Advancing a sustainable development policy requires balancing the needs of the citizens and the free market.Victor Umaña, director of the the Latin American Center for Competitiveness and Sustainable Development at INCAE Business School, told students on October 20 that this is a constant challenge for a small country like Costa Rica.

Following a visit to a medical device manufacturing plant in the Coyol Free Trade Zone on October 19, Umaña noted that while Costa Rica has grown economically due in part to policies that allow high-tech companies to easily open, rural areas are still left behind in some ways.

“How can we reconcile having a successful agricultural sector versus a high-tech light manufacturing sector?” he asked. “As you can see, we are in the presence of two Costa Ricas: one that is very advanced—with education as the competitive factor—and the other that is struggling to compete and survive. In that transition toward becoming a developed country, you face all of these problems: how do we solve problems with sustainability? What about infrastructure? How do we achieve a sustainable water management program? These are recurrent problems that many other developing countries in the same stage as Costa Rica are facing, too.

“We have to avoid a race to the bottom,” Umaña continued. “Tax incentives are needed, but so are taxes. Everybody hates to pay taxes, but we have to collect them for a public good. If we keep giving tax holidays to all of these firms, then what will happen to society in general? That’s a recurrent topic in any developing country.”

This week, Matthew O’Rourke is reporting from Global Network Week 2017 in Costa Rica, where INCAE Business School is presenting its module, “Doing Business in Latin America: The Competitiveness and Sustainability Challenge.”