Benefits and costs of nontraditional agricultural export promotion in Costa Rica

This report examines the impact of this strategy. The NTAE promotion strategy has been successful at the macroeconomic level. The growth of Costa Rica"s NTAEs over the past decade is impressive: NTAEs increased from $35 million in 1980 to $291 million in 1994. Also, since many NTAE crops are more labor-intensive than traditional crops, the strategy has created job opportunities, especially for women, including both direct employment and indirect employment in areas such as transportation and services; in 1989, these jobs totalled 15,000. Small farmers have also participated in and benefitted from NTAEs, particularly in crops such as roots and tubers, chayote, and macadamia; according to one study, small farmers produced 35% of NTAEs in 1989. The literature also points out, however, that small farmers face obstacles in exporting, such as lack of access to land, capital, technology, and information. The three main costs of NTAE promotion discussed in the literature are unequal distribution of the benefits, food security issues, and pesticide-related problems. Some authors argue that the benefits of NTAEs are concentrated in the hands of foreign and large national firms. The report finds that this argument is flawed and that it overlooks a number of major issues: NTAEs have created jobs for Costa Ricans, and there is national participation in the production and export of these crops. In addition, a positive impact of a foreign or large company is the transfer of technology, as well as the experience acquired by workers employed with these firms. The report also finds that NTAE promotion has not threatened Costa Rica"s food security, as some authors have suggested. Per capita food consumption in Costa Rica has increased since 1961, levelling off between 1985 and 1990. According to data from the International Fund for Agricultural Development, Costa Rica ranked as a high food security country in Latin America in 1991. Four problems relating to pesticides are briefly examined: pest resistance; health risks; environmental damage; and financial losses from residues in exported products. Current data on the health risk to humans and environmental damage associated with pesticide use are lacking. In sum, the promotion of NTAEs has allowed Costa Rica to diversify its export base and has generated badly needed foreign exchange for the country. The strategy has been successful and has resulted in a number of benefits for Costa Rica. (Author abstract, modified)