FOREIGN DEBT AND ECONOMIC DEVELOPMENT THE CASE OF COSTA RICA

Abstract

This chapter highlights foreign debt and economic development in Costa Rica. According to traditional standards, Costa Rica can be classified as being in the group of middle income, mixed economy countries. It has a population of 2.2 million people living within an area of 20 thousand square miles and achieved a per capita income of US $1700 in 1980. Costa Rica's productive structure is dominated by tertiary activities contributing more than 55% of the total value of goods and services produced annually. This sector's significant participation is based on the great importance of commercial activities, particularly those related to imported products, and the significant presence of the Government in the national economy. The primary sector is led by the main export products, namely, coffee, bananas, cattle, and sugarcane. Although this sector has shown marked increments in production in the past several decades, it has begun to lose importance relative to the secondary sector. Industrial activities have found the Central American Common Market, and the economic protection it represents, to be a favorable field within which to develop. Costa Rica's economic development, at least until 1978, exhibited highly dynamic qualities with not only great increments in production but in per capita income as well. These increases in production (6–8 percent per annum) have kept pace with the larger size of the labor force and, therefore, unemployment has not constituted a sizeable problem.