105 lines
3.5 KiB
YAML
105 lines
3.5 KiB
YAML
abstract: 'Costa Rica also adopted the Washington Consensus type of reforms, but in
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a much more gradual and less `orthodox'' way than the other countries in
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the region. It has combined import liberalization with active export
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promotion. By the 1980s, Costa Rica already had relatively few
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restrictions on capital inflows. Nonetheless, further liberalization of
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the capital account and legislative changes easing the entry of maquila
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industries and establishment of firms in export-processing free zones
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led to a boom in foreign direct investment in the 1990s. Despite the
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inflow of foreign capital, the government managed to stop the exchange
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rate from appreciating, keeping it competitive during most of the 1990s
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with a managed floating exchange regime. Economic growth has been
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volatile but on average the economy expanded at an annual growth rate of
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4.3 per cent during 1985-2001. Exports have been the engine of Costa
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Rica''s growth performance, especially non-traditional exports supported
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by export promotion policies (tax credit certificates, export-processing
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free zones and maquilas) and, since the late 1990s, exports by the Intel
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plant in the country. Growth in employment lagged behind gross domestic
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product growth, but was still substantially higher than growth of the
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labour force. Most new jobs were created in the formal sector. Real
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labour income increased, but due to growing demand for skilled workers,
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labour income inequality increased significantly. Income inequality also
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increased at the household level. The incidence of absolute poverty has
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remained stable, however, since the mid-1990s, thanks to an increase in
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employment and average income. Simulations with the computable general
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equilibrium model for Costa Rica indicate that trade liberalization
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tends to lead to increasing inequality of income, given the combined
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effect of significantly higher labour income in the most dynamic
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economic sectors, especially those intensive in the use of skilled
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workers, and a reduction in labour incomes in agriculture. Simulations
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also show, however, that because of the generally positive outcomes for
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employment, trade liberalization seems to have generated positive,
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though small, effects towards poverty reduction. Poverty also falls
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under the scenario of further trade integration through the Free Trade
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Area of the Americas and a worldwide World Trade Organization agreement.
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Not all workers will benefit from trade integration, however. Those in
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agriculture, in particular, would face falling employment and real
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incomes.'
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affiliation: 'Sanchez, Marco V., ISS, The Hague, Netherlands.
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Sauma, Pablo, Natl Univ Costa Rica, San Jose, Costa Rica.'
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author: Sanchez, Marco V. and Sauma, Pablo
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author_list:
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- family: Sanchez
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given: Marco V.
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- family: Sauma
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given: Pablo
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booktitle: 'WHO GAINS FROM FREE TRADE: EXPORT-LED GROWTH, INEQUALITY AND POVERTY IN
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LATIN AMERICA'
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da: '2023-09-28'
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editor: Vos, R and Ganuza, E and Morley, S and Robinson, S
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files: []
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isbn: 978-0-203-96583-2
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language: English
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number-of-cited-references: '18'
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pages: 204-230
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papis_id: e240343daf17494261e9f5134d583b72
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ref: Sanchez2006costarica
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series: Routledge Studies in Development Economics
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times-cited: '1'
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title: Costa Rica - export orientation and its effect on growth, inequality and poverty
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type: article
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unique-id: WOS:000278891300008
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usage-count-last-180-days: '2'
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usage-count-since-2013: '5'
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volume: '50'
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web-of-science-categories: Economics
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year: '2006'
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