The “Why’s” of the Costa Rican Economy

Today, we had the honor to attend a lecture from Dr. Juan Diego Sánchez Sánchez on Costa Rican legal and economic analysis. After learning some economic basics, we began to learn about the development of the Costa Rican economy from the 70’s up until now, and the influence of culture within the economy. After getting some background on the history and politics, economic basics and culture, I feel able to answer some of the “why’s” of Tico economy.

  1. Why has the right economic approach worked for the Costa Rican economy?

The right economic approach includes an emphasis on private property, liberalization, competitiveness, and a small state. Dr. Sánchez Sánchez shared his personal view that a right approach is best for a growing economy, as the Costa Rican economy was most successful during periods where the government followed this approach. For example, the economy was based on a right approach in the 90’s, and this lead to the growth of the middle class, and inflation rates were acceptable. In relation to culture, I don’t see any contradiction. The right approach is successful as Ticos have a strong sense of national pride, and invest in Tico chains and stores (private properties). This leads to competition between the PYME’s (small and medium businesses in English), which aligns with the right approach.

2. Why does the Costa Rican government invest so much in education?

As Dr. Sánchez Sánchez put it, Costa Rica is not quite a first-world country, but it is certainly not a third-world country. Thus, much of the company is service-based rather than information and industry. For example, 38% of the labor force of PYMEs is in services, while 23% is in industry, and 6% is in information technology (IT). However, to have a industry-based or information-based economy, this requires more education beyond high school. Thus to make higher-education possible for more Ticos, the government invests 8% of the GDP in public education every year. In addition, there are 50 universities through Costa Rica, 5 of which are public. This aligns with the culture I have seen so far, as education seems pushed and available to the public.  During my two days here so far, I have seen multiple universities throughout Heredia, and several ads for them.

3. Why is environmental protection so important to the Costa Rican government and            economy?

Coffee has been a central part of the Tico economy for years. In the 70’s, Costa Rica exported their best coffee, and only left the third-grade coffee for themselves (the lowest quality). However, later on in the 80’s and 90’s, Ticos began roasting their own coffee and keeping higher-grade beans for themselves. To sustain their success in coffee production and thus continue exporting it, they must use sustainable practices to ensure that they can keep growing it for as long as needed without degrading the environment. Ecotourism is also a huge source of income for Costa Rica, and this is only possible with a healthy forests, beaches and waterways. This aligns with the culture I have experienced so far, as Ticos make it a point to limit electricity and water use. In terms of politics, environmental law is one of the key aspects of the Tico legal envionment according to Dr. Sánchez Sánchez.

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