Nicaragua - Foreign investment

Until the 1979 revolution, Nicaragua encouraged private investment. Virtually no restrictions were imposed on the remittance of profits or the repatriation of capital. The economic and political climate for foreign investors in the 1980s was bleak, despite the claim that the Sandinista government was prepared to offer more favorable investment terms (including 100% foreign ownership and repatriation of profits) than the Somoza government had provided. As of 1984, direct US investment in Nicaragua had stopped completely.

As of 1994, Nicaragua has recovered some of the international credibility lost in the previous decade. Under the New Foreign Investment Law, the government of Nicaragua has concentrated most of its efforts on the expansion and promotion of foreign and national investment. This law, among other things, guarantees the repatriation of invested capital and generated capital. Also, it allows for 100% foreign ownership in all areas.

Foreign private capital inflows doubled from $97 million in 1996 to $184 million in 1998 and peaked in 1999, at $300 million. FDI inflow moderated to $265 million in 2000, but for the period 1998 to 2000, Nicaragua's share of world FDI inflows was over three times its share of world GDP. In the global slowdown in 2001, FDI inflows to Nicaragua fell to $132 million in 2001, and then to an estimated $95 million in 2002.

The United States is Nicaragua's largest trading partner by far—the source of 32% of its imports and the destination for 42% of its exports. About 25 wholly or partly owned subsidiaries of US companies operate in Nicaragua. The largest investments are in the energy, communications, manufacturing, fisheries, and shrimp farming sectors. Good opportunities exist for further investments in those same sectors, as well as in tourism, construction, services, mining, and agriculture.