Economy of Costa Rica

Economy of Costa Rica

According to businesscarriers, the country’s economy compares favorably with the economic structures of other Central American countries with a relatively high share of the industrial sector, including the production of electronic components of computers, light industry enterprises, processing of crop products, animal husbandry, tropical agriculture, and fishing. Tourism plays an important role in the economy. A feature of the country’s agricultural sector is a more even distribution of land in farm ownership in comparison with other countries of the region in the absence of large latifundia. Costa Rica ranks second in the world in banana production (after Ecuador) and is among the top ten countries producing coffee and cane sugar.

Thanks to the diversification of industrial and agricultural production, income from tourism, as well as diversified exports in terms of goods, Costa Rica is relatively well enduring the crisis associated with the so-called. globalization. GDP growth in 2002 was 1.5%. The crisis, which most affected the production of traditional export goods – bananas, coffee and sugar, domestic consumption and sales, did not lead to serious disproportions in the economy due to foreign investment.

Costa Rica’s GDP at current prices is $15,850 million, or $4,450 per capita (2001). The share of exports in GDP is 80%. As a founding member of the WTO, Costa Rica has taken advantage of the liberalization of foreign trade at the regional and global levels by entering into a series of Free Trade Agreements, achieving export growth of 8-10% per year.

In the structure of GDP, the real sector of the economy accounts for St. 50%, incl. 21.7% for industry, 18% for agriculture, 3.9% for fisheries, 3.7% for construction, and 3.5% for electricity generation and water supply. In the services sector, 11.5% is accounted for by transport and communications, 17% by trade, 8% by financial services, and the rest by the real estate business, services of administrative bodies, and other services.

Of the economically active population, 19% are employed in agriculture, 16% in industry, 14% in the service of administrative authorities, 11% in health and education, and the rest in trade and private sector enterprises.

The industry is divided into three groups of enterprises. The 1st group is formed by enterprises created by foreign investors in the Free Industrial Zones (FIZ). The group in terms of production costs is headed by the factory built in 1998 by INTEL (USA) for the production of electronic microcircuits and processors for personal computers of the 4th generation, the production volumes of which at a cost amount to 700-800 million US dollars per year. This group also includes enterprises of the textile, pharmaceutical, electrical, jewelry, and leather industries. Of the 220,000 Costa Ricans employed in industry, 85,000 work in the companies of this group.

The 2nd group includes enterprises operating outside the SDR regime, but producing products for both the domestic and foreign markets. Many of them initially received or receive incentives to stimulate their export activities. In this group of enterprises that form the core of the Costa Rican business. They produce milk, dairy products, juices, canned tropical fruits, broiler meat, orange juice concentrates and juices from other fruits, seafood and canned food from them, palm oil, as well as rubber products, low and high pressure polyethylene products, metal products, chemical fertilizers. The 3rd group includes enterprises with foreign and domestic private capital engaged in the production and export of traditional export goods: bananas, coffee and raw sugar.

Public sector enterprises produce approx. 10% of the value of GDP, but they are concentrated in strategically important sectors: energy, communications, oil refining, management of seaports. The rest of the civil services operate in the system of healthcare, education, and social insurance.

In agriculture, 418 thousand hectares, or 8% of the country’s territory, are occupied by various types of plants. Production volumes per year of the main types of crop production (thousand tons): bananas – 1800, coffee – 600, sugarcane – 3150, oranges – 185, pineapples – 210, palm oil – 494 (for nuts), mango – 28, rice – 220, flowers and ornamental plants – 70 (according to shipments for export). 200-220 thousand tons of rice, 120-130 thousand tons of beans, 30-35 thousand tons of corn are produced from cereals.

Costa Rica depends on imports only for certain types of grains: corn (about $90 million per year), wheat ($45 million), legumes (soybeans, beans – $10-11 million per year). year). In addition, some livestock products worth approx. $120 million per year. In total, imports of food products amounted to 344 million US dollars in 2000 (approx. 6% of total imports).

The transport infrastructure of the country in its technical condition needs to be improved. Out of 37,000 km of roads, only 8,000 km are paved and in a satisfactory condition, and another 5,000 km are in need of repair.

There is an oil pipeline from the port of Limon to San Jose with a length of 176 km. There are 30 airports in the country with paved runways, of which the Capital Airport and Liberia Airport have runways of 3047m and 2438m respectively. The main ports of the country are Puntarenas (on the Pacific Ocean) and Limon (on the Atlantic coast).

Communication services are monopolized by the state company RACSA, which is part of the ICE group. There are 515 thousand telephone subscribers in the country, 384 thousand users of Internet services (2002) and approx. 180 thousand mobile phone users. In terms of the number of Internet users, Costa Rica is among the top three Latin American countries.

For a long time, state-owned banks remained the basis of the country’s banking system. Private commercial banks, incl. foreign, were admitted to the country’s financial system with con. 1980s The creation of offshore financial structures in Costa Rica is also allowed.

Foreign tourism in recent years has become the most dynamically developing sector of the economy. In 2002, 1.2 million tourists visited Costa Rica, generating $1.1 billion in foreign tourism revenue. The main tourist niche is the so-called. ecological tourism using the country’s unique natural and climatic resources.

The most characteristic and traditional feature of the economic policy of the Costa Rican administrations is the desire to ensure, albeit at the cost of a state budget deficit, adequate social insurance, as well as the level of education and health expenditures fixed by the Constitution (6% of all budget expenditures each). As a result, the government’s internal debt accumulated over the years reached almost $7 billion in monetary terms, or approx. 1/2 of the value of GDP, and interest payments account for 1/3 of budget expenditures.

The balance of payments is passive, according to the results of 2002 – 845 million US dollars. Only thanks to the growth of tourism revenues, as well as the inflow of foreign direct investment (by 400-500 million US dollars annually), the government manages to avoid a large outflow from the country of foreign exchange reserves, the volume of which has been maintained in recent years at the level of 1.4-1.5 billion USD.

Economy of Costa Rica