Socio-Economic Perspectives of Costa Rica

 

 

Costa Rica may be small, but it has an interesting history. Prior to 1950, the economic model chosen for Costa Rica was for agro-export growth with a social policy cushion, between 1950 and 1978 it was a mixed economy, and then from 1978 onwards, through trade liberalization, the public sector expanded quickly and then the party was over.

The 1980’s were not kind to the Central American region and Costa Rica was no exception.  The threat and fear of communism (the red menace of the Sandinismo) coincided with an economic downturn that led to a growing arms and drugs trafficking. Much of this activity was to finance illegal arms supplies to the anti-communist Contra guerrillas fighting in Nicaragua. One of the restaurants we had to see in Manuel Antonio was El Avion. It was the “back up”  cargo plane that was used in the infamous Iran-Contra affair with Ollie North. These were heady days in Costa Rica, in 1978-79 the people and government of Costa Rica had provided non military support to the Sandinista revolutionaries fighting to overthrow (US backed) Nicaragua’s Samoza dictatorship.. 

In 1981 Costa Rica made the world news when the government declared a moratorium on the country’s foreign debt and broke off negotiations with the IMF. The “Thatcher-Reagan” style of neoliberal Economics and the privatization of state enterprises was coming up against a wall in Costa Rica (and the whole region).

By 1983 Costa Rica lost their big US player, United Fruit Company and the need to diversify the economy was obvious. Desperately wanting to avoid the civil war conflict engulfing the region, they declared their neutrality (2^nd time) and were “rewarded” with massive US aid to join the fight against communism.  Costa Ricans saw this as an opportunity for the US to showcase how capitalism and democracy could coexist in Central America. The USAID was dispatched to Costa Rica with a big bag of goodies worth about $1.3 billion that helped to soften the conditions imposed by the IMF, but also to win influence with private organizations beyond the reach of the legislative. 

In 1987 the President, Oscar Arias (86-90) was able to outmaneuver a UA administration obsessed with militarily defeating the Sandanista government, and was awarded the Peace prize for his efforts to broker the peace plans that was signed by the 5 key leaders of Central America.  Perhaps this man is better known in his country as the person who initiated an ambitious housing program to reduce the clout of the community activists, he also slashed state assistance to agricultural producers which overall, led to the virtual disappearance of the peasantry, but he racked up a huge government deficit. Due to a controversial decision of the Constitutional Court in 2003,

The PUSC government (1990-94) took advantage of the rising government deficit (exacerbated by the rise of tax exempt businesses), to justify an even stronger neoliberal program.  The central feature was the standard “shock therapy” model of increasing sales tax, salary freezes, and reductions in social spending. The effect of this shifting of the economic burden to the poor, which by the early 1990s resulted in the reappearance of diseases that had been formerly eradicated and increasing poverty among vulnerable households.  

This was a bad time for an economic downturn. By 1990, the US had lost interest in Central America and it’s aid drop dramatically. This was compensated for by an increase in direct foreign investment , reaching a peak of about half a billion dollars a year by 2004 (mostly tax-exempt businesses) . These were now heady days for hotel, restaurant and tourism operators.  But now that the economy has cooled in North America and Europe (where the tourists are), there is a glut of hotels and restaurants, tour operators and enough customers… Costa Ricans understand the ebb and flow of the tourism industry like surfers understand the need to wait for the big waves to come in.

The rapid growth in foreign tourism began in 1985 and by 2004, almost 1.5 million tourists generated $1.3 billion in revenue and 7 percent of GDP.  This coincided with a diversification of the economy (maquiladoras) including a profitable Intel plant built in the capital in 1996. Costa Ricans do not suffer unduly from brain drain (the 45,000 living abroad remit about $500 million per year), there are about 400 thousand Nicaraguans working legally and illegally in Costa Rica, as in the prosperous US, a blind eye is cast to this needed employment but work conditions and pay is often marginal.

 

Socio-Cultural Perspective:

An interesting and troubling social condition I witnessed here, but not widely reported, is the issue of legal prostitution in Costa Rica but pimping is illegal. I learned a bit about this the issue of child prostitution and how Costa Rica is seen as a sexual tourist destination for some men. I did not see or experience anything to support that this is a problem, but the woman (Maria) who we rent our villa from was helping to run a Catholic church style shelter for such young woman they were helping to get away from this prostitution trap. Especially compounded is that without pimps, it is often the parents that will traffic out their own young daughters body for food on the table. The influence of organized crime is visible in the creation of networks of female and male prostitution (minors and adults) that for the most part, services the tourist industry.  

I would admit that the young woman of Costa Rica are among the most beautiful and intelligent I have ever seen in the world, they have a wonderful sense of modesty and self pride that comes off gracefully and innocent. There is a deeply engrained sense of decency that runs through all society, these are no doubt passionate people, but at least in public, they extoll a virtue in conduct and appearance.

Speaking of intelligent, in 2005 Costa Rica had roughly 166,000 university students, making up about 4 percent of the total population.  The inevitable drift towards privatization has affected the arts and culture industry, there are more private primary schools and universities, and more private health clinics and hospitals (public ones are obviously underfunded), and the national police and security guards.

The rapid penetration of the American way of life was brought in by:

• The introduction of cable TV in 1981 and internet access shortly after
• The founding of private schools that emphasize the speaking of English
• The boom in Miami style advertising agencies
• The opening of video arcades and video rental shops

 Cultural globalization and the market economy has to some extent, been fueled by the tourist boom and trade liberalization itself. It has also been assisted by the surprising expansion of evangelical Protestantism , where devotees have tripled in number from 50 thousand to over 150,000, and many Costa Ricans attend evangelical services at least occasionally. The success of the evangelicals reveals that the Catholic Church has been left behind by the social and cultural changes (they dropped from 90 to 76 percent between 1985 and 2002).  The Church’s loss was also related to the greater secularization of society and changing demographics.  Smaller families (family size fell from 7 to 2 children in past 50 years) were increasingly headed by a woman and divorce rates began to grow to American equivalence.

 

There was growing feminine participation in the labor force, from one-fifth to one third between 1973 and 2005. New employment opened up for women in business, politics (the proportion of women deputies in the Legislature rose from 12 to 39 percent between 1986 and 2006) and the arts, the current President is a woman (this is a trend sweeping the whole region). However, it has been said that the feminist movement has taken a pragmatic approach by avoiding involvement in the systematic defense of working women’s rights.

Status seems to be increasingly associated with the consumption of brand-name products and access to private services. Perhaps where this is seen the most is in residential segregation, with a model that separates popular sectors from the middle classes and the business and political elites.

While in San Jose I walked around one of the very few public parks and I was shocked to hear the city wanted to cut down most of the old growth flowering trees to further encroach on this public space. I heard there were protests and that this could be a flash point in future. Although youth gangs did flourish during the 1990s and to some extent still do in the larger cities, they did not reach the size or degree of organization of the fearsome “maras” of Guatemala, El Salvador or Honduras.  While in Costa Rica I saw a few people trying to sell, or just smoking pot, but I never saw any other crime of any sort, or violence (even shouting) for that matter.

The proportion of homes beneath the poverty line has somewhat stabilized at around 20 percent, but there is plenty of inequality. In 2000, a census indicated that 77 percent of Costa Ricans own their homes, and over 80 percent had potable water, electricity, TV, fridge and washing machine. 

It will be up to Costa Rican civil society to decide whether neoliberalism is entrenched or whether strategic social infrastructure shall remain under tight state control.  Perhaps Costa Rica’s success is based on its fierce ancestral resistance to being dominated and it’s capacity to adapt processes of global change to its own local situation. This has been based on making gradual adjustments that have allowed the majority of the people to adapt to new economic and institutional realities. This has focused on a strong family unit and sense of social justice and community coherence, and love of peace and nature.

Perhaps these are the foundations for happiness and sustainability that can work in the world today?