Overview: A candid look at Nicaragua versus Costa Rica as a destination for expats. First I'll give some basic facts on each country including history, geography, people and economy. Then I'll give my assessment of what it means to expats considering either country for investment, living or retirement.
Decisions on where to live as an expat or where to retire as a baby boomer have many considerations. In the past I have looked at Costa Rica versus Panama (see that posting in our blog) but today we will look at Costa Rica compared to Nicaragua. All the photos in this post will be of Nicaragua since our blog and website has plenty of photos of Costa Rica.
Nicaragua history: Nicaragua was settled as a Spanish colony from Panama in the early 16th century. Independence from Spain was declared in 1821 and the country became an independent republic in 1838. Britain occupied the Caribbean Coast in the first half of the 19th century, but gradually ceded control of the region in subsequent decades. Violent opposition to governmental manipulation and corruption spread to all classes by 1978 and resulted in a short-lived civil war that brought the Marxist Sandinista guerrillas to power in 1979. Nicaraguan aid to leftist rebels in El Salvador caused the US to sponsor anti-Sandinista contra guerrillas through much of the 1980s. Free elections in 1990, 1996, and 2001, saw the Sandinistas defeated, but voting in 2006 announced the return of former Sandinista President Daniel ORTEGA Saavedra. The 2008 municipal elections were characterized by widespread irregularities. Nicaragua's infrastructure and economy - hard hit by the earlier civil war and by Hurricane Mitch in 1998 - are slowly being rebuilt, but democratic institutions face new challenges under the ORTEGA administration. Dan Ortega has waived term limits recently for Sandanista Magistrates and democracy is in jeapordy as a result of these actions. Nicaragua is considered a republic form of government. Unfortunatly international investment in Nicaragua has waned under Ortega and the economy has slipped backwards.
Costa Rica history: Christopher Columbus first discovered Costa Rica in 1502. Settlement began by Spain in 1522 and the area at the time was under the control of Guatemala. They gained independence from Spain in 1821 when a federation of Central American states was formed but Costa Rica left the federation in 1838. Costa Rica became truly democratic in 1899 and other than a brief period between 1917 and 1919, has remained a democratic republic ever since. The country abolished it's military in 1948 and ratified their constitution in 1953. They have term limits for most offices and have elected their 16th president since adopting their constitution. Costa Rica has no military and maintains only domestic police and security forces. A professional Coast Guard was established in 2000. When the country abolished their military by constitutional amendment in 1948, they put the money saved into education, conservation and healthcare.
Nicaragua Map
Geographically: Both countries are located next to each other in Central America. Nicaragua is to the north and located between 11 degrees and 14 degrees north of the equator while Costa Rica is south of Nicaragua and between 10 degrees and 8 degrees north of the equator. Both countries have many similarities but both also have many differences. Nicaragua, the largest country in Central America, is roughly 120,000 square kilometers of land and about 10,000 kilometers of water, primarily contained in Lake Nicaragua which is the largest body of fresh water in Central America. It is about the size of New York State. Nicaragua has 910 kilometers of coastline and about 1,200 kilometers of border (roughly 900 km. with Honduras and 300 km. with Costa Rica). Costa Rica has 51,100 square kilometers of land and 1,290 kms. of coastline and 948 km of border (roughly 300 kilometers with Nicaragua and 640 with Panama). Both countries are located in the "ring of fire". Nicaragua has a number of active volcanos with Cerro Negro being the most active. It erupted in 1999 and caused extensive damage to farm land and buildings. Nicaragua is also extremely susceptible to hurricanes, especially along the north eastern sector. Costa Rica has a number of active volcanos with Arenal being the most active. Arenal erupted in 1968 and destroyed the town of Tabacon. Being one of the most active volcanos in the world, it has had a few major eruptions since 1968 with the last major one in 1998. Costa Rica is less susceptible to hurricanes but sometimes suffers coastal flooding from the rain bands from large storms.
"No Dictator" grafitti on wall in Managua
People: Nicaragua's population is roughly 6 million. Ethnicity is primarily a mix of colonial Spanish and indigenous population called Mestizo (69%) White (17%) Black (9%) and Amerindian (5%) , The Black and Amerindian ethnic groups include Mayangna, Miskitu, Garifuna and Creole. Most of these other groups are located on the east coast and were migrants of the Caribbean islands of Jamaica, Belize and other British Caribbean territories. The median age is 22.5 years and the median life expectancy is 71.78 years. The literacy rate is 67.5% and they spend 3.1% of GDP, or about $500,000,000 million dollars total spent for education. They attend school for an average of 11 years.
In 2009 Costa Rica had an estimated population of 4,579,000 people. Together, whites and mestizos make up a 94% of the population, 3% are black, 1% Amerindians, 1% Chinese, and 1% other. There is also a large North American population in Costa Rica, estimated at over 100,000 in 2009. Few of the native Indians survived European contact; the indigenous population today numbers about 29,000 or less than 1% of the population. Median age is 28.8 year and life expectancy is 77.5 years. Costa Rica spends 5% of GDP on education, attend school an average of 12 years and has a 95% literacy rate.
Economy: Nicaragua is the poorest country in Central America and poverty and unemployment is widespread. Total GDP was only 16 billion dollars in 2009 and fell by 3% from the prior year. Foreign investment has declined since Ortega was elected president and the economy as a whole has suffered. Average income in Nicaragua was only $2800 in 2009 and fell from the prior year. Nearly 50% of the population lives in poverty. Exports include fruits, vegetables and raw commodities. Nicaragua relies on foreign assistance to meet much of it's internal financing needs and debt payment. There are roughly 3 million cell phones in use in Nicaragua, 310,000 land lines and 185,000 internet users. Nicaragua has one international airport in Managua but 11 airports with paved runways.
Costa Rica's economy is very robust with GDP of 48.8 billion dollars (2009) and average per capita income is $10,600 (2010). Costa Rica did suffer a contraction in GDP in 2009 as a result of global issues. The services sector--around 68% of GDP--was the most affected, with tourism falling by 8%. The economy has experienced a rebound in 2010 with a 3.6% GDP growth rate. Costa Rica enjoys the region’s highest standard of living, an unemployment rate of 6.7% and tourism is the largest source of income. Consumer price inflation is high but relatively constant at about a 10% annual rate in the last decade but only 4% in 2010. Both the central government and the overall public sector ran fiscal surpluses in 2007. Costa Rica's major economic resources are its fertile land, frequent rainfall and its well-educated population. Costa Rica is known worldwide for its conservation efforts with more than 26% of its land under protection, thus safeguarding more than 5% of the entire world's biodiversity. Costa Rica's economy benefits from high tech jobs. A huge number of multinationals have manufacturing facilities there and 99% of the country's electricity comes from renewable resources.
What does all this mean to an expat considering relocation to either country. If you want to live in a stable country, Costa Rica is your best bet. If you want cheap, go to Nicaragua. When you consider risk; political, social and economic, Costa Rica looks much better than Nicaragua. The economic situation in Nicaragua is pretty bleak with many people unemployed. Situations like this can lead to "economic unrest". Nicaragua's president, Dan Ortega, is also the leader of the Sandanista party. He has strong ties to Hugo Chavez in Venezuela and Fidel and Raul Castro. Political risk should be considered in your decision on where to buy. Costa Rica has plentiful jobs and low unemployment. There are many US and international firms with manufacturing facilities in Costa Rica. There are also strong social programs in place to assist those of
Costa Rica has seen an increase in crime in recent years and the administration is working to stop the trend. In 2006 the murder rate per 100,000 in Costa Rica was only 7.3 but in 2009 the rate was 11. Nicaragua's rate of 17.4 murders per 100,000 is much higher however.
The availability of amenities that North Americans desire is quite different between the two countries. Costa Rica has better telecomunications, better internet service, more availability of goods and services and better health care options. But you can't own ocean front in Costa Rica while you can in Nicaragua so if you have your heart set on owning beach front property, consider Nicaragua but be prepared to lose it all if Dan Ortega has his way.