What’s Causing Poverty in Costa Rica?

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SEATTLE — Poverty in Costa Rica has dropped in recent years, from 21.7 percent of Costa Ricans living in poverty in 2015 to 20.5 percent in 2016. This translates to 10,390 Costa Rican families who are no longer considered poor.

The National Statistics and Census Institute, or INEC, reports that Costa Rican inflation rates have trended downward over the last 10 years. However, although the country maintains more than 20 social spending programs, Costa Rica is one of only a few Latin American countries failing to significantly reduce poverty rates. In fact, Costa Rica’s poverty rate has remained in the 20 to 25 percent range for the last 20 years, with a 2011 rate of 21.7 percent and a 2014 rate of 22.4 percent.

This information contrasts with the fact that Costa Rica’s GDP has nearly quadrupled since 2000. Healthcare is universal, affordable and of high quality — the country is a hotspot for medical tourism. The education system in highly ranked, and 97.8 percent of the population is literate as of 2015.

Juan Carlos Hidalgo, a well-known Latin American policy analyst, contends that the disparity between Costa Rica’s high poverty rate and notable spending power is due to the government’s overinvestment in the country’s export economy. According to Hidalgo, multiple Costa Rican administrations have implemented trade and tax policies that privilege export-based sectors and increase the income gap between the rich and the poor. To begin closing this gap, Hidalgo recommends that Costa Rica institute a neutral exchange rate and encourage new, domestic entrepreneurship.

Suggested economic reforms aside, the Costa Rican government is making a streamlined attempt at poverty reduction through its Bridge to Development plan, released in March 2015. This program will combine Costa Rica’s 20-plus social spending programs into one welfare system through which families can apply for multiple types of aid, including food subsidies, pensions and scholarships.

While Bridge to Development will not directly increase funding for social spending, it will make it easier for poor families to access the resources they desperately need. This program hopefully represents a positive change in the government’s treatment of poverty in Costa Rica, as problems lie not with how much money is spent, but how money spent is organized and which groups are targeted.

Caroline Meyers
Photo: Flickr

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