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Productive Development Policies in Costa Rica: Market Failures, Government Failures, and Policy Outcomes

Author

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  • Ricardo Monge-Gonzalez
  • Luis Rivera
  • Julio Rosales-Tijerino

Abstract

This paper analyzes five Productive Development Policies (PDPs) implemented in Costa Rica, finding that they are not optimally addressing market failures. Moreover, government failures rather than market failures represent the main justification for PDPs. Even in the presence of market failures, the policy instruments applied are not necessarily the most economically efficient but rather the most politically feasible options. In addition, the lack of policy evaluation and monitoring prevents adjustments and corrections of such policies. Addressing the arguments for policy intervention and incorporating the results of evaluation into policy design and reform are necessary conditions for success. In spite of positive policy outcomes, limitations to enhance competitiveness and create the conditions for productivity growth are still present. An umbrella approach in the case of those PDPs that reinforce each other is necessary for productivity growth.

Suggested Citation

  • Ricardo Monge-Gonzalez & Luis Rivera & Julio Rosales-Tijerino, 2010. "Productive Development Policies in Costa Rica: Market Failures, Government Failures, and Policy Outcomes," Research Department Publications 4657, Inter-American Development Bank, Research Department.
    • Handle: RePEc:idb:wpaper:4657
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    References listed on IDEAS

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    1. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
    2. James Buchanan & Viktor Vanberg, 1988. "The politicization of market failure," Public Choice, Springer, vol. 57(2), pages 101-113, May.
    3. Thierry Verdier & Daron Acemoglu, 2000. "The Choice between Market Failures and Corruption," American Economic Review, American Economic Association, vol. 90(1), pages 194-211, March.
    4. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 5266, London School of Economics and Political Science, LSE Library.
    5. Judy L. Baker, 2000. "Evaluating the Impact of Development Projects on Poverty : A Handbook for Practitioners," World Bank Publications - Books, The World Bank Group, number 13949.
    6. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
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    Cited by:

    1. Monge, Ricardo & Rivera, Luis, 2021. "Exploring knowledge spillover through labour mobility from multinationals to domestic firms in the information technology sector in Costa Rica," Documentos de Proyectos 46581, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    2. Hewitt, John & Monge-González, Ricardo, 2010. "Innovation, R&D and Productivity in the Costa Rican ICT Sector: A Case Study," IDB Publications (Working Papers) 1810, Inter-American Development Bank.
    3. Ricardo Monges-Gonzalez & John Hewitt, 2010. "Innovation, R&D and Productivity in the Costa Rican ICT Sector: A Case Study," Research Department Publications 4670, Inter-American Development Bank, Research Department.
    4. Jennifer DeBoer & Rajat Panwar & Jorge Rivera, 2017. "Toward A Place‐Based Understanding of Business Sustainability: The Role of Green Competitors and Green Locales in Firms' Voluntary Environmental Engagement," Business Strategy and the Environment, Wiley Blackwell, vol. 26(7), pages 940-955, November.

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    More about this item

    Keywords

    Policy Analysis; Policy Making; Industrial Policy; Costa Rica;
    All these keywords.

    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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