The Economy of Costa Rica

Costa Rica started as one of the “Banana Republics” where everything was dependent on the production and export of bananas and coffee. Since 1980, economic growth has been hurt by staggeringly high interest rates, heavy debt service requirements, 18 percent average annual inflation, and a bloated public sector. This situation has changed over the years due to increasing competition from neighboring countries and a changing global economy. The Costa Rica which exists today has evolved to include a diverse and strong industry which includes hi-tech, medical, service, agriculture and tourism industries. The Hi-Tech industry is among the rising industries that have developed within the last 10-15 years, employing over 11,000 people, with an export value of US$2.120 million in 2005. The service sector is booming with high levels of employment in customer service call centers (e.g. Western Union), back-office services (e.g. Accounting & Human Resources) and software development companies (e.g. Microsoft, Unisys and Oracle). Last but not least, with more than 1.9 million tourists arriving in 2007, a 10.6% growth relative to the previous year, it is easy to see the potential in the tourism industry

Costa Rica has one of the strongest economies in Central America with GDP $26.23 billion (2007) and a low unemployment rate of 4.6%. One of factors that have contributed to help the country get to this point lies in having had a few capable and forward-looking leaders in its early history, whose vision was to eliminate the armed forces, in effect freeing up a large amount of funds to be invested in education, social services, commerce and infrastructure. The end result is that today, Costa Rica has a high literacy rate of around 95%, a highly-skilled workforce, a competitive telecommunications infrastructure and a stable political environment.