Three Lessons from an Unlikely Source
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This week the U.S. Chamber hosted a panel of Nicaraguan businessmen and decision-makers to discuss investment opportunities in the country. Nicaragua has done remarkably well under the DR-CAFTA. The country has more than doubled its exports to the United States since the agreement came into force and has been attracting one of the largest shares of foreign direct investment as a percentage of GDP in the region.
Putting these achievements in context, Nicaragua stands out for three reasons that offer some interesting, and frankly unexpected, lessons for the rest of Latin America.
The first lesson is continuity in macroeconomic management. This is an increasingly common story in Latin America’s current era of economic pragmatism, coming usually from the likes of Dilma Rousseff in Brazil, Sebastián Piñera in Chile, Ollanta Humala in Perú, and José Mujica in Uruguay. But few would expect such continuity and prudence from Sandinista Nicaragua, a country beset by polarized politics and controversial elections, not to mention a complicated past of civil war, hyperinflation, and other economic disasters.
Indeed, the second lesson from Nicaragua is that, in spite of deep polarization and political differences in the country, government and opposition are speaking to each other for the benefit of Nicaragua’s economy. Ideological differences and governing styles aside, there is an ample consensus in the country that free trade, foreign investment, and low inflation are key for moving people out of poverty. Our panel at the Chamber featured otherwise political opponents in a frank dialogue that recognized the achievements of the other while acknowledging the deep differences that divide them. Argentina, Bolivia, Venezuela, and El Salvador should be so lucky.
And the third lesson came from a statistical revelation - that Nicaragua has recently been certified as illiteracy-free by the World Bank. The second poorest country in Latin America is illiteracy free, faring far better in this key indicator than economies more than four times its size. Simply put, that’s smart investment in human capital even when financial resources are limited. Such planning for the long term is a policy choice we all hope Latin American leaders will do to institutionalize their newly found pragmatism.