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Is Costa Rica a Developed Country?

In her victory speech on election night, President-elect Laura Chinchilla listed her administration’s many goals for the next four years. On the list were improving public education, bettering health care coverage and continuing the country’s push for environmental sustainability.

And, she offered a lofty idea: “On the basis of our two biggest strengths – the intelligence of our people and the generosity of our environment – we will make Costa Rica the first developed country in Latin America.”

This statement drew rousing cheers from her supporters, but the assertion that Costa Rica could soon become a “developed” country is an audacious one.

While Costa Rica’s positive characteristics – including the lack of a military, the stable political climate and the region’s highest literacy rate (95 percent) – are often touted, a November 2009, National Statistics and Census Institute (INEC) report said 18.5 percent of the population, or nearly one in five residents, lives in poverty, earning less than $120 per month.

Keeping these contrasts in mind, the follow-up question to Chinchilla’s pledge must be “If Costa Rica is to become a socalled ‘developed’ country, what must be done to achieve that status?”


Who Says a Nation Is Developed?


Currently, there are two respected organizations whose opinions as to whether a country is developed or not receive wide acceptance. These are the 30-country Organization for Economic Co-operation and Development (OECD) and the United Nations Development Program’s Human Development Index (HDI). Each uses a different set of criteria to make the distinction.

The OECD, based in France, collects and analyzes economic and social data from countries worldwide and places nations into five categorizes according to their gross national income (GNI) and the amount of economic financial aid they receive from the organization’s member states. On the lowest rung of the category ladder is the “Least Developed Countries,” which include the most strife-torn African nations and countries affected by war, such as Afghanistan.

On the top rung are perched the 30 nations that are currently members of the OECD and are financially sound enough to provide aid to less-developed countries. Included in  this group are the United States, Canada, theUnited Kingdom, Germany, Spain and Japan.

Currently, the OECD places Costa Rica in the “Upper Middle Income Countries and Territories” category. Countries ranked here fall just short of OECD membership status.

Among the countries that join Costa Rica in this category are Brazil, Mexico, Panama and South Africa.

“Membership in the OECD means that you are a developed nation,” said Roberto Jiménez, leader of the environmental group CO2 Neutral 2021. “When you look at Latin  America, you see countries in three groups. There are the least developed countries, including Nicaragua, Bolivia and maybe Honduras. Then there is a different group that has moved on from least developed to a middle stage. Those are countries such as Brazil and Argentina. And then you have the developed countries, and the only (Latin American) country I have heard of being mentioned here is Chile … In that middle group there are several countries that are moving at a very fast developmental pace and I would say that, of that group, Costa Rica is one of them.” The HDI places Costa Rica’s development status in a similar range.

According to the index, Costa Rica is the 54th “most developed” country in the world, one slot behind Mexico and six places above Panama. The HDI considers Chile to be the most developed Latin American country and ranks it 44th.

The HDI differs from the OECD in that it deviates from the economics-heavy criteria of the latter, considering other factors when determining the development status of a country.

“The components making up the HDI include health, as measured by life expectancy at birth; education, as measured by the adult literacy rate and the gross enrollment ratio in (formal) education; and a decent standard of living, as measured by gross domestic product (GDP) in U.S. dollars,” said a representative of the United Nations Human Development Report office in a statement to The Tico Times. “These are used to create three indexes – life expectancy, education and GDP – which are combined to create a single HDI.”

Once these three criteria are averaged together, the HDI attributes a value to each country. On a scale with 1 being the highest achievable value, Costa Rica scored 0.854 on the 2009 HDI scale, boosted by the life expectancy of 77 years and a strong commitment to national health. The HDI considers all countries with a ranking over 0.9 to be “developed.”

“As you see, in the 2009 HDI, Costa Rica is in the ‘High Human Development’ category and is, therefore, referred to as ‘developing’,” the statement said.

Thirty-eight countries have an HDI rating of over 0.9, with Norway being considered the “most developed,” with a 0.971 score.


A Nation of Contrasts


There is a multi-million-dollar megamall in Escazú, west of San José, which sports outlets of some of the world’s most exclusive stores.

However, in October 2009, six people died when a rickety, wooden bridge in a rural area collapsed as a bus was crossing it.

The giant international software company Intel exported more than $2 billion in microprocessors and chipsets from its Costa Rican plant in 2009.

But, according to the State of the Nation report in November, at least 16,000 Costa Rican homes are “without basic services,” such as electricity and running water.

Twenty-nine multinational companies made plans to enter or enhance operations in the country in 2009, accounting for more than $304 million in investment and creating more than 5,729 jobs.

However, in April 2009, the International Monetary Fund (IMF) approved a stand-by arrangement in which Costa Rica was offered as-needed access to a $730 million precautionary fund should the economic and financial crisis become too overwhelming.

Costa Rica is among the world leaders in pineapple, coffee and banana exports. But, street signs and direct addresses remain a rarity.

A constant feature of this disparity in the makeup of Costa Rica is that, while certain areas of the country are surging ahead, there are many areas in which the country is not keeping up or is, indeed, falling behind. “I think there are several Costa Rica’s,” says Roman Macaya, vice president of Agroquimica Industrial RIMAC.

Macaya, who unsuccessfully sought the nomination last year of the Citizens Action Party in the recent presidential elections, said, “I think there is a developed Costa Rica, with segments of society in which people have very good jobs, high incomes, big houses, two cars and all the amenities that you would expect in the upper class of developed countries. Then there’s a poor Costa Rica, which is suffering quite a bit. You go into a poor residential area and you find every single problem there is … I wouldn’t even say those areas are developing. They have stagnated in a general despair.”

The new administration faces the challenge of finding the appropriate mix of policies to assist and stimulate struggling sectors of the economy, while remaining supportive of those that are thriving. According to many, herein lies the challenge of raising Costa Rica from the uppercrust of the “developing” countries into the echelon of the “developed” ones.


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