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2018 OECD Economic Surveys: Costa Rica 2018

image of OECD Economic Surveys: Costa Rica 2018

Costa Rica has achieved strong levels of well-being. However, many institutional obstacles are hampering more robust growth and the spreading of its gains more widely. Setting in motion a “virtuous cycle” of inclusive growth will require reforms across several policy areas that present win-win opportunities in terms of equity and productivity improvements. Rebalancing spending towards early childhood and secondary education would improve outcomes and equity and also help increasing the low level of participation of women in the labour market. Costa Rica should move from the current emphasis on education spending towards outcome policy targets, supported by performance indicators. Policies to reduce labour market informality should continue, including greater enforcement of obligations to pay social security contributions and a gradual move to a smaller number of minimum wages. Eliminating unjustified exemptions from competition would boost productivity growth. Fiscal imbalances remain the major threat to growth and living standards in the medium term. A comprehensive fiscal reform package is needed to bring to a halt the fast rising debt-to-GDP ratio, including measures to increase tax revenues and curb spending, strengthen the budgetary framework with a new, operational fiscal rule and restrict earmarking.

SPECIAL FEATURES: FISCAL POLICY; PRODUCTIVITY; INCLUSIVE GROWTH

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Basic statistics of Costa Rica

(Data refer to 2016 or latest available. Numbers in parentheses refer to the OECD average)

This Survey was prepared in the Economics Department by Sónia Araújo and Lisa Meehan under the supervision of Patrick Lenain. Damien Azzopardi, Pedro Herrera Gimenez, Alex Linares and Adrien Moutel provided statistical assistance and editorial assistance was provided by Stephanie Henry. The Survey also benefited from contributions by Eva Beuselinck, Bert Brys, Daniel Blume, Sara Calligaris, Thomas Dannequin, Manuela Fitzpatrick, Stephanie Guichard, Gernot Hutschenreiter, Andrea Marin Odio, Iota Nassr, Dirk Pilat and Anna Pons.The Survey was discussed at a meeting of the Economic and Development Review Committee on 1 March 2018 and is published under the responsibility of the Secretary General of the OECD.

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