Thesovereign state is a presidential republic. It has a long-standing and stable constitutional democracy and a highly educated workforce.[15] The country spends roughly 6.9% of its budget (2016) on education, compared to a global average of 4.4%.[15] Its economy, once heavily dependent on agriculture, has diversified to include sectors such as finance, corporate services for foreign companies, pharmaceuticals, and ecotourism. Many foreign manufacturing and services companies operate in Costa Rica's Free Trade Zones (FTZ) where they benefit from investment and tax incentives.[16]
Costa Rica was inhabited by indigenous peoples before coming under Spanish rule in the 16th century. It remained a peripheral colony of the empire until independence as part of the First Mexican Empire, followed by membership in the Federal Republic of Central America, from which it formally declared independence in 1847. Following the brief Costa Rican Civil War in 1948, it permanently abolished its army in 1949, becoming one of only a few sovereign nations without a standing army.[17][18][19]
The country has consistently performed favorably in the Human Development Index (HDI), placing 58th in the world as of 2022[update], and fifth in Latin America.[20] It has also been cited by the United Nations Development Programme (UNDP) as having attained much higher human development than other countries at the same income levels, with a better record on human development and inequality than the median of the region.[21] It also performs well in comparisons of democratic governance, press freedom, subjective happiness and sustainable wellbeing. It has the 8th freest press according to the Press Freedom Index, it is the 35th most democratic country according to the Freedom in the World index, and it is the 23rd happiest country in the 2023 World Happiness Report.[22][23] It is also a major tourist destination in the continent.[24]
Historians have classified the indigenous people of Costa Rica as belonging to the Intermediate Area, where the peripheries of the Mesoamerican and Andean native cultures overlapped. More recently, pre-Columbian Costa Rica has also been described as part of the Isthmo-Colombian Area.
Stone tools, the oldest evidence of human occupation in Costa Rica, are associated with the arrival of various groups of hunter-gatherers about 10,000 to 7,000 years BCE in the Turrialba Valley. The presence of Clovis culture type spearheads and arrows from South America opens the possibility that, in this area, two different cultures coexisted.[25]
Agriculture became evident in the populations that lived in Costa Rica about 5,000 years ago. They mainly grew tubers and roots. For the first and second millennia BCE there were already settled farming communities. These were small and scattered, although the timing of the transition from hunting and gathering to agriculture as the main livelihood in the territory is still unknown.[26]
The earliest use of pottery appears around 2,000 to 3,000 BCE. Shards of pots, cylindrical vases, platters, gourds, and other forms of vases decorated with grooves, prints, and some modeled after animals have been found.[27]
The influence of indigenous peoples on modern Costa Rican culture has been relatively small compared to other nations since the country lacked a strong native civilization, to begin with. Most of the native population was absorbed into the Spanish-speaking colonial society through inter-marriage, except for some small remnants, the most significant of which are the Bribri and Boruca tribes who still inhabit the mountains of the Cordillera de Talamanca, in the southeastern part of Costa Rica, near the frontier with Panama.
The name la costa rica, meaning "rich coast" in the Spanish language, was in some accounts first applied by Christopher Columbus, who sailed to the eastern shores of Costa Rica during his final voyage in 1502,[28] and reported vast quantities of gold jewelry worn by natives.[29] The name may also have come from conquistador Gil Gonzlez Dvila, who landed on the west coast in 1522, encountered natives, and obtained some of their gold, sometimes by violent theft and sometimes as gifts from local leaders.[30]
During most of the colonial period, Costa Rica was the southernmost province of the Captaincy General of Guatemala, nominally part of the Viceroyalty of New Spain. In practice, the captaincy general was a largely autonomous entity within the Spanish Empire. Costa Rica's distance from the capital of the captaincy in Guatemala, its legal prohibition under mercantilist Spanish law from trade with its southern neighbor Panama, then part of the Viceroyalty of New Granada (i.e. Colombia), and lack of resources such as gold and silver, made Costa Rica into a poor, isolated, and sparsely-inhabited region within the Spanish Empire.[31] Costa Rica was described as "the poorest and most miserable Spanish colony in all America" by a Spanish governor in 1719.[32]
Another important factor behind Costa Rica's poverty was the lack of a significant indigenous population available for encomienda (forced labor), which meant most of the Costa Rican settlers had to work on their land, preventing the establishment of large haciendas (plantations). For all these reasons, Costa Rica was, by and large, unappreciated and overlooked by the Spanish Crown and left to develop on its own. The circumstances during this period are believed to have led to many of the idiosyncrasies for which Costa Rica has become known, while concomitantly setting the stage for Costa Rica's development as a more egalitarian society than the rest of its neighbors. Costa Rica became a "rural democracy" with no oppressed mestizo or indigenous class. It was not long before Spanish settlers turned to the hills, where they found rich volcanic soil and a milder climate than that of the lowlands.[33]
On March 3, 1824, the government of the State of Costa Rica officially proposed to the municipality of Nicoya its voluntary incorporation into the country, through a document in which it invited it "if it was convenient to join its Province without going against its will." On July 4, an open town hall was convened in Nicoya to discuss the matter, but attendees declined the invitation under the argument "that this Party... cannot be dissident."
On July 25, 1824, a second plebiscite was called in the city of Nicoya. After deliberation, the incorporation into Costa Rica was decided in an open town hall meeting, preparing a record in which the main reasons for it were noted, pointing out the advantages in terms of trade, the desire to participate in the advances that are palpable in Costa Rica, the economic, administrative and public service benefits, the creation of schools, security and quiet, referring to the state of war that Nicaragua was experiencing at that time and the fear that it would spread to the Partido populations, in addition to point out the poverty in which its towns find themselves and the geography of the territory as justifications for the union. Three days later, another similar plebiscite was held in Santa Cruz, with the same result. The election was by majority vote, with 77% of the Party's population in favor of incorporation, and 23% against it. The town of Guanacaste was the only one that declined annexation, due to the ties its residents had with the city of Rivas, Nicaragua.
Upon independence, Costa Rican authorities faced the issue of officially deciding the future of the country. Two bands formed, the Imperialists, defended by Cartago and Heredia cities which were in favor of joining the Mexican Empire, and the Republicans, represented by the cities of San Jos and Alajuela who defended full independence. Because of the lack of agreement on these two possible outcomes, the first civil war of Costa Rica occurred. The Battle of Ochomogo took place on the Hill of Ochomogo, located in the Central Valley in 1823. The conflict was won by the Republicans and, as a consequence, the city of Cartago lost its status as the capital, which moved to San Jos.[35][36][37]
In 1838, long after the Federal Republic of Central America ceased to function in practice, Costa Rica formally withdrew and proclaimed itself sovereign. The considerable distance and poor communication routes between Guatemala City and the Central Plateau, where most of the Costa Rican population lived then and still lives now, meant the local population had little allegiance to the federal government in Guatemala. Since colonial times, Costa Rica has been reluctant to become economically tied with the rest of Central America. Even today, despite most of its neighbors'[a] efforts to increase regional integration,[38] Costa Rica has remained more independent.
Until 1849, when it became part of Panama, Chiriqu was part of Costa Rica. Costa Rican pride was assuaged for the loss of this eastern (or southern) territory with the acquisition of Guanacaste, in the north.
Coffee was first planted in Costa Rica in 1808,[39] and by the 1820s, it surpassed tobacco, sugar, and cacao as a primary export. Coffee production remained Costa Rica's principal source of wealth well into the 20th century, creating a wealthy class of growers, the so-called Coffee Barons.[40] The revenue helped to modernize the country.[41][42]
Most of the coffee exported was grown around the main centers of population in the Central Plateau and then transported by oxcart to the Pacific port of Puntarenas after the main road was built in 1846.[42] By the mid-1850s the main market for coffee was Britain.[43] It soon became a high priority to developing an effective transportation route from the Central Plateau to the Atlantic Ocean. For this purpose, in the 1870s, the Costa Rican government contracted with U.S. businessman Minor C. Keith to build a railroad from San Jos to the Caribbean port of Limn. Despite enormous difficulties with construction, disease, and financing, the railroad was completed in 1890.[44]
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