Costa Rica Economy

Our Economy | economic life

For many decades, Costa Rica’s economy was based mostly on its agriculture and products like coffee, bananas and sugar were the top exports of the country. However and luckily times have changed, since gobal investments have diversified, Costa Rica has turned to innovative ways to position itself in the international market scenario.

Agriculture | agricultural production

Agriculture brought most of last century´s prosperity to the country. Thanks to this activity families improved their living standards, people at the Central Valley had farms in which they produced coffee, and in some areas like Guanacaste and San Carlos people used their lands for cattle raising; other lowlands were dedicated to banana plantations and in lower proportion there were cacao, sugarcane and pineapple cultivated areas.

Industry | industrial trends

As a result of the changing trends in international markets, Costa Ricans needed to look for new products and new ways develope its economy. Likewise agriculture, industry has had an important role in the development of the country, basically woodworking factories, breweries, textiles, pharmaceuticals, cigars and cigarettes, etc. Unfortunately, those activities were not enough, so in the last two decades of the twentieth century two important new markets (tourism and technology) stepped forward, giving some economical advantage to Costa Rica over other countries in Central America. This land has been privileged with wonderful beaches, impressive volcanoes and above all nice, well educated people; good reasons to take advantage of the marvelous things that Costa Rica offers. Tourism has given some relief to the economy and nowadays it is an important factor in its economical stability. Along with tourism, Technology has taken an important part in the picture in the last years. Although some people didn’t have faith in it, when Intel opened its fist plant, Costa Rica became relevant, so that other technology-related investors arrived and made of it the new number-one export product. But Costa Rica also moves around non-traditional exports like ornamental plants, flowers, and some vegetables that are opening new markets and trends around the world. Similarly, other industries have invested in this little country such as pharmaceutical and health companies, fast food franchises, and of course, hotel chains.

Currency and Foreign Trade | trade and currency issues

The unit of currency in Costa Rica is the colón. The Banco Central issues this currency and administers the foreign reserves. To give you an idea about the trade volume, in 2003 the value of exports and imports were $6,176 billion and $7,057 billion respectively, and for the same year the country's exports, according to destination were: to the U.S. 14.2%, to Guatemala 3% and to Nicaragua 2.7% as the main export partners; where coffee, bananas, sugar; pineapples, textiles, electronic components and medical equipment were among the main products.On imports the main partners for 2003 were the U.S. 23.2%, Mexico 4.7% and Venezuela 3.2%; and the products were raw materials, consumer goods, and petroleum.

Since 1963, year in which Costa Rica joined the American Common Market, its trade has been increasing year after year. In 1995, Costa Rica became part of the Association of Caribbean States (ACS) representing members of the Caribbean Community and Common Market (CARICOM).

The NAFTA (North American Free Trade Agreement) with the US has gained relevance in the last years. Since it could bring new economic opportunities to the country, many industrial and agricultural companies had pinned all their hopes to get it done. This agreement is between the U.S. and Central American countries along with The Dominican Republic, and it is supposed to be approved in within this year.

Quality of life | life expectations in Costa Rica

The following information represents why Costa Rica is preferred over other countries in Central America. Education is a main concern; it is free and mandatory up to high school. As a result the literacy rate is around 95%. Costa Rica offers a high living standard, 96% of the population is covered by excellent health services. Life expectancy is around 76.8 years and infant mortality is about 10.2 per every thousand births. Electricity is not a real problem for Costa Ricans, for 2001 electricity production reached 6,839 billion kWh, getting to 96% of the population; and homes with drinking water were around 97%.

For the year 2003 the GDP (gross domestic product) was 5.6%, the porcentage of population below the poverty line was around 20.6%, and the unemployment rate was at 6.7%.

Infraestructure | geographycal advantages

Costa Rica has a strategic position in the American Continent. It is located in the center of the Western Hemisphere, with good infrastructure, and access to different markets and services. There are ports in the Caribbean and Pacific coasts -Caldera, Golfito, Moín, Puerto Limón, Quepos, Puntarenas- with a whole range of facilities for containers and other freights. International airports in Alajuela and Liberia offer efficient services for international trade, together with domestic flights to different cities and beaches within the country. Highways and roads cover more than 22,000 miles including the Inter-American highway crossing the country from Nicaragua to Panama.

Foreign Debt | ande economic development

Regardless of having the new areas to develop the economy, Costa Rica was and still is dependable of credit from foreign countries and international organizations. Although this support is not the same as it used to be, the country needs to satisfy some demands and payments from these organizations. In order to face this situation currency has been devaluated in a controlled way to satisfy some interest requirements and this is one of the reasons why foreign debt has delayed the economic development of the country.