Costa Rican well-being indicators are comparable or even above the OECD average in several dimensions (OECD, 2016a). Nevertheless, gaps with OECD countries are large in two dimensions: labour market participation and education.
Costa Rica's transport infrastructure sector has long suffered from insufficient and ineffective investment and maintenance spending, resulting in a congested and poor-quality transport network.
Boosting national productivity to sustain the convergence process towards OECD countries living standards will hinge on creating the right conditions for domestic firms to thrive and become more innovative and productive, while maintaining the long-standing commitment to open international markets and investment.
Costa Rica’s economic, social and environmental achievements are impressive. It has succeeded in combining rising living standards, virtually universal health care, pension and primary education systems with sustainable use of natural resources.
In the past 30 years Costa Rica has grown steadily and social indicators have improved markedly. Well-being indicators are comparable or even above the OECD average in several dimensions, such as health, environment or life-satisfaction. This paper reviews the social progress that Costa Rica has achieved and identifies reducing inequality and poverty as the main challenges.
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Boosting the productivity and competitiveness of the economy would help Costa Rica to progress further and take full advantage of its integration into GVCs. Improving the competitiveness of services sectors is particularly pertinent.
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Fragmentation is putting pressure on the effectiveness of the country’s governance mechanisms and service delivery capacity, further aggravated by limited steering and coordination capacity.
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Income inequality in Costa Rica is high by international standards and, in contrast with most other Latin American countries, it has increased in recent years.
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Improving competition law and policy in Costa Rica should be a primary objective of the government. Such reforms could yield substantial economic and social benefits, through higher productivity, lower prices to consumers and better quality products and services.