Costa Rica made progress last year – but not enough to grasp long-elusive social goals, researchers say.
Good news on poverty and the economy was offset by mediocre returns on health, education, crime and income distribution, according to the annual State of the Nation report released this week.
“I would say the glass is half empty and half full,” said Olman Segura, rector of the National University (UNA), who collaborated on the nearly 500-page study. “We have made important progress … but there are things that worry us.”
The report concluded that Costa Rica is “the nation of ‘almosts,’ always on the verge of achieving its goals.”
The economy did well in 2007. Gross domestic product grew at a healthy clip for the third consecutive year, and poverty dropped 3.5 points to 16.7 percent. (It has risen this year. See related story this page.) But income inequality was at its secondhighest in two decades, and 33 percent of the workforce made salaries at or below the state minimum wage.
Economic growth and improved tax collection led to a 16 percent increase in tax revenue in 2007, compared with the previous year. But state revenue is still low compared to other Latin American nations, and Costa Rica’s regressive tax system weighs on the less wealthy, thus increasing inequality, the report found.
Unless lawmakers pass tax reform, researchers said, the government will have to substantially reduce spending to keep state finances sound.
Meanwhile, the global financial crisis threatens to undermine Costa Rica’s economic and social progress. Surging grain and oil prices have worsened the trade deficit and hurt consumers. Lower export growth threatens to slow the economy and decrease tax collection.
“Our problems are certainly less serious than those of other Central American countries, but that shouldn’t be a consolation,” said Miguel Gutiérrez Saxe, who directed the report.
Meanwhile, progress on health and education has stagnated, the report found. About 57 percent of students who enter high school either fail to graduate or repeat more than three grades.
While wealthy Ticos are taking more advantage of free state health care, they are also increasingly turning to private clinics. In 1998, the richest 10 percent went to private clinics 6.4 times more than the poorest 10 percent. In 2004, the most recent year for which data was available, that figure was 37.5, according to the report.
As the homicide rate in 2007 for the first time exceeded one victim per day, Costa Ricans are increasingly worried about security.
Only 25 percent of Ticos think the state guarantees protection against crime.
Despite Costa Rica’s reputation for pacifism, some 40 percent of Ticos support the use of torture by police to obtain information, and more than half favor the death penalty, abolished in 1877.
The report’s authors celebrated Costa Rica’s first national referendum in October 2007 on the Central American Free-Trade Agreement with the United States (CAFTA).
But, they said, holes in the referendum law caused confusion and conflict over an already polarizing issue.
In addition, the controversial pact kept the Legislative Assembly from passing muchneeded reform. Lawmakers approved 48 bills during the 2007-2008 session, one-third fewer than the previous year. On average, “There is a disconnect between what the country needs, according to opinion leaders, and what the legislative branch has been able to offer,” the report found.