Costa Rica is a middle-income, developing country with a strong democratic tradition. Tourist facilities are extensive and generally adequate. While English is a second language for many Costa Ricans, knowledge of Spanish is necessary for legal matters.
The rainy season in Costa Rica normally runs from May to November, coinciding with the hurricane season in the Caribbean. Earthquakes are also common in Costa Rica.
GOVERNMENT
Costa Rica is a democratic republic with a very strong system of constitutional checks and balances. Executive responsibilities are vested in a president, who is the country's center of power. There also are two vice presidents and a 20-plus member cabinet. The president and 57 Legislative Assembly deputies are elected for 4-year terms. In April 2003, the Costa Rican Constitutional Court annulled a 1969 constitutional reform which had barred presidents from running for reelection. As a result, the law reverted back to the 1949 Constitution, which permits ex-presidents to run for reelection after they have been out of office for two presidential terms, or 8 years. Deputies may run for reelection after sitting out one term, or 4 years.
ECONOMY
After experiencing positive growth over the previous several years, the Costa Rican economy shrank slightly in 2009 (-2.5%) due to the global economic crisis. The services sector--around 68% of GDP--was the most affected, with tourism falling by 8%. The economy experienced a rebound in 2010 with a 3.6% GDP growth rate. Costa Rica enjoys the region’s highest standard of living, with a per capita income of about U.S. $10,569, and an unemployment rate of 6.7%. Consumer price inflation is high but relatively constant at about a 10% annual rate in the last decade. Both the central government and the overall public sector ran fiscal surpluses in 2007.
Costa Rica's major economic resources are its fertile land and frequent rainfall, its well-educated population, and its location in the Central American isthmus, which provides easy access to North and South American markets and direct ocean access to the European and Asian continents. Costa Rica is known worldwide for its conservation efforts with more than 26% of its land under protection, thus safeguarding more than 5% of the entire world's biodiversity. The country's top economic priorities include passing fiscal reform, pursuing responsible monetary policy, and creating opportunities for inclusive economic growth. Significant legislative hurdles slow down passage of new laws and present challenges for the country’s economic policymakers.
Costa Rica used to be known principally as a producer of bananas and coffee, but pineapples have surpassed coffee as the number two agricultural export. Manufacturing and industry's contribution to GDP overtook agriculture in the 1990s, led by foreign investment in Costa Rica's free trade zone. Well over half of that investment has come from the United States. Del Monte, Dole, and Chiquita have a large presence in the banana and pineapple industries. In recent years, Costa Rica has successfully attracted important investments by such companies as Intel Corporation, which employs 3,200 people at its $1.996 billion microprocessor plant; Procter and Gamble, which employs about 1,200 people in its administrative center for the Western Hemisphere; and Boston Scientific, Allergan, Hospira, and Baxter Healthcare from the health care products industry. Two-way trade between the U.S. and Costa Rica exceeded $10.3 billion in 2010. Costa Rica was the United States' 37th largest goods export market in 2009.
FOREIGN RELATIONS
Costa Rica is an active member of the international community and proclaimed its permanent neutrality in 1993. Its record on the environment and human rights and advocacy of peaceful settlement of disputes give it a weight in world affairs far beyond its size. The country lobbied aggressively for the establishment of the UN High Commissioner for Human Rights and became the first nation to recognize the jurisdiction of the Inter-American Human Rights Court, based in San Jose. Costa Rica has been a strong proponent of regional arms limitation agreements. In 2009, Costa Rica finished its third term as a non-permanent member of the United Nations Security Council.
During the tumultuous 1980s, then-President Oscar Arias authored a regional peace plan that served as the basis for the Esquipulas Peace Agreement. Arias' efforts earned him the 1987 Nobel Peace Prize. Subsequent agreements, supported by the United States, led to the Nicaraguan election of 1990 and the end of civil war in Nicaragua. Costa Rica also hosted several rounds of negotiations between the Salvadoran Government and the Farabundo Marti National Liberation Front (FMLN), aiding El Salvador's efforts to emerge from civil war and culminating in that country's 1994 free and fair elections.
In 2007 Costa Rica established diplomatic ties with China, ending nearly 60 years of diplomatic relations with Taiwan. In 2008, Costa Rica established diplomatic relations with "The State of Palestine," and in 2009 Costa Rica reopened formal relations with Cuba. In 2009, then-President Arias acted as mediator in the Honduran constitutional crisis, working closely with ousted President Manuel Zelaya and the interim Honduran government. Costa Rica formally recognized Porfirio "Pepe" Lobo as the winner of the 2009 Honduran elections and the President of Honduras. In October 2010, Costa Rica accused Nicaragua of invading its territory and claimed Nicaragua’s dredging of the San Juan River was causing irreparable environmental damage. The case is currently pending at the International Court of Justice, which is considering Costa Rica’s request for provisional measures.
U.S.-COSTA RICAN RELATIONS
The United States and Costa Rica have a history of close and friendly relations based on respect for democratic government, human freedoms, free trade, and other shared values. The country generally supports the U.S. in international fora, especially in the areas of democracy and human rights.
The United States is Costa Rica's most important trading partner. The U.S. accounts for almost half of Costa Rica's exports, imports, and tourism, and more than two-thirds of its foreign investment. The two countries share growing concerns for the environment and want to preserve Costa Rica's important tropical resources and prevent environmental degradation. In October 2010, the U.S. and Costa Rican Governments, the Central Bank of Costa Rica, and The Nature Conservancy concluded agreements that will provide more than $27 million over 15 years for tropical forest conservation in Costa Rica. The agreements were made possible by the Tropical Forest Conservation Act of 1998 (TFCA). Together with a previous TFCA program established in 2007, these agreements make Costa Rica, one of the most biologically diverse countries on earth, the largest beneficiary under the TFCA, with more than $50 million generated for the conservation, restoration, and protection of tropical forests.
The United States responded to Costa Rica's economic needs in the 1980s with significant economic and development assistance programs. Through provision of more than $1.1 billion in assistance, the U.S. Agency for International Development (USAID) supported Costa Rican efforts to stabilize its economy and broaden and accelerate economic growth through policy reforms and trade liberalization. Assistance initiatives in the 1990s concentrated on democratic policies, modernizing the administration of justice, and sustainable development. Once the country had graduated from most forms of U.S. assistance, the USAID Mission in Costa Rica closed in 1996. However, USAID completed a $9 million project in 2000-2001 to support refugees of Hurricane Mitch residing in Costa Rica. Additionally, Costa Rica benefits from regional USAID development programs.
For decades, Peace Corps volunteers have provided technical assistance in the areas of environmental education, natural resources, management, small business development, microfinance, basic business education, urban youth, and community education. In 2007, the Costa Rica Multilingue initiative approached the Peace Corps with a request for a new project focused on teaching English as a foreign language (TEFL). The first group of 25 Peace Corp trainees under the TEFL project arrived in October 2010.
Over 50,000 private American citizens, including many retirees, reside in the country and more than 700,000 American citizens visit Costa Rica annually. A few vexing expropriation and U.S. citizen investment disputes have hurt Costa Rica's investment climate and have occasionally produced bilateral friction.
The U.S.-Costa Rica Maritime Cooperation Agreement, the first of its kind in Central America, entered into force in late 1999. The agreement, which facilitates cooperation between the Coast Guard of Costa Rica and the U.S. Coast Guard, has resulted in a growing number of narcotics seizures, illegal migrant rescues, illegal fishing seizures, and search-and-rescue missions. Bilateral Costa Rican law enforcement cooperation, particularly against narcotrafficking, has been exemplary.
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