The land around Estelí is perfect for growing tobacco for use in cigars, and the town became a refuge for Cuban cigar makers after the Cuban Revolution in 1959. Award winning cigars have made Estelí one of the most important cigar-producing cities in the world. Estelí also has many language schools. Restaurants and hotels cater to tourists traveling to nearby natural reserves and other parts of the region. Natural Reserves around the area include Miraflor, Tisey-Estanzuela, Las Brisas-Quiabuc, Tomabú, Tepesomoto, and Moropotente.
The first settlement of what would become the City of Esteli occurred in Villa Vieja in 1685. It was founded by a group of Spaniards fleeing Nueva Segovia which at that time suffered from pirate attacks. Villa Vieja was then replaced by a new settlement (San Antonio de Pavia) from where the city of Esteli has grown. Today there is evidence of the first church in the Villa Vieja sector of the city.
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