Current Challenges

Costa Rican democracy remains strong but is subject to similar forces affecting politics in many other countries. For over fifty years following the re-establishment of democracy, the country’s politics were dominated by the center-left National Liberation Party (PLN) and a primary opposition that involved a shifting coalition of center-right parties. In the last 20 years, however, this two-party system has collapsed as the people have become increasingly frustrated and angry over growing inequalities and rising prices. This has opened the door for newer political forces like the Citizens’ Action Party that won presidential elections in 2014 and 2018, and the Social Democratic Process that won the 2022 election. With around 20 parties, however, there is legislative gridlock because no party has had an outright majority.

Agricultural and Economic Spotlight

Bananas and Pineapples: Bananas still represent a significant portion of agricultural exports of the country although pineapples and other tropical fruits are also important. The largest agricultural producers in the country include the multinational corporations Chiquita, Del Monte, and Dole. In 2023, there were about 125,000 acres of bananas and 80,000 acres of pineapples cultivated. Bananas represented 9% of total exports and pineapples 7.25%. Costa Rica is now the top exporter of pineapples in the world. With the relatively high living standards of Costa Ricans, the agricultural sector has increasingly come to depend on migrant labor. A recent estimate is that 70% of the workforce of the banana and pineapple growers are migrants from Nicaragua

Coffee: There is no denying the historical and cultural influence that coffee production had on Costa Rica. It maintains a reputation for high quality, sustainable production, and fair-trade practices. Exports in recent years have been valued at about $432 million, a quarter of the value of banana exports.

Economic Diversification: A priority for the country has been to diversify its economy away from agricultural products. Costa Rica has created Free Trade Zones in which companies receive tax and investment incentives. Foreign companies such as Intel, Dell, Boston Scientific. HP, Bayer, Bosch, IBM, and others have established operations in these zones. Call centers employing well-educated, English-speaking Costa Ricans; medical device and pharmaceutical manufacturers; companies creating software and making computer parts; along with a robust ecotourism sector, have led the way in helping economic diversification. Today only about 5% of the economic output of the country comes from agriculture, 18% from industry, and nearly 76% from the service sector.

Socio-Political Spotlight

Politics: Rodrigo Chaves Robles, a long-time economist at the World Bank and former Finance Minister of Costa Rica, was elected President of Costa Rica in 2022. He was elected with about 53% of the vote in a runoff of the top two candidates. As an indicator of the dissatisfaction of the people, more than 43% of those eligible did not cast a vote.

Crime: Long celebrated for its protected environment, relatively high standard of living, educated and laid-back population, and low crime rates, Costa Rica now faces some of the challenges of its geography. For one, it has become a transshipment point between the drug producing countries of South America and the high demand for these illicit drugs in the U.S. Violence from gangs transporting and trafficking drugs is increasing. The use of cheap crack cocaine and other drugs is growing among the local population further fueling the increase in crime.

Immigration: Although Costa Rica has long welcomed migrants from other countries, it is struggling with absorbing people fleeing the political and economic turmoil in Nicaragua and other countries. As of 2024, there were over a half million immigrants with legal status, with an unknown number of unregistered immigrants. The largest number of immigrants are people fleeing the political and economic conditions in neighboring Nicaragua, but Costa Rica has also become a stopping point for people of many countries who have been crossing the Darién Gap jungle from Colombia into Panama. These migrants are straining public health, education, and food and water systems that were already over-burdened as a result of economic difficulties and the COVID pandemic.

Manufacturing and Tourism Spotlight

Manufacturing: The country’s diversification into higher value products is working as manufactured goods make up a more significant portion of exports. The top three exports of Costa Rica in 2023 were Medical Instruments (almost $6 billion), Integrated Circuits ($2.86 billion), and Orthopedic Appliances ($2.21 billion). Together, Bananas and Tropical Fruits were valued at about $3.4 billion.

The entrance to the Intel campus in Belén. The company currently employs more than 2000 workers in Costa Rica. Photo courtesy of Intel.

Tourism: Despite its small size, Costa Rica welcomed about 2.6 million tourists in 2024. Hard hit by the travel restrictions during the COVID pandemic, tourism has quickly recovered. The sector generates about 190,000 jobs and approximately $5 billion in revenue. The country has become a favored destination for retirees, and it is estimated that there are over 50,000 Americans and 15,000 Canadians living in the country.