narrow floodplains of the numerous rivers, including the Escondido, the Río Grande de Matagalpa, the Prinzapolka, and the Coco, and along the many lesser streams that rise in the central highlands and cross the region en route to the complex of shallow bays, lagoons, and salt marshes of the Caribbean coast

Nicaragua - History

Nicaragua was first discovered by Europeans when Christopher Columbus arrived from Honduras and explored the eastern coast on his fourth voyage in 1502.

In 1522, the first Spaniards entered the region of what would become known as Nicaragua. Gil González Pereira with a small force reached its western portion after a trek through Costa Rica. He proceeded to explore the fertile western valleys and was impressed with the Indian civilization he found there. He and his small army gathered gold and baptized Indians along the way. Eventually, they so imposed upon the Indians that they were attacked and nearly annihilated. González Dávila returned to his expedition's starting point in Panama and reported on his find, naming the area Nicaragua. However, governor Pedrarias Dávila attempted to arrest him and confiscate his treasure. He was forced to flee to Santo Domingo to outfit another expedition.

Within a few months, Nicaragua was invaded by several Spanish forces, each led by a conquistador. González Dávila was authorized by royal decree, and came in from the Caribbean coast of Honduras. Francisco Hernández de Córdoba at the command of the governor of Panama approached from Costa Rica. Pedro de Alvarado and Cristóbal de Olid at the command of Hernán Cortés, came from Guatemala through San Salvador and Honduras.

Córdoba apparently came with the intention of colonization. In 1524, he established permanent settlements in the region, including two of Nicaragua's principal towns: Granada on Lake Nicaragua and León east of Lake Managua. But he soon found it necessary to prepare defenses for the cities and go on the offensive against incursions by the other conquistadores.

The inevitable clash between the Spanish forces devastated the indigenous population. The Indian civilization was destroyed. The series of battles came to be known as The War of the Captains.[4] By 1529, the conquest of Nicaragua was complete. Several conquistadores came out winners, and some were executed or murdered. Pedrarias Dávila was one such winner. Although he lost control of Panama, he moved to Nicaragua and established his base in León. olony.

The land was parceled out to the conquistadores. The area of most interest was the western portion. It included a wide, fertile valley with huge, freshwater lakes, a series of volcanoes, and volcanic lagoons. Many Indians were soon enslaved to develop and maintain "estates" there. Others were put to work in mines in northern Nicaragua, but the great majority were sent as slaves to Panama and Peru, for significant profit to the new landed aristocracy. Many Indians died through disease and neglect by the Spaniards, who controlled everything necessary for their subsistence

Nicaragua

Nicaragua , officially the repubic of Nicaragua, is the largest country in the Central American isthmus, bordered by Honduras to the north and Costa Rica to the south.  The Pacific Ocean lies to the west, and the Caribbean Sea to the east. The country's physical geography divides it into three major zones: Pacific lowlands; wet, cooler central highlands; and the Caribbean lowlands. On the Pacific side of the country are the two largest fresh water lakes in Central America—Lake Managua and Lake Nicaragua. Surrounding these lakes and extending to their northwest along the rift valley of the Gulf of Fonseca are fertile lowland plains, with soil highly enriched by ash from nearby volcanoes of the central highlands. Nicaragua's abundance of biologically significant and unique ecosystems contribute to Mesoamerica's designation as a biodiversity hotspot. Nicaragua is one of the richest countries in Central America.

The Spanish Empire conquered the region in the 16th century. Nicaragua achieved its independence from Spain in 1821. Since its independence, Nicaragua has undergone periods of political unrest, dictatorship, and fiscal crisis—the most notable causes that led to the Nicaraguan Revolution of the 1960s and 1970s. Nicaragua is a representative democratic republic, and has experienced economic growth and political stability in recent years. In 1990, Nicaragua elected Violeta Chamorro as its president, making it the first country in Central American history and the second in the Western Hemisphere to democratically elect a female head of state.

The population of Nicaragua, approximately 6 million, is multiethnic. Roughly a quarter of the population lives in the capital city, Managua;

Rank of Bhutan

Rank of Bhutan from the poorest is 54th. and from the richest is 152nd with national acerage per capita usingb atlas method in 2003 is 660. In other measurement As IMF, WB , CIA as in 2007, 2007 and 2008, gdp (nominal)per capita
rank/gdp.....rank/gdp.......rank/gdp
116/1,841...112/1,668....116/1,943
It is richer than India.as per gdfp.