Updated June 13, 2019
Costa Rica: An Overview
Costa Rica, a Central American nation of 5.1 million
people, historically has been an outpost of political and
economic stability in an often-turbulent region. The United
States has worked closely with the country to address
challenges in Central America and to advance shared
values, such as democracy and human rights, worldwide.
Costa Rica has sustained continuous civilian democratic
governance since 1949, when the country adopted a new
constitution in the aftermath of a short but violent 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 postwar 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 centerleft Citizens’ Action Party (PAC), which has won the past
two presidential elections. It also has made governance
more challenging, as party fragmentation in the Legislative
Assembly has led to increased gridlock.
Carlos Alvarado of the ruling PAC was elected president
with nearly 61% of the vote in a second-round runoff
election in April 2018. He defeated Fabricio Alvarado of
the conservative National Restoration Party (PRN), who
had surged to a first place finish in the first-round election
after he called for Costa Rica to withdraw from the InterAmerican Court of Human Rights in response to the court’s
advisory opinion that Costa Rica should legalize same-sex
marriage. President Alvarado, who is 39 years old,
previously served as Minister of Human Development and
Social Inclusion and as Minister of Labor and Social
Security under President Luis Guillermo Solís (2014-2018).
Since his May 2018 inauguration to a four-year term,
President Alvarado has taken steps to stabilize Costa Rica’s
finances and improve citizen security; pushed for new
investments in infrastructure, education, and training; and
launched an ambitious plan to reduce Costa Rica’s net
carbon emissions to zero by 2050. Alvarado appointed a
multiparty cabinet but needs to forge ad hoc legislative
coalitions to pass each portion of his policy agenda. The
PAC holds 10 of 57 seats in the unicameral Legislative
Assembly; the PLN holds 17 seats, the PUSC holds 9 seats,
the PRN and a bloc of PRN dissidents each hold 7 seats,
and the remaining 7 seats are divided among several small
parties. An April 2019 poll from the University of Costa
Rica found that 27% of Costa Ricans rate Alvarado’s
performance “good” or “very good,” 50% rate it “bad” or
“very bad,” and 22% rate it “average.”
Economic and Social Conditions
Costa Rica pursued state-led development throughout much
of the 20th century, but since the1980s, it has implemented
market-oriented economic policies. In the post-civil war
period, the Costa Rican government increased public-sector
employment, established one of the most comprehensive
social safety nets in Latin America, and supported local
producers with subsidies and trade barriers. Those policies
contributed to a rapid expansion of the economy; however,
a deep recession from 1980 to 1982 led Costa Rica to adopt
a new economic strategy. The country privatized the
majority of its state-owned enterprises, adopted free-trade
zones to attract investment, and gradually opened the
domestic market to foreign competition.
Figure 1. Costa Rica at a Glance
Source: CRS Graphics, Instituto Nacional de Estadística y Censos;
Centro de Investigación y Estudios Políticos; International Monetary
Fund; Global Trade Atlas.
Costa Rica has experienced considerable growth since
adopting the more outward-oriented economic strategy, but
many Costa Ricans are dissatisfied with the economy. The
country’s labor market has grown increasingly divided
between those involved in newer sectors—such as hightech manufacturing, tourism, and business services—that
provide higher pay and rising wages, and those involved in
traditional sectors that struggle to compete with imports and
provide lower pay and more precarious employment
conditions. Government statistics indicate that about 11%
of Costa Ricans are unemployed and 46% lack job
protections and benefits because they work in the untaxed
and unregulated informal sector. Moreover, 21% of Costa
Rican households live below the national poverty line.
Costa Rica’s extensive social welfare expenditures—
equivalent to nearly 24% of gross domestic product
(GDP)—have helped alleviate these challenges, but higher
levels of unemployment and informality have eroded the
tax base necessary to sustain the social safety net.
Costa Rica: An Overview
President Alvarado has called for a variety of public
investments to foster economic growth and improve social
welfare in the rural and coastal regions of Costa Rica that
have benefitted the least from changes in the economy.
Nevertheless, he spent most of his first year in office
pushing through a fiscal reform intended to narrow the
country’s budget deficit, which exceeded 6% of GDP in
2017 and 2018 according to the International Monetary
Fund (IMF). Many economists think further tax and
expenditure changes will be necessary to put the country’s
finances on a sustainable path. The IMF forecasts that the
Costa Rican economy will accelerate slightly from 2.7%
growth in 2018 to 2.9% growth in 2019.
U.S.-Costa Rican Relations
Under President Alvarado, Costa Rica and the United States
have maintained strong commercial ties and bolstered
cooperation on regional security issues. Both countries also
have supported international efforts to resolve the political
and humanitarian crises in Venezuela and Nicaragua,
though they sometimes have differed on tactics.
Trade and Investment Ties
The United States and Costa Rica were among the seven
countries that signed the Dominican Republic-Central
America-United States Free Trade Agreement (CAFTADR) in 2004. The agreement did not enter into force for
Costa Rica until January 2009, however, due to significant
domestic opposition. CAFTA-DR has eliminated tariffs on
consumer and industrial goods and is scheduled to phase
out tariffs on most agricultural products by 2020.
U.S.-Costa Rican trade totaled $11.2 billion in 2018. U.S.
exports to Costa Rica amounted to $6.3 billion while U.S.
imports from Costa Rica amounted to $4.9 billion, giving
the United States a $1.5 billion trade surplus. Top U.S.
exports to Costa Rica included refined oil products,
machinery and parts, medical instruments and equipment,
and plastics. Top U.S. imports from Costa Rica included
medical instruments and equipment, fruit, electric
machinery and parts, rubber, and coffee. The United States
was Costa Rica’s largest trading partner, accounting for
more than 41% of the country’s total trade in 2018.
CAFTA-DR also includes a chapter on investment that is
similar to a bilateral investment treaty. According to the
U.S. Bureau of Economic Analysis, the accumulated stock
of U.S. foreign direct investment in Costa Rica was $1.6
billion in 2017, with the manufacturing sector accounting
for nearly 86% of the total.
Although Costa Rica’s institutions have proven more
resilient than those of its Central American neighbors, the
country has experienced an increase in organized crime and
related violence in recent years. Government statistics
indicate that homicides increased from 411 in 2013 to a
record-high 603 in 2017, before declining slightly to 586 in
2018 (a homicide rate of 11.7 per 100,000 residents). Costa
Rican authorities have linked much of the violence to drug
trafficking organizations, which use the country as a transit
and storage point for South American cocaine destined for
the U.S. market. The Costa Rican government has
significantly increased security expenditures in response to
these challenges, allowing the country to hire additional
police officers and expand crime prevention programs.
The United States supports Costa Rica’s efforts to combat
transnational crime and other security threats. In the
Consolidated Appropriations Act, 2019 (P.L. 116-6), for
example, Congress appropriated $40.7 million of security
assistance for Costa Rica. That total includes $8.2 million
in bilateral aid and $32.5 million through the Central
America Regional Security Initiative (CARSI). U.S.
assistance has helped Costa Rica acquire equipment,
including boats, aircraft, and armored vehicles; train
security and justice-sector personnel; and establish a
judicial wire intercept program.
Costa Rica has had a counternarcotics cooperation
agreement with the United States since 1999, which allows
the U.S. Coast Guard, working with Costa Rican officials,
to carry out drug interdiction measures in Costa Rican
waters. These operations occasionally have generated
controversy in Costa Rica's Legislative Assembly, which
must grant permission to U.S. vessels to dock, refuel, and
resupply in Costa Rican territory. Many Costa Ricans are
sensitive about the presence of foreign military personnel in
the country, since Costa Rica abolished its standing military
in 1949. Nevertheless, the Legislative Assembly has voted
repeatedly to provide the necessary authorizations. Close
cooperation with the United States helped Costa Rica seize
a record-high 33.5 metric tons of cocaine in 2018.
Migration and Refugee Flows
As a comparatively prosperous and stable country, Costa
Rica has long served as a destination for migrants and
asylum-seekers from other Latin American nations. The
country has experienced a recent surge in asylum requests,
however, due to the ongoing political crisis in neighboring
Nicaragua. According to the U.N. High Commissioner for
Refugees (UNHCR), more than 55,000 Nicaraguans have
sought refuge in Costa Rica over the past year. Nearly
26,000 Venezuelans have also fled to Costa Rica, 5,400 of
whom have requested asylum. The Costa Rican government
has sought to provide protection and humanitarian aid to
those in need, but has called on the international community
for additional support. According to the U.S. Agency for
International Development, the United States has provided
$3.2 million through UNHCR and other humanitarian
organizations to assist Venezuelans in Costa Rica since
In addition to those who have sought refuge in Costa Rica,
many migrants pass through Costa Rican territory on their
way to the United States. In recent years, such transitory
flows have included large numbers of Cubans and Haitians,
as well as extra-regional migrants from Africa and Asia.
Costa Rican authorities, with U.S. support, have collected
biometric data on more than 23,000 extra-regional
migrants, leading to the identification, detention, and
deportation of criminals, according to the State Department.
Peter J. Meyer, Specialist in Latin American Affairs
Costa Rica: An Overview
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
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