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Evaluating Country Programmes 270 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 Disputes within USAID and Central America about whether the CACM was useful should have been replaced by debates about how the CACM should have been structured to promote development.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
OECD 1999 Real Progress: Fifty Years of USAID in Costa Rica early 1980s, its economy has successfully adapted to a changed world economy. It is a world leader in ecosystem management. If all developing countries had matched Costa Rica’s progress on economic, social, and political indices, there would be fewer complaints about the effectiveness of foreign aid. The assessment is even more strongly positive with respect to the large-scale assistance the United States provided during the 1980s. Costa Rica used US resources effectively, and its leaders, notably then-president Arias, took the lead in formulating an approach that restored peace to Central America. Finally, the US Congress and the American people would consider the economic assistance successful to the extent that Costa Rica no longer requires US economic aid. If Costa Rica were itself later to offer a helping hand to contribute to the development of its poorer neighbours, that would be the ultimate evidence to the American public that US assistance had succeeded in broad moral terms. 271
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