Stabilization, destabilization, and the popular classes in Nicaragua, 1979-1988

Abstract

The political tensions surrounding economic stabilization in revolutionary Nicaragua between 1979 and 1988 are examined. A review of the Nicaraguan case reveals that the Sandinista model of a mixed economy with multiclass "national unity' created a series of demands that were increasingly difficult to reconcile with defense priorities and longer-term goals for socioeconomic transformation. After 1981, access to external finance became more restrictive, the payoff horizon for investment projects began to lengthen, and destabilization intensified. Failure to assess these internal and external tensions realistically contributed to inflationary pressures and shifts in income distribution, which at times undermined the consolidation of revolutionary hegemony and required reconsidering alliance strategies. -from Author