Costa Rica is amazing and complicated

The small country has managed to do what few of its siblings couldn't

The “Amazon of Costa Rica” better known as Tortugero National Park.

First, apologies for not being active here over the last couple weeks. I’ve been in Costa Rica (and will continue to be here until early November). When all is said and done, I’ll have spent time in San Jose, the capital city, Tortuguero National Park, Puerto Viejo, Arenal Volcano, and Guanacaste and everywhere in between by way of Costa Rica’s pretty solid highway system. This has, obviously, led me to think much about my temporary home.

Costa Rica is not perfect, but is pretty dang impressive, especially when we compare it to the trials and tribulations of its neighbors such as Nicaragua, Honduras, El Salvador and Guatemala. In fact, as of 2024, Costa Rica has a GDP of a little over $29,000/person. That’s not all spread out equally, of course, and Costa Rica is a very unequal country, but it’s still something that has generally risen over the last couple decades. In act, Costa Rica has a higher GDP per capita than Mexico, China, and Brazil. That’s pretty impressive for a tiny country with not a huge manufacturing base, nor a significant natural resource it can extract. So, how did this tiny country buck the trend of nearly all its other Central American neighbors?

First let’s go back in time a bit! The roots of Costa Rica’s prosperity can be traced back to the early 20th century, when it made a number of unique choices. A defining moment came in 1948 when, after a brief civil war, Costa Rica abolished its army. Instead of funding a military, the government redirected resources to education, healthcare, and infrastructure. The effects of this were transformative: by prioritizing literacy and accessible healthcare, Costa Rica built a well-educated and healthier population, which attracted investments and created the foundation for economic growth.

And while there were no natural resources to extract from the ground, the country’s agricultural economy boomed! First with coffee and then bananas, as did much of Central America’s, but Costa Rica's political stability made it an attractive base for foreign agricultural companies, bringing further economic benefits and relatively higher wages. This could all still be improved, of course, but it began to outpace its neighbors and that’s an important historic inflection point to note.

But while political stability is often cited as a key difference between Costa Rica and its neighbors, this stability was not an accident. The 1948 revolution led by José Figueres Ferrer established democratic principles that have become embedded in Costa Rican governance. Elections have been held peacefully and consistently, a rarity in Central America, where many countries have experienced coups, dictatorships, and authoritarian regimes. This democratic tradition fostered a transparent legal environment and fostered the rule of law, helping to avoid the cycles of violence and corruption that have plagued nearby countries. While countries like Guatemala, El Salvador, and Nicaragua were caught in cycles of civil war and U.S.-backed intervention throughout the latter half of the 20th century, Costa Rica’s neutrality and commitment to peace set it apart, allowing it to focus on internal development.

But also, geographically (because that’s like my whole thing), Costa Rica has also benefited from being relatively isolated from the routes of drug trafficking and the associated violence. Unlike Honduras and El Salvador, where gang violence has become deeply entrenched, Costa Rica has managed to maintain relatively low crime rates. And part of this is due to Panama, its canal, and the Darien Gap, an stretch of wilderness at the far southern end of Panama where there are no roads and the land can’t be traversed easily. As it turns out, transporting drugs by road isn’t easy if there’s no road with which to use. So, cartels used boats and planes primarily instead. And because Costa Rica was relatively stable and far less corrupt, it made more sense for drug traffickers to just skip over the country altogether. That’s not to say there’s no drug activity here, but compared to its neighbors, it’s far less impactful.

But also, the Costa Rican government has invested a lot in its prime cultural export: it’s natural environment, which has helped build a tourism industry that now serves as a major economic driver. The establishment of national parks and protected areas—today covering roughly 25% of the country—has bolstered the appeal of Costa Rica as a leading eco-tourism destination. The government recognized early on that the country’s rich biodiversity could attract international tourists, and it has leveraged this by heavily promoting sustainable tourism. This approach has not only drawn millions of visitors each year but has also created jobs and stimulated the economy. As someone who just spent a few days in Tortuguero National Park and got to see the amazing wildlife that abounds there, it truly is remarkable!

All of this has led to the point where tourism in the country is skyrocketing. As the sector grew, it catalyzed the development of modern infrastructure, increased international investment, and created well-paying jobs for many Costa Ricans. Tourism accounts for a substantial portion of the country’s GDP and has helped to reduce poverty by providing opportunities that have a multiplier effect in local communities. In contrast, other Central American nations have struggled to establish sustainable tourism industries, often due to issues with crime, infrastructure, and political instability. Costa Rica’s focus on eco-tourism and sustainable travel has differentiated it, allowing it to attract a more affluent, environmentally-conscious group of travelers willing to spend more for ethical and high-quality experiences. Like I said, the highway system here is pretty impressive and you can basically take a bus or shuttle to wherever you need to go.

Now all this said, the success story of Costa Rica comes with challenges, of course. Rising costs of living are increasingly squeezing Costa Rican households, especially in popular tourist areas where demand has driven prices higher. I knew coming in that Costa Rica wasn’t exactly a budget travel destination, but it’s still been more expensive than I thought. A trip to my nearest grocery store easily set us back about $150 USD. That’s about on par with how much I’d spend at my local grocery story in Portland, Oregon.

Additionally, many foreign visitors—drawn by the natural beauty and relative safety of the country—have chosen to invest in second homes or retire in Costa Rica, adding pressure to the housing market. Immigration from wealthier nations, particularly the United States and Canada, has led to rapid gentrification in some coastal towns, driving up prices and making it difficult for locals to compete in the housing market. This influx has also created inflationary pressure, making goods and services more expensive in areas frequented by foreigners.

Beyond the rising cost of living, Costa Rica faces other potential pitfalls. While the country’s infrastructure is relatively advanced by Central American standards, it still lags behind more developed countries, and maintaining it will be essential as tourism numbers continue to rise. Additionally, environmental degradation, despite Costa Rica’s eco-friendly reputation, is a growing concern as tourist numbers climb, creating stress on national parks and protected areas. Although Costa Rica has been largely spared from the worst of Central America’s violence, the recent increase in drug trafficking activity within its borders has raised alarms, prompting calls for a reevaluation of its public safety strategy.

All this is to say, Costa Rica isn’t perfect! But it’s still a remarkable exception in Central America. One worth studying and learning from. And I feel incredibly lucky that I’m able to journey to this amazing part of the planet and experience it.

I’ll have more content coming out early next year about Costa Rica so stay tuned for that! Should be fun! 🤠