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Costa Rica is Getting Things Right in Society and Economy

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With this week’s inauguration of Costa Rica’s newest (and youngest ever) president, the nation of under 5 million is poised to continue its place as a world leader in developing holistic policies.  The new government’s mandate aims to continue the national trend of promoting democratic, sustainable, and inclusive economic growth. People in Costa Rica believe that the welfare of all citizens must be the focus of the government; a strategy that is not only good for the wellbeing of the people but also increases productivity.

Costa Rican citizens are committed to democratic principles, with a 66% voter turnout for round two of the presidential elections this past Easter Sunday.  And the aim of the majority of those voters was to redefine their country’s politics. Unlike the nations around the world that have recently turned inward to more nationalist and conservative policies, Costa Ricans show no signs of abandoning their progressive legacy, choosing the candidate who promised to move forward with gay marriage rights.

Carlos Alvarado, who is just 38, is attempting to create an new presidential model by drawing ministers from a range of parties to his cabinet, as well as the first black woman Vice President in the world, Epsy Campbell.  He hopes that the Costa Rican spirit of cooperation will take hold and that reason, rational discourse, science and freedom will flourish.

A bastion of reason

Costa Rica’s military was abolished 1948 after a short civil war.  Since this time, Costa Rica has been at the center of a world study of conflict resolution and prevention.  It has been host to the United Nations University for Peace since 1980, whose mandate is “to provide humanity with an international institution of higher education for peace with the aim of promoting among all human beings the spirit of understanding, tolerance and peaceful coexistence, to stimulate cooperation among peoples and to help lessen obstacles and threats to world peace and progress, in keeping with the noble aspirations proclaimed in the Charter of the United Nations.”

Successive government leaders in Costa Rica have maintained far-sighted environmental goals by pursuing aims like reforestation, designating a third of the country’s territory as protected natural reserve, and deriving the majority of the nation’s electric grid from clean energy sources like hydro and geothermal.  Costa Rica’s pioneering work for the Payments for Environmental Services program, established in 1997, was the first to be implemented on a national scale. It solidified Costa Rica as a global leader in environmental accomplishments, promoting forest and biodiversity conservation. Costa Rica is the only tropical country in the world that has reversed deforestation.

Plans for growth

The basic pillars of development are inclusion, growth, and sustainability.  Costa Rica still has problems with the first two pillars, however the government has strived to address these problems and is committed to the goal of creating an inclusive society that guarantees the welfare of its people, supported by transparent and accountable public institutions.

Costa Rica’s cooperatives and social enterprises already make up about 1/5th of businesses in the country.  These institutions are a viable alternative to the forms of extreme capitalism because they are based on building trust and cooperation within communities.  The shortfalls of extreme capitalism have recently been in the news more and more, with stories involving moral sacrifices like predatory lending (to people who cannot repay their debts), market manipulations, abuse of personal data, etc.

Nobel Laureate Joseph E Stiglitz, professor of economics at Columbia University, recently wrote about Costa Rica that:

“Like citizens of a few other countries, Costa Ricans have made clear that inequality is a choice, and that public policies can ensure a greater degree of economic equality and equality of opportunity than the market alone would provide. Even with limited resources, they boast about the quality of their free public health-care and education systems. Life expectancy is now higher than in the United States, and is increasing, while Americans, having chosen not to take the steps needed to improve the wellbeing of ordinary citizens, are dying sooner.”

Recognizing the shortcomings of the measurement and comparison of GDP, Costa Rica has joined the Wellbeing Alliance, a small group of countries that are working to construct better welfare metrics.  The goal of the Alliance is to ensure that public policy is in service of the citizen in the broadest measure, through the promotion of democracy, sustainability, and inclusive growth.

Costa Rica is considered an upper middle-income country by the World Bank.  It has experienced economic expansion over the last 25 years as a product of a systemic strategy of outward-oriented growth, with openness to foreign investment and gradual trade liberalization as its key components.  Despite low capital gains and property taxes, equality in Costa Rica is much higher than anywhere else in Latin America. The combination of political stability, steady growth, and strong human development policies has resulted in one of the lowest poverty rates in Latin America and the Caribbean.

Growing pains

Despite Costa Rica’s persistent problem of structural fiscal deficit, the nation’s governments have refused to cut items like infrastructure, for which the costs can go unseen for decades.  Costa Rica’s infrastructure cannot even keep up with current economic growth, and improving infrastructure would likely increase growth.

The other option is increasing taxation, which Costa Rica is working to reconcile with their strategy of economic growth by creatively implementing taxes with common welfare in mind.  This includes taxing less common things like big polluters and higher income individuals at a higher rate. Costa Rica is so green that a carbon tax would not raise as much money as other nations.  Nevertheless, in its continuous pursuit of achieving a carbon-neutral economy it is working to switch its public transportation to electric fleets, which would operate on the clean electric grid.

No matter the challenges presented, Costa Ricans are a people with moral values at the core of their culture.  Tough decisions have to be made at times, but it is our hope and belief that this next government will make the decisions that will be right for retaining the nation’s position as global leader of environmental protection, and regional leader of social welfare.