Everyone knows her as “Doña Nena.” At 75 years old, she has been a leader for half a century in the community of Luzón, in  Matina—one of the poorest counties in Costa Rica—on the Caribbean coast, 84 miles northeast of the capital: San José.

Courtesy of Mauricio Herrera

She has seen the evolution of Matina from a remote hamlet surrounded by banana trees, mosquitoes and disease to another: still surrounded by banana trees but now with electricity, potable water, an elementary school, a high school, telecommunications, internet, paved streets, a soccer field, labor laws, a health clinic and courts of justice.

Her life has run parallel to the period of great social and political reforms that generated better living conditions in Costa Rica, with its lights and shadows: a country that achieved greater economic, political and social stability than its neighbors; but without ceasing to be a developing society, which now faces the risk of regression in social, environmental, democratic and crime indicators.

“When I was a little girl, this was a forgotten town; barefoot children, without education or health. I learned to read at the age of 18 because there was no school. In the 70s, the ICE (Costa Rican Electricity Institute) installed electricity, and then the  (Institute of) Aqueducts  installed water. And so on, little by little. Now we are fighting for the Ministry of Education to hire a computer teacher for the school. We have the computers, but not the teacher, and we need him,” says Fuentes, who has been President of the Board of Education for 50 years, and leader of the Development Association and the Health Board in Luzón.

María Elena Fuentes Rodríguez (her full name) was born in August 1948, four months after the end of the last Costa Rican civil war and four months before the abolition of the army.

Courtesy of Mauricio Herrera

Doña Nena does not remember seeing a soldier in her life, she has not suffered hunger but neither has she had money for luxuries. She and her adult children still struggle to make ends meet. But she says the town’s biggest problem is not having a computer teacher.

Why has a country that shares similar cultural, historical, religious, social and ethnic roots to its neighbors performed better socially, economically and politically? Why has it not suffered the traumas of other nations, coups and recent civil wars? Why are its poverty, health, and education indicators relatively better? Why is it that in a small town in one of the poorest cantons in the country, the main problem is not having water, electricity or a doctor, but getting a specialized teacher?

I have asked myself these questions many times, as a journalist who has covered news in Central America. To seek answers, I also interviewed experts knowledgeable about this country of 19,691square miles and 5.1 million inhabitants, such as former President Luis Guillermo Solís, former International Criminal Court judge Elizabeth Odio, anthropologist Cristiana Figueres, and development expert Alberto Mora.

The short answer is this: since the 1940s, the abolition of the army and the construction of social, democratic and public service institutions allowed more money to be transferred to health, education and infrastructure, gave credibility to the election of presidents and authorities, and built a stronger middle class with a better quality of life.  These conditions produced social peace, institutional stability and long-term state policies that allowed for greater economic growth and social development.

Why are these positive achievements at risk? Why is Costa Rica not a developed country despite these historical achievements?

Credit: “MUNICIPALIDAD DE MATINA”. Photos of community fiestas

The Figures Confirm the Differences

Let’s start with some data: In a region characterized by political instability, how many coups, wars or armed uprisings has Costa Rica had since the middle of the last century: zero. How many consecutive clean, peaceful elections with legitimate rulers have there been since 1953: all of them, 18.

The United Nations Human Development Index of 2023, which weighs data on life expectancy, education, and economic growth, places Costa Rica among the countries with a very high level of  human development, in the 64th position among 176.

Overall poverty in Costa Rica is the lowest in the region and fluctuates around 20%; 100% of the population has access to electricity and 95% of households have drinking water, directly from the pipe. Life expectancy is among the highest: 80.8 years, while in Latin America the average is 75 years.

Another revealing figure is that while GDP per capita tripled from US$1,808 in 1990 to US$13,365 in 2022, Costa Rica’s forest cover almost doubled to 59%, which speaks volumes about the country’s commitment to environmental protection, ecotourism and export diversification.  In addition, by 2022, 98% of the country’s electricity was produced from renewable sources, such as water, geothermal energy, wind and solar.

For Alberto Mora, an expert in development policies, “If we look at the socioeconomic indicators, there are important differences: the Costa Rican economy is more sophisticated and diversified, more linked to international markets, with a notable capacity to attract direct investment and tourism.”

So, considering internationally validated data, it is possible to affirm that Costa Rica is indeed a different country. Now it is up to us to explain why.

Historical Decisions

Credit: “MUNICIPALIDAD DE MATINA”. Photos of community fiestas

The former president and expert in Central American history, Luis Guillermo Solís, believes that the set of social and political reforms that the country achieved in the mid-20th century was the great turning point that marked a different destiny for the country.

Between 1940 and 1948, a very “sui generis” political alliance between a Social Christian government, the Catholic Church, and the Communist Party, achieved a set of reforms that transformed Costa Rica. The creation of the public health system, the introduction of social guarantees in the Political Constitution, the Labor Code and public university education— among other reforms—date from that period.

Then, in 1948, an armed movement led by the social democrat José Figueres Ferrer—who fought for the respect of the popular vote in elections—overthrew the government of the social alliance in a two-month revolution. But when he triumphed, instead of reversing the social reforms, he consolidated and deepened them, nationalized the banks, founded the Costa Rican Electricity Institute and created the Supreme Electoral Tribunal, among other reforms.

Conservative sectors of the extreme right wing allied with Figueres felt betrayed, labeled him a “communist” and organized coup d’état attempts against his government. Figueres’ reaction to the coup threats was unusual and with historical vision: he abolished the army, turned the barracks into museums, and its budget was gradually transferred to social investment.

According to the former president of the Inter-American Court of Justice, Elizabeth Odio, since the 19th century, Costa Rica has given strong emphasis to public education and health, but it is in the mid-20th century that the country takes a different direction.

The World Bank calls Costa Rica a “success story.” In its reports on Costa Rica from 2016 to 2023, the World Bank concludes that Costa Rica’s development model is based on four fundamental pillars: its long-standing democracy, an ambitious social pact, a model of economic openness and its green brand.

According to a 2016 World Bank report, “with the abolition of the army, the country had more resources to invest in providing public and social services for the entire population.” Since the 1950s, investment in education, health, and social security went from about three percent of the GDP to more than 20 percent in the second decade of the 21st century.

For former President Solís, unlike what happened in other Central American countries, the reforms of the 1940s in Costa Rica were successful and consolidated in successive governments, even though they were ideological antagonists.  In his opinion, “… the consolidation of social reforms allowed the construction of a society with a strong predominance of the middle class.”

Cristiana Figueres has been the executive secretary of the United Nations Framework Convention on Climate Change and knows in depth the evolution of Costa Rica’s environmental policies. When we talked about this topic, she added two other factors that make a difference: investment in environmental protection and the promotion of ecotourism.

In the 1970s, Costa Rica established the national park system and currently more than 25% of the country’s territory is under some form of protection. Tourism revenues are equivalent to 8% of GDP and 80% of tourists visit national parks.

“Fifty years ago as a country, we realized that investing in biodiversity is not a luxury but an investment. It was not only an environmentally responsible decision but an economic decision: we protect what feeds us,” says Figueres.

A model at risk

But why has a country that built such advantageous conditions not achieved economic and social development?

The interviewees agree on a series of factors such as limited national industrialization, lack of major national agreements to renew the welfare state model, corruption, inefficient public spending, lack of modernization of a state that is still very large and centralized, but at the same time, the implementation of neoliberal policies that weaken public services and concentrate wealth.

“We have not been able to forge national agreements that would allow us to update the premises of the Costa Rican development model, forged in the last century” says Alberto Mora.

Elizabeth Odio and Luis Guillermo Solís attribute the deterioration of the growth with equity model to neoliberal reforms implemented since the end of the 20th century, which in their opinion have worsened under the current government.

“The country has had improvements in the fiscal balance, but this has been done at the expense of social issues. We are deteriorating two fundamental pillars: health and education,” says Odio.

Credit: “MUNICIPALIDAD DE MATINA”. Photos of community fiestas

Driven by reforms in previous years, the Costa Rican state had more income than expenses in 2022 and 2023, something that had not happened since 2007, and the fiscal deficit (including interest payments) went from 8.3% of GDP in 2020 to 3.3% of GDP in 2023.

“The Costa Rican economy is in excellent health, in a way that I never cease to be surprised,” said President Rodrigo Chaves at a press conference on February 14.

Although production and national income are increasing, while the fiscal deficit is decreasing, poverty is stagnant and inequality has increased, as recognized by the World Bank.

“Income inequality has Costa Rica trapped,” said economist Sandro Zolezzi. “Our income inequality per household reached 11.5 in 2022. There is no way to sustain that level of inequality over time. We must find and attack the possible reasons for that difference,” warned Zolezzi in a publication of the think tank Academia de Centroamérica.

The deterioration seems to have worsened under the current government. The 2024 budget for social investment is the lowest in a decade and represents just 9.7% of GDP. Budget cuts have been significant in the education, health, anti-poverty, and public infrastructure construction budgets. The fiscal crisis is being transformed into a social crisis.

Among the member countries of the Organization for Economic Cooperation and Development (OECD), of which Costa Rica is a member, the average social investment is 21.1% of GDP.

In addition to all the above, crime has skyrocketed, and the homicide rate went from 12 per 100,000 inhabitants in 2022 to 17 per 100,000 inhabitants in 2023.

The government attributes the increase in violence to the increase in international drug trafficking, denies that there is a social deterioration, and describes the decisions to contain spending as “responsible.”

Last December, President Chaves told Bloomberg News: “Costa Rica is the bright spot in Latin America today in terms of stability, growth and macroeconomic performance (…). We have created a virtuous circle of clearly responsible fiscal policy; a pro-business environment and businesses are responding to that.”

Doña Nena is a supporter of President Chaves and supports his administration, as do more than half of Costa Ricans. In addition to a new computer teacher at her school, Luzon needs a child care center for toddlers. She is also concerned that there is more crime in the community but is confident that the government will do what is necessary to solve Matina’s and the country’s problems.

Costa Rica is at a crossroads, where it has the conditions to make the leap in terms of development and economic prosperity, but it could also go backward and lose its advantages if it makes the wrong decisions.

Mauricio Herrera-Ulloa was a Nieman Fellow at Harvard (2007). He received the Moors Cabot Award Special Citation (2005) and was the Minister of Communication of Costa Rica between 2015 and 2018.