The Neoliberal Implant

It seems that Costa Rica, despite its impressive historical commitment to long-term state investment in the public sector, to an active welfare state and to equality and human rights, has, in the end, been unable to entirely avoid the affects of the ‘neoliberal implant’ ¹⁵ that has been laying waste to its neighbors since the 1980s.

Many of the problems outlined in the State of the Nation Report are directly attributable to a package of ‘economic reform’ imposed by the World Bank, the IMF and USAID in the 1980s, involving a switch from the import-substitution strategy pursued through the 1960s and 70s, in which domestic production was encouraged and protectionist measures were imposed on imports, to the export-led orientation and opening of markets seen today.

While foreign investment in the technology and tourism sectors has brought in huge inflows of revenue, expected to average over $850 million in 2006 alone, most of this remains in the private sector, benefiting big business and the already wealthy rather than creating sufficient domestic growth to improve the lives of the excluded majority. Weak links between export-oriented activities - which import the majority of their inputs - and domestic industries are producing a polarization in income distribution, in which those hardest hit by the widening wealth gap are the lowest income groups and middle classes who are experiencing rises in living costs and inflation together with the simultaneous decline in real income and deterioration of public services and general quality of life.