San José, Costa Rica, since 1956

A State of Regional Woe

Costa Rica, sometimes dubbed the Switzerland of Central America because it is considered safer and more developed than its neighbors, is now facing some of their same problems, according to the latest State of the Region report.

Compared to its neighbors, Costa Rica has lower poverty levels, stronger economic growth, a qualified workforce, lower emigration and lower levels of violence. Still, like the rest of Central America, Costa Rica faces increasing crime and surging food and fuel prices, states the report, released last week after two years of study by researchers throughout Central America.

Despite its reputation as an environmental paradise, Costa Rica is also the region’s biggest polluter and producer of trash.

“Costa Rica and Panama are in a better position than the rest of the countries in the region,” said Alberto Mora, the report’s research coordinator. “But there are problems we all share.”

Although Costa Rica has often shunned regional cooperation initiatives, the report concluded that the problems facing Central America can be overcome only through joint initiatives.

Mora suggested that Central American countries jointly invest in renewable energy sources, sign immigration accords to fill labor shortages and share strategies on agricultural production.

“No one country, acting alone, can effectively tackle such challenges as fuel prices, food prices, drug trafficking and insecurity,” he said.

La Dolce Vita

In many ways, Costa Rica still deserves the Switzerland reference, though Panama is quickly catching up.

Only in Costa Rica, Panama and Belize did gross domestic product (GDP) per capita grow an average of more than 2 percent a year between 1995 and 2006. Costa Rica and Panama have the most diversified export portfolio in the region, and together they captured about 57 percent of foreign direct investment in the region between 2000 and 2006.

According to the United Nations Development Programme (UNDP), only Costa Rica and Panama have a high level of “human development,” defined by life expectancy, education levels, and GDP per capita.

Costa Rica also has the lowest poverty levels in Central America. As of 2006, some 23 percent of Ticos lived below the poverty line, compared to between 32 and 68 percent in other Central American countries.

Costa Rica and Panama have the most educated workforces and highest minimum wages in the region.

Costa Rica’s life expectancy has been highest in the region, followed by Belize and then Panama. On health and social security, Panama and Costa Rica spend eight times as much per capita as Nicaragua, and five times as much as the other countries.

In a reflection of greater opportunity, Costa Rica and Panama are the only countries in the region where immigrants exceed emigrants. Fewer than 185,000 people emigrated from Costa Rica and Panama in 2006, compared to more than 1 million from El Salvador and Guatemala.

Costa Rica and Panama are doing better than their neighbors, in part because they have historically invested more in health care and education and dealt better with social conflicts, said Miguel Gutiérrez Saxe, who directed the report.

In Costa Rica, a coffee export industry dating from the 19th century created a stable base of middle class farmers, Gutiérrez Saxe said. In Panama, the manmade canal has created jobs and contributed to a robust economic growth.

Trouble Down the Road

Still, the report revealed some worrisome trends. While Costa Rica had the lowest income inequality in the region as of 2005, it was one of two Central American countries where inequality had increased since 1995.

Costa Rica, like other Central American countries, has increased its dependence on imported grains over the past two decades and reduced local production. That’s dangerous, the report found, because it reduces Costa Rica’s self-sufficiency in the face of surging global food prices. Average food prices increased more in Costa Rica than in any other Central American country between 2004 and 2007.

President Oscar Arias often boasts that Costa Rica is the safest country in the nation. But while the Tico murder rate is the lowest in the region, rates of murder and assault have more than doubled over the last two decades, and Costa Ricans are feeling less safe, the report found.

The country’s location has contributed to a growing drug problem. Most of the cocaine traveling to the United States moves through Central America, including Costa Rica. Some of the drug stays here and fuels crime.


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