Over time, the economy in Costa Rica has changed drastically, shifting from a socialist Left to a capitalist Right approach. After the most recent election (that shifted the government approach back to the Left), a majority of the workforce lies at odds with the future state of the nation’s economy.
After hearing a presentation on the legal and economic analysis of Costa Rica by guest lecturer Dr. José Sánchez, I was left with several observations/questions as to why things are they way they are here in Costa Rica.
First, why has the Costa Rican government switched back to a Left governmental/economic approach? Costa Rica seems to thrive under a liberal, free economy where the players are allowed to do as they please, and where the government has less of an influence on these decisions. Surprisingly, a major platform for the most recently elected party is to create more taxes. With an already large amount of taxes going into the government every year, it is puzzling as to why Costa Ricans would elect a government that in the long run might just increase the percentage they have to pay in taxes or the number of taxes paid altogether. I can only hope that this new government can find a way to improve conditions without a significant change in taxes, but for the most part I disagree with the reasoning of the governmental shift.
Second, why is the recent economic growth of the 2000’s equally disadvantageous as it is advantageous? The word growth has a positive connotation. However, with this growth comes an increase in poverty (as a result of workers paying more taxes to the government). Every single tax goes to pay people, instead of going towards much needed infrastructure programs. As theory suggests, with more people working comes an increase in the amount of taxes going into the government. So here, I think there is definitely a give-and-take associated with achieving sustainable economic growth, one in which the government has to decide for itself what is best for not only the future, but current nation.
Lastly (and a major focus of this trip), why is coffee so important to the modern Costa Rican economy? Originally, coffee was just a raw material good. But in the 1990’s, the economy shifted to an added-value approach, meaning Costa Rican’s now roast and export coffee under the Costa Rican name/brand. This change was significant because now Costa Rica has this major export that holds a lot of power and produces many benefits for the country. The growth of the coffee industry has proved to be beneficial for the country so far. However, there are signs that the demand of owning & operating roasting plantations here in the country is decreasing, which may in turn cause problems for the industry in the future. For now, coffee serves as a major export for the Costa Ricans.
All in all, the economic state of this country seems dependent on a myriad of influences, and it will be interesting to see how Costa Rica handles the most recent changes to its economic model in the upcoming years.