Costa Rica was inhabited by an estimated 400,000 Indians when Columbus explored it in 1502. The Spanish conquest began in 1524. The region grew slowly and was administered as a Spanish province. Costa Rica achieved independence in 1821 but was absorbed for two years by Agustín de Iturbide in his Mexican empire. It became a republic in 1848. Except for the military dictatorship of Tomás Guardia from 1870 to 1882, Costa Rica has enjoyed one of the most democratic governments in Latin America.
In the 1970s, rising oil prices, falling international commodity prices, and inflation hurt the economy. Efforts have since been made to reduce reliance on coffee, banana, and beef exports. Tourism is now a major business
José Maria Figueres Olsen of the National Liberation Party became president in 1994. He opposed economic suggestions made by the International Monetary Fund, instead favoring greater government intervention in the economy. The World Bank subsequently withheld $100 million of financing. In 1998, Miguel Angel Rodríguez of the Social Christian Unity Party became president, pledging economic reforms, such as privatization. In 2000, Costa Rica and Nicaragua resolved a long-standing dispute over navigation of the San Juan River, which forms their shared border. A psychiatrist, Abel Pacheco, also of the Social Christian Unity Party, won the presidency in elections held in April 2002. In May 2003, several national strikes took place, by energy and telecommunications workers over privatization and by teachers over their salaries.
Costa Rica is unique. While sharing with its neighbors the experiences of colonial exploitation and commodity-export dependency, Costa Rica managed to rise above. Instead of recurring cycles of dictatorship and poverty, Costa Rica boasts an enduring democracy and the highest standards of living in Central America.
Prior to the global economic crisis, Costa Rica enjoyed stable economic growth. The economy contracted 0.7% in 2009, but resumed growth at more than 3% in 2010. While the traditional agricultural exports of bananas, coffee, sugar, and beef are still the backbone of commodity export trade, a variety of industrial and specialized agricultural products have broadened export trade in recent years. High value added goods and services, including microchips, have further bolstered exports. Tourism continues to bring in foreign exchange, as Costa Rica's impressive biodiversity makes it a key destination for ecotourism. Foreign investors remain attracted by the country's political stability and relatively high education levels, as well as the fiscal incentives offered in the free-trade zones. Costa Rica has attracted one of the highest levels of foreign direct investment per capita in Latin America. Unlike the rest of Central America, Costa Rica is not highly dependent on remittances as they only represent about 2% of GDP. The US-Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) entered into force on 1 January 2009, after significant delays within the Costa Rican legislature. CAFTA-DR will likely lead to increased foreign direct investment in key sectors of the economy, including the insurance and telecommunications sectors recently opened to private investors. President Chinchilla is likely to push for fiscal reform in the coming year, seeking to boost revenue, possibly through revised tax legislation, to fund an increase in security services and education.
"Pura Vida" is the most recognizable phrase attached to Costa Ricans and it reflects the Costa Rican way of life. Often, people walking down the streets, or buying food at shops say hello by saying "Pura Vida" which means pure life, or good life. It can be phrased as a question or as an acknowledgement of one's presence. A recommended response to "How are you?" would be "Pura Vida".
Costa Rica was the point where the Mesoamerican and South American native cultures met. The northwest of the country, the Nicoya peninsula, was the southernmost point of Nahuatl cultural influence when the Spanish conquerors (conquistadores) came in the 16th century. The central and southern portions of the country had Chibcha influences. The Atlantic coast, meanwhile, was populated with African workers during the 17th and 18th centuries.
Costa Rican cuisine is a blend of Native American, Spanish, African and many other cuisine origins. Dishes like the very traditional tamale and many other made of corn are the most representative of its indigenous inhabitants, and similar to other neighboring Mesoamerican countries. Spaniards brought many new ingredients to the country from other lands, specially spices and domestic animals. And later in the 19th century, the African flavor did its presence with influence from other Caribbean mixed flavors. This is how Costa Rican cuisine today is very varied, with every new ethnic group who had recently become part of the country's population influencing the country's cuisine.
As a result of the immigration of Spaniards, their 16th century Spanish culture and its evolution marked everyday life and culture until today, with Spanish language and the Catholic religion as primary influences.
Dance-oriented genres like soca, salsa, bachata, merengue, cumbia and Costa Rican swing are enjoyed increasingly by older rather than younger people. The guitar is popular, especially as an accompaniment to folk dances, however, the marimba was made the national instrument.
Panama's history has been shaped by the evolution of the world economy and the ambitions of great powers. The earliest known inhabitants of Panama were the Cuevas and the Coclé tribes, but they were decimated by disease and fighting when the Spanish arrived in the 1500s.
Rodrigo de Bastidas, sailing westward from Venezuela in 1501 in search of gold, was the first European to explore the Isthmus of Panama. A year later, Christopher Columbus visited the Isthmus and established a short-lived settlement in the Darien. Vasco Nunez de Balboa's tortuous trek from the Atlantic to the Pacific in 1513 demonstrated that the Isthmus was, indeed, the path between the seas, and Panama quickly became the crossroads and marketplace of Spain's empire in the New World. Gold and silver were brought by ship from South America, hauled across the Isthmus, and loaded aboard ships for Spain. The route became known as the Camino Real, or Royal Road, although it was more commonly known as Camino de Cruces (Road of the Crosses) because of the abundance of gravesites along the way.
Panama was part of the Spanish empire for 300 years (1538-1821). From the outset, Panamanian identity was based on a sense of "geographic destiny," and Panamanian fortunes fluctuated with the geopolitical importance of the Isthmus. The colonial experience also spawned Panamanian nationalism as well as a racially complex and highly stratified society, the source of internal conflicts that ran counter to the unifying force of nationalism.
In recent years, Panama's economy has experienced an economic boom, with growth in real gross domestic product (GDP) averaging over 10.4% from 2006–2008. The Panamanian economy has been among the fastest growing and best managed in Latin America. Latin Business Chronicle has predicted that Panama will be the fastest growing economy in Latin America in the five-year period 2010–14, matching Brazil's 10% rate.
Panama's economy, because of its key geographic location, is mainly based on a well-developed service sector heavily weighted towards the Panama Canal, banking, commerce, tourism, trading. The handover of the Canal and military installations by the United States has given rise to large construction projects. Less than a quarter of the land is used for agriculture. On the upland savannas cattle are grazed and subsistence crops such as rice, corn, coffee, and sugarcane are grown. Bananas are grown on the Pacific coast. The country has various light industries, including construction, brewing, and sugar milling. The Colón Free Zone, established in 1953, is a center for foreign investment in manufacturing.
Bananas are the leading export, followed by shrimp, sugar, coffee, and clothing. Capital goods, foodstuffs, consumer goods, and chemicals are imported. Much of the trade is with the United States.
Panamanians' culture, customs, and language are predominantly Caribbean Spanish. The majority of the population is ethnically mestizo or mixed Spanish, indigenous, Chinese, and West Indian. Spanish is the official and dominant language; English is a common second language spoken by the West Indians and by many businesspeople and professionals. More than half the population lives in the Panama City-Colon metropolitan corridor.
Panama is rich in folklore and popular traditions. Lively salsa--a mixture of Latin American popular music, rhythm and blues, jazz, and rock--is a Panamanian specialty, and Ruben Blades its best-known performer. Indigenous influences dominate handicrafts such as the famous Kuna textile molas. Artist Roberto Lewis' Presidential Palace murals and his restoration work and ceiling in the National Theater are widely admired.