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Encyclopedia > Economy of Costa Rica

The economy of Costa Rica heavily depends on tourism, agriculture, and electronics exports. Poverty has been reduced over the past 15 years, and a social safety net put into place. Economic growth rebounded from -0.9% in 1996 to 4% in 1997, 6% in 1998, 7% in 1999. Tourists on Oahu, Hawaii Tourism is travel for predominantly recreational or leisure purposes or the provision of services to support this leisure travel. ... Electronics is the study of the flow of charge through various materials and devices such as, semiconductors, resistors, inductors, capacitors, nano-structures, and vacuum tubes. ... Year 1996 (MCMXCVI) was a leap year starting on Monday (link will display full 1996 Gregorian calendar). ... Year 1997 (MCMXCVII) was a common year starting on Wednesday (link will display full 1997 Gregorian calendar). ... Year 1998 (MCMXCVIII) was a common year starting on Thursday (link will display full 1998 Gregorian calendar). ... Year 1999 (MCMXCIX) was a common year starting on Friday (link will display full 1999 Gregorian calendar). ...


Inflation rose to 22.5% in 1995, dropped to 11.1% in 1997, 12% in 1998, and 11% in 1999. Large government deficits - fueled by interest payments on the massive internal debt - and inefficient administration by government monopolies have undermined efforts to maintain the quality of social services. Curbing inflation, reducing the deficit, and improving public sector efficiency through an anti-corruption drive, remain key challenges to the government. Political resistance to privatization has stalled liberalization efforts. Year 1995 (MCMXCV) was a common year starting on Sunday (link will display full 1995 Gregorian calendar). ... internal debt is the part of countries debts owed to creditors inside the country. ... This article does not adequately cite its references or sources. ...


Costa Rica's economy emerged from recession in 1997 and has shown strong aggregate growth since then. After 6.2% growth in 1998, GDP grew a substantial 8.3% in 1999, led by exports of the country's free trade zones and the tourism sector. The Central Bank attributes almost half of 1999 growth to the production of Intel Corporation's microprocessor assembly and testing plant. Intel Corporation (NASDAQ: INTC, SEHK: 4335), founded in 1968 as Integrated Electronics Corporation, is an American multinational corporation that is best known for designing and manufacturing microprocessors and specialized integrated circuits. ...


The strength in the nontraditional export and tourism sector is masking a relatively lackluster performance by traditional sectors, including agriculture. Inflation, as measured by the Consumer Price Index, was 10.1% in 1999, down from 11.2% the year before. The central government deficit decreased to 3.2% of GDP in 1999, down from 3.3% from the year before. On a consolidated basis, including Central Bank losses and parastatal enterprise profits, the public sector deficit was 2.3% of GDP.


Controlling the budget deficit remains the single biggest challenge for the country's economic policy makers, as interest costs on the accumulated central government debt consumes the equivalent of 30% of the government's total revenues. This limits the resources available for investments in the country's deteriorated public infrastructure, investments in many cases that would result in higher quality infrastructure if not made through the many inefficient government monopolies.

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Resources

Costa Rica's major economic resources are its fertile land and frequent rainfall, its well-educated population, and its location in the Central American isthmus, which provides easy access to North and South American markets and direct ocean access to the European and Asian Continents. Costa Rica has 2 seasons, both of which have their own agricultural resources. The seasons are the basic, wet and dry, tropical seasons. One-fourth of Costa Rica's land is dedicated to national forests, often adjoining beaches, which has made the country a popular destination for affluent retirees and ecotourists. Ecotourism means ecological tourism, where ecological has both environmental and social connotations. ...


Exports and Jobs

Costa Rica used to be known principally as a producer of bananas and coffee. Its principal exports are still listed as coffee, bananas, cocoa, sugar, lumber, wood products and beef. In recent years, however the country has successfully attracted important investments by such companies as Intel Corporation, which employs nearly 2,000 people at its custom built $300 million microprocessor plant; Procter & Gamble, which is establishing its administrative center for the Western Hemisphere in Costa Rica; and Abbott Laboratories and Baxter Healthcare from the health care products industry likewise. Manufacturing and industry's contribution to GDP overtook agriculture over the course of the 1990s, led by foreign investment in Costa Rica's free trade zones. Well over half of that investment has come from the U.S. Tourism also is booming, with the number of visitors up from 780,000 in 1996 through more than 1 million in 1999 to 1.5 million by 2004. Tourism now earns more foreign exchange than bananas and coffee combined.[1] This article or section does not cite its references or sources. ... A cup of coffee Workers sorting and pulping coffee beans in Guatemala Mature coffee fruit still on the plant Coffee is a widely consumed beverage prepared from the roasted seeds — commonly referred to as beans — of the coffee plant. ... Cocoa beans in a cacao pod Cocoa is the dried and partially fermented fatty seed of the cacao tree from which chocolate is made. ... Magnification of grains of sugar, showing their monoclinic hemihedral crystalline structure. ... Timber in storage for later processing at a sawmill Lumber or Timber is a term used to describe wood, either standing or that has been processed for use—from the time trees are felled, to its end product as a material suitable for industrial use—as structural material for construction... Trunks A tree trunk as found at the Veluwe, The Netherlands Wood is a solid material derived from woody plants, notably trees but also shrubs. ... Procter & Gamble Co. ... For the band, see 1990s (band). ...


The country has not discovered sources of fossil fuels--apart from minor coal deposits-- but its mountainous terrain and abundant rainfall have permitted the construction of a dozen hydroelectric power plants, making it self-sufficient in all energy needs, except oil for transportation. Costa Rica exports electricity to Central America and has the potential to become a major electricity exporter if plans for new generating plants and a regional distribution grid are realized. Mild climate and trade winds make neither heating nor cooling necessary, particularly in the highland cities and towns where some 90% of the population lives. Coal Coal (IPA: ) is a fossil fuel formed in swamp ecosystems where plant remains were saved by water and mud from oxidization and biodegradation. ... Hydroelectric dam diagram The waters of Llyn Stwlan, the upper reservoir of the Ffestiniog Pumped-Storage Scheme in north Wales, can just be glimpsed on the right. ...


Infrastructure

Costa Rica's infrastructure has suffered from a lack of maintenance and new investment. The country has an extensive road system of more than 30,000 kilometers, although much of it is in disrepair. Most parts of the country are accessible by road. The main highland cities in the country's Central Valley are connected by paved all-weather roads with the Atlantic and Pacific coasts and by the Pan American Highway with Nicaragua and Panama, the neighboring countries to the North and the South. Costa Rica's ports are struggling to keep pace with growing trade. They have insufficient capacity, and their equipment is in poor condition. The railroad didn't function for several years, until recent government effort to reactivate it for city transportation. The Pan-American Highway (Carretera Panamericana in Spanish) is a collective system of roads, approximately 16,000 miles (25,750 km) long, that nearly links the mainland nations of the Americas in a roughly unified stretch of highway. ... Seaport, a painting by Claude Lorrain, 1638 The Port of Wellington at night. ...


The government hopes to bring foreign investment, technology, and management into the telecommunications and electrical power sectors, which are monopolies of the state. However, political opposition to opening these sectors to private participation has stalled the government's efforts.


Costa Rica has a reputation as one of the most stable, prosperous, and least corrupt Latin American countries. But in fall 2004, three former Costa Rican presidents (Jose Maria Figueres Olsen, Miguel Angel Rodríguez, and Rafael Angel Calderon) were investigated on corruption charges related to the issuance of government contracts.


The poor state of public finances and the maladministration by state monopolies will continue to limit the state's ability to try to modernize these sectors in the absence of a political consensus to permit private investment. Failure to act soon on telecommunications could prove an obstacle to the government's desire to attract more world-class foreign investment.


Nationalized Industry

Some large sectors such as utilities and telecommunications are nationalized and/or are government supported monopolies. A public utility is a company that maintains the infrastructure for a public service. ... Telecommunication involves the transmission of signals over a distance for the purpose of communication. ... This article is about economic monopoly. ...


Although there are no formal capital controls, it has been claimed that the prevalance of state-owned banks have had the same effect. They are also blamed for the rampant inflation that currently runs at around 11%. Capital controls are restrictions on the trade of assets across international borders. ... Public ownership (also called government ownership or state ownership) is government ownership of any asset, industry, or corporation at any level, national, regional or local (municipal). ...


The quality of these industries, particularly power and communications, have been sharply criticized for the outages that occur nearly daily.


The large amount of government intervention and support for these industries has been blamed for the lack of funding for and virtual non-existence of police.


Trade Policy

Costa Rica has sought to widen its economic and trade ties, both within and outside the region. Costa Rica signed a bilateral trade agreement with Mexico in 1994, which was later amended to cover a wider range of products. Costa Rica joined other Central American countries, plus the Dominican Republic, in establishing a Trade and Investment Council with the United States in March 1998.


Costa Rica is negotiating or seeking ratification of trade agreements with Chile, the Dominican Republic, Panama, and Cuba. It lobbied aggressively for enhancement of the U.S. Government's Caribbean Basin Initiative and has made clear its interest in joining the North American Free Trade Agreement (NAFTA) or signing a similar treaty with the U.S. Costa Rica is an active participant in the negotiation of the hemispheric Free Trade Area of the Americas, a process that the Costa Rican Government chaired in preparation for the April 1998 Summit of the Americas in Santiago, Chile. Secretariats Mexico City, Ottawa and Washington, D.C. Official languages English, French and Spanish Membership Canada, Mexico and the United States Establishment  -  Formation 1 January 1994  Website http://www. ... Location of Santiago commune in Greater Santiago Coordinates: Region Santiago Metropolitan Region Province Santiago Province Foundation February 12, 1541 Government  - Mayor Raúl Alcaíno Lihn Area 1  - City 641. ...


Despite this involvement, Costa Rica is the only signatory to the US-Central American Free Trade Agreement (CAFTA) that has not ratified it. CAFTA implementation would result in economic reforms and an improved investment climate. The Central American Free Trade Agreement (CAFTA) is a free trade agreement between the United States and the Central American countries of Guatemala, Honduras, and Canada, and Mexico. ...


Costa Rica also is a member of the Cairns Group which is pursuing global agricultural trade liberalization in the World Trade Organization and helping to maintain the proper economy level in costa rica. The Cairns Group is an interest group of 18 agricultural exporting countries, composed of Argentina, Australia , Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, the Philippines, South Africa, Thailand, and Uruguay. ...


Statistics

GDP: $20.2 billion (2006)


GDP PPP: $37.96 billion. (2006)


GDP real growth rate: 6.8% (2006 est.)


GDP per capita: purchasing power parity - $11,100 (2005 est.)


GDP composition by sector: agriculture: 8.5% (2005) Bananas, pineapples, coffee, beef, sugarcane, rice, dairy products, vegetables, fruits and ornamental plants. industry: 29.7% (2004) Electronic components, food processing, textiles and apparel, construction materials, cement, fertilizer. services: 61.8% (2004) Hotels, restaurants, tourist services, banks, and insurance.


Population below poverty line: 18% (2006)


Household income or consumption by percentage share: lowest 10%: 1.1% highest 10%: 36.8% (2004 est.)


Inflation rate (consumer prices): 8.75%(interanual from June 2006 to June 2007), 9.76%(2006)


Labor force: 1.81 million (2004 est.)


Labor force by occupation: agriculture 20%, industry 22%, services 58% (1999 est.)


Unemployment rate: 6.6% (2004 est.) (understated); 7.5% underemployment


Budget: revenues: $2.497 billion (2004 est.) expenditures: $3.094 billion (2004 est.)


Industries: microprocessors, food processing, textiles and clothing, construction materials, fertilizer, plastic products


Industrial production growth rate: 24.5% (1999)


Electricity production: 5,742 GWh (1998)


Electricity production by source: fossil fuel: 9.28% hydro: 80.62% nuclear: 0% other: 10.1% (1998)


Electricity consumption: 5,267 GWh (1998)


Electricity exports: 77 GWh (1998)


Electricity imports: 4 GWh (1998)


Agriculture products: coffee, bananas, sugar, corn, rice, beans, potatoes, beef, timber


Exports: $6.4 billion (f.o.b., 1999 est.)


Export commodities: coffee, bananas, sugar; textiles, electronic components, electricity


Export partners: USA 49%, EU 22%, Central America 10% (1999)


Imports: $6.5 billion (c.i.f., 1999 est.)


Import commodities: raw materials, consumer goods, capital equipment, petroleum, electricity


Import partners: USA 41%, Japan 8.1%, Mexico 7.3%, Venezuela 4% (1998)


External debt: $3.9 billion (1998 est.)


Economic aid - recipient: $107.1 million (1995)


Currency: 1 Costa Rican colon (₡) = 100 centimos


Exchange rates: Costa Rican colones (₡) per US$1 - 506.11 (April 2006), 479.57 (July 2005), 299.63 (February 2000), 285.68 (1999), 257.23 (1998), 232.60 (1997), 207.69 (1996) and 179.73 (1995)


Fiscal year: October 1September 30 is the 274th day of the year (275th in leap years) in the Gregorian calendar. ... is the 273rd day of the year (274th in leap years) in the Gregorian calendar. ...


External links

  • CambioDelDolar.com - Up to date exchange rate of the Costa Rica colón as sold and bought in every authorized financial institution (they can vary greatly) as well as news pertaining the subject
  • Costa Rica's Economy

  Results from FactBites:
 
Costa Rica ECONOMY (587 words)
The economy of Costa Rica, like that of all other countries in Central America, was originally based on the production of tropical agricultural commodities for export.
There is some forestry in Costa Rica but very little mining, although steps have been taken to exploit bauxite, sulfur, and petroleum.
Costa Rica normally spends the whole of its export revenues from coffee on importing petroleum.
Costa Rica - MSN Encarta (819 words)
Costa Rica, which means “rich coast” in Spanish, was named by Christopher Columbus and his explorers, who expected to find gold here.
Costa Rica's only natural lake of any significant size is Lake Arenal, which is located on the eastern side of the Cordillera de Guanacaste.
The climate of Costa Rica ranges from tropical on the coastal plains to temperate in the interior highlands.
  More results at FactBites »

 
 

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