In 1502, on his fourth and last voyage to the New World, Christopher
Columbus made the first European landfall in the area. Settlement of Costa
Rica began in 1522. For nearly three centuries, Spain administered the
region as part of the Captaincy General of Guatemala under a military governor.
The Spanish optimistically called the country "Rich Coast." Finding little
gold or other valuable minerals in Costa Rica, however, the Spanish turned
The small landowners' relative poverty, the lack of a large indigenous
labor force, the population's ethnic and linguistic homogeneity, and Costa
Rica's isolation from the Spanish colonial centers in Mexico and the Andes
all contributed to the development of an autonomous and individualistic
agrarian society. An egalitarian tradition also arose. This tradition survived
the widened class distinctions brought on by the 19th-century introduction
of banana and coffee cultivation and consequent accumulations of local
Costa Rica joined other Central American provinces in 1821 in a joint
declaration of independence from Spain. Although the newly independent
provinces formed a Federation, border disputes broke out among them, adding
to the region's turbulent history and conditions. Costa Rica's northern
Guanacaste Province was annexed from Nicaragua in one such regional dispute.
In 1838, long after the Central American Federation ceased to function
in practice, Costa Rica formally withdrew and proclaimed itself sovereign.
An era of peaceful democracy in Costa Rica began in 1899 with elections
considered the first truly free and honest ones in the country's history.
This began a trend continued until today with only two lapses: in 1917-19,
Federico Tinoco ruled as a dictator, and, in 1948, Jose Figueres led an
armed uprising in the wake of a disputed presidential election.
With more than 2,000 dead, the 44-day civil war resulting from this
uprising was the bloodiest event in 20th-century Costa Rican history, but
the victorious junta drafted a constitution guaranteeing free elections
with universal suffrage and the abolition of the military. Figueres became
a national hero, winning the first election under the new constitution
in 1953. Since then, Costa Rica has held 13 presidential elections, the
latest in 2002.
Costa Rica long has emphasized the development of democracy and respect
for human rights. Until recently, the country's political system has contrasted
sharply with many of its Central American neighbors; it has steadily developed
and maintained democratic institutions and an orderly, constitutional scheme
for government succession. Several factors have contributed to this tendency,
including enlightened government leaders, comparative prosperity, flexible
class lines, educational opportunities that have created a stable middle
class, and high social indicators. Also, because Costa Rica has no armed
forces, it has avoided the possibility of political intrusiveness by the
military that other countries in the region have experienced.
During the tumultuous 1980s, then President Oscar Arias authored a regional
peace plan in 1987 that served as the basis for the Esquipulas Peace Agreement.
Arias' efforts earned him the 1987 Nobel Peace Prize. Subsequent agreements,
supported by the United States, led to the Nicaraguan election of 1990
and the end of civil war in Nicaragua. Costa Rica also hosted several rounds
of negotiations between the Salvadoran Government and the Farabundo Marti
National Liberation Front (FMLN), aiding El Salvador's efforts to emerge
from civil war and culminating in that country's 1994 free and fair elections.
Costa Rica has been a strong proponent of regional arms limitation agreements.
With the establishment of democratically elected governments in all
Central American nations by the 1990s, Costa Rica turned its focus from
regional conflicts to the pursuit of democratic and economic development
on the isthmus. It was instrumental in drawing Panama into the Central
American development process and participated in the multinational Partnership
for Democracy and Development in Central America.
Regional political integration has not proven attractive to Costa Rica.
The country debated its role in the Central American integration process
under former President Calderon. Costa Rica has sought concrete economic
ties with its Central American neighbors rather than the establishment
of regional political institutions, and it chose not to join the Central
American Parliament. Former President Figueres promoted a higher profile
for Costa Rica in regional and international fora. Costa Rica gained election
as president of the Group of 77 in the United Nations in 1995.
In May 2002, President Abel Pacheco of the Social Christian Union Party
(PUSC) assumed office after defeating National Liberation Party (PLN) candidate
Rolando Araya in the first-ever second-round runoff election. The April
2002 runoff election was necessitated by the failure of any one candidate
to obtain the constitutionally required 40% of the popular vote in the
February first-round election. Pacheco has been criticized as having achieved
little during the first half of his four-year term, and his declining approval
ratings reflect public frustration with his government. In his defense,
Pacheco cites achievements in fighting corruption and reducing poverty.
He continues to seek a fiscal reform package and can count the successful
negotiation of a U.S.-Central America Free Trade Agreement (U.S.-CAFTA)
and an improved economy among his significant accomplishments. The 57-member
unicameral Legislative Assembly has five principal party factions, with
the governing party, PUSC, having only a 19-seat plurality. As a result,
legislative action has been slow.
After four years of slow economic growth, the Costa Rican economy grew
at a healthy 5.6% in 2003, with growth estimates exceeding 4% for 2004.
Compared with its Central American neighbors, Costa Rica has achieved a
high standard of living, with a per capita income of about U.S. $4,100,
and an unemployment rate of 6.3%. The annual inflation rate hovers around
9% as the Costa Rican Government seeks to reduce a large fiscal deficit.
Controlling the budget deficit remains the single-biggest challenge
for the country's economic policymakers, as interest costs on the accumulated
central government consumes the equivalent of 32.1% in 2003 of the government's
total revenues. About 18.9% of the national budget was financed by public
borrowing. This limits the resources available for investments in the country's
deteriorated public infrastructure.
There is an ongoing dispute between Nicaragua and Costa Rica regarding
navigational rights on the San Juan River separating the two countries.
Nicaragua and Costa Rica signed an agreement in September of 2002 to defer
until 2005 presenting the dispute to the International Court of Justice
(ICJ) for resolution. Meanwhile, the governments of Nicaragua and Costa
Rica agreed to work towards an amicable solution and to jointly-fund community
development projects in the border area.