Nicaragua‘s free trade zones have turned out to be the major earners of foreign exchange revenue for the country, having drawn US$2.19 billion in goods and service exports last year.
This is a major development in the Central American country which has traditionally been heavily reliant on agriculture.
Revenues generated by companies operating in the free zone rose more than 133% in the past six years, according to local newspaper Prensa Latina.
Nicaragua’s free trade zones, says the Spanish paper El Nuevo Diario, account for close to 50% of the country’s export revenue, a major increase from a mere 14% in 1995.
The free zones first came into being in the 1990s and have been expanding ever since. By government estimates, they have generated in excess of 100,000 jobs in the country, where over 40% of the population still lives below the poverty line.
Comprised of 45 industrial parks across the nation, the free zones are home to as many as 174 companies, most of whom are in textile, footwear, automotive or tobacco industries.
Companies operating here have survived several economic storms that the country endured in the past decades. Last year, Honduras’ Grupo Karim’s acquired the defunct Cone Denim Mill in the free zone area, saying it would restart production by investing US$30 million. Denim Mill had ceased operations in 2009 due to a decrease in orders from the US.
The free zones are also home to some outsourcing firms serving North American clients. According to ProNicaragua, the country’s investment promotion agency, the outsourcing sector earned US$80 million in service exports in 2013. The sector has employed about 6,000 people, mostly in the capital Managua.