Varieties of Liberalism in Central America: Nation-States as Works in Progress

WHAT WENT WRONG?

WHAT WENT WRONG? Beginning in 1936, Nicaragua was effectively headed by General Anastasio Somoza and his family for more than four decades. In January 1951, his government requested the World Bank to send a general survey mission to the country to assist in spurring economic development. The World Bank complied, sending a special mission, which was stationed in Nicaragua from July 1951 to May 1952. The team conducted interviews , reviewed data, and had a firsthand look at the infrastructure of the country. The outlook was deemed promising. In addition to Nicaragua being the largest but least densely populated country in Central America, the World Bank mission was impressed with the commitment of the Nicaraguan government to economic progress: From its nearly year-long travel in the country, the mission concluded that few underdeveloped countries have so great a physical potential for growth and economic development as does Nicaragua. . . . it has almost unlimited land for development. . . . The physical resources of the country provide a sound basis for economic development. . . . During the past two years the government has shown a clear awareness of the need for improvement and of the areas where improvement is necessary. It has demonstrated both the imagination and will to move forward with vigorous action. Economic 80 Varieties of Liberalism in Central America conditions have reinforced the determination of the government. During the past two years, the economic and financial position of the country has been stronger than ever before. The national income has never been higher. These conditions, together with the administrative changes being undertaken by the government, can provide the stimulus for very rapid economic development and a promising future. The staff of the World Bank was thus confident that Nicaragua was primed for an economic takeoff, an accelerated period of growth that would “modernize” the country. What was missing was a suitable program—or plan—backed by foreign assistance . The World Bank itself was prepared to meet these needs: it offered a plan and assistance. Emphasis was placed in the plan on further developing the agricultural sector and on improving infrastructure, including transportation, vital to agricultural growth. The plan also embraced investments in industry and power and in education and public health. Concessionary loans were offered to implement the sweeping program. The government—or regime—of Anastasio Somoza complied with the recommendations of the World Bank, and his dynastic descendants, sons Luis and Anastasio, likewise followed the suggestions of succeeding World Bank missions. Just as predicted, economic growth ensued. Acreage planted increased, with the “agricultural frontier” being pushed farther and farther away from long-settled areas. New crops—such as cotton, beef, tobacco , and sesame seeds—helped diversify the “agro-export economy,” as it was labeled. The public sector dedicated itself to strengthening the country’s infrastructure and to assisting the initiatives of the private sector. The Nicaraguan economy flourished. During the first half of the 1950s, in fact, the economy grew at an annual rate of 9 percent , although in the second half of the decade annual growth was only 2.5 percent. Then between 1960 and 1970, annual What Went Wrong? 81 growth rates increased to 7.3 percent. Moreover, there was price stability, and the national currency—the córdoba—held its value against the dollar. By 1970, per capita income had tripled from what it had been measured to be by the World Bank in its 1952 report, even though the population had doubled in the twentyyear period. (Nicaragua had a very high population growth rate throughout the twentieth century.) The growth of agricultural exports was blamed by some for curtailing access to fertile lands long worked by peasants. Others , though, point out that the area dedicated to the cultivation of the traditional crops of Nicaraguan peasants—white corn and red beans—did not diminish during the 1950s and, in fact, increased significantly during the 1960s. The number of farms in the country doubled between 1952 and 1970, from 51,000 to 117,000 farms. Only 1,500 farms were larger than 500 manzanas (roughly 350 hectares or 875 acres). In the agricultural export sector, by 1970 there were 7,000 cotton producers, 25,000 coffee producers, and 40,000 ranchers raising cattle. Still, there was poverty in rural Nicaragua. Rural workers, generally landless, constituted over half of the economically active rural population but received—by some estimations—less than 10 percent of the total gross value of output...