Economic Freedom Score
Least free 0
75 100 free
World Rank: 54
Regional Rank: 9
osta Rica’s economic freedom score is 65.9, making its economy the 54th freest in the 2010 Index. Its overall score is 0.5 point lower than last year, reflecting small decreases in five of the 10 economic freedoms. Costa Rica is ranked 9th out of 29countries in the South and Central America/ Caribbean region, and its overall score is higher than the global and regional averages. Costa Rica’s average annual growth rate has been over 6 percent for the past five years. Personal and corporate tax rates are moderate, and the overall burden is not high. The trade regime is more open, and management of public finance is sound. Costa Rica has beenworking to improve financial-sector freedom by consolidating private banks, easing procedures for foreign banks’ operations, and introducing a new development bank structure. Bureaucratic procedures continue to discourage dynamic entrepreneurial activity, and privatization and fiscal reform have slowed. Inflation has been hovering at around 12 percent due to rising commodity prices. The court system,while transparent and not corrupt, is inefficient, and enforcement is weak. Background: With a strong tradition of democracy and respect for human rights, and with no standing army, Costa Rica has avoided the political violence that has afflicted other Central American countries over the past half-century. Former President Oscar Arias (1986–1990) was elected for a second time in 2006 on a pledge tobreak up state monopolies, especially in telecommunications and insurance, but unions have resisted his gradual approach to privatization. An important producer of bananas, pineapples, and coffee, Costa Rica has benefited from industrialization in electronics and health care, and per capita income is high by regional standards. In October 2007, a slender majority of Costa Ricans voted for theCentral America–Dominican Republic–United States Free Trade Agreement, which entered into force on January 1, 2009.
Country’s Score Over Time
Population: 4.5 million gdP (PPP): $50.9 billion 2.9% growth in 2008 6.3% 5-year compound annualgrowth $11,241 per capita unemployment: 4.9% Inflation (cPI): 13.4% FdI Inflow: $2 billion
2008 data unless otherwise noted Data compiled as of September 2009
See page 457 for an explanation of the methodology or visit the Index Web site at heritage.org/index.
How Do We Measure Economic Freedom?
COstA RiCA’s tEn ECOnOMiC fREEDOMs
Business Freedom Trade Freedom Fiscal FreedomGovernment Spending Monetary Freedom Investment Freedom Financial Freedom Property Rights Fdm. from Corruption Labor Freedom
59.3 82.5 82.4 87.0 67.8 70.0 50.0 50.0 51.0 59.0
0 0 20 least free
= world average
100 100 most free
BUsinEss fREEDOM — 59.3
The overall freedom to start, operate, and close a business is limited by Costa Rica’s regulatory environment.Starting a business takes an average of 60 days, compared to the world average of 35 days, although obtaining a business license requires less than the world average of 218 days.
services, wholesale distribution, fixed-line telecommunications, energy generation and distribution, transportation, and petroleum are reserved for state companies or require participation of a certain percentage of CostaRican citizens or residents. Laws, regulations, and practices are generally transparent, although bureaucratic procedures are often burdensome. There are no controls on capital flows, but reporting requirements are mandatory for some transactions. There are no restrictions or controls on the holding of foreign exchange accounts, which are readily transferable and available at market rates. There...