Economy

Nicaragua's economy was severely damaged by a civil war during 1978-79 and continuing strife throughout the 1980's. Major changes took place in the 1980's. Much of the nation's industry was nationalized and agrarian reforms, including land redistribution, were introduced. A change in government in the early 1990's led to an emphasis on the denationalization of many industries.

Nicaragua's basic currency unit is the córdoba oro.

Agriculture is the mainstay of the economy. It accounts for about 35 per cent of the workforce, about 25 per cent of the gross domestic product, and more than 70 per cent of the nation's exports. Commercial crops include beef and dairy products, cotton, coffee, sugar cane, peanuts, and bananas. They are grown mostly on large state farms and cooperatives and on privately owned estates. The chief crops grown for local use are corn, beans, rice, and sorghum. They are grown mostly on small plots by farmers living at the subsistence level.

Farming is done largely in the western lowlands. Cattle ranching is increasingly important, especially in the east. Much beef is exported.

Manufacturing grew rapidly after the 1950's, particulary after the establishment of the Central American Common Market. By the time of the civil war, manufacturing was one of Nicaragua's leading economic activities. During the 1980's, however, manufacturing declined significantly. In 1989 it accounted for less than 15 per cent of the gross domestic product. During the early 1990's, after internal conflict subsided, manufacturing began to expand.

The processing and packaging of agricultural goods such as processed foods and beverages are the chief manufacturing activities. Also important are the manufacture of chemicals, metal products, textiles, and clothing. Managua is the main industrial center.

Forests cover slightly more than a quarter of the country. Trees that are commercially harvested include mahogany, cedar, and rosewood. Overharvesting and the wide-spread use of wood for fuel have caused deforestation. Commercial fishing is of growing importance. Tuna, shrimp, and lobsters are the chief catch.

Service industries are a leading industry in Nicaragua, particularly the marketing of farm products and government activities.

Mining plays a minor role in the economy. Copper, gold and silver are produced in small amounts.

Roads are generally poor. A road across Nicaragua links the Pacific and Caribbean coasts. Almost all other major roads are on the west coast. The Inter-American Highway, part of the Pan American Highway system, connects Nicaragua with its neighbors. The only railway, which is owned by the government, runs through Managua, north to Corinto and Chinandega, and south to Granada and Diriamba. Augusto César Sandino Airport, near Managua, is the main international airport. AERONICA is the national airline.

There is a small merchant marine. The most important port is Corinto, on the west coast. The Caribbean coast has good natural harbors, but the ports serve mainly local needs.