San José, Costa Rica, since 1956
State of the Nation

Costa Rica is 20 percent more expensive than other Latin American countries

The Switzerland of the Americas, indeed. The cost of living in Costa Rica is 20 percent more expensive than the average Latin American country, according to the 20th State of the Nation report issued Tuesday. The soaring cost of electricity and basic goods, like rice, and increasing demand for hydrocarbons have contributed to a more expensive Costa Rica even as inflation fell to 3.7 percent in 2013, the lowest it’s been in the last 20 years.

Economic concerns were front and center in the annual report on the state of Costa Rica, which highlighted topics like unemployment, inequality, poverty and the deficit. After 20 years of economic growth, the report’s authors said that Costa Rica has yet to make significant gains in human development. Costa Rica and other countries worldwide have seen improvements in human development — which include economic, political and environmental factors — during the last 20 years, but Costa Rica has seen little improvement relative to other middle-income nations.

Costa Rica’s GINI score, which measures inequality, hit its highest level ever (0.524) in 2013, and the country’s stubborn poverty rate at 20.7 percent has remained largely unchanged during the last two decades.

The report gave positive ratings to Costa Rica’s cornucopia of social and cash transfer programs, which improved the country’s GINI score by 1.4 percent and reduced poverty by 2.5 percent. However, benefits from social programs have not been able to close the widening earnings gap between rich and poor Ticos.

Jorge Vargas, interim director of the State of the Nation Program, said the problem is a conceptual one: “The labor market is the source of inequality.”

Vargas noted that the demand for more qualified employees would continue to leave workers — especially young people — without competitive wages. The report summed up the gap as the difference between the “old” and “new” economies; the former reliant on unskilled labor and the latter on more skilled, educated workers.

Vargas noted that while Costa Rica has dedicated large amounts of its annual budget to health and education there has been little attention paid to employment policy and how to train unskilled workers for jobs in growing sectors of the economy. Salaries for those in the new economy outpaced wage growth for those in old-economy jobs, especially in the agroindustrial sector. Coffee and manufacturing were both down in 2013, the report observed.

The State of the Nation report said that the culture of staying in school longer has been slow to catch on in Costa Rica. Some 60 percent of those looking for work do not have a high school education. If those who did not finish high school were paid the average wage of those who did, the report estimated, extreme poverty in Costa Rica would be cut in half to 3.2 percent and extreme poverty would fall by 7.3 percent.

Low wage earners are further impacted by the number of Costa Ricans working in the informal sector and without the basic benefits owed to them, like earning the minimum wage, access to Costa Rica’s socialized health care system and the aguinaldo, a mandatory year-end bonus.

Despite some of the report’s gloomier findings, Costa Rica has made strides in human development and takes pride in having one of the region’s strongest and oldest democracies. The majority of Tico households have seen improvements in their quality of life during the last 20 years from expanded political rights to growing economic earnings and a cleaner environment. Costa Rica has seen improvements, but these advancements have been coming at a slower rate than they did between the 1950s and 1980s.

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I appreciate the news story but why doesn’t the Tico Times do a little analysis about WHY the prices are 20% higher?
I agree wholeheartedly with the first two comments, that the role corruption and ineptitude play in running the government affairs, but I also think the problem lies in the high cost of shipping because of the inefficient docks in Limon and the monopolies in the retail businesses.

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Rick Nelson

Sadly true comments by Blake. The country has been living off of the good reputation of decades ago. this also means that even when the ship’s coarse is corrected, it will again take decades to regain credibility. One of the reason so many expatriates moved to CR in the first place was all the ECO Hype which as we now know is mostly bogus. News items such as: “Cr is the best prepared against Climate Change”, or “CR will be Carbon Neutral by 2021” which the media and most naive foreigners eat-up are responsible for the CR Gov’t turning it’s back on real and tangible development.

Unattainable ridiculous goals and propaganda hype can only go so far and fool a certain number of people. Ticos are suffering and paying the price for all these lies which benefit a handful in NGOs and scamming other governments.

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Don Blake

More rubbish being written by ministers in the government! The ridiculous and necessarily high cost of living in Costa Rica, has nothing to do with Human development, that is just a ‘red herring’ to bullshit people about the real issue, which is that Costa Rica’ is a failing and worsening economy, with a poir reputation globally. The fact is the government is corrupt beyond belief, and just constantly lines it’s own pockets, and there is not enough intelligent Internationally trained, experienced or educated senior government ministers, to introduce the job and business growth strategies necessary to stimulate and grow the economy. All they do is introduce new taxes, and increase existing taxes, which they can’t even collect efficiently, which as any intelligent business person with a half decent business degree knows, is a recipe for economic failure, and eventual collapse! Of course they don’t care about any of this, as when it happens they will have bank accounts stuffed with their ill gotten gains, to live on comfortably for the rest of their lives…..meanwhile it will be the normal Costa Rican families that will suffer, along with foreigners like me, that have been stupid enough to invest in this dying country! Costa Rica is falling so far behind other Latin American countries, as these countries push ahead and develop, through the careful planning, implementation, execution, and delivery of intelligent and sustainable short medium and long term economic growth and development strategies and initiatives. The government in Costs Rica isn’t smart enough to even understand what this means, never mind set about actually doing it. Costa Rica is not even a respected power in Central America, never mind on a global level, which is frankly just embarrassing for the good people of Costa Rica, but as I said earlier, this doesn’t matter to the government, they will just continue to bleed the country and people dry, with tax increases, and price increases for state owned services like electricity and telecommunications etc…..and then when the big collapse comes, they will sail off into the sunset in their yachts, laughing all the way to the bank! Their parting gift to the Costa Rican people will be to publish yet another laughable survey, that states the Costs Rican people are the happiest in the world!……Pura Vida!

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