Costa Rica has succeeded where its neighbors have failed

How did this one country buck the trend of Central America?

San Jose, Costa Rica. Photo by César Badilla Miranda on Unsplash

I know, I know… two articles about Costa Rica in just a couple months? The reality is that this will probably happen more and more as I travel throughout the world this year. When I’m in place, there’s simply going to be more ideas and more interesting things I want to talk about. I’ll definitely make the articles different enough when it does happen, but it’s gonna happen. So enjoy this article about Costa Rica’s unique success compared to its neighbors’. And, as usual, there’s a video that goes with it!

Costa Rica stands out as an incredibly successful country in Central America. And this is remarkable considering its closest neighbors, El Salvador, Honduras, and Nicaragua, have long struggled with civil wars, authoritarian regimes, and foreign intervention. Panama, of course, has seen a similar level of success, but they had a whole other thing going on due to the Panama Canal. So then the key question is: why is Costa Rica thriving while its neighbors continue to face such challenges? Surprisingly, despite sharing similar physical geographies, there are some differences that help explain this.

Central America occupies a unique position as the narrow bridge connecting North and South America. This physical geography, which is defined by dramatic mountain ranges, sprawling lowlands, and a tropical climate, has significantly shaped the development of its countries.

El Salvador, for instance, is densely populated and highly influenced by its volcanic terrain, which provides fertile soils for coffee cultivation but also subjects the country to frequent natural disasters. Fun fact, El Salvador has a denser population than either the United Kingdom or Germany, two countries well known for their dense, bustling cities!

Honduras is dominated by mountainous landscapes and narrow coastal plains, with its eastern half, the Mosquito Coast, largely uninhabited. It really is interesting! If you look at Google Maps of Honduras you can see the development drop off in the east.

And finally, there’s Nicaragua, the largest country in the region! Nicaragua features vast plains and many large freshwater lakes. And because of these lakes, Nicaragua was almost selected as the host for a transcontinental canal. That canal, of course, would ultimately get built in Panama, but it makes you think how NIcaragua would e different today had the canal been built there instead.

Costa Rica, by contrast, combines all of the geographic features of its neighbors into a pretty balanced landscape of fertile valleys, lush rainforests, and stable coasts, making it well-suited for eco-tourism and sustainable development. And unlike its neighbors, Costa Rica experiences less seismic activity and fewer natural disasters, giving it a physical advantage.

Now, because of the unique geographies attached to each country, the very way they were colonized by Spain was different. All four, of course, were part of the Spanish Empire under the Captaincy General of Guatemala, which exploited their resources for colonial gain. However, Costa Rica’s lack of easily exploitable wealth and distance from the capital in Guatemala, left it as a peripheral colony, fostering a small farming tradition rather than a society dominated by powerful elites. That’s not to say Costa Rica didn’t have powerful elites, but they were less integral to the operations of the colony than they were in El Salvador, Honduras, and Nicaragua.

When the region declared independence from Spain in 1821, the countries briefly united under the United Provinces of Central America before fracturing into independent republics by 1841. Post-independence, El Salvador, Honduras, and Nicaragua faced severe political instability, entrenched class divisions, and exploitation by foreign powers. But Costa Rica was shielded from these dynamics and because of this developed a more egalitarian society with a burgeoning middle class.

But then Costa Rica did something that really set it on a different path from its neighbors: it completely abolished its military following a brief civil war. This unique decision redirected resources toward education, healthcare, and infrastructure, fostering a more educated populace and higher living standards. In contrast, its neighbors maintained strong militaries, which often became tools of political repression and fueled cycles of violence. For example, Nicaragua endured the brutal Somoza dictatorship and later the Sandinista-Contra conflict, while El Salvador’s civil war claimed over 75,000 lives. Honduras, although avoiding full-scale war, became heavily militarized as a base for U.S. operations during the Cold War. These conflicts deeply unsettled each country for which they’re still healing from.

And because it didn’t have a military, Costa Rica’s democratic stability has been another cornerstone of its success. Since 1948, it has maintained a functioning democracy with regular elections and peaceful transfers of power. This can’t be overstated enough: stability brings more stability. It sounds stupidly simple, but it’s often the explanation for why a country is successful versus one that is not.

Of course, Costa Rica’s commitment to protecting its environment has also been pivotal. The country recognized the value of its biodiversity early on, establishing national parks and protected areas that now cover more than a quarter of its land. This has fueled a thriving eco-tourism industry, attracting millions of international visitors annually and significantly boosting its GDP. In contrast, environmental degradation in El Salvador, Honduras, and Nicaragua has hindered similar opportunities.

Economic and social indicators further illustrate Costa Rica’s success. Its GDP per capita exceeds $29,779, far outpacing its neighbors. It also ranks 64th globally on the Human Development Index, compared to El Salvador’s 127th, Honduras’ 138th, and Nicaragua’s 130th. These disparities highlight Costa Rica’s distinct priorities, such as investing in human capital and fostering innovation.

Now all this said, Costa Rica is not without challenges. The rising cost of living, driven partly by an influx of wealthy expatriates, has made life increasingly unaffordable for many locals. Housing and food prices have surged, threatening to exacerbate inequality and undermine the country’s progress. Addressing these issues will be crucial for Costa Rica to sustain its success.

All that’s to say, Costa Rica’s success compared to its neighbors is worth highlighting. And it’s all due to a cascading series of decisions made both while it was a colony and then after it gained independence. The other three? Well, they weren’t as lucky.