Clare Ribando Seelke
Analyst in Latin American Affairs
Foreign Affairs, Defense, and Trade Division
Summary
Nicaragua, the second poorest country in Latin America after Haiti, has had a difficult path to democracy, characterized by ongoing struggles between rival caudillos (strongmen), generations of dictatorial rule, and civil war. Since 1990, Nicaragua has been developing democratic institutions and a framework for economic development. Nonetheless, the country remains extremely poor and its institutions are weak. Former revolutionary Sandinista leader, Daniel Ortega, was inaugurated to a new five-year presidential term in January 2007 and appears to be governing generally democratically and implementing market-friendly economic policies. The United States, though concerned about Ortega’s ties to Venezuela and Iran and his authoritarian tendencies, has remained actively engaged with the Ortega Administration. The two countries are working together to implement the U.S.-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), control narcotics and crime, and promote economic development through the Millennium Challenge Account (MCA). Nicaragua is receiving some $28.6 million in U.S. assistance in FY2008 and could benefit from the proposed Mérida Initiative for Mexico and Central America. This report may not be updated.
Background
Nicaragua is a Central American nation bordering both the Caribbean sea and the Pacific ocean between Costa Rica and Honduras. Slightly smaller than the state of New York, Nicaragua has a population of roughly 5.4 million. With a per capita income level of $1000 (2006), Nicaragua is classified by the World Bank as a lower middle income developing country.[1] Nicaragua is still largely an agricultural country, but its non-traditional exports (textiles, tobacco products, vegetables, gold) have expanded rapidly in the last few years. Nicaragua’s key development challenge is to boost growth rates to a level that can reduce poverty, which is especially severe in rural areas.
↑World Bank, World Development Report, 2008 and “Nicaragua Country Brief,” December 2007.
