Envío Digital
Central American University - UCA  
  Number 192 | Julio 1997



Coffe and Sesame: Mirrors on the Solution

How to overcome the economic and social polarization? Both vertical links and horizontal links in the productive chain are lacking, as is shown clearly in the case of coffee and sesame seed. The new world scenario demonstrates that there will be develop for everybody or for nobody.

Mario Davide Parrilli

The new tax law and the debate it unleashed demonstrate once again how hard it is for Nicaragua to find agreement among all the socioeconomic actors on a development program. The social, economic and political polarization that runs through the history of this country is both the most visible face of its underdevelopment and the greatest obstacle to overcoming it. Export agroindustry, particularly coffee and sesame, also reflects these conflicts, while offering a glimpse into an optimistic alternative for national development.

A Poor and War torn Country

The past 20 years of Nicaragua's history have been especially rough. The armed struggle against the dictatorial Somoza regime, the war of the 1980s between Sandinista and counterrevolutionary forces, and the severe structural adjustment of the 1990s have all pushed the county into an acute crisis. In particular, they have radically polarized it politically, socially and economically.

War destroys the social fabric of any country, because it transforms the social and political conflicts from verbal, legal and even occasionally violent expressions into intensely destructive processes. Armed conflict installs a dynamic of terror, exasperation and violence, which is tragically prolonged in the postwar situation. Its effects are suffered most acutely by the poor. In Nicaragua, the war crushed the traditional peasant "neutrality"--as well as the urban one--by socially forcing the poor who supported the Sandinistas and the poor who supported the contras into polar opposition with each other.

With the change of government in 1990, Nicaragua followed the trend throughout America Latina: reduction of armed conflict and apparently neutral management of national policy in favor of the famous structural adjustment. But the social division has not disappeared. It is only getting worse between rich and poor, literate and illiterate, workers and unemployed, etc.

The most recent poll by the Nicaraguan research center FIDEG shows a growing gap between the income of the wealthiest 20% of households and the poorest 20%: the wealthy had 27.1 times more income in 1992, while by 1996 they already had 35.8 times more. The percentage of the population that can't afford the basic market basket of products increased in the 1992-96 period from 59% to 80.7%.

Nicaragua's population has suffered a rapid deterioration of its living standards in the past 15 years. According to the United Nations Development Program (UNDP), it is the poorest country in Latin America after Haiti, and one of the 50 poorest in the world. The UNDP's human development index, which is based on per capita income, education level and life expectancy, has dropped continually in Nicaragua since the late 1980s. A growing part of the population is becoming more impoverished, illiterate, hungry and lacking in basic services.

Functionaries of the new Liberal government's economic team have announced that the gross domestic product will grow by up to 8% this year. They don't say that it had already grown significantly in the past two years--around 5%--without having any effect on the trend toward generalized impoverishment. The vast majority of Nicaraguans weren't even aware of the country's economic growth since they were getting even poorer. Economic growth and development aren't the same thing, as even children know.

Why So Much Delay?

There are many explanations for Nicaragua's impoverishment. In the 1980s the war reduced the country's economic opportunities, weakened its productive effort and human resources, annihilated its agricultural resources and triggered massive capital flight. In the 1990s, necessary public spending in education, health, housing and basic infrastructure was rerouted to service the foreign debt and meet other requirements of the international credit agencies aimed at reestablishing financial stability. The conflicts over land ownership and rural violence have also scared off possible productive investment, with the consequent reduction of job and income generation (the national under-occupation level is 55%). The peasantry's structural weakness in relation to the country's financial and commercial institutions do not permit it to move out of its subsistence economy. And finally, in an agricultural economy such as Nicaragua's, the scant rural development has also hobbled urban development, with consequent low production and employment levels in industry and services. These factors have multiplied subsistence employment in the urban informal sector as well.

There are also other valid reasons for the impoverishment and polarization of Nicaraguan society, since underdevelopment has a thousand faces. We will focus on just one, which we believe to be one of the most important catalysts of the socioeconomic crisis, and identify a possible way out.

Weak Civic Consciousness

All countries in the world have socioeconomic problems. The most advanced countries are also saddled with internal deficits and considerable foreign debts, which are obliging them to cut social spending. There are also unemployment problems everywhere--the unemployed population is over 10% in Germany, Great Britain, France and Italy. But none of this impedes these countries from enjoying generalized well-being, with relatively low levels of social exclusion, and with public investment and income redistribution policies such as unemployment insurance, subsidized health and education services, food stamps and the like, depending on the country, that act as social shock absorbers.

What's wrong with Nicaragua, then, that prevents it from every reaching these benchmarks? The distant history offers many dramatic answers to this question. But today, the most obvious impression is that civic consciousness is weak among most of the population and, with more responsibility, among the most powerful classes in particular. The consciousness of belonging to a largely impoverished society does not compel enough people to decide to actively fight against this "injustice" and seek a change. The country's satisfied minority and the middle class are still not making the efforts that are indispensible to an integral and joint solution to the problem. At the opposite social extreme, the profound poverty in which the "others" are submerged impedes them from finding organizational formulas that would allow them to make economic, social and institutional progress.

This weak civic consciousness is framed by a lack of legal and organizational mechanisms that would facilitate the citizenry's control over the administration of public and private institutions to reduce the multiplying injustice and corruption. For historic social, political and economic reasons, an intense individualist focus has developed, favoring only those who can defend their privileged well-being.

The Controversial Tax Law

The most recent example of polarization and political corporativism is found in the way the controversial new tax law was formulated and debated, even though its reforms are largely geared to increasing public finances and fomenting economic growth in the framework of growing socioeconomic equity. Let's look at what happened.

A serious political and economic conflict broke out in the first days of May, sparked by the contradictory legal battle the Liberal government undertook against a sector of unproductive national oligopolist business owners. Among them were the franchise distributors for foreign firms in Nicaragua.

The political opposition attacked various contradictory aspects of the tax reform that certainly could increase the percentage of the population living below the poverty line beyond the current 70%. Among the aspects attacked were a price rise for some primary goods, such as chicken, caused by a rise in import duties; the land tax for owners of more than 18 acres; and the elimination or reduction in 1999 of the exemptions and incentives that cooperatives and small business now have. The business class--from all political tendencies--attacked the proposal to gradually reduce the duties on consumer goods imports over the next two years because that would endanger the sales of national factories and merchants and, hence, national income and employment.

The "urgency" stamp that President Arnoldo Alemán put on the tax reform bill in order to skip the National Assembly review procedures contributed to the political conflict. The minimal importance that the executive office attributes to debate and national agreement worsened the tensions between the different socioeconomic groups, which reacted by struggling corporatively.

But individualism and socioeconomic corporativism no longer work. They are pieces of a lost logic, especially at a national level, since their aim is to face the challenges of the new "globalized" world society in a static manner, without considering the frequent changes in the international surroundings and their effects on the national context. It goes without saying that some businesspeople will go on finding their niches of well-being with this lost logic. But by doing so they will affect the rest of society, which will wake up poorer and more insecure each day.

Even those who individualistically settle satisfied into their niches of well-being will find themselves at more risk each day. The existence of such unequal neighborhoods in a single city or town, some so charming and others so miserable, necessarily generates problems. There are no "separate worlds" in a single city; the problems of some neighborhoods quickly spread to others If the inhabitants of a poor neighborhood are frequently without water, light, houses or work, their frustrations will flow toward the more affluent residential zones of the city in the form of robbery, violence and aggressiveness. Everybody has something to lose and everybody must pay something, whether it be a jail sentence, the services of neighborhood guards, fear of going into the street, lack of liberty, theft, death.... While a handful of Nicaraguans benefit from the 8% economic growth, misery will continue surrounding the country on all sides and will dig in for a very long time.

National Concertación: The Key to Success

In Japan, economic and political development are perceived collectively as being closely linked to making use of all national human resources. As the English socioeconomist Dore notes, the fact that groups or individuals exist on the margins of Japanese society is perceived by all as a failure of the whole society. For this reason, both the national and local executive spheres seek to involve all citizens in the national development process.

After 20 years of war and social polarization, Nicaragua must find a non-conflictive road to development for the country, one on which all Nicaraguans can travel. The socioeconomic and political polarization must be set aside to foster a common strategy of all actors: producers, merchants, industrialists, exporters, dealers and consumers. A strategy that translates into benefits for everyone.

President Alemán's authoritarian style, which denigrates the institutional approach to formulating legislation, makes such a strategy difficult, because it doesn't stimulate concertación, the reaching of agreements among national actors. It employs only a centralist, individualist and charismatic logic. Instead of strengthening dialogue and restoring confidence in the state institutions, respecting the separation of powers, the President is aggressively assuming the role of the country's top legislator, accentuating this tendency with the excess use of "urgency procedures."
This creates mistrust, abandonment of responsibility and deactivation throughout the national community, from the highest political posts to the last citizens. Agreement and compromise among economic actors find the going rough with no parallel process in the more representative political institutions. Today the national community is not participating in decision-making discussions. Finding itself marginalized from this process removes the operational dynamism that could make the tax reform and the country's development successful. As long as the population feels it has no role in decision-making, it will neither take risks nor make real efforts to uphold the commitments that others make, since it doesn't feel represented in them.

In spite of all this, the essential idea of the tax reform is correct: the country should be inserted into the international dynamics and should improve its productive environment. The new law's measures go in two directions: to make primary goods cheaper and more available to the poorest population, and to improve the productivity and competitiveness levels of the country's economic actors. Without improvements in both of these directions, any social policy will have little effect. But the success of any measure depends on the degree to which it is part of the whole picture, framed within a national development strategy.

Four Good Reasons to Look at Coffee and Sesame

Let's get concrete. The cases of the agroindustrial chains of coffee and sesame, with special reference to the industrial link of these chains, help us understand the need for a national development strategy and clarify the fundamental responsibility that the economic actors have even before the state assigns it to them.

There are four good reasons to consider these two productions. First, the reality of polarization and inefficient organization of the economic actors is clearly demonstrated and shows a possible way out of such a severe problem.

Second, the coffee chain involves some 250,000 people and their families while the sesame chain involves around 20,000. In an agricultural economy like Nicaragua's, they well represent the activities of the majority of the rural population and of a large part of the population in important cities--Matagalpa for coffee and León for sesame.

Third, as export crops, coffee and sesame represent now and will continue to represent in the future one of the spaces for the most incisive "suggestions" of the International Monetary Fund and the World Bank regarding the Nicaraguan government's policy on payment of the foreign debt.

Fourth, as the history of the industrialized countries shows, the industrial link of any chain merits emphasis since any country's development strategy must focus on production with greater value added, which, in addition to bringing higher and more stable international prices than the export of unprocessed raw materials, also guarantees benefits in terms of technology transfer, human resource training and the commercialization of less perishable products.

The recent study by the Central American University's research center Nitlapán on the industrial link of coffee and sesame permits us to form an idea of the agroindustrial chain of these two products. At the same time, it serves as an enlarging lens to investigate the relations among the different socioeconomic actors and identify the fundamental problem: the lack of horizontal and vertical collaboration among these actors.

Just The Big Ones Or All of Them?

In general, the 60 national coffee companies and the 5 sesame ones are achieving a medium-to-high profitability. Average gross earnings in coffee have been estimated at between $45 million and $70 million annually. There is a certain cornering of the warehousing, processing and exporting market: some companies have three to four plants and a powerful export operation, which allows them much more consistent earnings. Today CISA, Caley Dagnal and Nicafesa control about 60% of the national coffee processing activity.

There is even more concentration in sesame processing: the 20,000 producers make deals with only 5 plants. Overall earnings are hard to quantify since the processing companies also commercialize the product and combine their earnings from processing with that of sales. Earnings may reach over $200,000 annually.

The concentration of the market among a few relatively large actors and the habit of lethargy and lack of openness to international competition in the business class mean that the benefits of both the coffee and the sesame businesses are distributed among few actors: a few storage and processing enterprises and a handful of export companies. These benefits don't manage to trickle down to the thousands of small economic actors of these two productive sectors, particularly small producers and the field and plant workers.

The new tax law appears to be geared to reducing the static features of the economy, and to prodding the business class into more dynamism and productivity to try to promote international competitiveness and increase employment and income. Nonetheless, the law doesn't distinguish between large and small companies and thus runs the risk of strengthening the oligopolist features of Nicaragua's economy. In fact, the most affected businesses in the liberalization processes taking place all over Latin America, which are similar to Nicaragua's, are always the small and medium-sized ones. If this also happens with the new law, many small businesses will be pushed out of the market and many more people will lose their jobs, which will deepen the social chasm and continue undermining the country's development, to say nothing of the effects it will have on the newly unemployed individuals and their families.

Is There Productive Efficiency?

Nicaraguan industries are profitable. But the effective competitiveness of their manufacturing link is dubious, and there are signs that underscore how various sources of earnings that would benefit all the actors along the chain are being lost. Greater international success by Nicaragua's producers, like that of Colombia's coffee growers, would permit increased sales, and thus more income and employment for all actors in the chain: the producers and processors, the plant workers and exporters. But this requires improving the linkage among them all.

The first worrisome sign is that the plants are only working at 50% of their installed capacity. Based on a survey done this year by Nitlapán of 19 coffee processing companies and the 5 sesame ones, the sesame plants used only 48.56% of their capacity in the 1995/96 agricultural cycle and the coffee plants used only 53.76%. This is an expression of marked inefficiency, which increases production costs, reduces competitiveness and underutilizes the productive potential of the industry's entire chain.

The 1995/96 cycle was an exceptional harvest year for coffee and sesame producers, yet the utilized capacity was very low. Why did this happen? There are many reasons, but the most consistent, as the plant managers themselves recognize, are Nicaragua's low production in the case of coffee and competition from foreign buyers in the case of sesame. Both reasons arise from the crux of the problem: the weak linkage among actors.

Many coffee producers, especially those in Matagalpa and Carazo, indicate that financial support to producers should be a priority of the agricultural development policy. They say that if production rises, everyone wins, including the processors and exporters. The reality is that the small and medium producers have a hard time getting access to credit, even when it is available, and thus can't cultivate and harvest properly. Yet the processors, though well aware of the problem, are reticent to provide credit directly to the producers themselves; they continue waiting passively--and uselessly--for the state to solve the credit problem.

What would happen if the actors didn't wait for the intervention of a slow and indebted state and a private banking sector that frowns on medium and long-term investments, but instead organized themselves through financial agreements that would allow the producers to cultivate and the processors and marketers to recover their loans? Currently, only the big export companies are making this kind of agreement with a few large and medium producers. Wouldn't generalizing these agreements increase production levels and quality, with advantageous consequences for all links on the chain?
The central problem in the sesame industry is different. Foreign distributors buy a large quantity of the product because they offer producers a better price than the local buyers. They export the sesame to their own country, where they process it, which means that some 40% of Nicaragua's production is exported in its natural state, with no value-added processing whatever. In general, the foreign buyers pay the national producers 10-15 córdobas per hundredweight to serve and expand their own consumer market.

What would happen if the five Nicaraguan processing companies offered the national producers the same price as the foreign buyers? Would they go bankrupt or would they increase their activity, their utilized capacity, their sales and their position in the international market? And wouldn't production, processing and export of a product that generates hard cash, income and employment also increase if they strengthened their relations with the producers through improvements to the chain such as technical assistance, sale of inputs on credit, etc.?

Does the Product Have Quality?

The lack of coordination among the actors along the chain and the negative consequences of this are also visible in other aspects of productive activity. For example, the lack of financing for thousands of peasants lowers the yield of their harvest, because a large amount of coffee that could be of prime quality is harvested poorly or late and becomes broza, the catch-all name given to any kind of damaged and poor-quality coffee. In many cases, the coffee isn't even processed, which creates major losses not only to the producers but also to the processors and exporters.

The divergence that can be seen in the table between the production and export of both coffee and sesame illustrates this loss, while also implicitly revealing the extremely low quota for national consumption. If the second-class product that is exported were added to this loss, it would be found that production and processing quality could be greatly improved. All production called "broza" in coffee and "manchado" in sesame is unprocessable and is sold at a far lower price or is thrown away.

The income lost due to lack of attention to or resources for cultivation is high. In the case of coffee, nearly 576,000 hundredweights were not sold abroad in the three cycles between 1992 and 1995. Even assuming that 200,000 of that amount was sold to roasters in the country in those three years (in 1996 it was only 45,000), that still would leave 370,000 hundredweights. At a weighted average export price of $98 (it is currently over $250), we are talking about a total loss of over $36 million, which is nothing to sneer at for a country like ours.

Given this reality, why should the plants and exporters wait for the government to organize development activities (production prefinancing, input sales on credit, technical assistance, etc.) that remove the causes of these problems? Why not do it themselves with the required precautions? A transcendental challenge for producers, processors and exporters is to construct a chain of dynamic, productive and coordinated actors that allows both overall production and its quality to rise, thus lowering product costs and losses. Only that way can earnings, income and employment grow, and with that the country.

The heated debate sparked by the tax law revealed the corporativism prevailing among the economic actors, who don't want to take any responsibility for moving the country forward. Manufacturers don't want a drop in import duties that favor the foreign competitors. Large and medium-sized producers don't want the pressure of a land tax. Consumers don't want to buy primary goods at prices that are double or triple the international price. While this may be logical, change has to start somewhere. A country that wants to develop clearly can't begin by transferring the burden solely to the weakest, through prices for consumer goods and taxes on production and service cooperatives, for example.

The country's most powerful socioeconomic actors are obviously the factories, merchants and exporters, but some of them are still seeking only to guarantee their protected niche in the market. They haven't yet accepted that they are the only ones who can pull the country out of its crisis, and that they must do it through active, cooperative and competitive participation in the national and international market.

The Fear of Horizontal Collaboration

The spaces for action among the different actors along the chain don't just exist in the vertical relations. Horizontal relations are also possible and beneficial among processors. An example: all plants store the product for a long time, sometimes over six months, with the resulting warehouse and guard costs, interest on loans and loss of quality. If they coordinated better with other actors on the chain or even among themselves, they could reduce that time and the losses. Why not organize a common warehouse, for example, which would save them storage, guard and other expenses? This cost reduction would increase the competitiveness of the industry and the chain itself, and increase the opportunities to expand overall investment and thus income and employment.

But the industrialists are afraid to cooperate. They perceive the presence of the other plants around theirs as dangers to their own success, contrary to what is shown by the experience of industrial districts in other parts of the world (Italy, Germany, Denmark, Belgium, Japan, etc.). In Nicaragua, formal and informal cooperation is weak. The existing associations are ineffective: there are no relevant activities in marketing and export (fairs, delegations abroad to gather information and contract products), storage (common warehousing), credit (credit consortiums), quality control (laboratories for quality certification and research), or the formation of human resources (training courses, workshops). There are no joint lobbying activities to demand the commitment of the political representatives to infrastructure improvement (energy, highways, industrial and small-scale manufacturing zones). The few cases of collaboration occur among very few businesses and in a simplistic form: visits to other plants, the loan of spare parts, etc.

Awareness of the concrete advantages of acting together to increase national competitiveness is evidently weak. The reality is that even the most successful business endangers its long-term growth by acting individually, because it reduces opportunities that only collective strength can produce. Furthermore, insertion in the international market that is achieved individually is a very fragile insertion since buyers move quickly from one country to another in search of better conditions.

The producers of Nueva Segovia accuse those of Matagalpa of making off with the coffee produced in the north, without reflecting that, at the same time, Vietnam is selling coffee to Nicaragua's roasters. Is it still useful to continue thinking along the lines of the classic oligopolic solutions, aimed at dividing the national market among a few? Isn't it better to coordinate the chain to improve the opportunities for the insertion of Nicaragua's production into the international market?

The Future Is in the Human Resources

Collaboration among national actors to improve Nicaragua's insertion into the world context also has to do with the internal organization of the businesses. There is a tendency in processing not to use skilled workers or invest in training them. But the more developed countries are abandoning the industrial organizational paradigm of the old Ford motor plant, in which workers are considered a cost and the idea is to pay them as little as possible and assign them only routine bits of work on the assembly line. They are now beginning to dabble with the post-Ford paradigm, in which workers are considered important resources for the success of the business, capable of contributing innovations and increasing productivity. In a country like Nicaragua, where the agricultural frontier has been almost completely exploited, improving workers' skills and productivity is the most appropriate solution for increasing production and national well-being.

But valuing human resources has not yet arrived in Nicaragua. The daily pay to unskilled workers is quite often below 20 córdobas ($2), which barely means the right to eat once a day. What are these workers supposed to do so they can eat twice a day and have something to wear, not to mention build a house with water and electricity? And what are they supposed to do to improve their own skills or see to it that their children study so they can enter the same companies at a higher level?
Job stability is low in Nicaragua, both because of the seasonal nature of agricultural work and because of this low estimation of the individual. The "ideal" seems to be that everyone be capable of doing simple work. The skills level in the coffee processing plants is extremely low: only 10-15% of all workers are skilled, and even this only refers to skills learned on the job, never through training courses. Things are a bit better in sesame, where 37.5% of the workers are skilled. The surveys done in these two industries indicate that production also increases when skills are increased, with a consequent drop in production costs and increase in competitiveness.

Investing in human resources is positive for the owners of plants, farms and sales and export companies because higher labor productivity is achieved. And it is positive for farm and plant workers because they can earn a higher wage. A virtuous circle is thus created between labor productivity and operational flexibility: the more the worker produces or processes, the more adequately and rapidly processors and exporters can respond to the demand of foreign importers and consumers in quantity and quality terms. The net effect is earnings from a greater quota of the market for the individual companies and for the country as a whole.

Germany and Japan Do It Better

This has been the experience in the industrialized countries. Development either involves everybody or it isn't development. An extremely interesting study by the Japanese economist Aoki emphasizes some aspects of the current political and economic logic. Faced with the crisis, Germany and Japan reacted unitarily, reducing the work time of the workers instead of laying them off. They did so because the workers are considered essential resources for the company and for the economy. On the contrary, the United States and Great Britain reacted by laying off workers, thus creating social conflicts.

Germany and Japan move in the framework of a national development strategy and of crisis confrontation. In the United States and Britain the response to the crisis is given individualistically, with an "every man for himself" mentality. German and Japanese societies are more developed, as the UNDP confirms, taking into account the natural difficulties of the annexation of East Germany. The United States and Great Britain, on the other hand, are societies with the highest margins of exclusion and individualism/social atomization.

In Nicaragua, in areas like Matagalpa, Jinotega, Nueva Segovia, where the majority of the population cultivates coffee or processes it in the plants, as well as in the sesame areas like León and Chinandega, the industrialists could do a lot to strengthen the human resources, and would benefit greatly from doing so. They could organize workshops, classes, productivity incentives, support to complementary activities (transport, quality labs, storage, commercial shops, etc.) They would thus build a highly skilled and therefore dynamic, productive industry.

What Development and With Whom

Arnoldo Alemán's "developmentalist" policy has some grave contradictions, like the dispositions that endanger the cooperatives and small businesses or the indemnization aimed at compensating the confiscated Somocistas. But, despite them, the policy seems oriented to doing away with traditional state protection of the large static business interests, in the conviction that Nicaragua can and should go forward on its own steam.

In this sense, the new tax law forecasts measures to foster productivity that are centered on the business class and on the owner-worker group--in the case of the cooperatives--that move the country's resources. The reform seems to say "You have to be dynamic," to involve the citizenry in an active national development process. For that reason the cooperatives and small and medium enterprises are also involved in the reform.

The problem is how to accomplish it. The country's integral development will not come from fulfilling the minimalist objectives of the IMF and World Bank; they only want low inflation and correct financial accounts. Nor will it come from the individualist framework of a clear neoliberal conception, which only solves the problems of some. It will come with a constructive plan that is able to capitalize on the complementariness among the different economic actors.

An analysis of the situation of the coffee and sesame exporting industries indicates that and leaves the impression that Nicaragua has valid socioeconomic development opportunities. The losses caused by low national production and minimal attention to quality and to the formation of human resources indicate the consistent benefits that the economic actors would achieve if they "adjusted" their relationships in the framework of a fluid coordination.

It's in Everyone's Interest

In Nicaragua, says the Belgian economist Bastiaensen, "confli-stagnation should be replaced with coop-tiveness." The polarization and social conflict/economic stagnation should make way for a cooperative attitude to improve the country's competitiveness and success abroad.

The development policies of the past decade and this one have not been successful because they fostered social conflict in the country, and that most affected the poorest part of the population in both the cities and the countryside. Another way has to be chosen that does not stimulate opposition in the political social and economic spheres, but rather builds harmonious agreement among the national actors: peasants and farmers, industrialists and exporters, workers, employees and managers. Only in that way can the forces of the country be properly valued and put at the service of an integral development of Nicaraguan society.

All the national actors recognize the importance of such an initiative, but they lack incentives to implement it. The large and medium-sized national business leaders are relatively passive since they are in better shape. The small producer and urban and rural workers, which are the majority, are the ones in bad shape, but they lack a voice to be heard.

Incentives are needed to push the change along. These could be promoted by the same actors and by others indirectly involved in the socioeconomic development process: the state and the various research centers.

The most potent incentives are based on the very logic of business activity: profitability and well-being. The businesses are losing earnings margins due to their lack of initiative in prefinancing production, in other activities that back production and in the formation of workers. In addition, if the country continues living in a chronic state of poverty and instability, the social and economic welfare of everyone is at risk. With every day that passes, international interest in investments or commercial transactions with Nicaragua falls more.

The major benefits that the small producers and workers would enjoy if they succeeded in increasing productivity, production and quality should be stimulated in coordination with the businesses: better communication with the transporters, industrialists and exporters; attention to quality; reimbursement of loans and credits; and more streamlined delivery. If the small don't push consistently, this change of relationships will never happen. The fragmentation of the labor and peasant force is a big incentive for the business owners not to seek solutions of national interest, and to limit themselves to corporativist policies that only benefit themselves.

Workers and peasants should associate themselves and act together so that the other actors are stimulated to recognize their rights and, for that reason, seek mutually advantageous solutions. The existing associations do not represent the small actors enough. In fact they defend the large and medium sized ones and are not even present in some crops, such as sesame.

Although the value of public and private intervention (research centers, service institutions) is recognized, direct responsibility for pushing a national concertación process falls to the socioeconomic actors themselves. In the advanced countries, the actors do not wait for the state to organize themselves and exploit the earnings that national cooperation with respect to the exterior assumes. They are the very ones who push the process, first involving local governments, and later the state, which only then realizes the effective representation that they have in the local and national economy.

Compete, But "Outside"

If the country wants to shake off the instability and poverty, it can't even wait another year to do what the economically more developed countries have been doing for some time. Nicaragua should begin immediately to convert what has up to now been an atomized or oligopolist strategy of the different productive sectors, in a new form of competition in which competitiveness improves with vertical coordination along the links of the productive chains and with horizontal collaboration within a specific operational phase.

This means abandoning competition "inside," by which the strongest national actors go after the weakest and most numerous actors, producing conflicts, poverty, and social and political instability. This should be replaced with competition "outside," in which the national forces join together to gain international spaces, and once having done that to increase income, security and stability. By doing so they will be increasing the country's well-being.

Print text   

Send text

<< Previous   Next >>


From Environmentalism To Radical Ecology

Coffe and Sesame: Mirrors on the Solution

Is There a Bridge Over These Troubled Waters?

El Salvador
A Leftwing Mayor In the Continent's Most Violent Capital

War Embedded in the Culture

Popular Pressure In a Sea of Violence

End of Century, End of a Regime

Envío a monthly magazine of analysis on Central America
GüeGüe: Web Hosting and Development