Report Says Costa Rica Falling Short Of Its Potential

Mike Godfrey, Tax-news.com, New York

03 November 2000

According to a recently released report entitled "State of the Nation Report on Sustainable Human Development", Costa Rica is not fulfilling its potential to become a stronger and more advanced country. Jointly sponsored by the National Council of University Rectors, the Ombudswoman’s Office and the United Nations Development Programme, the annual report analyses Costa Rica on a number of fronts, including the national economy, public education, health-care services, the environment, employment levels, poverty indexes, and public accountability of political institutions.

Fears that Costa Rica is dragging its heels as far as development is concerned are not new. Earlier this year, a key business group, the Union of Costa Rican Private-Sector Chambers and Associations (UCCAEP), said that a downward profit spiral in construction and agriculture meant that prosperity in the Central American country will stagnate or decline in the coming months, unless the government grabs the bull by the horns and acts positively to save its ailing businesses.

The State of the Nation Report mirrors the concerns of the UCCAEP. Its first chapter says: 'We [as Costa Ricans] feel that we are capable of constructing a better nation, yet we do not make the effort to do so. We consider our country’s past achievements in human development a prized inheritance that offers us security. But often we confuse security with complacency. We have a lot of cards on the table, but we cannot recognize a winning hand, because we are tortured by a lack of confidence as a country.'

While Costa Rica received overall adequate to above average marks in the areas of education and health care, one of the most glaring problems in the report was in the discrepancy between macroeconomic growth and its effects on employment, real wages, and levels of poverty. The report said that whilst the Gross Domestic Product (GDP) of Costa Rica grew eight percent in 1999, and five and a half per cent in terms of economic growth per capita, the national economy was still on shaky ground: '[For most Costa Ricans], macroeconomic growth was not accompanied by an increase in disposable income, principally because activities related to foreign investment and high levels of exports did not generate internal economic growth,' the report found. 'And the economic advancement and opportunity generated [by the export platform], clearly show a concentration of growth in just a few sectors of the economy and in a few areas of the country.'

The study comes to the conclusion that a major problem is the influx of large international companies. Whilst they do bring a degree of prosperity, 95 per cent of all industry in Costa Rica is small to medium-sized and depends on domestic markets to sell goods and services. As the economy continues to adopt free-trade measures in the name of globalisation, many of these small-market businesses find they are unable to adequately compete in the domestic market with larger international companies, according to the report, which said: 'Intel accounted for more than a quarter of national production in 1999, making that one company the most important sector of the national economy. Meanwhile, the agricultural sector continues to lose importance - accounting for only 11 per cent of last year’s GDP - although it is still one of the principal generators of employment in Costa Rica.'

Wealth in Costa Rica continues to be concentrated in the hands of a few, that much is clear, and unemployment is growing. Max Esquivel, assistant to the Ombudswoman's Office which co-sponsored the report, said: 'We have to look at ways to better distribute the income in our country. The State of the Nation report allows us to see that around 10 per cent of the population is not incorporated in the national economy. [Our economic model] marginalises sectors of society such as the indigenous, the disabled, the young and the elderly. We have to realize that these people have something to contribute to the economy, and if we continue to exclude them, it will only result in more problems down the road.'

.

Recommended

Write a comment