Agriculture

After 1950 the scope of capital-intensive modern agriculture increased greatly. This growth was concentrated in export crops, while crops destined for domestic use continued to be produced by traditional labor-intensive methods. The shift to industrialized agriculture also significantly reduced the proportion of the population directly dependent on agriculture.

Commercial agriculture thrives in the Pacific Lowlands, where cotton and sugarcane are the staple crops. Although coffee is grown in the Pacific zone at elevations over 1,000 feet (300 meters), the most important coffee zone is the northwestern part of the Central Highlands, from Matagalpa to Jinotega. Cattle for the export of beef are raised in the southeastern part of the highlands.

The overall expansion of export production by large landholders pushed the smallholders who produced the country’s maize, beans, and other dietary staples onto marginal lands, with the result that food production could not keep up with population increase.

In the 1990s the government initiated efforts to diversify agriculture. Some of the new export-oriented crops were peanuts, sesame, melons, and onions.

Nicaragua’s agricultural sector has benefited because of the country’s strong ties to Venezuela. It is estimated that Venezuela will import approximately $200 million in agricultural goods.

Fishing and Forestry

Forestry and fishing are the bases of the eastern seaboard’s commercial economy. In national terms, neither sector was important until the take-off of the fishing industry in the late 20th century. Mahogany was harvested commercially on the Atlantic coast beginning early in the 19th century. In the 20th century pine stands began to be exploited. In neither case, though, was the resource managed so as to ensure a sustained yield.

Nicaragua’s fishing industry operates off both coasts and in freshwater Lake Nicaragua. The lake also has an aquaculture industry. The most valuable catches are shrimp and spiny lobster. The government expanded the size of the fishing fleet in the 1980s, which permitted a rapid expansion of shrimp and lobster exports in the 1990s. A turtle fishery thrived on the Caribbean coast before it collapsed from over-exploitation.

Mining and Energy

Mining is not a major industry in Nicaragua, contributing less than 1% of gross domestic product (GDP). Still, gold and silver mines in the north-central and northeastern parts of the country are important elements of regional economies and constitute sources of revenue.

Important domestic sources of electrical energy are hydropower and geothermal power, the latter from the volcano Momotombo, near Managua. But most commercial electricity is generated by imported petroleum.

Manufacturing

Although the manufacturing sector of the economy contributes somewhat more to GDP than agriculture, it employs far fewer people. It was traditionally concerned largely with the processing of agricultural products, and it supplied the domestic market with foods, beverages, edible oils, cigarettes, and textile goods. Also manufactured were light metal goods, construction materials, wood and paper products, and chemicals such as fertilizers and pesticides.

The manufacturing sector was expanded beyond these areas in the 1990s with the introduction of maquila industries, in which imported parts are assembled for reexport. The principal products were garments, footwear, aluminum frames, and jewelry. Growth in the maquila sector slowed in the first decade of the 21st century with rising competition from Asian markets, particularly China.