Costa Rica
Colonial poverty forced settlers to work their own land, creating egalitarianism that compounded through coffee wealth (1840s) to military abolition (1949) to today's $95B green economy.
Costa Rica exists because José Figueres Ferrer took a sledgehammer to the Bellavista Barracks on December 1, 1948, and declared the army abolished. This became perhaps the most consequential single decision in Central American history: the military budget was redirected to education, healthcare, and conservation, and the former barracks now houses the National Museum. While neighbors descended into civil wars, Costa Rica built the region's most stable democracy.
Spain colonized this 'Rich Coast' in the sixteenth century but found neither gold nor large indigenous populations to exploit. The resulting pattern—small landholders rather than plantation oligarchies—created a more egalitarian society than elsewhere in the isthmus. Independence came in 1821 as part of the Central American Federation; Costa Rica became fully sovereign in 1838. The 1948 civil war lasted just 44 days, ending with Figueres' victory and the constitutional abolition of the military. Article 12 of the 1949 Constitution states: 'The Army as a permanent institution is abolished. For the surveillance and preservation of public order, there will be the necessary police forces.'
The decision created a virtuous cycle. Without military spending, Costa Rica could invest in universal healthcare and free public education through university. High human development attracted foreign investment and tourism. Today, Costa Rica generates 98% of its electricity from renewable sources and protects 26% of its land area. Three of every five visitors to the country tour its national parks and protected areas—this is ecotourism as economic strategy, pioneered before the term existed.
The economy has outperformed the region. GDP reached $95.35 billion in 2024 with 4.3% growth, making Costa Rica second in Central America for GDP per capita. In 2025, the World Bank reclassified it as a high-income country. Unemployment fell to 6.6% in 2024, while 2.9 million tourists arrived and foreign direct investment hit a record $5 billion. President Rodrigo Chaves, an economist and former World Bank official elected in 2022, completed two IMF agreements worth $2.3 billion and reduced public debt from 68% to below 60% of GDP.
But the model faces pressures. Trump's April 2025 tariffs initially imposed 10-15% duties on Costa Rican exports; 47% of the country's goods—medical devices, coffee, pineapples, bananas—go to the United States. By November 2025, key agricultural products were exempted, but the vulnerability was exposed. Chaves holds only 9 of 57 Congressional seats, limiting his reform agenda. The 'Jaguar Law' passed to accelerate development, and Costa Rica began the CPTPP accession process in late 2024, seeking to diversify trade relationships.
By 2026, Costa Rica will likely maintain its high-income status and ecotourism revenues while navigating US trade policy uncertainty. The fundamental wager—that investing in people and nature rather than weapons would produce better outcomes—has been vindicated by 75 years of peace and prosperity. But success creates its own challenges: rising inequality, housing costs, and the question of whether ecotourism is sufficient to protect ecosystems under climate stress. The country that proved armies are optional must now prove that sustainable development can scale.