ABSTRACT
The economy of Nicaragua represented the point of greatest external vulnerability for the Sandinista revolutionary government throughout its first seven years in power. This chapter argues that traditional policies of economic aggression against Latin American regimes out of favor with Washington constituted an important part of the initial policy response of the Ronald Reagan administration to the consolidation of the Sandinista government. Nicaraguan dependence can be seen first in the relative importance to the economy as a whole of its export products and in their vulnerability to fluctuations in production and market prices. Reactivation of the economy became the highest priority of the Sandinista economic policy during the last half of 1979 and throughout 1980. The private control of export production forced the Sandinista government to face the stiffest test of its resolve to maintain private production in the bulk of the economy.
