by Juan Carlos Hidalgo
February 03, 2014
Costa Rica’s economic transformation of the last 30 years included numerous liberalization measures, but a closer look reveals a strong mercantilist bias. Successive administrations adopted monetary, trade, tax, and regulatory regimes that benefited the export-oriented sectors of the economy at the expense of the overall population, particularly the poor. As a result, even though the country has enjoyed a healthy growth rate for over 25 years, the proportion of Costa Ricans living below the poverty line remains pretty much the same as it did in 1994 at around 20 percent, while income inequality is on the rise. Costa Rica needs genuine market reforms that eliminate the government’s power to pick winners and losers or otherwise bestow favoritism.