During most of the colonial period, Costa Rica was the southernmost province of the Captaincy General of Guatemala, which was nominally part of the Viceroyalty of New Spain (i.e., Mexico), but which in practice operated as a largely autonomous entity within the Spanish Empire.

Costa Rica’s distance from the capital in Guatemala, its legal prohibition under Spanish law to trade with its southern neighbors in Panama, then part of the Viceroyalty of New Granada (i.e., Colombia), and the lack of resources such as gold and silver, made Costa Rica into a poor, isolated, and sparsely inhabited region within the Spanish Empire. Costa Rica was described as “the poorest and most miserable Spanish colony in all America” by a Spanish governor in 1719.

Another important factor behind Costa Rica’s poverty was the lack of a significant indigenous population available for forced labor, which meant that most of the Costa Rican settlers had to work on their own land, preventing the establishment of large haciendas. For all these reasons Costa Rica was by and large unappreciated and overlooked by the Spanish Crown and left to develop on its own.

The small landowners’ relative poverty, the lack of a large indigenous labor force, the population’s ethnic and linguistic homogeneity, and Costa Rica’s isolation from the Spanish colonial centers in Mexico and the Andes all contributed to the development of an autonomous and individualistic agrarian society. Even the Governor had to farm his own crops and tend to his own garden due to the poverty that he lived in. An egalitarian tradition also arose.

Costa Rica became a “rural democracy” with no oppressed mestizo or indigenous class. It was not long before Spanish settlers turned to the hills, where they found rich volcanic soil and a milder climate than that of the lowlands.