USAID in Costa Rica Demonstrates Positive Results

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SEATTLE — Since the United States began dispensing foreign aid, detractors have criticized its efficacy, questioned its intentions and promoted its failure. However, USAID in Costa Rica serves as a case study of sorts, showing the potency of foreign assistance when applied with wisdom, prudence and practicality.[hr_invisible]

Three Presidents, One Mission

In 1961, the John F. Kennedy Administration established the United States Agency for International Development (USAID). It was, in essence, a culmination of the prior two administrations’ emphasis on assisting in the economic development of poor nations in the aftermath of World War II.

Presidents Truman, Eisenhower and Kennedy all saw the advantages of assisting the world’s poor and helping build democratic institutions across the globe. Rooted in the recognition that promoting American interests need not be sacrificed at the altar of helping vulnerable nations, foreign assistance became a pillar of American foreign policy in the 1950s and 1960s.[hr_invisible]

Building Blocks and a Helping Hand

Tasked with the charter of “furthering America’s foreign policy interests in expanding democracy and free markets while also extending a helping hand to people struggling”, USAID began its work.

Costa Rica was among the first beneficiaries of America’s new posture toward development assistance and humanitarian aid. Although some assistance was given to the Central American nation following its independence in 1948, America’s aid to Costa Rica began in earnest in the 1950s, with a primary focus on improving access to healthcare.

In this regard, USAID in Costa Rica was largely successful. Infant survival rates improved significantly, as did overall caloric intake. Access to clean water and sewage increased, and the development of the Inter-American Highway allowed Costa Ricans, especially those in rural areas, better access to medical services.

In the 1970s, the priority of USAID programs shifted to concerns over population growth. With the provision of contraceptives and family planning initiatives, along with better economic conditions generally, the fertility rate in Costa Rica fell from 5.8 births per woman in 1967 to 3.1 in 1992.

In response to a fiscal crisis that threatened Costa Rica in the early 1980s, the U.S. tailored its efforts toward economic stabilization. Infusions of cash from USAID, in concert with the International Monetary Fund, helped reduce national unemployment from 9 percent in 1983 to below 4 percent by 1989. Growth rates also spiked; following a span of negative growth, Costa Rica’s economy sustained growth rates of 5.3 percent from 1983 to 1993.

Additionally, aid during this period also went to liberalizing credit markets and reducing barriers to trade, both of which spurred investment.

These reforms offered much-needed stability when Costa Rica’s economy was in crisis, and they helped set Costa Rica on the proper economic path.[hr_invisible]

Off the Dole and On the Rise

In 1997, Costa Rica “graduated” from American foreign aid, as it stopped receiving assistance from USAID. The nation’s progress, however, has been sustained.

Today, Costa Rica is Latin America’s oldest and most robust democracy, no small feat for a country that operates amid a milieu of political and economic turmoil in neighboring countries like Nicaragua. Growth rates are still steady, and exports have shifted from a reliance on fruits to technologically driven products like medical equipment.

The United States has also benefited from Costa Rica’s economic stability as its number one trading partner. Forty-one percent of Costa Rica’s exports come to the U.S., while 37 percent of its imports come from America. This mutually beneficial relationship provides jobs and lower-priced products to both nations.

In keeping with the mission enunciated by Truman, Eisenhower and Kennedy, USAID in Costa Rica has demonstrated the ability of targeted and adaptable foreign assistance to be successful.

– Brendan Wade

Photo: Flickr

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About Author

Brendan Wade

Brendan writes for The Borgen Project from Phoenix, AZ. His academic interests include economics and political science. Brendan hopes to study law.

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