Costa Rica long has emphasized the development of democracy and respect for human rights. Until recently, the country's political system has contrasted sharply with many of its Central American neighbors; it has steadily developed and maintained democratic institutions and an orderly, constitutional scheme for government succession. Several factors have contributed to this tendency, including enlightened government leaders, comparative prosperity, flexible class lines, educational opportunities that have created a stable middle class, and high social indicators. Also, because Costa Rica has no armed forces, it has avoided the possibility of political intrusiveness by the military that some neighboring countries have experienced. Costa Rica experienced several unusual days of demonstrations and civil disturbance in early 2000 due to protests over legislation that would have permitted private sector participation in the telecommunications and electrical power sectors. These sectors currently are controlled by a state-owned monopoly. The legislation was withdrawn, but the underlying question of the appropriate role of the state in the provision of public services remains sensitive.

In May 2002 President Abel Pacheco of the Social Christian Union Party (PUSC) assumed office after defeating National Liberation Party (PLN) candidate Rolando Araya in the first-ever second-round runoff election. The April 2002 runoff election was necessitated by the failure of any one candidate to obtain the constitutionally required 40% of the popular vote in the February first-round election.