And this has happened despite the fact that Costa Rica has one of Latin America’s highest social expenditures: The government has 44 anti-poverty programs, plus large entitlement programs like social security and state-provided health insurance.

So why has Costa Rica been unable to lower its poverty rate despite healthy growth rates? Because its economic model is still in significant ways based on a mercantilist system that is biased toward certain favored sectors of the economy (exports, tourism) at the expense of the poor.

Take, for example, monetary policy. Over the last 30 years the Costa Rican central bank has actively intervened in the foreign exchange market to boost the export-related sectors of the economy, even though doing so has driven inflation as high as 14 percent in 2005, the highest rate in the last 10 years.

Trade policy is another problem. While Costa Rica opened up to imports in the early 1990s by cutting tariffs on many consumer goods, it maintains high tariffs on a number of key farm goods like milk, rice and chicken, which drives up prices.

And yet these are precisely the products most consumed by the poor. A 2002 study by Costa Rica’s Incae Business School found that agricultural protectionism constituted a 17.5 percent income burden on the poorest 20 percent of the population. In 2013, the cost of a basic basket of food products required to meet an average person’s minimum caloric intake represented 82 percent of the average per capita income of the poorest Costa Ricans.

To make matters worse, while the Costa Rican government offers tax and regulatory incentives to multinational companies, it suffocates local businesses with high taxes and crippling regulations. The country ranks 102 (out of 189 economies) in the World Bank’s Doing Business Report. The total tax rate amounts to 55.3 percent of an average local business’s profit. As a result, many people can’t cope with the high costs of doing business and turn to the parallel economy: The latest data show that one in three Costa Ricans work in the informal sector.

Many Costa Ricans mistakenly believe that economic liberalization is to blame for the country’s social woes. In reality, the current economic model is designed to benefit powerful sectors of the economy at the expense of the overall population, particularly the poor. What Costa Rica needs are genuine market reforms that eliminate the government’s power to pick winners and losers. Let’s hope the voters can see past the empty promises of populism next week.

Juan Carlos Hidalgo is a policy analyst on Latin America at the Cato Institute’s Center for Global Liberty and Prosperity.