COSTA RICA NEWS — Costa Rica is the one of the best examples of what happens when you put obstacles in the way of economic and social development, exemplifying the coming and going between state paternalism and trade.
On receiving an award from the National Association for Economic Development for Freedom (ANFE) 2014 Juan Carlos Hidalgo gave a stark analysis of the Costa Rican situation, which highlights the apparent contradictions between sustained economic growth and the painful reality of growing poverty.
… The economic liberalization that Costa Rica has experienced since the mid-eighties has given us an economic growth rate that is among the highest in Latin America. However, official figures indicate that the country has consistently failed to reduce the poverty rate to below the barrier of 20%. According to the latest estimates from the INEC, poverty actually increased in the last year and now affects more than one million Costa Ricans. This should serve as unequivocal proof of the social deficit in the model.
… liberalization measures which have been implemented over the last 30 years reveal their strong trade bias. Successive governments adopted monetary, trade, fiscal and regulatory regimes that benefited specific sectors at the expense of the general population, especially of the poor.
… While governments have provided every facility to large companies located in EPZs, national entrepreneurs have had to shoulder a relentless ordeal of taxes and regulations. According to the latest Doing Business Index of the World Bank, Costa Rica’s average employer pays total tax on their earnings which is 58% higher than the average in developed countries or even the average for Latin America.
… This regulatory bottleneck is the main reason why a third of the economically active population of Costa Rica is in the informal sector. The upper classes can afford lawyers and accountants to enable them to navigate the waters of a bureaucratic state. But the poor have no choice but to be thrown onto the streets to earn a living by any means. As indicated by Mario Vargas Llosa in the prologue of ‘El Otro Sendero’ (The Other Route), in our country the law is ‘a privilege that is only accessed through economic and political power. “Today, in Costa Rica, a third of the population is trapped in an economic and legal apartheid called informality.
… The monetary policy of the past 30 years has been a huge subsidy to exporters and the financial sector at the expense of the less fortunate.
… The products which carry the most weight in the basic basket, such as rice, milk, beans and chicken, are the first to be excluded from any negotiations or have tariff reduction periods of up to 20 years. All this in order to benefit large oligopolies such as Conarroz, Dos Pinos and Pipasa. as a result of this mercantilist trade policy, a single mother in La Carpio can buy a Ribera del Duero bottle of wine duty free, but not a carton of milk.
In 2013 “… The state spent nearly $1 billion on 44 anti-poverty programs administered by 24 public institutions. And yet, the statistics show that we have more and more poor people in Costa Rica.”