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Costa Rica
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Although
explored by the Spanish early in the 16th century, initial
attempts at colonizing Costa Rica proved unsuccessful
due to a combination of factors, including: disease from
mosquito-infested swamps, brutal heat, resistance by natives,
and pirate raids. It was not until 1563 that a permanent
settlement of Cartago was established in the cooler, fertile
central highlands. The area remained a colony for some
two and a half centuries. In 1821, Costa Rica became one
of several Central American provinces that jointly declared
their independence from Spain. Two years later it joined
the United Provinces of Central America, but this federation
disintegrated in 1838, at which time Costa Rica proclaimed
its sovereignty and independence. Since the late 19th
century, only two brief periods of violence have marred
the country's democratic development. Although it still
maintains a large agricultural sector, Costa Rica has
expanded its economy to include strong technology and
tourism industries. The standard of living is relatively
high. Land ownership is widespread. In January 2008, Costa
Rica assumed a nonpermanent seat on the UN Security Council
for the 2008-09 term.
Costa
Rica's basically stable economy depends on tourism, agriculture,
and electronics exports. Exports have become more diversified
in the past 10 years due to the growth of the high-tech
manufacturing sector, which is dominated by the microprocessor
industry and the production of medical devices. Tourism
continues to bring in foreign exchange, as Costa Rica's
impressive biodiversity makes it a key destination for
ecotourism. Foreign investors remain attracted by the
country's political stability and relatively high education
levels, as well as the fiscal incentives offered in the
free-trade zones. Costa Rica has attracted one of the
highest levels of foreign direct investment per capita
in Latin America. Poverty has remained around 20% for
nearly 20 years, and the strong social safety net that
had been put into place by the government has eroded due
to increased financial constraints on government expenditures.
Immigration from Nicaragua has increasingly become a concern
for the government. The estimated 300,000-500,000 Nicaraguans
in Costa Rica legally and illegally are an important source
of - mostly unskilled - labor, but also place heavy demands
on the social welfare system. Under the ARIAS administration,
the government has made strides in reducing internal and
external debt - in 2007, Costa Rica had its first budget
surplus in 50 years. Reducing inflation remains a difficult
problem because of rising commodity import prices and
labor market rigidities, though lower oil prices will
decrease upward pressures. The Central Bank is moving
towards a more flexible exchange rate system to focus
on inflation targeting by 2010. The US-Central American
Free Trade Agreement (CAFTA) entered into force on 1 January
2009, after significant delays within the Costa Rican
legislature. Nevertheless, economic growth has slowed
in 2009 as the global downturn reduced export demand and
invesment inflows.
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