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Quantifying sustainable development: the future of tropical economies | Luquillo LTER
Until recently, the phenomenal economic development of the Asian tigers, Chile, and Malaysia, as well as the sustained economic growth of the United States, painted a very desirable and optimistic picture of free markets, fiscal responsibility, and, more generally, the entire dogma of neoclassical economics. As of the fall of , however, the economies of many tropical countries have contracted severely, and the enthusiasm of the developing tropics for the free market and all of its ancillary policies is decidedly cooler.
Have our traditional approaches to economics been failing the developing world? However, despite reassuring social development figures, increased investment in the high-tech industries, the ecotourism boom and impressive environmental record, this little piece of paradise is not without its troubles and has not entirely avoided the social, economic and political crisis experienced by its isthmus neighbors.
It seems that while the country has gone a long way to meet the Millennium Development Goals in education, health care, gender equality and environmental conservation, this is mostly the result of policies implemented before the s, while under the current strategies of development social indices are actually falling and efforts to meet key targets in poverty reduction and income distribution equality have been at best 'insufficient'. It highlights a sharp rise in poverty and decline in real income for the population, to the extent that the current minimum wage has fallen to a level similar to that of despite considerable economic growth during this period.
This has been accompanied by a simultaneous decline in the social income provided by the state due to a lack of growth in tax revenue and a pressure to reduce fiscal deficit. Current figures show that Much of this rise in poverty is concentrated in urban areas, with urban poverty surpassing rural poverty for the first time in This situation is reflected in the growth of shanty towns in the greater metropolitan area of San Jose, which more than doubled in size between and and in the increasing 'contamination of urban centers' 14in terms of overcrowding, waste and air pollution, rising crime, prostitution, drug addiction, social and sexual violence.
Costa Rica's public safety record is no longer the envy of Central American countries and privately employed armed guards are now a common site, patrolling banks and businesses, shopping malls, hotels, offices and upscale neighborhoods, somewhat undermining the country's image as a safe, peace- loving nation. In fact, although a ranking of 47th on the Human Development Index is fairly impressive for a small, developing country, figures from the World Bank reveal that between and Costa Rica actually fell from 28th to 47th place.
Many of the problems outlined in the State of the Nation Report are directly attributable to a package of 'economic reform' imposed by the World Bank, the IMF and USAID in the s, involving a switch from the import-substitution strategy pursued through the s and 70s, in which domestic production was encouraged and protectionist measures were imposed on imports, to the export- led orientation and opening of markets seen today. Weak links between export-oriented activities - which import the majority of their inputs - and domestic industries are producing a polarization in income distribution, in which those hardest hit by the widening wealth gap are the lowest income groups and middle classes who are experiencing rises in living costs and inflation together with the simultaneous decline in real income and deterioration of public services and general quality of life.
These SAPS included the switch in production strategies and emphasis on trade liberalization as well as imposing certain austerity measures to discourage social spending, reduce the role of the state and privatize state-owned industries. All this was aimed at reducing the country's deficits and generating sufficient growth to enable it to meet its debt repayments. However, this objective has not been met. The country also suffers from chronic fiscal weakness, running a persistent deficit in order to maintain its social support systems and the trade incentive policies implemented to encourage investment actually act as a drain on resources, depriving the government of much needed tax revenues and disadvantaging local companies who do not enjoy the same privileges.
Finally, and perhaps most importantly, austerity measures have severely undermined government autonomy in terms of social spending forcing huge cutbacks in the public sector and reducing the ability of the State to provide for its people - leaving the once admired health, education and transport systems starved of resources and increasingly failing to deliver, while devastating small businesses and independent farmers unable to compete with mass produced, subsidized U.
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S imports. The tradition of liberal democracy and long established State-centered model of development has begun to be unraveled leaving a weakened State endlessly making new promises and approving new environmental and social legislation yet increasingly 'unable to fulfill its mandates'.
The development of ecotourism and the use of environmental services for income generation have gone someway to address this, ensuring investment in rural and disadvantaged areas by providing opportunities for local people and actively seeking to integrate regional economic growth with community development. However it has been insufficient to counteract growing poverty, especially in urban areas, and has itself been affected by cutbacks in government spending and the innate inequity of globalized markets. The national parks, reserves and conservation systems have suffered from over centralization and lack of autonomy, in which even SINAC's regional offices are managed from a national government office, and , more importantly, budget, resulting in inadequate human and financial resources to effectively police, manage and maintain protected land systems and enforce legislation passed.
Many private and independent operations are being affected by problems of 'leakage' in which tourism developments are increasingly owned by wealthy foreign investors causing revenue to 'leak' out of the country, while the majority of the opportunities generated for local people are limited to low wage support jobs or the informal street vendor economy. The State of the Nation report notes that although tourism is increasing, investment is currently moving away from ecotourism towards luxury, high-end hotels and operations which will only exacerbate problems of inequity and foreign ownership.
Most ominously of all is the fact that these failures and cutbacks have particularly grave consequences for the future competitiveness of the country and therefore the sustainability of both its high-tech export driven industry and its ecotourism sector. Both of these models depend on the advantages gained as a result of the country's social contract - its commitment to public welfare, human development and environmental protection.
According to the World Bank itself, Costa Rica is already facing serious hurdles in maintaining sufficient skilled workforces and in improving its inefficient, state-operated telecommunications and transport industries and overly bureaucratic and poorly administered tax and legal systems, due to an inability to increase fiscal spending, while the poor state of its roads and deteriorating public safety record are a serious threat to tourism and all forms of foreign investment.
The State of the Nation report concludes by describing Costa Rica, perhaps somewhat dramatically, as entering a 'new and dangerous phase' in which 'profound transformations' are needed to address the 'inadequate economic and social performance' and increasing human development challenges. The results of the Presidential and Congressional elections of February can perhaps be seen as evidence of this 'phase' marking a radical change in Costa Rica's political landscape revealing the impact of these tensions between proponents and critics of 'economic reform'.
In a surprising and highly disputed result, Dr. For more than fifty years Costa Rica has effectively existed under a two-party political system with administrations alternating between the traditionally Social Democratic PLN, famously responsible for the abolition of the army and establishment of the welfare state, and the more center-right Partido de Union Social Cristiana PUSC. However, under the recent reforms these two parties had begun to move together into a moderate neo-liberal agenda, and in the elections, a new left- leaning reformist party, the PAC - founded by former PLN Minister for Planning, Otton Solis - emerged on to the scene with the aim of challenging the 'ideological centrism' of the main parties with a 'third voice'.
Although the new party was soundly defeated on this occasion they did win 14 seats on the Assembly undermining then PUSC President, Abel Pacheco's legislative capabilities. The surprising success of the PAC in signifies a shift left in Costa Rican politics, pushing out the presence of the right altogether, while a record high rate of abstentions and null ballots reflects massive civic disenchantment and discontent. Arias's support came from the powerful political and business elite, while support for Solis was drawn mainly from the public sector labor unions, the educated, urban middle classes and much of academia, diverse social and environmental groups, and perhaps surprisingly, the Catholic Church.
In short, these unexpected results reflect the aforementioned 'struggle in progress', with DR-CAFTA serving as a stark symbol of a divided nation and the PAC as an embodiment of the backlash to the failures of economic reform, drawing together diverse interests in opposition to the free trade agreement. The agreement was signed in and has now been ratified by all the countries involved with the exception of Costa Rica.
An integrated framework for sustainable development goals
Proponents of the treaty claim that the freer movement of goods and services will promote economic growth and provide new sources of employment. Arias believes that approving the agreement is key to achieving his development goal, claiming that 'there is no better cure for poverty than a stronger, more globally integrated economy' and describing any return to commercial protectionism or discouragement of FDI as the surest route to 'condemn Costa Rica's youth to unemployment and the country to underdevelopment'.
However, more than a year after the treaty was sent to the legislative assembly and nearly fifty hearings later, the country has failed to gain congressional approval in the face of huge opposition and protest. This opposition has been manifested not only in Parliament but also on the streets in the form of marches, demonstrations, petitions and road blockades led primarily by labor union leaders calling for a referendum or renegotiation of the deal.
Costa Rica, unlike many of its neighbors, has largely retained its tradition of worker's rights and public sector unions are still an influential political presence, who in recent years have successfully managed to mobilize large sectors of civic society into direct action. Together with the challenge of the PAC and the contribution from the Academic left in analyzing and debating the CAFTA text to reveal its contradictions and perversity, this opposition has been extraordinarily effective in counteracting the propaganda spread by the government and US-financed think- tanks, so far blocking ratification altogether.
Citing the failures of NAFTA in Mexico, they claim that the agreement will undermine the Constitution, encouraging a society based on survival of the strongest in which the only sure winners are huge transnational companies and where poverty, income inequality and social exclusion are intensified. Although oppositional forces have unified in expressing generalized dissatisfaction towards the agreement, particular objections have been extensive and diverse.
Analysts and small business owners fear that as tariffs on the imports of US manufactured goods and agricultural products are dropped, even more independent businesses and farmers will be squeezed out, unable to compete on economies of scale. Despite the Arias Administration's efforts to counteract this through micro-financing iniatives for SMEs protestors claim that these are insufficient and that the trade pact will encourage further dependency on foreign imports, depressing domestic industry, in turn raising inflation rates, trade deficits and unemployment.
It has also been suggested that although Arias has pledged to fortify links between foreign owned export industries and the local commercial fabric, provisions within the CAFTA text to attract investment will actually further weaken these links. These stipulations will prohibit the governments of Central American countries from implementing policy tools requiring that investors use local materials, labor and small businesses for example, currently used to ensure maximum benefit to local communities and promote sustainable, domestic development.
The labor unions have their own specific concerns, primarily focused around the fear that the competition from poorer countries will threaten the country's labor standards in what is often referred to as the,' race to the bottom' in terms of employment costs, rights and instability. Members of ANEP, the National Association of Public and Private Employees and FIT, the Costa Rican Electricity Institute's union object to proposals to privatize the national telecommunications and insurance systems and open them up to competition, fearing that once privatized these institutions would respond only to the needs of the market rather than the people, resulting in reduced, deregulated services, job losses and salary cuts.
This will extend patents on new drugs enabling companies to hold an effective market monopoly, inhibiting the production of much lower cost generic drugs, including those used to treat Aids, malaria and tuberculosis, thereby reducing access to these medications and threatening the ability of the caja system to provide adequate care for its people.
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Meanwhile environmental protestors have drawn attention to stipulations in the agreement's investment chapter which grant foreign corporations the power to legally challenge government legislation before private, international tribunals. Under these new rules companies will be able to file suit against national and local laws that cut into their future profits even if these are enacted for legitimate public safety and environmental protection objectives, on the grounds that these constitute unfair barriers to trade.
Protestors anticipate that this could have serious consequences for conservation, threatening the country's extensive legislation and endangering its environmental industries. This competition could prove to be especially perverse in Costa Rica, where, on account of its higher social indices, particularly its minimum wage and workers rights, the country may lose out not only to giant US investors but also to competition from surrounding less developed countries, with their lower standards and costs.
Opposition leaders have openly stated that they do not object to expanding trade with the US per se, but that what they want is a renegotiation of the agreement or the drawing up of a 'new kind of deal - preferably bilateral', that takes into consideration Costa Rica's particular advantages with respect to its neighbors.
However at this stage, with no foreseeable alternative on the table, the implications of not signing may be just as serious. Retaining tariffs will put the country at a competitive disadvantage on the global market, important companies including Sardimar - a large scale tuna producer and exporter - and Melones de Costa Rica, have already threatened to pull out if approval is not reached, and now that other countries involved have ratified Costa Rica has very little negotiating power.
Arias has reaffirmed his determination to reach approval, putting debate over the treaty at the top of his agenda, pushing other pending matters into However, in his Independence Day speech, addressing both celebrations and protesters he made his views clear, stating that it was 'time for Costa Rica to change', to 'make decisions' and 'choose a path', rather than remaining 'wrapped up in old beliefs of former policies…that have stopped serving the best interests of the country' and have instead become 'heavy chains for the advancement of our society.
Arias has described himself as a 'modern social democrat' of the European mold, dedicated to the principles of social welfare yet seeking to 'balance the populism of the old PLN with some of the economic philosophy of the right', accepting the forces of global capitalism as a given and choosing to work within their logic. Arias' election campaign centered around his manifesto entitled, 'Towards 8 Priority Tasks for the Country', in which he pledged to: alleviate poverty and reduce inequality; act against racial and class discrimination; strengthen public services, especially the health, education and social security systems; improve the transport infrastructure; stem the rising tide of crime and drug use; promote environmental protection as 'the central crux of Costa Rica's foreign policy', fight corruption and reduce bureaucracy and address the country's 'perennial fiscal crisis', transforming the taxation system so that 'those who have more contribute more', in order to pay for these improvements.
His problem is that his support of DR-CAFTA may prove to be contradictory to carrying out these pledges, with the text threatening to undermine social and environmental investment and weaken the role of the State.
His challenge is in finding a way to produce much needed economic growth whilst retaining the social contract vital to meeting the requirements of both the country's major development tools, the high-technology and service sector and the tourism industry. Charles A. Hall, ed. Academic Press, San Diego, The contributors to the book sought to examine the limitations of economic development and to investigate the relationship of biological and physical resources as they affect the economic geography of the region. Most of the contributors are Costa Rican, which gives the book a valuable perspective; but, as Lester Thurow of the Massachusetts Institute of Technology pointed out in the foreword, that fact does not mean the contributors were able to explain fully why most tropical countries are economic failures.
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