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Costa Rica Five Years after CAFTA-DR

Author

Listed:
  • Friederike Koehler-Geib
  • Susana M. Sanchez

Abstract

For Costa Rica, the Dominican Republic-Central America-free trade agreement (CAFTA-DR) has been more than a trade agreement. Costa Rica has used trade liberalization and promotion of international trade as a core development strategy for decades. CAFTA-DR consolidated benefits that had previously been unilaterally extended under the Caribbean Basin Initiative (CBI) into a multilateral FTA, providing a much more stable environment for trade relationships. Beyond just being a trade agreement, CAFTA-DR brought about the opening of state monopolies in telecommunications and insurance, which polarized the country. No other trade agreement has generated as much controversy as this one about the potential impacts on the economy. Following a referendum with a small margin in favor of the agreement, Costa Rica was the last member country to ratify CAFTA-DR in 2009. Given the controversy at the time, the current study takes stock of the early impacts of CAFTA-DR during the five years since its ratification, addresses the following questions: What actual changes did the agreement bring about and what was their context? What was the impact of those changes on trade and FDI flows? How have the high tech, insurance, telecommunications, and pharmaceutical sectors been impacted?

Suggested Citation

  • Friederike Koehler-Geib & Susana M. Sanchez, 2015. "Costa Rica Five Years after CAFTA-DR," World Bank Publications - Books, The World Bank Group, number 22013, October.
    • Handle: RePEc:wbk:wbpubs:22013
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    References listed on IDEAS

    as
    1. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-481, August.
    2. Carlos Felipe Jaramillo & Daniel Lederman & Maurizio Bussolo & David Gould & Andrew Mason, 2006. "Challenges of CAFTA : Maximizing the Benefits for Central America," World Bank Publications - Books, The World Bank Group, number 7127, May.
    3. David M. Gould, 1998. "Has NAFTA changed North American trade?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q 1, pages 12-23.
    4. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
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    Cited by:

    1. Pedro Caldentey & Manuel Alejandro Cardenete & Adolfo Cristóbal & Olexandr Nekhay, 2016. "Intra-regional vs extra-regional liberalization trade in Central America," Working Papers 2016-004, Universidad Loyola Andalucía, Department of Economics.
    2. Adolfo Cristobal Campoamor & Olexandr Nekhay & Manuel Alejandro Cardenete Flores & Pedro Caldentey del Pozo, 2016. "Intra-regional versus Inter-regional Trade Liberalization for Central America," EcoMod2016 9422, EcoMod.
    3. Cardozo Silva, Adriana R. & Díaz Pavez, Luis R. & Martínez-Zarzoso, Inmaculada, 2023. "The impact of migration on wages in Costa Rica," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 11(1), pages 23-51.

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