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San José, Costa Rica, Monday, June 27, 2016, Vol. 17, No. 125
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International organization keeps watch on Costa Rica
By the A.M. Costa Rica staff

British citizens have voted to leave the European Union, but Costa Rica is working hard to affiliate the country with yet another international organization which seeks to change profoundly life here.

The Organisation for Economic Co-operation and Development is not new to Costa Ricans. The unelected organization has been a strong promoter of the central government’s plans to raise taxes. In fact, the organization is on record suggesting that the country needs to raise much more taxes.

The Paris-based organization says it provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and coordinate domestic and international policies. But it also keeps a scorecard for dozens of performance factors.

The United States, which has been a member for decades says that the organization is a unique forum where the governments of 34 democracies with market economies work with each other, as well as with more than 70 non-member economies to promote economic growth, prosperity, and sustainable development. The organization grew out of the Marshall Fund that helped rebuild war-torn Europe.

In order to enter the realm of most First World nations, Costa Rica has to make substantial changes. No topic is too small. In the next few months experts from the Organisation for Economic Co-operation and Development will visit Costa Rica to fill out what amounts to a report card on the nation’s digital policy and consumers.

That was agreed upon Friday in Cancún, México, when the Costa Rican science and economics ministers discussed innovation and social prosperity regarding the Internet.

The gathering generated a 14-point declaration that promotes digital commerce, online privacy and social inclusion for those who might not be connected now to the Internet. In addition to Costa Rica, 41 countries were involved.

To some extent the organization is promoting a European-style society with a strong central government. Internet privacy and laws that allow individuals to delete unflattering online comments have raised major legal issues in Europe.

The organization’s goals for Costa Rica were laid out by its secretary general in February when he visited. He is economist Ángel Gurría of México.

He stressed the need for action on government finances and noted that the average governmental income for organization member countries was 34 percent of their gross domestic product. Even with tax proposals of the central government, the average for Costa Rica would only be just 20 percent, he said. He also noted that 83 percent of the government’s income already was allocated by law.

Gurría also said that in Costa Rica, the top 10 percent brings in 32 times the income of the 10 percent poorest. The average for organization member states is that the top 10 percent brings in just 10 times that of the 10 percent poorest, he added.

Solis and Guerria
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President Luis Guillermo Solís and Ángel Gurría display a report on Costa Rica that was delivered in February.

He urged more investment in education, noting that only 40 percent of the work force has finished high school and that in an international math test, Costa Rica scored 56th of 64 countries.

He called for distributing resources more equitably to combat school dropouts. He also urged the inclusion of more women in the work force, noting that just half of the eligible women are working. So he urged more public child care and early child education.

Gurría noted that 40 percent of the country’s employees work off the books in the so-called informal sector. His solution was to make registering a company easier and reducing non-salary labor costs.

He also called for reducing obstacles to competition. He noted that Costa Rican companies show low productivity and that for a more solid and strong economy more competition is needed.

He also called for much more investment in infrastructure, noting the quality of ports, rail lines, highways and airports.

Th organization has called for in the past direct payments to reduce the income gap.

Some critics have called the organization unAmerica, in part because it seemed to support a global tax levied by the United Nations. Others support what is called tax competition in which countries offer lower taxes to attract companies and industries. The organization seeks to equalize tax and has promoted a black list of countries that are considered tax havens.

Some U.S. commentators also have objected to the $70 million a year their government donates to the organization. Finances is not a big issue for Costa Rica. Nine countries provide 66 percent of the organization’s budget of $365 million. Costa Rica might end up paying 1 percent or less a year.

For Costa Rica, the effort  to join the organization seems mainly motivated by the prestige of being a member among mostly First World nations.

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