Although Nicaragua remains one of the poorest countries in Central America, the poverty rate has been cut in half in the last 10 years. Between 2005 and 2016, Nicaragua’s poverty rate fell from 48 percent to 25 percent. One reason for this dramatic reduction is industrialization. Over time, tourism and mining have become important to Nicaragua’s economic growth and stability.
According to the United Nations Industrial Development Organization, the key to reducing poverty is “to mobilize private and public investments […] around a long-term inclusive and sustainable industrialization plan for export-oriented and job-creating industrial capacity.” The following are three areas that both keep the U.N.’s policy recommendation in mind and hold promise in reducing Nicaragua’s poverty rate.
The Impact of Tourism
Tourism is the second largest industry in Nicaragua and has grown significantly since the Nicaraguan Revolution in the 1980s. For the first time in Nicaraguan history, there were more than one million visits to the country in 2010. This is an 8 percent increase from 2009. The tourism industry is currently thriving and provides revenue to small businesses. Additionally, it provides income to poor Nicaraguans in rural areas.
Tropical islands and volcanoes, such as the Mombacho volcano and the Corn Islands, are two popular destinations that attract tourists from the U.S., Europe and Central and South America. In 2010, gross income from foreign tourism was approximately $360 million. This is a $15 million increase in gross income from the previous year.
Mining Sparks Economic Growth
Alongside tourism, there has also been an increase in gold mining production. Between 2006 and 2016, production has gone from more than 109,000 ounces to 267,000. The results are even greater for silver mining, which increased from 94,000 ounces in 2005 to almost 682,000 in 2016. Mining is steadily growing to become one of Nicaragua’s driving economic forces.
Gold, beef and coffee are the country’s top three exports. Gold production has doubled and is emerging as an important source of income to the Nicaraguan government and their citizens. For each dollar earned from mining, $.66 cents go to taxes, remuneration and acquisition of goods and services. This revenue can aid in investing in better farming equipment for poor farmers and creating jobs through emerging industries like mining.
Agricultural Advances Combat Nicaragua’s Poverty Rate
Nicaragua still remains an agriculture-dependent economy. About 50 percent of its exports come from textiles and the agriculture industry. Bananas, cotton, sugarcane, rice and tobacco are some of Nicaragua’s other exports. However, Nicaragua’s poverty rate remains high, especially in rural areas where extreme poverty is heavily concentrated.
Many in the agriculture industry are migrants who harvest crops for half the year and search for other work during the other half. By investing in farm equipment and technology, farmers of smaller plots have a chance to increase their income beyond than $2 a day.
An example of increasing crop quality and yields is shown through conservation tillage, which is transgenic insect control. This system decreases erosion, increases organic matter in soil and conserves soil moisture. Additionally, marker-assisted breeding and biotechnology traits are new developments that have been shown to increase yields and improve traits, such as grain moisture in corn.
Other traits include providing resistance to corn rootworm and borers. Lastly, diversification is another way to help those in the agriculture industry. If crop prices are unfavorable, another crop’s production would offset the negative effect of those prices.
There are several ways to reduce Nicaragua’s poverty rate. A combination of improvements in quality and quantity alongside the diversification of crops can help increase income to those in poverty.
– Lucas Schmidt