Nicaragua’s economic tragedy
Economic development is a challenge that has individualized systems and roots within itself, let alone the details and specific approaches in Nicaragua. From the social conformity perspective, the outrageous corruption from the government, to the intervention of the powerful global organization. Nicaraguan history is quite complex, and can be reduced to a vicious cycle. The current economic crisis can be seen as an ongoing pattern in Nicaragua. This country has a history with dictatorships, and for certain times of power, these ‘governments’ appear to be helping the economic well-being of the country, yet as soon as they start taking advantage of their position and power, the Nicaraguan people unite to fight back the oppression.
Somoza showed an economic increase from the mid-1950s, to the early 1970s; however, after the downfall, he was unable to put the economy back together, which left thousands of Nicaraguans to starvation.
Once people started demanding back their rights after oppression, a movement started to rise, the Sandinistas. At their hands, Nicaragua united against the Nicaraguan government to claim back their years of dictatorship and entered a war that only worsens the economic instability. Shortly after this period, in 1979, Nicaragua fell into the hands of the Sandinista revolution, ironically, the FSLN gained support from the Nicaraguan people since the Somoza dictatorship furthered an economic paralysis.
The Sandinista revolution economic outlook can be divided into 3 chapters: make the structure of agrarian property more egalitarian (redistributing land from the great owners to the "landless"), improve the living conditions of the great masses impoverishment through food, education, health, and housing, and modernize the productive apparatus to do so more effectively. However, decades after their actions against the Nicaraguan people defeated their original economic purpose.
When talking about resources, it refers to the power that goes into a system, sorts as the fuel within. Systems can have numerous “streams'' of fuel, yet it is always prominent within them. In my system, that being the economic adversity and disparity in Nicaragua, the resources or fuel that power the system is the lack of education within Nicaragua and socialist conformism. Moving onto roles and relationships discusses the “actors'' or general leads within the system. . Economic instability, the main roles or ‘actors’ within it are the president and the government, for these are the one that powers the resources and create opportunity (or lack of) within the country. The current Nicaraguan president has found expertise and passion for devaluating Nicaraguans, violating their rights, and taking the economy down with him. Nicaragua is overwhelmed with corruption, which reflects intensely in the economy, thus no true appropriation or order is found. The current tax policies are done for the economical benefit of the government. This is where the relationship comes in handy, and there is a connection between the government and Ortega. Nicaragua is known for its dictatorship, and within there is the monopolization of several companies, this most of Nicaragua’s big economy is in the hands of powerful people affiliated with the government. Like previously mentioned, the electricity and water are mandated by a governmental company, thus since the demand is high and only one company that can supply, they are free to monopolize prices, which is exactly what was done during the economic crisis in 2018. Rules, on the other hand, entail the system function and whether there are laws or norms, hence formal and informal rules. Given the unconstitutional nature of Nicaragua’s government, the formal laws within the system are unfollowed, while the informal seems to be the rule of the system.
Now, the issues within the challenge can only be understood if one grasps the content through its elements and its connections. First, we know that the government caused a political crisis and that Ortega refused to cooperate with any attempts of solving the issues, such as “El Dialogo” arranged by the catholic church, in which he and the “Alianza” were supposed to resolve the political turmoil. Therefore, the government and Ortega are two important elements. Secondly, we have the role of Global Organizations to attempt to redeem the political disaster, such as hearing from the Organization of American States, the presence of the InterAmerican Court of Human rights in Nicaragua, and the mandates of the United Nations. Furthermore, there is the overbearing poverty of Nicaragua, and even though there was a trend of economic growth before 2018, we were still placed as the second poorest country in Latin America.
According to the Borgen Project, 43 percent of the Nicaraguan population lives in rural areas and 68 percent of them are trying to survive off just over $1 per day. Overall, 46.2 percent of the population lives below the poverty line and according to the OAS, “The growth rate in relation to the economic activity performance of 2018 would be -2.0% compared to 2017 (contraction), which represents a loss of US $ 916 million in the added value of the economy.” (OAS Nicaragua’s report 2018)
If Nicaragua has a history of poverty and several correlations between dictatorship and its economic status, then we can conclude that the root of the problem is not really “the government” or “poverty through the years.” Yes, these are all collateral effects of what we call a disaster democracy, yet what really goes on is that the education system is failing Nicaraguans. There is a huge gap between the issue and the solution, yet it could be drastically improved and filled by investment in quality education. However, in order to better the education system and improve the mentality of Nicaraguans, there is a big sight issue, the government is in charge of the ministry of education. So how can we improve the lifestyle, mentality, and possibilities for those who live in overbearing poverty lines if the current government neglects education as a root cause? Well, then the one plausible alternative is to vote for a government that really cares about the bettering of Nicaragua. That has in mind the future of the economy, the well-being of those in poverty and a real economic positive regression. This whole idea can be seen through feedback loops. In fact, we discuss feedback loops, I believe that the poverty line and the percentage of Nicaraguan citizens that lie below it are the negative feedback. This is because the lack of activism before the 2018 political crisis allowed the system to keep in place and balance; hence no one truly presented any initiate to overthrow the government, making the system stable and in place.However, this also feed the vicious cycle of power of Ortega’s presidency, which can be seen as the positive feedback, for it took away from the original ideology of democracy, and lead into corruption and dictatorship. Feedback is what either keeps the balance or furthers a cycle, hence either reinforcing or balancing the system. Furthermore, within these cycles, I would say that the Global Organizations have provided negative feedback through the sanctions, thus balancing the economic instability by keeping the trade in check, and sanctioning the government. This has decreased the influence of the government amongst the Nicaraguan people by keeping Ortega under a radar, yet has had an unequivocal economical damage to the country.
The iceberg model helps have a better understanding of a system by using an iceberg as a model, in which numerous layers are illustrated. From underneath the water, we have what is the underlying patterns, the systemic structure, and the mental models. However, on the other hand, from the above water, we host the small part of the system that can be seen, the observable behaviors. This model represents the complexity of a system, and that in order to see the past the obvious and what is easy to the eye, one must dig deeper than the surface and reach towards a deeper level to find a solution. Nicaragua has an underlying history of corrupt governments and economic disaster that follows it. As I did research and read about decades of years of economic behavior and the effects of corruption, I realized that the economic problem was not only lying in the 2018 crisis Nicaragua faced, but rather it was a consequence of extensive years of corruption, and the Nicaraguan’s disinterest in providing a better government. If I were to analyze the system from the iceberg model, I would label it as such that the Events and observable behaviors would be the protests in 2018 and the economic strikes during this time, which lead to the fall of the GDP and an increase in unemployment. The patterns of behaviors are the presidency of Daniel Ortega and his transformation from socialist to dictatorship. He developed a power hunger and was able to masquerade his desire to remain in power by ‘helping’ the poor and deceiving the reality of the government, which was to stay in power no matter what.
The Understanding of systemic structure is the disinterest of the Nicaraguan people. Nicaragua was never passionate about the electoral processes, there were other parties but people just accepted Ortega as president. When the slighted threat was presented, the presidential candidates magically disappeared or passed away, and people in Nicaragua just went along with it, and no major movement was ever developed. This leads to mental models, which is what keeps the system in place. Given the disinterest in politics by the overwhelming majority of Nicaraguans, then as an entirety, we have lost a say in the governmental procedures. Once we let Ortega rewrite the constitution to reflect himself, used dead voters to raise his votes, and disappeared candidates, we decided to conform with the government. Up until 2017, there was no real reason to fight the government, there was, in fact, some economic ‘progress’. This kept the system in place and allowed Ortega to root his power to the presidency.
The issue with the poor and bad education in Nicaragua is that it has a long term effect on the economy, rather than a circumstantial and sudden issue like the political crisis. A bad education leads to a poor employment career. Given the vast majority of Nicaragua is made up by rural sectors, education is not a priority. These sectors are made up by different ideologies, in which “la vida de campo'' or life in the valley is not composed by a higher education. Most people go as far as a high school diploma if lucky, hence let alone a degree. This leaves the future of Nicaragua’s economy in the hands of a minimized population. The deepening of poverty, together with high unemployment rates, low wages, and the privatization of basic services, has sensibly stressed the household economy, weakening human mechanisms of resistance, which is expressed in uncertainty and hopelessness towards the future. future, and in a growing migration.
According to an article in Open Edition journals, Nicaragua has several pending issues in education. About 34% of the population between 3 and 18 years old does not have access to the educational system, its population has average schooling of 5.6 years, only 54.77% of the population between 15 and 64 years old, which corresponds to the Economically Population Active (PEA), has primary education and less than 29% secondary education. Technical training (basic, medium or higher) is a minority, reaching less than 1% of the population at those ages (ENMV, 2005).
According to an economic analysis done my the “Education Next” when testing the effects of education on the GDP of 50 countries, “when the average number of years of schooling in a country was higher, the economy grew at a higher annual rate over subsequent decades. Specifically, we found that, across the 50 countries, each additional year of average schooling in a country increased the average 40-year growth rate in GDP by about 0.37 percentage points.”
Education is the root for the economic disparity, it connects all the dots together. If I go deeper, I could say education is directly connected to Nicaraguan conformism, and the mentality of settling and not aspiring to greater things. Furthermore, even the current president did not finish highschool, so what does that say about the education system throughout the years?
Conformism with a socialist government drives the problem because it has allowed for the current government to exploit corruption and continue to hover over the teconomy and monopolize multiple franchises for their benefit. People in Nicaragua have presented a blind eye to several years of this dictatorship, not complaining about feeling any drive to move through an actual democracy. The spike and change only happened once we were in the doom of violence and economic crisis, yet it was too late to overshadow the instated power and influence Ortega has over the country, hence things only got worse and continued to not only affect the lives of people through the violent attacks but the create an economic disparity, furthering poverty sites and unemployment in Nicaragua. Nicaragua decided to respond to the attacks with economic strikes powered and promoted by the private sector, these left an economic shock to the entire country, which caused the liquid flow of money for months. Businesses remained closed, people avoided transactions and the government was snatched from income taxes. This only furthered the economic instability since the government passed policies to increase the employee, employer, and trade taxes. Furthermore, since the electric and water companies are monopolized by people on the government, tariffs for water and light cost increased. If Nicaraguan people had not settled for the bare minimum and allowed the government and Ortega to increase their power and dictatorship over us, then our country would have been able to avoid such catastrophes. There was a conformity with the leftist democracy, and their current and constant attempts to maintain power through corruption.
Nicaragua had faced an economic boost for the past few years before 2018. From 2010 onwards, there had been a constant increase in the economy, of course not enough to take us out of the title of the second poorest nation in Latin America, yet consistent enough to maintain a positive regression.
However, right after 2018 and the political crisis, Nicaragua fell below the GDP projection and fell from a 5% notorious increase, to a negative 4% projection. This was one of the most prominent barriers and insurgences that revalidated the entire economic system and furthered a new one, in which there was a devaluation of the Cordoba, and profits for any economic income were severely decreased, while expenses rose.
Property value fell, and anything that was once before 1 million dollars, lost its value to somewhere around 650k, so did rent for houses, people began to receive less income than before. There was a wave of unemployment right after, the prices for basic foods increased, and the cost for electricity and water also spiked in prices
Nicaragua is not the only country who has been affected by a socialist dictatorship, or influenced by a poor education, or suffers from poverty. Therefore, I recurred to observing the trend lined and possible solutions to economic development as thus approached by other Latin American Nations. In order to counterattack the realtiations of the root cause, Nicaragua must elect a democratic government that will allow us not only to improve education, but the economic relationships with other countries, and open up trade markets that will better the yearly revenue. This idea of choosing a specific way to address a challenge and the strategies taken upon it comes from David W. Pearce, who said : “the development strategy is the “way of approaching the problem of underdevelopment that depends on the model of growth used ”.
According to Eugenio Trejos Benavides in a report regarding the strategies for economic development in Latin America: The "outward" development strategy, focused on the production of primary goods for the foreign market, has the benefit of taking advantage of the country's natural resources and that it absorbs a great amount of your workforce.
This strategy has been the basis of the economic growth of the vast majority of underdeveloped countries. With it, the agricultural countries managed to insert themselves into world markets and took a place in the international division of labor, based on productive specialization based on the endowment of natural resources, which was established with the industrial revolution and the consolidation of the world capitalist. This is a huge leverage from a Nicaraguan stand, since this country is filled with opportunities for development based on natural resources. Agriculture has one of the most profitable businesses all over the country, hence if we focused on bettering the education in rural areas we could really impulse two major sectors of improvement: overall education and economic benefit from agriculture.
Nicaragua has suffered from years and years of dictatorship and conformism, which have subsequently led to a poor education.
This is the root cause of the entire problem, as thus even the “president” did not go through high school. 54% of the population only has primary education, and less than 27% has secondary education, and less than 1% receive technical training. Therefore image, Nicaragua is a country filled with opportunities for development, such as export, trade, agriculture and several other natural resources, however, there is no proper knowledge or educational base that serves as a catalyst for improvement.
Sources
https://www.eleconomista.com.mx/opinion/La-crisis-economica-de-Nicaragua-20190305-0096.h tml
https://www.efe.com/efe/america/economia/nicaragua-se-encamina-a-su-peor-crisis-economicade-los-ultimos-30-anos/20000011-3893157 https://www.telesurtv.net/opinion/La-economia-en-tiempos-de-Daniel-Ortega-20160904-0023.ht ml http://repositorio.uca.edu.ni/3338/1/Un%20siglo%20y%20medio%20de%20econom%C3%ADa %20nicarag%C3%BCense%20Las%20ra%C3%ADces%20del%20presente.pdf https://www.efe.com/efe/america/economia/economia-de-nicaragua-decrecera-4-en-2018-y-5-2- 2019-segun-ong-funides/20000011-3800559 https://www.el19digital.com/articulos/ver/titulo:75754-economia-de-nicaragua-crecio-49-en-el-2 017 https://www.elnuevodiario.com.ni/economia/489011-decrecimiento-pib-economia-nicaragua/ https://www.bcie.org/fileadmin/bcie/espanol/archivos/novedades/publicaciones/estrategias/Estrat egia_Nicaragua_web1.pdf http://scm.oas.org/pdfs/2019/CP41661SINFORMECOMISIONNICARAGUA.pdf https://www.elnuevodiario.com.ni/nacionales/491367-sanciones-estados-unidos-gobierno-nicara gua/ https://borgenproject.org/poverty-in-nicaragua/ http://www.oas.org/es/cidh/docs/anual/2018/docs/IA2018cap.4B.NI-es.pdf
https://www.educationnext.org/education-and-economic-growth/#:~:text=The%20level%20of%20cognitive%20skills,attainment%20also%20boost%20cognitive%20skills
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