Global Firms and Local Development: Evidence from Costa Rica

Esteban Méndez () and Diana Van Patten ()
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Esteban Méndez: Central Bank of Costa Rica
Diana Van Patten: Yale University

A chapter in Roots of Underdevelopment, 2023, pp 473-483 from Springer

Abstract: Abstract This chapter studies the effects of large firms on economic development, using evidence from one of the largest multinationals of the twentieth century: the United Fruit Company (UFCo). We first focus on Costa Rica, where the firm was given a large land concession between 1899 and 1984. Using historical records along with census data, we find that the UFCo had a positive and long-lasting impact on living standards in the regions where it operated. Moreover, satellite data shows that regions within the concession’s boundary are more luminous at night—which is associated with higher income levels—than those outside the UFCo region even today. Historical accounts suggest that investmentsInvestment in local amenities carried out by the UFCo to attract workers are the main drivers behind its positive effects. The chapter then discusses the role of institutions and labor mobility in determining the UFCo’s effect, and how it might differ in other Latin American countries.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-38723-4_17

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DOI: 10.1007/978-3-031-38723-4_17

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