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A farewell to arms: the peace dividend of Costa Rica's army abolition

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  • Abarca, Alejandro
  • Ramirez Varas, Surayabi

Abstract

This paper estimates Costa Rica's peace dividend following the end of the civil war and the army's abolition in 1949 with synthetic control. We find that the country's average per capita GDP growth increased from 1.46% to 2.28% between 1950-2010, relative to a counterfactual Costa Rica that did not take this path. Three main mechanisms are offered to explain these results: After the end of the civil war and the proscription of the military, the country decided to invest substantially in infrastructure, education, and health, which drove economic development. Second, the new constitution reduced power concentration by the executive branch and increased its accountability. Third, the military's proscription guaranteed the survival and the long-run success of these political and socio-economic reforms.

Suggested Citation

  • Abarca, Alejandro & Ramirez Varas, Surayabi, 2025. "A farewell to arms: the peace dividend of Costa Rica's army abolition," LSE Research Online Documents on Economics 126870, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:126870
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    File URL: https://researchonline.lse.ac.uk/id/eprint/126870/
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    References listed on IDEAS

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    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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