[1] However, these laissez-faire policies became unsustainable due to a series of incidental internal and external situations including the economic crisis caused by the First World War; the increase in poverty and stark economic inequality; harsh working conditions, especially in the banana plantations of the United Fruit Company; the emergence of political-social movements that questioned the model including social-Christians, socialists, communists and anarchists; and the immigration of ethnic groups such as Chinese, Afro-Caribbeans and Italians to work on large urbanization projects such as the Atlantic Railroad.

Italians staged the first strike in the history of Costa Rica, and many immigrants come from countries where the workers' rights and socialist movements were strong.

He foresaw the exhaustion of the liberal model and initiated a series of interventionist reforms that included creating direct taxes for land and income; creating the first state bank, the International Bank of Costa Rica; implementing the "Tercerillas" (keeping one third of public employees' salary in the form of loans to generate income to the state); and taxing the Grand Capital.

This led to a coup by the Secretary of War Federico Tinoco in January of 1917 who, in principle, enjoyed popular support based on the April 1917 general election where his was the only name on the ballot.

The 1934 Great Banana Strike involved about 10,000 workers and demanded such rights as wage increases, payment in cash instead of coupons, first aid kits on the farms, and an eight-hour workday.

[5][6] Rafael Ángel Calderón Guardia was a medical doctor educated in Belgium, where he came into contact with social-Christian and humanist political movements.

Calderón won the 1940 presidential election, and soon after taking office, he broke with Cortes' powerful oligarchy and initiated a series of economic and social reforms.

[7] Calderón, eager for allies, reached an agreement with Mora's party and the Catholic Church led by Monsignor Víctor Manuel Sanabria Martínez.

The latter effectively reconstituted the University of Santo Tomás, which had been closed by an anti-clerical government in 1888 and replaced with schools of Law and Notaries, Medicine and Engineering, Pharmacy, and Fine Arts.

[10] This allowed the country to enjoy of one of the biggest middle classes in Latin America (alongside Chile, Uruguay and Argentina) and maintain high health, literacy, and urban development.

Left-leaning President Rodrigo Carazo (1978-1982)[11] held left nationalist ideas and broke away from Washington, the World Bank and the IMF.

Rejecting debt payment and the Washington Consensus, Carazo supported the Sandinistas (FSLN) in their action against the Somoza dictatorship in neighboring Nicaragua.