Updated September 30, 2021
Costa Rica: An Overview
Costa Rica historically has been an outpost of political and
Ricans viewed Alvarado’s performance in office positively,
economic stability in an often-turbulent region. The United
58% viewed it negatively, and 22% held neutral opinions.
States has worked closely with the country to address
Costa Rica’s next presidential and legislative elections are
challenges in Central America and to advance shared
scheduled for February 6, 2022.
values, such as democracy and human rights, worldwide.
Figure 1. Costa Rica at a Glance
Political Situation
Costa Rica has sustained continuous civilian democratic
governance since 1949, when the country adopted a new
constitution in the aftermath of a short civil war. The
center-left (now centrist) National Liberation Party (PLN)
and a center-right opposition that ultimately became the
Social Christian Unity Party dominated post-war politics.
The two-party system has collapsed over the past 20 years,
however, as many Costa Ricans have grown disenchanted
with the country’s political class and have abandoned the
traditional parties. This shift has allowed newer political
forces to contest power, such as the center-left Citizens’
Action Party, which has won the past two presidential
elections. It also has made governance more challenging, as
party fragmentation has contributed to legislative gridlock.

President Carlos Alvarado of the Citizens’ Action Party
Sources: CRS Graphics, Instituto Nacional de Estadística y Censos;
took office for a four-year term in May 2018 after defeating
Centro de Investigación y Estudios Políticos; International Monetary
Fabricio Alvarado of the conservative National Restoration
Fund; Trade Data Monitor.
Party, 61% to 39%, in a second-round runoff. Alvarado
must forge ad hoc coalitions to pass his policy agenda,
Economic and Social Conditions
since his party holds 10 of 57 seats in the unicameral
Costa Rica pursued state-led economic development
Legislative Assembly. During the first three years of
throughout much of the 20th century but began to adopt a
Alvarado’s term, Costa Rica legalized same-sex marriage,
more market-oriented economic strategy in the 1980s. Over
enacted structural reforms required for admission into the
the past three decades, Costa Rica has attracted a cluster of
Organization for Economic Cooperation and Development,
high-tech manufacturers, such as medical device
and began implementing an ambitious plan to reduce net
companies, and developed a dynamic tourism sector,
carbon emissions to zero by 2050. Other portions of
contributing to the diversification of the country’s once
Alvarado’s agenda have stalled due to fiscal constraints and
predominantly agricultural economy. These newer
the Coronavirus Disease 2019 (COVID-19) pandemic.
industries provide higher pay and rising wages, but many
Costa Ricans remain employed in traditional industries,
Costa Rica has been more successful than many Latin
which struggle to compete with imports and provide lower
American countries in containing COVID-19. The
pay and precarious employment conditions. This
Alvarado administration took swift action in March 2020 to
divergence has reinforced Costa Rica’s relatively high level
slow the initial spread of the virus, imposing border
of income inequality. It also has contributed to high rates of
restrictions, closing schools and nonessential businesses,
unemployment and informal employment, eroding the tax
and prohibiting mass gatherings. Infections began to rise in
base necessary to sustain Costa Rica’s social safety net.
May 2020, however, after the government began to reopen
the economy. Costa Rica has faced two large waves of
Socioeconomic conditions have deteriorated considerably
infections since April 2021, which analysts have attributed
due to the COVID-19 pandemic. Although the government
to the spread of the Delta variant and a relaxation of public
enacted emergency measures to support businesses and
health restrictions. According to Johns Hopkins University,
households, the economy contracted by 4.1% and the
as of September 30, 2021, Costa Rica had recorded more
poverty rate increased from 24% to 30% in 2020. More
than 530,000 cases and 6,300 deaths from COVID-19 and
than 19% of Costa Ricans remained unemployed in the
40% of its population was fully vaccinated.
second quarter of 2021. Nevertheless, the Central Bank of
Costa Rica estimates that economic activity has returned to
Alvarado’s approval rating spiked early in the pandemic but
pre-pandemic levels and forecasts 3.9% growth for 2021.
has returned to pre-pandemic levels. An August 2021 poll
from the University of Costa Rica found that 20% of Costa
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Costa Rica: An Overview
The economic downturn also exacerbated Costa Rica’s
transnational crime and other security threats. In the
fiscal challenges, as the budget deficit widened to 8.7% of
Consolidated Appropriations Act, 2021 (P.L. 116-260),
GDP in 2020. The Alvarado administration negotiated a
Congress appropriated $40.7 million of security assistance
three-year, $1.8 billion financing arrangement with the
for Costa Rica. That total includes $8.2 million in bilateral
International Monetary Fund intended to support Costa
military aid and $32.5 million through the Central America
Rica’s economic recovery while stabilizing the country’s
Regional Security Initiative (CARSI). The U.S. Department
debt burden. The government’s proposed austerity
of Defense has provided additional support to Costa Rica in
measures sparked protests in September and October 2020
recent years, with a particular focus on increasing Costa
and could generate further unrest, if implemented.
Rica’s interdiction capabilities.
U.S.-Costa Rican Relations
U.S. assistance has helped Costa Rica expand community-
The Alvarado administration has sought to maintain
based crime prevention programs, train security and justice
friendly relations with the United States. During a June
sector personnel, and acquire equipment—including
2021 visit to Costa Rica, U.S. Secretary of State Antony
aircraft, patrol boats, and ground-based radar—that
Blinken highlighted bilateral economic and security ties as
enhances the country’s ability to monitor and control its
well as U.S.-Costa Rican cooperation to address shared
national territory. According to the U.S. State Department,
challenges such as the COVID-19 pandemic, regional
Costa Rica, working closely with the United States,
migration flows, and climate change.
disrupted at least 17 international drug trafficking
organizations and seized more than 71 metric tons of illicit
Trade and Investment Ties
drugs in 2020.
The United States and Costa Rica are parties to the
Dominican Republic-Central America-United States Free
COVID-19
Trade Agreement (CAFTA-DR), which was signed in 2004
President Alvarado has repeatedly called on the
and entered into force for Costa Rica in 2009. Bilateral
international community to help developing countries
trade more than doubled between 2008 and 2012 but has
obtain COVID-19 vaccines and recover from the pandemic.
declined 43% over the past eight years, largely due to a
In July 2021, the United States donated 500,000 doses of
steep drop in U.S. imports following Intel’s 2014 closure of
the Pfizer/BioNTech vaccine to Costa Rica. The United
a microprocessor manufacturing plant in Costa Rica. U.S.-
States also has provided more than $4 million of pandemic-
Costa Rican trade totaled $11 billion in 2020, a 3% decline
related assistance to Costa Rica, including personal
compared with 2019. U.S. goods exports to Costa Rica
protective equipment, medical and hygiene supplies, and
amounted to $5.7 billion and U.S. goods imports from
mobile hospitals.
Costa Rica amounted to $5.4 billion in 2020, giving the
United States a $331 million trade surplus. Top U.S.
Migration and Refugee Flows
exports to Costa Rica in 2020 included mineral fuels,
As a comparatively prosperous and stable country, Costa
machinery and parts, medical instruments and equipment,
Rica has long served as a destination for migrants and
and plastics; top U.S. imports from Costa Rica included
asylum-seekers from other Latin American nations. The
medical instruments and equipment, fruit, electric
country has experienced a recent surge in asylum requests,
machinery and parts, and coffee.
however, primarily due to the ongoing political crisis in
neighboring Nicaragua. According to the U.N. Refugee
CAFTA-DR includes a chapter on investment that is similar
Agency, more than 85,000 Nicaraguans have sought asylum
to a bilateral investment treaty. According to the U.S.
in Costa Rica since 2018. Costa Rica also has experienced
Bureau of Economic Analysis, the accumulated stock of
increasing inflows of migrants and asylum-seekers from
U.S. foreign direct investment in Costa Rica was $2 billion
Venezuela, El Salvador, and Honduras.
in 2020, with the manufacturing sector accounting for 45%
of the total.
The Costa Rican government has sought to provide
protection and humanitarian aid to those in need but has
Security Cooperation
called on the international community for additional
Although Costa Rica’s institutions have proven more
support. According to the U.S. Agency for International
resilient than those of its Central American neighbors, the
Development, the United States has provided $9.3 million
country has experienced an increase in organized crime and
to international humanitarian organizations in FY2021 to
related violence over the past decade. Costa Rica recorded
support migrants, asylum-seekers, and refugees in Costa
570 homicides in 2020, giving it a homicide rate of 11.2 per
Rica.
100,000 residents. Costa Rican authorities have linked
much of the violence to drug trafficking organizations,
In addition to those who have sought refuge in Costa Rica,
which use the country as a transit and storage point for
many migrants pass through Costa Rican territory on their
South American cocaine destined for the U.S. market. Drug
way to the United States. In recent years, such transitory
trafficking organizations also have sought to infiltrate Costa
flows have included large numbers of Cubans and Haitians,
Rican institutions, contributing to increased corruption in
as well as extra-regional migrants from Africa and Asia.
the security forces and judiciary, according to the U.S. State
Costa Rica has worked with the U.S. government to
Department.
conduct background checks on those transiting the country
and to identify and respond to potential security threats
The United States coordinates closely with Costa Rica and
before they reach the U.S. border.
provides the country with assistance to combat
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Costa Rica: An Overview

Peter J. Meyer, Specialist in Latin American and Canadian
Affairs
IF10908


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https://crsreports.congress.gov | IF10908 · VERSION 5 · UPDATED

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