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Evaluating Country Programmes
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Rican growth. Disputes within USAID and Central America about whether the
CACM was useful should have been replaced by debates about how the
CACM should have been structured to promote development. USAID’s
efforts during the 1970s to lower the CACM’s external tariff – which the World
Bank achieved during the 1980s – would have helped prevent the sharp
regional crisis of the early 1980s.
– USAID has a comparative advantage over other donors in policy reform.
Costa Rica is the most successful case of structural adjustment in Latin
America. Although Chile is acknowledged as currently having the soundest
policy regime, it was achieved at great social cost. Chile applied policies
espoused by the International Monetary Fund and the World Bank more resolutely
than Costa Rica did, with unnecessary pain. The Costa Rican case may
be unique, though, because of the high level of US assistance provided
during the 1980s.
– Institutional change is critical to development. The Costa Rican experience
supports the hypothesis of Douglas North, the Nobelist in economics, that
economic development depends on efficient and flexible institutions as well
as on correct economic policies. By institutions, North means the informal
rules and procedures as well as the formal ones. Dialogue by USAID with
Costa Rican intellectuals and politicians, particularly during the last two
decades, has done much to change the way Costa Ricans have perceived
their situation and prospects and, consequently, to adapt their institutions
to meet the challenges of a changing world environment.
The bottom line: was it worth it?
US economic assistance to Costa Rica significantly contributed to Costa Rican
welfare. Costa Ricans are healthier, wealthier, and better educated than they would
have been without US assistance. Income distribution is more equal than it would
have been, and the country’s environmental base is maintained better than it
would have been without US assistance. Early technical assistance and training
were key factors, because they established collaborative relationships between
Costa Ricans and Americans, which speeded the flow of ideas. Such ideas embodied
more productive ways of working that were critical to building up the capacity
of Costa Rican institutions to deliver basic services to the people, and ways of
increasing the productivity of the economy. But these benefits came at a cost to
American taxpayers. Did they get their money’s worth?
The best way to answer this question is to compare the expectations Congress
had when it appropriated the money with the outcome of the aid. In the broadest
terms, Costa Rica has met expectations. It continues as a vibrant democracy with
respect for human rights, a model for other countries. After a rocky period in the
OECD 1999