Non-contributory pensions Social assistance programmes. These were created with the primary purpose of

92 ESS-33 Lesson 4 Costa Rica is also a case in which social development has come from within. ODA resources played no significant role in the construction of the country’s social protection system. Yet, at the time the mandatory social insurance programme was launched, fewer than 40 per cent of the population wore shoes. Lesson 5 The extension of social protection is a highly political issue. The abolishment of the army and the approval of the Social Security Act were two atypical decisions for a highly underdeveloped country, as well as in terms of their timing. The first decision made Costa Rica the first country in the world without a military budget. The second involved agents that, in principle, had nothing in common. Both measures signified an enhancement of the availability of resources and helped to consolidate a model in which human capital formation was the centrepiece. All this required a clear long-term vision on the part of society as a whole. Lesson 6 In terms of governance, the tripartite body that manages Costa Ricas social insurance fund workers, employers and Government, all represented on the Board of the CCSS and the mechanisms that promote social dialogue among the different parties have worked as a powerful political shield to protect the collection of social contributions. For instance, during the 1980s and 1990, when the neoliberal structural adjustment and stabilization packages reduced central Government spending on health to a historical low, the revenue of the social security system actually increased and helped to keep expenditure on health at the same level. Lesson 7 Money is important but, again, money alone is not enough. For more than a decade, from 1994 to 2006, poverty rates in Costa Rica remained stable at around 20 per cent of the population, despite the fact that an extensive institutional framework was already in place. That said, there remain problems with targeting and with programme design. Lesson 8 Achieving results demands patience. The social insurance programme did not cover the entire population from the very start but was a process that took more than 30 years to complete. A strategy such as this calls for permanent institutions, and that is what Costa Rica established. More than 80 per cent of the countrys core social programmes were created 25 years ago and the two building blocks of the social strategy, the CCSS and the FODESAF, have been in existence for more than 35 years. Lesson 9 To meet the necessary conditions, the country had to identify appropriate financing sources. In the case of Costa Rica, there is a mix of financial sources that includes payroll contributions, earmarked taxes and other lesser sources such as profits from the national lottery. The problem with this type of design, however, is that in times of crisis the revenue tends to decrease just when poverty is on the increase. It is therefore important that part at least of the financing be fixed or stable, even though this may have negative fiscal implications. ESS-33 93 Lesson 10 Countries should be very careful about the initiatives they create. A long list of social programmes may generate problems of governance throughout the system. Moreover, the contribution of some programmes to the fight against poverty may be quite small. Costa Ricas experience raises two potential problems. First, it is usually very difficult to cancel or reverse programmes that are under way, and so policymakers may tend to keep them even though they do not bring the desired results. Secondly, if there are too many programmes, the demand for additional funds may set them in competition with other priorities such as infrastructure and the environment.