Costa Rica's Economy Bears Fruit of Ten Years of `Structural Adjustment'

Problems looming a bit farther down the line raise deeper queries about the nature and cost of current success. To date, Costa Rica's export boom has been powered by tax subsidies, a form of state paternalism for business that international lending organizations have insisted be done away with by 1996. Once they are gone, no one is quite sure how Costa Rica's export industries will perform.

Tax incentives to prop up exports, which amounted to 6 to 7 percent of the 1993 budget, have come out of spending on social services, particularly health. During the Calderon years, critics charge, infant nutrition and preventive health-care programs went underfunded, leading to outbreaks of contagious diseases.

President-to-be Figueres promises to repair the damage to the nation's semisocialized health system, traditionally one of the best in Latin America.

Figures will have to do this and more if he wants to make a dent in another problem. Per capita income in Costa Rica has been rising steadily since 1984, to its current $2,300 annually, enough to make the country receive a ``semideveloped'' rating. But the wealth has been unevenly divided. Despite a decade of 4 percent real growth rates, the poverty index hovers at around 20 percent of the population.

The persistence of poverty in the midst of boom, critics of the model argue, has much to do with export-led growth. This is providing people with jobs, putting unemployment at 4 percent and underemployment at 5 percent. Migrant workers from neighboring Nicaragua, where the corresponding figures are 20 percent and 54 percent, increasingly replace locals in Costa Rica's coffee fields and at San Jose construction sites.

But the jobs are low-paying and precarious. ``We are seeing work days grow longer, working conditions deteriorate, and job-related accidents rise,'' says Mauricio Gonzalez of the Social Action Studies Center. An economy that grows off of tourism, pineapple-raising, and apparel manufacture in maquiladoras is not creating the kinds of jobs that incorporate new technology and upgrade the labor force, laying the basis for real wage growth.

Meanwhile, the number of self-employed Costa Ricans, including small farmers who are selling their land to foreign banana growers and tourist companies, is rapidly declining.

Faced with these contrasting trends, Costa Rica's economists are presently debating the pros and cons of agreements negotiated by the outgoing Calderon government with the World Bank and Inter-American Development Bank. The accords would deepen current policies by cutting jobs in government and opening up public utilities to competition from the private sector.

Seemingly irreversible by this point, those policies may eventually lay the basis for a sound development. Costa Rica voters, however, remain to be convinced.

In the last two elections, they have turned thumbs down on contenders who promised more of the same ``success,'' and voted in presidents who, like Figueres, promised to protect them against the rigors of the economic change.

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