from envio, september 1992:
Everyone recognizes that this poor showing is primarily due to the country's high degree of instability, but not all sectors agree on what causes that instability. The government and the right wing lay the blame on rebellious Sandinista workers and armed rural groups of impatient and battle-hungry former soldiers. But they do not admit that behind these rebellions lies the government's own economic plan, which is driving these sectors to desperation.
(...) [investment] Some say that foreign investment is good in and of itself: the capital it brings to the country can help in times of crisis of domestic capital; it offers new jobs; and it can bring new technology. But the history of Nicaragua's Atlantic Coast demonstrates the weakness of these criteria. For many years, the coast was at the mercy of foreign companies that exploited the region's natural resources, plowing nothing back into the local economy, then simply picked up and left when the resources were exhausted.
(...) Governments want to attract investment because it will supposedly bring foreign exchange into the country. But this is not guaranteed unless the government takes care to do so: in many cases, investors simply borrow money from the recipient country to build or buy their assets. In addition, there should be control over the repatriation of capital. Nicaragua's law—which curiously only applies to those who choose to accept the rights and obligations it stipulates—allows capital repatriation after three years.
(...) What would be a good investment? On the one hand, raw materials extracted from Nicaragua should not be exported as such; the industry that processes those materials and increases their value should also be located in Nicaragua. And industry, on the other hand, should acquire the majority of its inputs from raw materials produced or extracted in Nicaragua. Instead of operating in isolated enclaves, such integration of economic processes, from raw material extraction to industrial processing, would tie each individual production process into others, producing a multiplier effect in the economy. This means, for example, that cotton itself should not be exported, but that cloth, thread and even clothing should be produced here and exported; and an industry that produces clothing should not import cloth or cotton but purchase its inputs from local producers.
(...) [on a violent culture?] Instability is not caused by those who protest; protest is a predictable response to instability. If the government and big business insist on blaming the Sandinistas for the results of their own policies, they should be more accurate: the FSLN played an important role in heightening the people's capacity to protest in an effective organized fashion. Since Nicaraguan officials often cite Chile as this government's model for economic policy and growth, perhaps they see the "problem" in attracting investment here as simply the lack of an ironhanded Pinochet.
(...) [FTZ at this time] the cost of renting space in the zone is cheaper here than in Honduras; workers' wages are much lower here than in Costa Rica; and Nicaraguan workers have a reputation for being more productive than either Honduran or Costa Rican workers. Zamora also mentioned that problems with electric power in the Dominican Republic are even greater than in Nicaragua. ... The six existing companies together occupy 25,000 square meters, almost all the space currently available. Only 26% of the 57-hectare industrial park has been constructed. New construction and remodeling, which will be undertaken with a $7.6 million loan from the Inter-American Economic Integration Bank, will bring the total to about 35%. The National Penitentiary System, says Zamora, has agreed to abandon the 8,600 square meters within the zone that it is currently using as a prison by the middle of this year.
(...) This means that maquila industry, as a whole, has very contradictory consequences—it can offer jobs where there are none, yet, by nature, it works against any improvement in workers' wages. The Costa Rican example also demonstrates how easily it can pack up and move on if it gets better "advantages" elsewhere.
In addition, investors in maquila prefer authoritarian governments where there are no unions or they have no power. None of the three private companies in the Free Trade zone has a union. Though Latino said that he would accept any "reasonable" workers' organization in Crecen, he had previously referred to workers interested in forming a union as "rebels," who, according to him, "left on their own."
(...) [skills] Zamora also claims that maquila plants will bring free worker training in new technologies and the transfer of technology to Nicaragua. This, however, is a somewhat absurd assertion. Maquila plants by definition only do piecework—one small part of an assembly process—in the host country. If workers learn a new skill, it is one with very limited use, as is any new technology that an industry would import.
(...) [question of integration] Zamora also asserts that over time there will be "vertical integration" with the local economy, that is, that the maquila plants will begin to purchase some part of their inputs from the domestic market. But while this is true in a few cases, there is no vertical integration in the vast majority. Purchasing inputs from the local economy could interfere with mobility, and the very nature of maquila plants is that they are highly mobile enterprises. If conditions suddenly look better in another country, it is easy to move. The kinds of conditions that could encourage such a move include rising wages, active unions or effective worker health and safety laws—conditions to which we would hope Nicaragua aspires. Because of the "attraction" to investors of conditions that could include a dangerous work place or the abuse of workers' rights, many activists are fighting internationally for a "social charter" that would make it more difficult for transnationals to compete "on the backs of the workers."
(...) [the various development plans] Using Chile as its model, the Nicaraguan government's priorities, according to Ramírez, lay in agroindustry and the industrialization of natural resources, such as canning fish and processing lumber into plywood or furniture. Other investments, he says, such as in tourism, transportation and maquila, are complementary but not strategic. The government's priorities, therefore, appear to fall precisely in line with "good investment" as described above. But this is contradicted by a document called "Basic Information for the Investor," written by Ramírez' office. It specifically says that "the highest priority is placed on investments in nontraditional agricultural exports," which are not likely to further the country's industrialization and development. While the director of Nicaragua's Non-traditionals Commission, Alvaro Velásquez, told envío of his hopes for establishing plants for making and canning fruit juices, the most common nontraditional crops grown in Central America—such as melons, snow peas and broccoli—involve no industrial processing whatsoever. In addition, while crop diversification in itself is clearly not a bad thing, nontraditional agriculture generally brings with it excessive agrochemical use, with all the health and environmental consequences that generates, as well as significant economic risks, and should hardly be Nicaragua's top investment priority. The November 1991 preliminary version of another Ministry of Economy (MEDE) publication, "General Guidelines for a National Development Strategy 1991-2000," states that development would be based on both natural resource processing and "production processes not integrated at the local level, which form part of multinational production chains and make intensive use of national labor," in other words, maquila industries.