Updated May 27, 2022
Costa Rica: An Overview
Costa Rica historically has been a bastion of political and
constitution prohibits such initiatives from addressing
economic stability in an often-turbulent region. The United
budget, tax, pension, or security policies.
States has worked closely with Costa Rica to address
challenges in Central America and to advance shared
Figure 1. Costa Rica at a Glance
values, such as democracy and human rights, worldwide.
Political Situation
Costa Rica has sustained 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 (PUSC) dominated post-war politics. The two-
party system has collapsed over the past 20 years, however,
as many discontented Costa Ricans have abandoned the
traditional parties. This shift has allowed newer political
forces to contest power, such as the center-left Citizens’
Action Party (PAC), which won the 2014 and 2018
presidential elections, and the center-right Social
Democratic Progress Party (PPSD), which won the 2022

presidential election. It also has contributed to legislative
Sources: CRS Graphics, Instituto Nacional de Estadística y Censos;
fragmentation, making governance more challenging.
Universidad de Costa Rica, Centro de Investigación y Estudios
Políticos; International Monetary Fund; Trade Data Monitor.
Carlos Alvarado of the PAC served as president from May
2018 to May 2022. During his term, Costa Rica legalized
Economic and Social Conditions
same-sex marriage, enacted structural reforms to join the
Costa Rica pursued state-led economic development
Organization for Economic Cooperation and Development
throughout much of the 20th century but began to adopt a
(OECD) in 2021, and began to implement a plan to reduce
more market-oriented economic strategy in the 1980s. Since
net carbon emissions to zero by 2050. Other portions of
that time, Costa Rica has attracted a cluster of high-tech
Alvarado’s agenda stalled due to fiscal constraints, the
manufacturers, including medical device companies, and
Coronavirus Disease 2019 (COVID-19) pandemic, and a
has developed a dynamic tourism sector, contributing to the
lack of support in the unicameral Legislative Assembly.
diversification of the country’s once predominantly
Costa Ricans generally expressed low levels of approval for
agricultural economy. These newer industries provide
Alvarado throughout his presidency; a March 2022
higher wages, but many Costa Ricans remain employed in
University of Costa Rica poll found that 18% of Costa
traditional industries, which struggle to compete with
Ricans viewed his presidency favorably.
imports and provide lower pay and precarious working
conditions. This divergence has reinforced Costa Rica’s
Rodrigo Chaves, a former Costa Rican finance minister and
relatively high level of income inequality. It also has
World Bank official, was elected to succeed Alvarado,
contributed to rising levels of unemployment and informal
securing 53% of the vote in an April 2022 runoff election
employment, eroding the tax base necessary to sustain
against former President José María Figueres (1994-1998)
Costa Rica’s social welfare system.
of the PLN. Some 43% of the population abstained from the
vote after an acrimonious campaign, in which Chaves
Socioeconomic and public health conditions deteriorated in
harshly criticized the traditional political class as corrupt
Costa Rica in 2020 due to the COVID-19 pandemic but
and ineffectual while personally facing allegations of sexual
have begun to recover. Although the Costa Rican
harassment and campaign finance irregularities. Chaves
government enacted emergency measures to support
promised to “rebuild” the nation in his May 2022
businesses and households through the pandemic, the
inauguration speech, indicating his major priorities include
economy contracted by 4.1% and the poverty rate increased
reviving the economy, streamlining government operations,
from 24% in 2019 to 30% in 2020. Costa Rica registered a
reducing the cost of living, and combatting corruption and
7.6% economic growth rate in 2021, which helped reduce
crime. The new president may struggle to move his agenda
the poverty rate to 26%. According to Johns Hopkins
through the Legislative Assembly, in which his PPSD holds
University, as of May 27, 2022, Costa Rica had recorded
10 of 57 seats. Although Chaves has asserted that he could
nearly 8,500 COVID-19 deaths (167 per 100,000 people)
bypass the legislature with popular referenda, the
and more than 81% of the population was fully vaccinated.
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Costa Rica: An Overview
The pandemic-driven economic downturn also exacerbated
experienced an increase in organized crime and violence
Costa Rica’s fiscal challenges, as the budget deficit
over the past decade. Costa Rica recorded 588 homicides in
widened to 8.4% of GDP in 2020. The Alvarado
2021, giving it a homicide rate of 11.4 per 100,000
administration negotiated a three-year, $1.8 billion
residents. Costa Rican authorities have linked much of the
financing arrangement with the International Monetary
violence to drug trafficking organizations, which use the
Fund (IMF) intended to support Costa Rica’s economic
country as a transit and storage point for South American
recovery while stabilizing the country’s debt burden. The
cocaine destined for the U.S. market. Drug trafficking
budget deficit fell to 5.1% of GDP in 2021, and IMF
organizations also have sought to infiltrate Costa Rican
officials agreed to extend the arrangement by five months
institutions, contributing to increased corruption in the
(until July 2024) in March 2022. Chaves has vowed to
justice sector, according to the U.S. State Department.
renegotiate the terms of the IMF agreement to reflect
changing global dynamics and his policy priorities.
The United States provides foreign assistance to Costa Rica
to help the country combat transnational crime and other
The IMF forecasts 3.3% economic growth for Costa Rica in
security threats. In the Consolidated Appropriations Act,
2022, aided by widespread vaccination and sustained
2022 (P.L. 117-103), Congress appropriated $40.7 million
exports. The effects of Russia’s invasion of Ukraine could
of security assistance for Costa Rica. That total includes
slow Costa Rica’s recovery, however, by contributing to
$8.2 million in bilateral aid and $32.5 million provided
rising fuel prices and tighter global financial conditions.
through the Central America Regional Security Initiative.
U.S. assistance has helped Costa Rica expand community-
U.S.-Costa Rican Relations
based crime prevention programs, train security and justice
The Biden Administration has sought to bolster ties with
sector personnel, and acquire equipment. For FY2023, the
Costa Rica. In April 2022, the State Department
Biden Administration has requested $600,000 to train Costa
congratulated Chaves on his election and expressed interest
Rican security forces. In May 2022, the State Department
in working with the new government to advance common
offered a $10 million reward for information on leaders of
interests, including humane migration management and
Conti, a Russian hacking group that has carried out a far-
environmental protection. The Biden Administration also
reaching cyberattack against the Costa Rican government.
has expressed support for the Alliance for Development in
Democracy—an informal arrangement among Costa Rica,
Migration and Refugee Flows
Panama, and the Dominican Republic intended to accelerate
As a comparatively prosperous and stable country, Costa
post-pandemic economic recovery, foster sustainable
Rica has long served as a destination for migrants and
development, and defend democracy and human rights
asylum-seekers from other Latin American nations. The
throughout the region. The United States has donated 1.5
country has experienced a recent surge in asylum requests,
million COVID-19 vaccine doses and more than $4 million
however, primarily due to the ongoing political crisis in
in other pandemic-related aid to Costa Rica.
neighboring Nicaragua. According to the U.N. Refugee
Agency, more than 150,000 Nicaraguans have sought
Trade and Investment Ties
asylum in Costa Rica. Costa Rica also has experienced
The United States and Costa Rica are parties to the
increasing inflows of migrants and asylum-seekers from
Dominican Republic-Central America-United States Free
Venezuela, El Salvador, and Honduras.
Trade Agreement (CAFTA-DR), which was signed in 2004
and entered into force for Costa Rica in 2009. Bilateral
The Costa Rican government has sought to provide
trade more than doubled between 2008 and 2012 but
protection and humanitarian aid to those in need but has
declined 43% between 2012 and 2020, largely due to a
called on the international community for additional
steep drop in U.S. imports following Intel’s 2014 closure of
support. According to the U.S. Agency for International
a microprocessor manufacturing plant in Costa Rica. U.S.-
Development, the United States provided nearly $14.2
Costa Rican trade totaled $13.8 billion in 2021, a 25%
million to humanitarian organizations in FY2021 to support
increase from 2020 levels. U.S. goods exports to Costa Rica
migrants, asylum-seekers, and refugees in Costa Rica.
amounted to $7.3 billion and U.S. goods imports from
Costa Rica amounted to $6.5 billion in 2021, giving the
In addition to those who have sought refuge in Costa Rica,
United States a $774 million trade surplus. Top U.S.
many migrants pass through Costa Rican territory on their
exports to Costa Rica in 2021 included mineral fuels,
way to the United States. In recent years, such transitory
electronic machinery and parts, and medical equipment; top
flows have included large numbers of Cubans and Haitians,
U.S. imports from Costa Rica in 2021 included medical
as well as extra-regional migrants from Africa and Asia.
equipment, fruit, and electric machinery and parts.
Costa Rica has worked with the U.S. government to
conduct background checks on those transiting the country
CAFTA-DR includes a chapter on investment that is similar
and to identify and respond to potential security threats
to a bilateral investment treaty. According to the U.S.
before they reach the U.S. border. During a March 2022
Bureau of Economic Analysis, the accumulated stock of
visit by U.S. Secretary of Homeland Security Alejandro
U.S. foreign direct investment in Costa Rica was $2 billion
Mayorkas, the United States and Costa Rica signed a
in 2020, with 45% invested in the manufacturing sector.
migration collaboration agreement focused on combatting
migrant smuggling and human trafficking and improving
Security Cooperation
migrant integration and protection programs.
Costa Rica’s institutions have proven more resilient than
those of its Central American neighbors, but the country has
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Costa Rica: An Overview

Joshua Klein, Presidential Management Fellow
IF10908
Peter J. Meyer, Specialist in Latin American and Canadian
Affairs


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https://crsreports.congress.gov | IF10908 · VERSION 7 · UPDATED

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