Institutional innovation and inclusive growth: Lessons from the coffee and palm oil sectors in Costa Rica

Abstract

Costa Rica is a small country in Central America of 50 660 sq km and with a population of about 4.5 million. Traditionally, Costa Rica has developed several institutions to promote inclusive growth, based on policies of free and obligatory education and a good health system. In some of the main agro-food sectors- coffee, milk, grains, and so on - there has been significant participation on the part of small farmers or co-operatives and other kinds of farmer associations. In other sectors - banana, melon, and so on- there is greater concentration of few producers. The argument I develop in this chapter is that there have been several institutional innovations that have contributed through time to inclusive growth in a number of sectors, but particularly in the coffee and the palm oil sectors. Some of these institutional arrangements have also contributed to the improvement of environmental and economic performance in the sectors. In this way, it is possible to view these strategies as directed by the concept of sustainable development. The coffee sector has been very important for Costa Rica’s economy for a long time. It was the main export activity for many decades, until the end of the twentieth century. However, more recently coffee has diminished in importance in terms of the export structure of the country, but it continues to be a very important activity.