Many of today’s “Ticos”, as Costa Ricans call themselves, can trace their roots back to Spanish colonizing families and their indigenous companions. The conquistadors found a country with extremely rugged topography and sparse populations of indigenous people.
Costa Rica was the poorest colony in the Spanish Empire. This in the long run was a blessing for the country, since the absence of precious metals and Indian labor force prevented the Spaniards from introducing semi-feudal institutions from the Iberian Peninsula into the province.
Most of the natives escaped enslavement by fleeing into the Talamanca mountains, where they perished from wars of resistance, epidemics and wars among rival tribes. Other indigenous people were assimilated into colonial society. Still others maintained their cultural identity because they lived—and still live—in isolated mountain regions.
The extermination and assimilation of the Indians yielded a more homogeneous society. A society of small farmers developed, which formed the basis for today’s large middle class. The pronounced class divisions that still exist in other Latin American countries never developed here.
Coffee and Bananas
Without fanfare, Costa Rica gained its independence from Spain in 1821. The Spaniards in Costa Rica were shocked by the letter announcing the country’s liberation which took a month to arrive from Guatemala.
Coffee started to be produced in Costa Rica at the end of the colonial period and was first exported in 1820. The first Chief of State —governor of the independent state of Costa Rica—wanted to find a cash crop to export since Costa Rican economy had been a subsistence economy up to this point. He promoted coffee by offering free land and seeds to all peasants willing to grow it. This policy of homesteading transformed Costa Rican society into a nation of small farmers and landowners.
In the 1830s, Costa Ricans began to grow coffee in the highlands for sale to Europe. Small farmer sold their crop to central processing plants called beneficios, and the wealthy owners of the beneficios then exported the beans. This is a process that continues today.
In the 1870s the Costa Rican government wanted to build a railroad to the Atlantic coast to increase the volume of its coffee exports to Europe, and contracted U.S builders in exchange for a land grant on both sides of the route.
While building the railroad, the Americans started growing and exporting bananas. By the time the national railroad (currently not functioning) was completed, bananas had become one of the leading exports of the country.
The banana industry—mega-farms owned by U.S. giant Dole and other companies, and Costa Rican-owned small farms that sell to the giants—continues today.
The Political System
The two-party democratic system and the system of free, obligatory public education Costa Ricans know today was largely in place the 1890s.
During the great depression of 1929, Costa Rica had no way to face the economic crisis. President Calderon Guardia tried to offer dissatisfied workers a “New Deal” by passing a series of social reforms intended to avoid a social revolution.
The reforms calmed the working class but antagonized the wealthy. In 1948, an electoral fraud served as a pretext for the disgruntled opposition to stage a civil war, which lasted one month. The leader of insurgency movement and of the National Liberation Army was Jose Figueres Ferrer, a farmer known as “Don Pepe”.
At the end of the civil war rather than undoing the social reforms implemented by Calderon Guardia, Don Pepe continued reforming the country’s institutions into what he denominated “The Second Republic.”
Among many of the reforms implemented by Don Pepe was the courageous decision to abolish the country’s army. This was especially significant considering that Costa Rica bordered to the North with Somoza's Nicaragua and to the South with Panama, two heavily armed nations.
The decision to abolish the army meant that more of the government's budget could be spent on providing education, medical care and other services to tax payers. It also thrust Costa Rica into the international spotlight as a neutral power in a war torn region. The U.S. has historically been Costa Rica's main allay and provider of foreign aid. In order to guarantee the country’s integrity and security, Costa Rican governments increased their links with the U.S. and became an important moral ally for this world power.
Modern Costa Rica
The Nicaraguan Revolution of 1979 which ousted one of the oldest dictatorships in the hemisphere, stimulated revolutionary movements all over Central America. Not having a revolutionary climate within its boarders, Costa Rica remained neutral during the violent decade of the 1980s. President Oscar Arias (1986-90) brought Costa Rica international recognition through his role as peacemaker in the Contra-Sandinista conflict in Nicaragua. His efforts to broker a negotiated solution earned him the 1987 Nobel Peace Prize.
Currently, over the half of Costa Rica's population lives in urban areas and campesinos in search of economic prosperity continue to migrate to the Central Valley from rural areas.
Despite austerity programs imposed by the International Monetary Fund, the government and state owned industries including the National Insurance Institute and the Costa Rican Electricity Institute continue to employ almost 30 percent of the population. Women make up 50 percent of the work force.
The Costa Rican government struggles to service a staggering foreign debt and control inflation and provide adequate social services for the population. One of the areas slighted by the national budget is the national park system, where more than half the expropriated properties (today parks and wildlife reserves) have not been paid for.
In 1997, U.S. computer company INTEL opened a microprocessor assembly plant in the Central Valley, and other U.S. firms have located customer service call centers here. Tourism is now the country’s most important industry, and 1,100,000 tourists are expected in 2001.