ISI or Export-Led Growth?

Historians of economic development examine two strategies for economic growth: Import Substitution Industrialization (ISI), or manufacturing at home what you used to buy from others, and Export-Led Growth, or making more products to sell abroad. Historians typically favor export-driven growth. It has a better track record. It worked for the Asian Tigers, whereas ISI failed in Latin America in the 1970s. And Export-Led Growth allows each country to specialize more and make better use of their Comparative Advantage, which economists argue leads to greater global efficiency.

I'd like to apply these theories to my new community. We export pineapples and cheese. We import ice cream, vegetables, meat, and trucks. If we want to increase our standard of living and have more ice cream, economists would probably recommend that we grow even more pineapples and sell them to buy more ice cream.

Can we apply this at the village level? One company's pineapple plantation alone is seven thousand hectares--70 square kilometers. While we're grateful to have these jobs in the community, large scale monoculture has environmental disadvantages.

Maybe we can use our milk to make more ice cream. That's inefficient, economists say--better to increase the industrial pineapple farming and leave ice cream production to the ice cream factories elsewhere. But there's also the issue of transaction costs and transportation costs. I'm sure it's less efficient to make ice cream at home, but you don't have to ship it or market it. You can sell it directly to your neighbors. And maybe our lives will be better, because now we're ice cream artisans in addition to employees. And it's nice to to feel ownership for your ice cream.

So--ice cream or pineapples? What do you think?

Site Assignment Day

The magical day has come.

Climate: hot and wet
Geography: flat
Nearby cities: Boca Arenal
Tagline: This is where your pineapples come from



I´m in the north, in the middle of the country (in the void above Pital on this map), 5+ hours from the nearest beach, and not far from Nicaragua. It´s good for biking, though. I´ll be working with the local development association, a rural eco-tourism group (if you want to visit...), a dairy cooperative, English students, a women´s group, and more. I´m about five hours from San Jose.

I´m in a town of about 250 (not counting cows) and I have (satellite) internet access, but no supermarket, no clinic, no municipal water system (everyone has wells). Peace Corps doesn´t want me to tell you the name of the town, but you get the idea. If you want to see pictures, I´ve already got a few--this is the site I visited in March.

I´m excited. The other good news: there´s no bakery yet in my town, so maybe I can start one. And if I´m really lucky I can start a agouti ranch.

Keeping Busy

This Friday Peace Corps announces our posts. On May 22nd I move into my new home for two years. Aside from reading and playing harmonica, how will I keep myself busy?

Peace Corps expects Community Economic Development (CED) volunteers like me to:

(1) transfer skills and knowledge in business management,

(2) strengthen ICT (Information and Communication Technology) knowledge and resources,

(3) teach English for income generation and employability, and

(4) promote social and environmental responsibility.

What does this mean in practice?

-We work with FINCA to establish community microfinance banks or help improve existing banks (like SACRIN)

-We work with the Ministry of Science and Technology (and other organizations) to establish computer labs and teach classes

-We teach English classes, either in schools or informally

-We volunteer with Junior Achievement to teach students about entrepreneurship

-We coach local entrepreneurs and organizations using tools like SWOT analysis

And, as part of Peace Corps' general goals:

-We share American culture with Costa Ricans and teach Americans back home about Costa Rica

-We help the community access outside knowledge and resources

-We train community members to be self-sufficient leaders

Peace Corps also expects us to train Costa Ricans in waffle baking, curling, and competitive rock-paper-scissors.

How to Survive in Manuel Antonio Park

Peace Corps has its perks--last weekend I camped on the beach and spent a day in Manuel Antonio park, the most visited in Costa Rica.

After setting up the tent I went swimming. Lots of fun! Next time I'll remember to take off my glasses first, although being blind for a day and a half wasn't as bad as I feared.

Can you spot the sloth near my tent? Hint: it's a grey blob. Looks about the same with and without glasses.

The beach cleaned up well. Here's 5:30 in the morning, after 10 hours of rain (somehow we still managed to cook on a campfire):

Then, the park! More beaches:

Crafty little forest crabs:

And endless monkey business. Did you know monkeys eat doritos?

I took a quick nap before getting on the bus. 10 hilly miles carrying everything on my back, chafed feet from my sandals, soaked in sweat, sore from sleepin on packed sand, borrowing a friend's glasses... what an adventure!

Microfinance and Chives

Last week we went to visit a volunteer in San Cristobal Norte. San Cristobal produces and sells chives to Chinese restaurants around the country. What's special about this little town in the hills near Cartago? How did they corner the chive market? Turns out there's nothing special about the soil or altitude. One day a local farmer who grew a few chives noticed chinese families buying his entire crop and realized that there was a large market. Other farmers caught on, increased production, and signed contracts with chinese restaurants near and far.

Economists argue about why certain towns or countries produce certain products. Does Japan export cars because Japan has an inherent comparative advantage in cars? (meaning they have a lower opportunity cost--what they could have produced instead of cars is less that what other countries can produce instead of cars). Or, did Japan do something at some point to gain the comparative advantage in cars--for example, invest in engineering schools, or raise tariffs to protect domestic car markets and give Japanese car companies an advantage until they could compete on the world market? I'm sure this dichotomy depends on the product and country, but San Cristobal Norte developed their comparative advantage in chives.

In San Cristobal we interviewed the president and secretary of Sacrin de Desamparados SA, a microfinance bank founded in 1996. Twenty members of the community came together, put in $200, wrote by-laws, and elected officers. They lent money to community members for agriculture and other businesses. They know the community and require borrowers to find co-signers, and after fourteen years they have yet to write off a bad loan. They offer lower interest rates than banks, offer smaller loans than banks, and require less paperwork. Sacrin turns a generous profit for shareholders--all community members--and has grown to 82 shareholders, $50,000 in capital, and made $200,000 of loans in the last year.

We also had a chance to climb this hill:

Holy Week

Holy Week in Costa Rica is not what I expected. School is out for the whole week. Most stores are closed on Thursday and Friday (big party days). Saturday and Sunday everything's back to normal. In the States, Easter Sunday is the big day. Here, it doesn't count for much.

Peace Corps kept us in class through Wednesday, but on Thursday morning I was privileged to participate in one of Costa Rica's great holiday traditions:

1) go for a hike

2) arrive at the river and build a dam so you have a spot to swim

3) cook something delicious

The third picture holds a startling revelation: my host family is not catholic (much less vegetarian). Most Costa Ricans don't eat meat during Holy Week. Instead, they eat lots of sardines and salted cod (which makes a delicious soup).

Here, the divide between Catholics and "Evangelicals" (read: anyone who isn't Catholic) is much stronger than what I'm used to. The Catholic church has a lot going on for Holy Week, including some marches through the streets with music and floats and the stations of the cross. Most evangelicals here don't want to have anything to do with the Catholic church, though. But Catholics and Evangelicals alike can both enjoy the plethora of Christian films on TV this week!

Coffee

Here they plant coffee on the sides of the hills, where it's difficult to plant anything else. Sometimes they mix in a few banana and other trees for shade (and food). Right-click and open this picture in a new window to zoom in.

Workers pick the coffee from November to January (our summer). Local people used to pick it, but now people come from Nicaragua and other parts of Costa Rica. It's very difficult work but if you're in town at the right time there's plenty of it so there's money to be made. You get $2 to fill up a box like this one:



...and carry it to a shed like this one so it can be loaded into a truck to take it to the coffee mill:


Increasingly, Costa Ricans mill their coffee before exporting. Unprocessed coffee doesn't sell for much and it's hard to compete with countries like Vietnam or Nicaragua where labor and land are cheaper. Milling involves taking the pulp off of the bean and drying it.

Here, the burn the husks (along with wood) to dry the coffee:


Once the coffee is dry (but not roasted--that happens later, for freshness), the beans are sorted by density on a machine called an "Oliver:"


You can see the densest product (light green, on the right) differs substantially from the least dense product. There's a big range of quality.