Is Costa Rica considered a 3rd world country?

When many people hear the term “third-world country,” they envision poverty, instability, and limited economic opportunities. However, the reality is far more nuanced — especially for countries like Costa Rica in 2025. Today, Costa Rica stands at a crossroads of development, boasting many characteristics of a modern, thriving nation, yet still facing challenges that set it apart from the world’s most advanced economies.

This article explores Costa Rica’s current development status, dismantles outdated labels, and explains why calling Costa Rica a “third-world country” in 2025 would be inaccurate.

1. What Does “Third-World Country” Really Mean?

The term “third-world country” emerged during the Cold War era, referring to nations that stayed outside both the Western alliance led by NATO and the Eastern communist sphere. Over time, it came to be used — often incorrectly — as a shorthand for poor, underdeveloped countries.

Experts today avoid the term because it’s vague and misleading. Instead, modern classification relies on objective metrics such as:

• Income levels (e.g., GDP per capita)

• Human Development Index (HDI)

• Membership in international economic organizations

• Access to education and healthcare

• Quality of life and infrastructure

Using precise, data-driven criteria gives a more accurate picture of Costa Rica’s status in 2025.

2. Costa Rica’s Income Classification: High Income, Not “Third World”

One of the strongest pieces of evidence about Costa Rica’s development comes from the World Bank’s income classification. In **2025, the World Bank officially upgraded Costa Rica from “upper-middle-income” to a “high-income” country, meaning its per-person income has surpassed the threshold used to define economically advanced economies.

How This Matters

• The World Bank groups nations according to their average income per person, measured through Gross National Income (GNI).

• Costa Rica’s GNI per capita exceeded the high-income threshold in 2025, placing it in the same broad category as many economically developed nations (though this classification doesn’t capture every aspect of development).

This means that economically, Costa Rica does not fit the outdated idea of a third-world country — in terms of income generation, it is more aligned with prosperous nations.

3. Human Development: A Key Indicator of Progress

A crucial measure of development is the Human Development Index (HDI), created by the United Nations Development Programme (UNDP). HDI combines:

• Life expectancy

• Education levels

• Standard of living (income)

Costa Rica consistently ranks high in global HDI reports — typically placing around the 60s out of nearly 200 countries.

What This Shows

• Costa Rica’s HDI is higher than many nations often labeled “developing.”

• Access to education, healthcare, and healthy living conditions contribute strongly to its high HDI score.

This tells us Costa Rica is not at the low end of global development, where most historically termed “third-world” countries fall.

4. Economic Performance and Institutional Strength

Beyond income and human development, Costa Rica has made strides in many other areas of modern state performance:

Steady Economic Growth

• Costa Rica’s economy is forecasted to grow steadily at around 3.8% in 2025.

Strong Institutional Framework

• It is a member of the Organization for Economic Cooperation and Development (OECD) — a club of largely high-income, developed nations.

Moderately Free Economy

• The Index of Economic Freedom (2025) ranks Costa Rica 41st globally and 7th in the Americas, highlighting its openness to trade, investment, and economic activity.

These facts illustrate institutional stability, global integration, and economic viability, further breaking the myth that Costa Rica is “third world.”

5. Quality of Life: Education, Health, and Environment

Costa Rica prides itself on its social systems and sustainable policies — areas where it outperforms many countries with similar incomes.

Education

• High literacy rates and widespread access to schooling are core parts of the Costa Rican success story.

Healthcare

• Costa Rica offers universal healthcare, with life expectancy among the highest in Latin America, largely due to effective public health systems.

Environmental Leadership

• The country is known for its ambitious renewable energy goals, including efforts to generate nearly all electricity from clean sources.

Together, these social and environmental achievements reinforce Costa Rica’s advanced quality of life relative to many so-called “third world” nations.

6. Why Some People Still Use the Term “Third World”

Despite all the data, you may sometimes see people refer to Costa Rica (and many other countries) as “third world.” Here’s why that happens — and why it’s misleading:

1. Outdated Stereotypes

The term grew out of Cold War politics, not economic reality. Many use it casually to mean “less developed,” even though measurement standards have moved on.

2. Visible Inequality

• Costa Rica still faces income inequality and notable gaps between urban and rural regions.

• Some citizens may feel economic pressure due to costs of living and wage disparities.

These factors can contribute to the perception that Costa Rica is “behind,” but social inequality does not automatically equate to being a third-world country.

7. Understanding Development as a Spectrum

Instead of seeing countries as simply “first” or “third” world, modern analysts view development as a spectrum, with multiple layers:

Developed

• Very high income

• Top HDI scores

• Advanced infrastructure

Emerging / Newly Industrialized

• Growing economies with rising incomes

• Increasing influence in global trade

Developing

• Moderate income and growing services or industrial sectors
  Costa Rica, by most metrics in 2025, falls between emerging and developed, showing attributes of both but leaning toward the developed side due to income, human development, and institutional performance.

8. Costa Rica’s Global Role and Future Potential

Costa Rica is increasingly recognized on the global stage:

• It hosted and chaired ministerial meetings under the OECD in 2025, reflecting its leadership role in global economic cooperation.

• Costa Ricans like Rebeca Grynspan, a top UN candidate, signal the country’s rising global influence.

These are major markers of influence that go well beyond old development labels.

9. Final Verdict: Is Costa Rica a Third-World Country in 2025?

No — Costa Rica is not a third-world country in 2025.

Here’s why:

✔ It is classified by the World Bank as a high-income economy.
✔ It has strong HDI rankings and human development outcomes.
✔ It is a member of the OECD, a group traditionally composed of developed economies.
✔ It has institutional stability, economic freedom, and growth prospects that exceed what the outdated term “third world” implies.

That said, Costa Rica is still developing in some respects — particularly in addressing inequality, ensuring widespread technological innovation, and building infrastructure to match its economic and human capital.

But in the modern, data-driven understanding of development, Costa Rica is much closer to developed than to “third world.”

10. How to Think About Costa Rica’s Development in Context

If you’re comparing Costa Rica to:

Highly Developed Nations

• Nations like the U.S., Germany, or Japan still have deeper industrial bases

• Costa Rica’s GDP per capita and HDI are lower than these countries

Other Latin American Countries

• Costa Rica often ranks above average in HDI, economic freedom, and quality of life indicators

• It is frequently seen as a regional leader in social development

Global South Countries

• Compared to countries with lower incomes and weaker institutions, Costa Rica performs significantly better.

This contextual view shows 2025 Costa Rica as a unique success story — blending sustainability, economic progress, and social well-being.

11. Destigmatizing Terminology and Embracing Progress

Labels like “third world” are outdated and propagate misunderstanding. Costa Rica’s journey over recent decades shows that:

• A small nation can build strong social systems

• Economic growth can be inclusive and sustainable

• A country can leave behind historical development limitations

Today, Costa Rica in 2025 cannot be accurately described as third world. It is better seen as a high-income, increasingly influential country on the path to fuller development — one that rivals many established economies in important human and economic metrics.