Costa Rica Poised to Become R&D Investment Hub, Says ECLAC, but Education Reform Is Crucial

Experts analyze the changes the country needs to become an R&D Investment Hub.

The next stage in attracting investment to Costa Rica is not decided solely in boardrooms or through financial studies—it must also pass through the classroom.

This is the diagnosis of the Economic Commission for Latin America and the Caribbean (ECLAC), which, after analyzing investment attraction efforts, sees potential for the country to position itself in more advanced segments. However, this also demands better conditions for the establishment of companies, especially those aiming to make Costa Rica a genuine R&D Investment Hub.

“Costa Rica is already at a level where the challenge is how to attract investment in Research and Development (R&D). It’s something far more sophisticated,” explained ECLAC’s Executive Secretary, José Manuel Salazar Xirinachs.

According to Salazar, although financial considerations remain essential in the discussion, the recipe requires more ingredients. These include aligning technology transfer with clear objectives and strengthening participation in global value chains.

In this regard, talent is also critical. The challenge is meeting investor demands.

“Yes, it requires incentives, but it’s no longer just about giving money or subsidies. It’s about having universities that respond, having human resources, doctoral programs, master’s programs,” Salazar emphasized.

“Costa Rica competes based on the value and quality of its human capital—not just on cost,” he added.

Costa Rica as an R&D Investment Hub

To better understand the country’s potential as an R&D Investment Hub, it is essential to grasp the scope of its reach.

Generally, production includes levels such as manufacturing, assembly, or packaging. Complementing this, however, is the area responsible for generating products—driven by innovation, creativity, and systematic processes.

“This represents a key frontier to further scale up the country’s added value within global chains,” explains Vanessa Gibson, Director of Investment Climate at the Costa Rican Investment Promotion Agency (CINDE).

The foundation of R&D areas lies in research, testing, and evaluation. For this, the key input is human talent trained in fields ranging from engineering to the sciences. Depending on business focus, knowledge in health or data is also required, in addition to people with experience and training in finance.

According to CINDE, Costa Rica’s main R&D Investment Hub niches are:

• Medical Devices: The country could move beyond manufacturing. Product development could provide a significant competitive advantage by reducing time-to-market.
• Biotechnology: Especially in areas such as health and environmental solutions. The country already has an academic positioning in this field.
• Software Technology and Digital Services: Costa Rica already boasts high digital literacy and penetration. The country could become a test market for pilot programs and new launches.

What Needs to Be Done to Attract Advanced Investment?

R&D Investment Hub opportunities in Costa Rica are accompanied by challenges. Other countries that are direct competitors have taken some steps more quickly than Costa Rica.

“Costa Rica currently does not have a robust system of research incentives or grants comparable to other countries in the region or the OECD. It is one of the few OECD countries without direct incentives for research,” Gibson noted.

In addition, the development of human talent remains a pressing issue.

“The number of individuals with doctorates in STEM fields is limited, and there are insufficient incentives to facilitate the return of Costa Rican talent from abroad or to attract international professionals with training in applied research or technological development,” she added.

In line with ECLAC’s analysis, CINDE also emphasizes the role of universities, advocating for better alignment between academic and business efforts. “This would significantly facilitate the creation of joint R&D projects that could scale in impact and attract investment,” they explained.

Finally, updating the legal framework remains a pending task, as there are still legal gaps and unregulated areas that hinder Costa Rica’s emergence as an R&D Investment Hub.

“Despite these challenges, the country has demonstrated proven capacity to build successful sectoral ecosystems based on shared vision, enabling reforms, and public-private partnerships,” Gibson stated.

“If we make progress in closing the aforementioned gaps and combine that with technological foresight, Costa Rica can become a regional R&D Investment Hub of innovation and applied research in service of global competitiveness,” she concluded.

Costa Rica’s Battle in the Investment Stream

The Foreign Trade Promotion Agency (PROCOMER) places the R&D Investment Hub scenario within the broader challenges of maintaining the country’s relevance as an investment destination.

“The report also identifies several challenges, including the need to diversify sectors, sources, and regions from which investment originates,” they stated regarding ECLAC’s analysis.

Like other stakeholders, they also highlight the workforce.

“One of the most urgent challenges is the development and specialization of human capital. Aligning academia, the public sector, and private enterprise so that more Costa Ricans can receive training and expand their skills in response to business demand, and gain access to quality jobs,” said PROCOMER’s General Manager, Laura López.

In this vein, projects such as the Human Talent Development Incentive for businesses have been introduced. This program co-finances the training of current and potential employees in high-demand areas and specialized technical skills. The initiative aims to reach 14,000 people in collaboration with the National Institute of Learning (INA).

PROCOMER also highlights other key factors to enable R&D Investment Hub operations for businesses.

“In terms of R&D capabilities and integrating regional countries into more sophisticated segments of the value chain, it is essential to improve current regulations so that sectors such as pharmaceuticals and medical research have the proper legal framework to operate competitively in Costa Rica,” López affirmed.

This assessment includes streamlining processes to reduce operating costs for biomedical research companies. That means eliminating unnecessary procedures and administrative burdens, such as indefinite timelines for supplying drugs or biomedical materials outside clinical trials, official translations of protocols and amendments, and resolving the lack of methodology for recognizing international training.

The Incentives Debate

Returning to the issue of incentives, ECLAC does not disregard them as a key component of foreign investment.

The current trend is toward a more comprehensive approach, encompassing more factors in the strategy that positions each country as a potential R&D Investment Hub.

“This means the incentive discussion should not be framed as whether to keep or eliminate them, but rather how to modernize them—how to make incentives more effective under new conditions,” Salazar asserted.

However, the warning is that these discussions are not just about substance, they’re also about process.

“The way these issues are discussed is key. For success, the process must be technically sound, involve good dialogue, be predictable in terms of changes to the rules, and be consulted rather than imposed or sprung by surprise, which would increase uncertainty.

“This has been under discussion in the country for some time, especially regarding free trade zone benefits and tax exemptions,” the ECLAC head explained.

Another point consistently raised by experts is legal certainty, an essential principle when companies decide where to establish their investments—especially if Costa Rica aims to solidify its position as a premier R&D Investment Hub in Latin America.