How Costa Rica Became a Center for Advanced Manufacturing in Central America
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Costa Rica has emerged as a prominent center for advanced manufacturing in Central America, positioning itself as Latin America’s second-largest exporter of medical devices. This blog post explores how this country has distinguished itself internationally and achieved impressive economic and social growth.
From its early years of independence, Costa Rica capitalized on its geographic position and natural resources, connecting to the global market through coffee in the 1840s. This initial success spurred economic and social development, later expanded with banana production in the 19th and 20th centuries under the agro-export model.
Costa Rica Industrializes
In the second half of the 20th century, Costa Rica focused on industrialization to replace imports. Key industries emerged, such as electrical materials, construction, textiles, machinery, chemicals, and food products. Additionally, non-traditional export products like pineapples, flowers, and ornamental plants were established.
Advanced manufacturing in Central America has been significantly shaped by Costa Rica’s strategic incentives and emphasis on education. To solidify its position as a competitive destination, Costa Rica implemented tax reductions and other incentives to attract foreign investment. Factors such as legal security, political stability, and a robust public education system, free and mandatory since the 19th century and strengthened in 1949 with the abolition of the military, have been fundamental pillars.
Established in 1965, the National Institute of Learning (Instituto Nacional de Aprendizaje) plays a vital role in Costa Ricans’ technical and industrial training, adapting their skills to market demands and preparing them for modern industry.
The Rise of Medical Devices
Starting in 1990, Costa Rica became a magnet for multinational medical device companies, leading the region in exports. In 2023, these devices accounted for 42% of the country’s total exports, reaching $7.6 billion, a 28% increase from the previous year. More than 65% of these exports are destined for the United States, solidifying a strong trade relationship.
Costa Rica currently hosts 92 medical device manufacturing companies. The country is a critical player in the global industry, with a diverse range of products manufactured across different medical device classes. These devices are categorized into three main classes based on their complexity and the risk they pose to patients.
Class I devices are the simplest and generally pose the lowest risk to users. They include surgical instruments, examination gloves, and wound care products. Costa Rica’s manufacturing capabilities in this category are strong, with companies like MicroVention Terumo producing catheter accessories and Hologic specializing in surgical tools.
Class II devices are more complex and require greater regulatory control due to their moderate risk. Examples of Class II devices manufactured in Costa Rica include diagnostic equipment, infusion pumps, and blood pressure monitors. Prominent companies like Baxter and Abbott have established significant operations in Costa Rica, producing devices such as infusion therapy products and diagnostic tools.
Class III devices are the most complex and critical to sustaining or supporting life. They often require premarket approval and rigorous testing to ensure safety and efficacy. In Costa Rica, companies like Boston Scientific and Edwards Lifesciences are leaders in manufacturing high-risk, life-sustaining devices such as pacemakers, stents, and heart valves.
The presence of these global giants has positioned Costa Rica as a significant hub for advanced manufacturing in Central America. Its advanced infrastructure, skilled workforce, and strong regulatory environment support producing a wide range of medical devices across all three classes.
A Promising Future: Semiconductors and Technology
Costa Rica’s definitive rise as a center of skilled labor occurred with Intel’s arrival in 1997. This positive experience attracted other multinationals with sophisticated technological operations. Although Intel moved its assembly operations to Asia in 2014, it retained a design and engineering division in Costa Rica and returned in 2020 with expansion plans following the pandemic.
The country now aims to become one of the leading semiconductor producers in Latin America, supported by strategic initiatives from the United States. The U.S. designated Costa Rica as the first strategic ally in its plan to reduce dependence on the Asian market and bring microchip manufacturing to reliable allies.
Costa Rican President Rodrigo Chaves has declared the semiconductor industry of public interest and presented a roadmap to accelerate its growth in the coming years.
Costa Rica’s transformation into a center for advanced manufacturing in Central America showcases its remarkable journey from an agrarian economy to a hub of technological innovation and industrial sophistication. The country’s strategic emphasis on education, political stability, and legal security has fostered an environment conducive to attracting global giants in the medical device and technology sectors. This evolution is evident in the exponential growth of its medical device exports, which now dominate the national export portfolio and its emerging role in the semiconductor industry. The government’s proactive policies, including tax incentives and public declarations of industry significance, underscore Costa Rica’s commitment to maintaining and expanding its competitive edge in the global market.
As Costa Rica diversifies its industrial base, it is poised to become a critical player in Latin America and on the world stage. The country’s ability to adapt to shifting global demands while nurturing a skilled workforce positions it uniquely for future growth. With its solid foundation in education and innovation, Costa Rica’s status as an advanced manufacturing center in Central America is secure and likely to strengthen, driving economic prosperity and technological leadership for decades to come.
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