Book Chapter
Country Role Models for Development Success

The Case of Costa Rica

In this paper, I discuss the reasons for Costa Rica’s economic performance over the last quarter of a century. Three complementary sets of policies (investments in human capital, careful stabilization, and an intelligent and aggressive integration into the world economy) explain the successful trends, and can be thought of—at least in hindsight—as a development strategy.

While fruitful, this strategy has been incomplete, as there have been less results in other policy areas, including income distribution, infrastructure, adequate taxation and telecoms. These omissions result from the weakness of the political system to deliver decisions and implement chosen policies. Despite these problems, Costa Rica’s case is interesting and worthy of study from the perspective of other small, developing countries.


'This valuable collection of studies is full of new insights. It confirms that a deep understanding of economic history really matters for policy makers in developing countries.' - Nicholas Crafts, Professor of Economic History, Warwick University

'Comparative analysis of development successes based on country case studies is a useful complement to statistical cross-country regressions. While they have no claim at establishing causality, they give us a richness of detail that reliably suggests policy approaches to success. The 21 case studies from all five continents presented in this book show that success can be achieved, that there are many ways of engineering success, but that good governance and market forces play key complementary roles. While we have a good understanding of how markets work, knowing how to make developing country governments assume developmental functions is one of the greatest challenges to the development profession. This book makes an important contribution in that direction that will be of great assistance to both scholars and policy makers.' - Elisabeth Sadoulet, Professor, Agricultural & Resource Economics, University of California at Berkeley

'Nations are not destined to fail, however most fail to be successful. The case studies in this book provide both aspiration and insights on how to guide a nation away from failure towards success. This book will become an essential reading for scholars and for policy makers in developing countries, international development community, and in developed countries as well.' - Justin Yifu Lin, Professor and Honorary Dean, National School of Development, Peking University and Former Chief Economist, World Bank