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Unleashing Central America’s Growth Potential : Nicaragua (English)

As the smallest economy in Central America, Nicaragua has undergone a structural transformation that has enabled the country to grow at a high pace since the mid-1990s. The objective of this study is to investigate the drivers and constraints of growth and productivity in Nicaragua and explore areas with high potential. The value added of this study is to provide an in-depth analysis of the drivers and constraints of Nicaragua’s growth using a wide range of analytical tools. Using these tools, the report finds that boosting growth and reducing poverty requires raising productivity growth and facilitating the entry of women to the labor market. According to the growth diagnostics methodology, this report finds that the areas preventing faster growth are: (i) corruption, (ii) financial development, (iii) governance, (iv) lack of innovation, and (v) property rights. Addressing the identified growth constraints can help the country in the path towards diversification, which will increase the resilience to external shocks, create job opportunities, generate sustainable growth, and reduce dependence on remittances. This report has identified several key areas where policy reforms can help boost productivity and growth over the medium to long term. They include: implementing measures to boost female labor force participation; increasing the access of small firms to finance and addressing collateral laws, credit information coverage, and competition; coordinate with the private sector to identify missing public goods and to design mechanisms to provide them; creation of an enabling environment for innovation; strengthening public institutions through reducing bureaucracy, promoting transparency and rule of law, and strengthening the capacity of the public sector; improving the property titling regime and the land administration system; and strengthening the institutional framework, including tackling corruption.


  • Author

    Ulku,Hulya, Zaourak,Gabriel Roberto, Arenas,Guillermo Carlos, Campora,Natalia Leonor, Kasyanenko,Sergiy, Lakatos,Csilla, Mulabdic,Alen, Yu,Shu

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    Latin America & Caribbean,

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    Unleashing Central America’s Growth Potential : Nicaragua

  • Keywords

    Micro, Small and Medium Enterprise; information and communication technology; female labor force participation; computable general equilibrium model; growth and development; labor productivity growth; geographic distribution of poverty; access to basic service; improvement in tax policy; public expenditure on education; early stage of development; primary education completion rate; foreign value added; domestic value added; living in poverty; access to banking; Rule of Law; current account deficit; labor market policy; high growth rate; land administration system; investment in research; real gdp; property right; increase in income; weak law enforcement; improvement in governance; control of corruption; foreign direct investment; entry of women; structure of employment; reduction in inflation; cross-cutting themes; allocation of resource; status in employment; global value chain; flow of labor; participation of woman; accumulation of capital; factor of production; quality of education; human capital accumulation; reduced poverty; flow of remittance; foreign exchange income; contribution of capital; national poverty line; reduction of poverty; access to water; human development index; Early childhood education; reduction in poverty; national poverty headcount; output per worker; increase in capital; gross public debt; exchange rate policy; Exchange rate policies; baseline poverty rate; access to finance; engine of growth; diversification of export; privileges and immunity; labor market distortion; long-term growth; factor accumulation; employment share; Financial Sector; political instability; aggregate trends; productivity gap; private investment; government effectiveness; analytical tool; international standard; democratic transition; Property title; Exchange Rates; productive sector; tax revenue; banking system; small economy; employment composition; negative growth; advanced economy; saving rate; human rights; Gender Inequality; political unrest; positive impact; reform scenario; political risk; aggregate productivity; export quality; comparative advantage; historical context; agricultural sector; political will; gender inequalities; Boosting Growth; relative labor; baseline scenario; female participation; recent years; gender norm; gini index; rural area; childcare services; Export Diversification; domestic saving; job opportunities; diminishing return; job opportunity; Infant Mortality; economic diversification; quality regulation; social indicator; market efficiency; available data; banking sector; cross-border trade; promoting competition; traditional service; Civil War; financial depth; low-skilled worker; domestic credit; regional economy; Population Density; land dispute; subsidiary right; institutional framework; increase growth; low performance; international partners; institutional strengthening; local saving; efficiency gain; pension system; financial crisis; indebted country; military spending; market institution; Macroeconomic Policy; lower inflation; Armed Conflict; industrial cluster; external assistance; noncommercial purposes; collateral law; labor-intensive services; employment growth; productive area; labor-intensive industry; Public Goods; trading services; digital infrastructure; Technology Transfer; national science; aggregate investment; price control; macroeconomic effect; land title; take stock; Higher Education; higher-educated worker; low education; higher growth; export opportunities; historical growth; export opportunity; macroeconomic performance; social spending; total employment; subsequent section; other sectors; cross-country benchmark; regression analysis; industrial sector; binding constraint; quantitative method; risk indicator; net export; economic history; remittance inflow; protected status; Real estate; lower rate; longitudinal data; low risk; Financial Stability; financial intermediation; program leader; firm level; research assistance; industrial labor; domestic consumption



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Ulku,Hulya Zaourak,Gabriel Roberto Arenas,Guillermo Carlos Campora,Natalia Leonor Kasyanenko,Sergiy Lakatos,Csilla Mulabdic,Alen Yu,Shu

Unleashing Central America’s Growth Potential : Nicaragua (English). Unleashing Central America’s Growth Potential Washington, D.C. : World Bank Group.