I lived in Costa Rica for 25 years and have now lived in Panama for four. During that time, I have obviously gained insights into the contrasts between the two countries. Though neighbors, the topography did much to keep them apart and their historical development – economic, social and cultural – could not have been more different.
Panama City was one of Spain’s first beachheads in the Americas. Its strategic geographic importance was immediately obvious to the conquistadores. Costa Rica, on the other hand, remained largely uninhabited because the mountainous terrain made access difficult. Around the time of independence, nearly two hundred years ago, there were still only about 30,000 people in the whole of Costa Rica and the population was slow to grow
Panama’s economy has always been driven by trade and movement across the isthmus. After the country gained its independence from Colombia, it became an unofficial colony of the U.S. This fact, along with the construction of the canal, determined the course of its development.
Costa Rica’s first big economic boost was the development of the coffee industry. European-born coffee farmers established strong ties with countries such as England, France and Germany. They sent their children to European universities, where they were exposed to emerging ideas.
In Panama, the country’s economic model imitated that of the U.S., and still does. That is why import taxes are low and the free market is encouraged, to the point where it has long been a tax haven. The cost of living is lower than in many countries in the region.
In the late 19th century, Costa Rica created a liberal state in the European tradition. Free public education was instituted early on, followed by other social programs. The whole structure was tied together after World War 2 by the victor in the brief civil war, Jose Figueres. Having flirted with fascism in the 1930s and being set into exile by the U.S. during WW2, he warmed to socialism.
The result was a large number of state-run institutions and a strong public education system, including the outstanding University of Costa Rica. A good public health system too and, in general, a democratic society in which citizens believed they had rights. When I first visited the country, in 1972, the population was still only 1.5 million, so the system was fairly manageable.
But lots of public services and government employees meant higher taxes, and still do. That is why the cost of living is notably higher than in Panama. Salaries are higher as well, though. I was shocked to learn that my daughters’ high-school teachers earn only $100 per week. And it is a private high school.
The system put in place in Costa Rica made society more equitable than in Panama. That situation is changing but the poverty rate in Panama is still considerably higher. Costa Rica’s public education and health systems are better than those of Panama, but other, privately-owned services are much more developed here. These include telephony and Internet, public transport and insurance. Panama has no currency of its own but the use of the U.S. dollar has provided stability for the economy and kept inflation low. For the last 30 years, inflationary pressures have been a permanent feature of Costa Rica’s economy.
The most visible contrast between the two countries is the state of the roads. In Costa Rica they are appalling, despite plenty of money being spent on maintaining them. The roads in Panama are a real delight by comparison. This has to do with the strategic importance of the canal and Panama’s military tradition. Good roads are a prerequisite for security.
Panama may have an open economy but it has traditionally kept as many foreigners out as possible. While Costa Rica’s economy is “closed” (imposing high tariffs on imports), until recently the country was very welcoming of immigrants and tourism is the country’s largest industry. There are far more foreigners living there, including large numbers of Europeans and North Americans, plus political refugees from all over Latin America. And many more Panamanians live in Costa Rica than the other way round.
Interestingly, on the day that the People’s Republic of China celebrated its 60th anniversary, the President of Panama made some highly xenophobic, even racist, remarks about the Chinese, while in Costa Rica cultural activities were held and it was announced that an official “Chinatown” was to be created in the capital.
Finally, Panamanians tend to be socially conservative, while Costa Ricans are socially liberal. For example, here the gay community keeps a very low profile and body piercing is hardly ever seen. In this society, appearances are very important. Costa Rica is a much more of an “anything goes” society, especially influenced by the influx of foreigners over the last 30 years.
So where these two countries are concerned, “you pays your money and you takes your choice.”
[Cara y cruz is the Spanish terms for heads and tails]