Costa Rica's background
Costa Rica's modern development history begins with its
1948 revolution, and the broad-based development policies that emerged in its wake. The country has retained its democratic system since then, a rare exception in a region in which most countries have experienced extended periods of military rule in the postwar period. This democratic systemshould not be overly glamorized—the president holds substantial personal power; the legislativebranch has tended to be inefficient and politically weak; central government power has expanded at the expense of local jurisdictions; and citizen participation is modest at best. The tax system in Costa Rica is quite regressive, like most countries in Latin America. The country experienced a 1980s armed right-wing movement associated with the contras. U.S. military and economic aid has been significant, but two-edged. A 1980s scandal involved allegations that American aid funded a "parallel state"—one that drew part of its budget from high central bank interest payments on undisbursed USAID funds—and whose activities were directed at undermining Costa Rica's government-directed development policies.