After the debt crisis in 1981, Costa Rica shifted from an inward (IDS) to an outward oriented development strategy (ODS). "Neoliberal" economists have characterized this shift as being a result of free trade and liberalization policies and reduced government intervention. The neoliberal perspective has seen inward and outward development strategies as mutually exclusive and has evaluated their success mainly in terms of GDP and export growth. This dissertation first shows that IDS and ODS are in fact not mutually exclusive and that countries which have been successful in applying an ODS, such as Taiwan and Korea, have had strong government intervention, particularly in that they have implemented a selective trade policy. Second, in the case of Costa Rica, it illustrates that the shift towards a more ODS has been the result of previous development achievements, pursuit of macroeconomic balance with social stability, and strong institutional and financial support for export promotion. Additionally, using a computable general equilibrium model, the study also shows that a gradual and combined policy of tariffs and export subsidies may have better overall macroeconomic results, not only in terms of growth, but also in terms of distributional issues, as compared with the neoliberal shock policies, involving import liberalization and large devaluations. This gradual and combined approach is consistent with the policies adopted by Costa Rica in the transition to an ODS; it also helps illustrate the distributional concerns that governments face when choosing a trade policy and development strategy. However, in order for Costa Rica to go beyond an easy stage of export promotion to a deeper export development process and overcome similar problems encountered during the period of import substitution industrialization such as rent seeking, developing an industrial structure with small degrees of value added and increasing trade imbalances and fiscal deficits, it is necessary to transform the productive structure and develop strategic export and import substitution sectors that would give Costa Rica a competitive advantage. The dissertation concludes by proposing a greater role for the state to promote an ODS based on a selective trade strategy and a combined macroeconomic policy of maintaining a realistic exchange rate and gradual and selective fiscal policies.
| Identifer | oai:union.ndltd.org:UMASS/oai:scholarworks.umass.edu:dissertations-9077 |
| Date | 01 January 1995 |
| Creators | Ansorena, Claudio |
| Publisher | ScholarWorks@UMass Amherst |
| Source Sets | University of Massachusetts, Amherst |
| Language | English |
| Detected Language | English |
| Type | text |
| Source | Doctoral Dissertations Available from Proquest |
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