Recipient of US$1.3 billion in FDI annually, Costa Rica outpaces China, Brazil, and Mexico in FDI per capita. Free trade zones, stability, and quality human capital are major factors
Small yet prodigious, humble yet outstanding, and ambitious yet ethical, Costa Rica is home to such talent and stability that it’s become a sort of Central American Mecca for foreign investment. And it is this investment that has helped the country’s economy grow consistently stronger over the past few decades.
Once the world – and especially the United States – took notice of this little slice of land between the Pacific and the Caribbean that renounced a standing army, fully espoused the tenets of democracy, and took up the banner of environmental conservation, the economy underwent a transformation from a commodities market to an export-driven one with increasingly higher value added products and services.
Leading global players in the high-tech industry have found a safe, and not to mention extremely lovely, home in Costa Rica, where the work force is flexible, eager to learn, highly educated, and less expensive compared to the U.S. and Europe.
“The superior quality of life, highly prepared professionals, and very advanced business intelligence here marked Costa Rica as the ideal place to base our operations,” comments Esteban Echavarria Cano, country manager of Kimberly-Clark.
Arturo Velasco, country manager at Hewlett-Packard is of similar mind: “Thanks to the competitive advantages we found in Costa Rica, we went from just 120 employees to over 6,500 in about seven years.”
|‘COSTA RICA IS SELECTIVE WHEN IT COMES TO THE KIND OF TOURISM AND INDUSTRIES IT WELCOMES...THE COUNTRY IS QUITE OPEN TO THOSE COMPANIES WHO’VE ADOPTED GOOD CSR PRACTICES’|
RENE CASTRO, Minister of Foreign Affairs
Like a consummate actor who’s earned the luxury of being able to pick and choose roles at his whim, Costa Rica has narrowed down the kind of industry it welcomes. According to Rene Castro, Minister of Foreign Affairs, this is an earned privilege that contrasts with the country’s investment policies of the 1960s and 70s, when the main goal was to attract investment at nearly any price.
“Costa Rica is selective in both the kind of tourism it attracts as well as the industry it invites. I say selective because we require that a business not only perform well economically but also socially and environmentally,” he explains. “The country is quite open to those companies who’ve adopted good corporate social responsibility practices.”
Those investors who seek the most convenient and effective path into Costa Rica go through CINDE, the Costa Rica Investment Promotion Agency, a non-governmental and non-profit institution that is considered among the best 10 investment promotion agencies worldwide.
According to Jose Rossi, president of CINDE, the agency constantly seeks out investment opportunities. Once a potential investor makes contact, CINDE prepares their work agenda, sets up appointments with relevant government entities and organizations, as well as with already established companies so that the interested party can see and hear first hand of their experiences and results. CINDE then organizes the necessary authorizations, applications, and other paperwork a new business requires to get started. In the third stage, which Mr. Rossi calls ‘after care’, CINDE is available if the investor should need any further help, whether it be with important issues or simply day-to-day operations.
The kind of investment CINDE strives to attract is in the knowledge-based sectors. “CINDE has worked proactively in the sector of medical equipment, advanced manufacturing of high-tech, and in services,” says Mr. Rossi. “Our goal is to maintain this focus and initiate programs to seek out investment in the fields of clean energy technologies, biotech, and robotics.”
Though a far cry from the coffee and banana-based economy from just a few decades ago, Costa Rica’s innovation and high-tech industry is gaining momentum thanks to foreign investment. “I see Costa Rica as the future Silicon Valley of Central America,” claims HP’s Arturo Velasco. Or as Juan Pablo Consuegra, general manager of Microsoft in Costa Rica, says, “Costa Rica is open to the world, investing in innovation, using science and technology to propel its economy.”
Today, there are 55 companies employing more than 13,000 people in advanced manufacturing, and over 9,000 employees working in 31 companies that produce medical equipment.
Of the sectors that Costa Rica has targeted for greater development, energy, telecoms, and infrastructure are the ones that require the greatest investment. Luis Gamboa of the American Chamber of Commerce (AmCham) in Costa Rica explains, “Energy because Costa Rica needs to double its electricity generation in the next 10 years and that requires US$10 billion in investment. Telecoms, which was recently opened to private investment, will need a similar amount in the next decade. Over the next five years, about US$5 billion will be needed in infrastructure development,” he says. “However, Costa Rica is also an excellent place to establish manufacturing, high-tech, service centers, and software, film, and video production, among other things.”
Costa Rica knows that in order to enjoy continued economic growth, foreign investment will become increasingly important. Nevertheless, it remains unwavering in its commitment to sustainable development, according to Luis Liberman, Second Vice President of Costa Rica. “Costa Rica is open for business to companies and investors who are interested in sharing in our dream of developing and growing in harmony with nature. We are only interested in sustainable growth and we want to take advantage of our greatest resource: our people,” he says.