Costa Rica is making gradual progress in closing the large economic gap in GDP per capita with the upper half of the OECD economies. However, productivity levels remain relatively low. The post-COVID recovery saw a boost in investment – driven largely by foreign direct investment (FDI) – which contributed to the creation of high-productivity formal jobs. Despite this, the positive impact on aggregate productivity was offset by a decline in the labour force participation rate and stagnation in overall employment levels. Both labour force participation and employment rate remain well below those of the upper half of OECD economies.
Reducing the mismatch between the skills demanded by the private sector and those available in the labour market would boost productivity. Improving access to early childhood education and care would enable more women to participate in the labour market, boosting overall employment. Investing in transport and digital infrastructure is essential to support economic development, improve connectivity, and reduce regional disparities. Accelerating current efforts to advance the digital transformation of public services would enhance the efficiency, transparency, and quality of service delivery. Expanding and diversifying the renewable electricity generation capacity will be crucial to meet Costa Rica’s decarbonisation goals.
