The Evolution of a classically agrarian country:
Costa Rica’s old economy system appeared obsolete very clearly as early as the 1970’s. An economy that had survived almost solely from the revenues of a tiny share of the global markets of coffee and bananas would no longer support itself before the first manifestations of total commercial liberalism. The Unites States –always so protective of its national agro-sector- was no longer so desirable an ally and other growing economies posed both a threat and opportunity for expansion.
The real and functional effectiveness with which the state had managed private and public assets allowed for a more diversified strategy. Following we will briefly discuss the shapes of the Costa Rican Economy development.
1-Modelol de Agro-Exportacion (Model of Exportation of Agricultural assets).
Strictly referring to the most basic of Costa Rica’s economic activities: that of the selling of local agro-produce. Firstly done with Chile during 1838 (coffee was the element during this exchange). Europe becoming our first primordial commercial partner, cacao seeds, beef, coffee and bananas our main export.
During World War II and its circumstantial blockage of the European market, Costa Rica was forced to trade relations for a more North American oriented front. The local producers and those involved in the purchasing of overseas materials witnessed an improvement in the conditions the country could provide for both sectors. Legislation of taxation for foreign goods, the promotion of cultivation of our primary crops to much larger areas and Free Trade agreements all contributed to the betterment of the local economic scenario.
The balance between imported and exported groups had already started to break as early as the 1950’s, given the little industrialization of the country and the large demand for goods of regular consumption by the general public; yet, the country had managed throughout all this time to maintain political stability, improve the living conditions of its people, the birth mortality rates dropped and the population could easily be pondered as a happy one during this period.
The 1970’s arrived with its dramatic alterations to the world trade stage, demand of our tropical produce (our fundamental financial backbone) was unstable and Costa Rica saw the necessity to shift its course towards a more diversified economy. The Industrial Costa Rica was born.
2-Modelo de Sustitucion de Importaciones (Model of Substitution of Imported Goods).
Perhaps, the most fundamental of all: the shift in government sponsorship from the agro sector to that of Industrial effective development, thus permitting for a better keeping in local monetary resources by replacing the need for imported goods. Costa Rica begun pondering the possibility of a larger Macro-economic area, that of Central America.
Despite it all, the industrial sector ended up consuming more raw materials from the developed countries than it was capable of producing and selling inside and outside. The Colon currency managed to keep its exaggerated value still and internal revenue was kept stable by the establishment of local brands that did manage to replace the imported ones.
This unbalanced and unmeasured economical growth (which in reality never surpassed the 3 and 4%) added to International shaken financial condition, the oil crises, and general international protectionism brought about the demise of the plan. The approach towards the national classic crops and their financial capacity needed be reassessed; a new Agro-Industrial plan was crafted, seeking to largely industrialize the local market to make it more competent in the international marked and provide for added value.
Once again, the circumstances doomed the success of the intent. Many great agrarian sectors were entirely forsaken and the increase in imported goods was again on a rise. The new industrial attempt failed to improve the product value; the state of affairs was equal or worse than before.