Nicaragua: Foreign direct investment in the neoliberal era

Date of Award




Degree Name

Doctor of Philosophy (Ph.D.)

First Committee Member

Bruce Bagley - Committee Chair


The purpose of the study was to explore Nicaragua's investment climate in the neo-liberal era. Two populations were researched: investing and non-investing. Foreign Direct Investment (FDI) activity and nature was identified and compared to theories on multinationals in other countries, especially from Latin America.A profile of foreign investors was developed and their recommendations on how to improve the Nicaraguan investment climate were gathered. The reasons for not investing as well as the development impact of multinationals were discussed.Field research during period 1999--2001 involved personal interviews with forty-two executives in Nicaragua. Eighteen businessmen who decided not to invest were also consulted by phone. The study was further enhanced with interviews and speeches from selected Nicaraguan personalities.The study indicates that, overall, Nicaragua's investment climate took a turn for the better in the 1990s. However, three major areas of improvement were identified, as follows: land tenure, institutionalization and law enforcement. The establishment of clear rules of the game and the design of investment strategies were recommended by current investors. On the other hand, non-investors advised a proactive role towards new investments attraction. Both populations agreed on considering bureaucracy as the major obstacle to FDI.Research results indicate that sound macro-economic programs and open-market reforms motivated investors to locate in Nicaragua, coinciding with theories on FDI in other Latin American countries during the 1990s. Government incentives played no part in the decision-making process.Multinationals demonstrated economic benefits for the host country, especially employment generation and technology transfer. Foreign investments showed competitive advantage in the local marketplace based on special knowledge related to production, quality control, and markets.A change process must be implemented in order to insert Nicaragua into the global era. The desired ending result of the process is a new business society committed to hard work and productivity, in which, FDI becomes a contributor to development and not the engine of it.


History, Latin American; Economics, Commerce-Business; Sociology, Social Structure and Development

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