Why Things are in Costa Rica’s Economy

  1. Why is Costa Rica a right sided economy?

Costa Rica’s economy is centered right. They have limited productive resources, so they specialize in what they have available. It is also a very small state. Costa Rica is a tiny country so they don’t need as many government regulations. The government still has a say in what businesses can do. It is like America a little bit, since the government creates taxes that must be payed. Costa Rica has a ton of taxes. A lot of companies are also private property. Along with this, Costa Rica’s economic model is based off of PYME. PYME is basically small companies, which is what has taken over Costa Rica’s economy. I agree with Costa Rica’s reasoning on being right center. Many countries that are left centered do not have the same economic success as Costa Rica.

2. Why are Costa Rica’s poverty rates so high?

One of the main reasons that 20% of Costa Ricans are in poverty is because of the expense of living. Costa Rica has relevantly high cost of living. Other countries like Panama’s cost of living is much cheaper. Another reason that there are high poverty rates is because of all the taxes. Everything is taxed in Costa Rica. For example, eating at a restaurant people can pay up to 30% in taxes. Average income in Costa Rica also isn’t high. It is about $1,500 a month.  Lastly, it is very expensive for companies to hire workers. Companies are taxed very hard when hiring a knew employee. I disagree with Costa Rica’s policies in place to fix poverty. Yes they give money to those in poverty, but people in poverty still have to pay a ton of taxes, so the money is essentially worthless since it doesn’t last.

3. Why were the 90’s considered Costa Rica’s best economical era?

It started with the opening of many more companies. The Free trade agreement was also created in this era, which has continued to benefit Costa Rica. Also the emergence of coffee was huge. Coffee is arguably Costa Rica’s biggest economic factor. It is extremely profitable to Costa Rica. The emergence of Costa Rica created the added value approach. During this time EAP increased and more and more people became part of the middle class. People were becoming wealthier. The poverty and inflation rate were also at acceptable numbers. Neither were too high. Lastly the government grew tremendously. Costa Rica’s economy flourished in the 90’s.

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