Costa Rica is a development success story in many respects. An upper middle-income country, the country has experienced steady economic expansion over the past 25 years. The post-1980s economic growth is the product of a strategy of outward-oriented, export-led growth, openness to foreign investment; and gradual trade liberalization.
Costa Rica is also a global leader for its environmental policies and accomplishments, which have helped the country to build its Green Trademark. The pioneering Payments for Environmental Services (PES) program has been successful in promoting forest and biodiversity conservation and Costa Rica is the only tropical country in the world that has reversed deforestation.
The combination of political stability, the social compact, and steady growth, has resulted in one of the lowest poverty rates in LAC. Using the poverty and extreme poverty lines of US$4 per day and US$2.5 per day respectively, just 12 percent of the Costa Rican population is considered poor, and 4.7 percent extremely poor (about one third of the LAC average).
Moreover, only 1.4 percent of the population lives under the US$1.25 poverty line. The country’s success over the past decades is also reflected in its strong human development indicators, which continue to rank higher than those of other countries in the region.
Costa Rica’s GDP per capita has tripled since 1960 and its growth averaged 4.5 percent between 2000 and 2013, as compared to the LAC average of 3.8 percent for the same period.
During the global crisis, real GDP growth slowed to 2.7 percent in 2008 and contracted by 1 percent in 2009. The economy rebounded following the crisis, achieving an average real growth rate of 4.9 percent between 2010 and 2012. Growth decelerated to 3.5 percent in 2013, and remained stable in 2014. It is not likely to change in 2015 but is expected to pick up in 2016 to 4.2 percent.
Despite the solid growth over the past decades, two pressing development challenges stand out: the deteriorating fiscal situation and stubborn inequality. These challenges cut across the fabric of Costa Rica’s development model and affect the basic pillars of development: inclusion, growth, and sustainability.
The new government seeks to address these problems and is committed to an inclusive society that guarantees the welfare of its people, supported by transparent and accountable public institutions.
Last Updated: Dec 23, 2015