Costa Rica Economy


Costa Rica, like the other Central American states, traditionally bases its economy on agricultural activity, which appears to be more developed than that of neighboring countries; in particular, Costa Rica has lower internal imbalances and a more homogeneous distribution of both land and national income (the country’s GDP was equal, in 2008, to US $ 29,828 million, with a per capita GDP US $ 6,580), thus placing itself at an average level higher than that of Central and South America; unemployment is also contained (4.6% in 2007). Alongside the small and medium-sized farms with direct management, which have always been the characteristic of the country since the colonial era, there are also some large plantations in the hands of foreign companies, starting with the American United Brands (formerly United Fruit Company, called Mamita Yunai by the natives), or to local landowners; however, small and medium-sized landowners constitute the most significant economic class and can count on substantial subsidies from the government, whose agricultural support programs also include the distribution of new land to peasants, especially in coastal areas recently. enhancement. No less relevant is the commitment made by the government to diversify production structures, through the strengthening of tourism and above all with the launch of a broad industrialization process, facilitated by a policy that stimulates foreign investment. Tax incentives and the creation of some free zones have also attracted many foreign companies, including some in the IT sector (such as Motorola, Acer and Intel, which in 1998 opened a microchip factory near the capital). These companies contribute substantially to the country’s exports, guaranteeing Costa Rica a certain independence from the trend of the international markets for plantation crops (bananas and coffee), which are produced here in large quantities. The free trade agreement concluded with Mexico in 1994, which led to a reduction in tariffs on Costa Rica’s exports to it, as well as the elimination of taxes on raw materials imported from that state, must also be read as part of the development incentive process, which has another key point in tourism. The great potential of this sector, in fact, although not fully exploited, they have made it possible to obtain revenues higher than those deriving from the banana trade, traditionally on top of exported products (increased 8 times from 1990 to 2006); the number of tourists, mainly from the United States and Canada, but also from Europe and especially from Germany, increased in the period 1985-93 by 150%, reaching over 1.7 million admissions in the early years of the new millennium (2006 estimate). In 2004, the country also joined, albeit with various perplexities, the CAFTA (Central American Free Trade Agreement), promoted by the United States.


According to allcountrylist, Costa Rica is the most industrialized country in Central America; over a fifth of the country’s workforce is employed in the secondary sector, which accounts for almost 29% of the national GDP. The sector includes mostly small and medium-sized companies, whose activity is based on the processing of agricultural, livestock and forestry products (sugar factories, tobacco factories, meat and fish canneries, breweries, furniture factories, textile and clothing factories). However, alongside these companies that produce consumer goods almost exclusively for the domestic market, some large complexes (mechanical, pharmaceutical, chemical) located around San José have sprung up following massive government interventions and US aid. to which must be added the Puntarenas plant for the production of fertilizers and the Limón oil refinery, connected with an oil pipeline to the capital. Particularly evident in the case of electronic component companies (established in the country, as already mentioned, following incentives and tax breaks), the model of foreign investors in Costa Rica follows that followed in many other countries of Central and South America, i.e. say that of maquiladoras, companies destined for the assembly of products for the foreign market. Not only that, but this type of investment and development, essentially exogenous, by fueling the traffic of goods has influenced the trade balance, distorting its analysis of the trend, since in fact the processed materials only transit the country.

Mineral resources are somewhat limited and mining is not very developed, despite recent government interest and growth in industrial demand. Only modest quantities of gold, silver, iron ores, sulfur, manganese, bauxite and brine are obtained. There are also some fuel deposits such as oil (Talamanca Valley). On the other hand, the energy sector recorded considerable increases thanks to the huge hydroelectric potential of the other lands; the production of energy, mostly of water origin, increased between 1989 and 2004 by almost three times.

Costa Rica Economy

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