Until the middle of the 19th century, Costa Rica was a very poor country with an economy based on subsistence agriculture. Then the introduction of Coffee began to provide a product suitable for export. This was followed by bananas, and today these two crops continue to be the most important in the country. Other important traditional exports include meat and sugar.
In the early 1990s, nontraditional export items such as ornamental plants and flowers, seafood, pineapples, pharmaceutical products, textiles and clothing, tires, furniture, and many other products began to rival the traditional exports.
Also during the early 1990s, tourism experienced and unprecedented boom in Costa Rica. Numbers of foreign tourists visiting the country rose from 376,000 in 1989 to over a million at present. The annual value of revenues from tourism soon rose to overtake the traditional banana and coffee exports during the mid 1990s. In 2000, revenues from tourism reached almost $1 billion, with 1,088,075 visitors. In 2001, a record-breaking 1,131,598 visitors were recorded, of which over 430,000 were US citizens, about the same as in 2000. There was a slight decrease in European and Canadian visitors to Costa Rica, and a bout a 10% increase from Latin American visitors.
In the late 1990s, the electronic sector showed a strong growth. Intel, the multinational manufacturer of computer chips opened factories in Costa Rica. Their influence fueled the electronics industry to become Costa Rica's top Dollar earner in 1998, bringing the country US$ 1.2 billion, of which about78% was attributed to Intel. However a drop in world demand for microchips resulted in much lower exports from Intel in succeeding years. The textile industry continues to show a strong growth.
In 2000, a world glut of bananas caused a drop in the value of Costa Rican banana exports from $667.5 million in 1998 to 546.5 million in 2000. Coffee, selling at over $140 per 100lb sack in 1998, brought in $409 million in that year. The average price of coffee dropped to about $95 a sack in 2000, bringing the country only $272 million. In 2001, with coffee dropping to a in value to a disastrous low of under $50 a sack, many coffee growers were forced to dump their produce and coffee exports were the lowest in many years. Costa Rica coffee growers claim that they need to make $92 a sack to break even.
The USA is by far the most important export destination, followed by Europe, especially Germany. The USA is also the main supplier of imports, distantly followed by Mexico, Europe, and Japan.
In 2001, devaluation of the colón against the US dollar was almost 7%, and inflation was over 11%, up from 10.3% in 2000. Recent unemployment figures (2000 estimate) were 5,2%, but there is considerable underemployment. As with the rest of the world, Costa Rica's economy was slowed after the World Trade Center attacks on September 11th, 2001.
With the country's high standard of living, Costa Rica leads a more comfortable existence than do other Central Americans, Nonetheless, the country faces numerous pressing issues. The most significant of these is debt. Impressive social services, such as free health care, have left the country with staggering public arrears. Costa Rica's internal and external dept is experiencing booming double-digit growth - not the kind of economic indicators anyone's bragging about. The administration spends nearly a quarter of its budget on foreign-dept payments, leaving little for programs such as education or environmental regulation.
The government also finds itself in the midst of dealing with fallout from the Central American Free Trade Agreement (Cafta) recently negotiated with other Latin American countries and the US. While the agreement hasn't been ratified on either side, small business owners are already worried about competing with mass-produced US imports. the deal also requires the opening up of the state owned telecommunications and insurance monopolies to foreign competition, an act that has some local experts concerned that the cost of public services will go up. Foreign critics say that Cafta fails to implement internationally recognized labor standards and the environmental impact is, as yet, undetermined. Whether or not Cafta will become a reality remains to be seen. the government swears up and down that the public just needs to wait for the benefits to pour in, but if the plan does as little for Costa Rica as the North American free-trade deal has done for Mexico, it could be a long wait.
Tn the meantime, tourism remains on of Costa Rica's top sources of foreign income. the influx of relatively wealthy travelers spending US dollars has kept the local standard of living high, even as the nations two other most profitable sectors have cooled (coffee and microchip processing). However, much of the money made from the tourist trade goes to Europeans and Americans who have landed in the country in droves to set up hotels. As a result, cost have skyrocketed and many Ticos (Costa Ricans) have been priced out of their own towns. Authorities are therefore beginning to clamp down on foreign tourists who overstay their visas or don't follow proper residency procedures.
Pictures by Jörn Malek. The team of 1-CostaRicaLink and Costa-Rica-Information-Mobile wishes you the best of times in our little paradise called Costa Rica.
Text by Lonely Planet.
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