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COSTA
RICA
The Republic of Costa Rica is a republic of Central America. Remarkably for
the region, Costa Rica has stood as a bastion of stability and democracy
since the minor civil war of the late 1940s that brought President José
Figueres Ferrer to power. In fact, Costa Rica has no military, only a
domestic police force (albeit a heavily armed one). The capital is San José.
History of Costa Rica
The native peoples were conquered by Spain in the 16th century. Costa Rica
was then the southern-most province in the Spanish territory of New Spain.
The provincial capital was in Cartago.
After a brief time in the Mexican Empire of
Agustín de Iturbide (see: History of Mexico and Mexican Empire) Costa Rica
became a state in the United States of Central America (see: History of
Central America) from 1823 to 1839. In 1824 the capital was moved to San
José. From the 1840s on Costa Rica was an independent nation.
Costa Rica is a Central American success story: since the late 19th century,
only two brief periods of violence have marred its democratic development.
In 1949, José Figueres Ferrer abolished the army; and since then, Costa Rica
has been one of the few countries to operate within the democratic system
without the assistance of a military.
Although still a largely agricultural country, it has achieved a relatively
high standard of living. Land ownership is widespread. Tourism is a rapidly
expanding industry.
Provinces of Costa Rica
Costa Rica consists of seven provinces:
Alajuela (central; north of capital San José)
Cartago
Guanacaste (north-west)
Heredia
Limón
Puntarenas (south-west)
San José (Area around capital)
Geography of Costa Rica
Location: Central America, bordering both the Caribbean Sea and the North
Pacific Ocean, between Nicaragua and Panama
Geographic coordinates: 10 00 N, 84 00 W
Map references: Central America and the Caribbean
Area:
total: 51,100 km²
land: 50,660 km²
water: 440 km²
note: includes Isla del Coco (Cocos Island) in the Pacific Ocean
Area - comparative: slightly smaller than West Virginia
Land boundaries:
total: 639 km
border countries: Nicaragua 309 km, Panama 330 km
Coastline: 1,290 km
Maritime claims:
exclusive economic zone: 200 nm
territorial sea: 12 nm
Climate: tropical and subtropical; dry season (December to April); rainy
season (May to November); cooler in highlands
Terrain: coastal plains separated by rugged mountains
Elevation extremes:
lowest point: Pacific Ocean 0 m
highest point: Cerro Chirripo 3,810 m
Natural resources: hydropower
Land use:
arable land: 6%
permanent crops: 5%
permanent pastures: 46%
forests and woodland: 31%
other: 12% (1993 est.)
Irrigated land: 1,200 km² (1993 est.)
Natural hazards: occasional earthquakes, hurricanes along Atlantic coast;
frequent flooding of lowlands at onset of rainy season; active volcanoes
Environment - current issues: deforestation, largely a result of the
clearing of land for cattle ranching; soil erosion; water pollution (rivers);
fisheries protection; solid waste management
Economy of Costa Rica
Costa Rica's basically stable economy depends on tourism, agriculture, and
electronics exports. Poverty has been substantially reduced over the past 15
years, and a strong social safety net has been put into place. Economic
growth has rebounded from -0.9% in 1996 to 4% in 1997, 6% in 1998, and 7% in
1999. Inflation rose to 22.5% in 1995, dropped to 11.1% in 1997, 12% in
1998, and 11% in 1999. Large government deficits--fueled by interest
payments on the massive internal debt--have undermined efforts to maintain
the quality of social services. Curbing inflation, reducing the deficit, and
improving public sector efficiency remain key challenges to the government.
Political resistance to privatization has stalled liberalization efforts.
Costa Rica's economy emerged from recession in 1997 and has shown strong
aggregate growth since then. After 6.2% growth in 1998, GDP grew a
substantial 8.3% in 1999, led by exports of the country's free trade zones
and the tourism sector. The Central Bank attributes almost half of 1999
growth to the production of Intel Corporation's microprocessor assembly and
testing plant. The strength in the nontraditional export and tourism sector
is masking a relatively lackluster performance by traditional sectors,
including agriculture. Inflation, as measured by the Consumer Price Index,
was 10.1% in 1999, down from 11.2% the year before. The central government
deficit decreased to 3.2% of GDP in 1999, down from 3.3% from the year
before. On a consolidated basis, including Central Bank losses and
parastatal enterprise profits, the public sector deficit was 2.3% of GDP.
Controlling the budget deficit remains the single biggest challenge for the
country's economic policymakers, as interest costs on the accumulated
central government consumes the equivalent of 30% of the government's total
revenues. This limits the resources available for investments in the
country's deteriorated public infrastructure.
Costa Rica's major economic resources are its fertile land and frequent
rainfall, its well-educated population, and its location in the Central
American isthmus, which provides easy access to North and South American
markets and direct ocean access to the European and Asian Continents. One-fourth
of Costa Rica's land is dedicated to national forests, often adjoining
picturesque beaches, which has made the country a popular destination for
affluent retirees and ecotourists.
Costa Rica used to be known principally as a producer of bananas and coffee.
In recent years, Costa Rica has successfully attracted important investments
by such companies as Intel Corporation, which employs nearly 2,000 people at
its $300 million microprocessor plant; Proctor and Gamble, which is
establishing its administrative center for the Western Hemisphere; and
Abbott Laboratories and Baxter Healthcare from the health care products
industry. Manufacturing and industry's contribution to GDP overtook
agriculture over the course of the 1990s, led by foreign investment in Costa
Rica's free trade zone. Well over half of that investment has come from the
U.S. Tourism also is booming, with the number of visitors up from 780,000 in
1996 to more than 1 million in 1999. Tourism now earns more foreign exchange
than bananas and coffee combined.
The country has not discovered sources of fossil fuels--apart from minor
coal deposits-- but its mountainous terrain and abundant rainfall have
permitted the construction of a dozen hydroelectric power plants, making it
self-sufficient in all energy needs, except oil for transportation. Costa
Rica exports electricity to Nicaragua and has the potential to become a
major electricity exporter if plans for new generating plants and a regional
distribution grid are realized. Mild climate and trade winds make neither
heating nor cooling necessary, particularly in the highland cities and towns
where some 90% of the population lives.
Costa Rica's infrastructure has suffered from a lack of maintenance and new
investment. The country has an extensive road system of more than 30,000
kilometers, although much of it is in disrepair. Most parts of the country
are accessible by road. The main highland cities in the country's Central
Valley are connected by paved all-weather roads with the Atlantic and
Pacific coasts and by the Pan American Highway with Nicaragua and Panama,
the neighboring countries to the North and the South. Costa Rica's ports are
struggling to keep pace with growing trade. They have insufficient capacity,
and their equipment is in poor condition. The railroad does not function,
with the exception of a couple of spurs reactivated by a U.S.-owned banana
company. The government is expected to open both the ports and the railroads
to competitive bidding opportunities for private investment and management
during the coming months. The government also hopes to bring foreign
investment, technology, and management into the telecommunications and
electrical power sectors, which are monopolies of the state. However,
political opposition to opening these sectors to private participation has
stalled the government's efforts. The poor state of public finances will
continue to limit the state's ability to try to modernize these sectors in
the absence of a political consensus to permit private investment. Failure
to act soon on telecommunications could prove an obstacle to the
government's desire to attract more world-class foreign investment.
Costa Rica has sought to widen its economic and trade ties, both within and
outside the region. Costa Rica signed a bilateral trade agreement with
Mexico in 1994, which was later amended to cover a wider range of products.
Costa Rica joined other Central American countries, plus the Dominican
Republic, in establishing a Trade and Investment Council with the United
States in March 1998. Costa Rica is negotiating or seeking ratification of
trade agreements with Chile, the Dominican Republic, Panama, and Trinidad
and Tobago. It lobbied aggressively for enhancement of the U.S. Government's
Caribbean Basin Initiative and has made clear its interest in joining the
North American Free Trade Agreement (NAFTA) or signing a similar treaty with
the U.S. Costa Rica is an active participant in the negotiation of the
hemispheric Free Trade Area of the Americas, a process that the Costa Rican
Government chaired in preparation for the April 1998 Summit of the Americas
in Santiago, Chile. It also is a member of the so-called Cairns Group which
is pursuing global agricultural trade liberalization in the World Trade
Organization.
GDP: purchasing power parity - $26 billion (1999 est.)
GDP - real growth rate: 7% (1999 est.)
GDP - per capita: purchasing power parity - $7,100 (1999 est.)
GDP - composition by sector:
agriculture: 14%
industry: 22%
services: 64% (1998)
Population below poverty line: NA%
Household income or consumption by percentage share:
lowest 10%: 1.3%
highest 10%: 34.7% (1996)
Inflation rate (consumer prices): 10.8% (1999 est.)
Labor force: 1.377 million (1998)
Labor force - by occupation: agriculture 20%, industry 22%, services 58%
(1999 est.)
Unemployment rate: 5.6% (1998 est.); 7.5% underemployment
Budget:
revenues: $1.93 billion
expenditures: $2.27 billion, including capital expenditures of $NA (1999
est.)
Industries: microprocessors, food processing, textiles and clothing,
construction materials, fertilizer, plastic products
Industrial production growth rate: 24.5% (1999)
Electricity - production: 5,742 GWh (1998)
Electricity - production by source:
fossil fuel: 9.28%
hydro: 80.62%
nuclear: 0%
other: 10.1% (1998)
Electricity - consumption: 5,267 GWh (1998)
Electricity - exports: 77 GWh (1998)
Electricity - imports: 4 GWh (1998)
Agriculture - products: coffee, bananas, sugar, corn, rice, beans, potatoes;
beef; timber
Exports: $6.4 billion (f.o.b., 1999 est.)
Exports - commodities: coffee, bananas, sugar; textiles, electronic
components, electricity
Exports - partners: US 49%, EU 22%, Central America 10% (1999)
Imports: $6.5 billion (c.i.f., 1999 est.)
Imports - commodities: raw materials, consumer goods, capital equipment,
petroleum, electricity
Imports - partners: US 41%, Japan 8.1%, Mexico 7.3%, Venezuela 4% (1998)
Debt - external: $3.9 billion (1998 est.)
Economic aid - recipient: $107.1 million (1995)
Currency: 1 Costa Rican colon (C) = 100 centimos
Exchange rates: Costa Rican colones (C) per US$1 - 299.63 (February 2000),
285.68 (1999), 257.23 (1998), 232.60 (1997), 207.69 (1996), 179.73 (1995)
Fiscal year: 1 of october to 30 of september
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