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manufacturing plant in costa rica

Johnson & Johnson MedTech will install a new manufacturing plant in Costa Rica

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Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.

The American company Johnson & Johnson MedTech recently announced that it will install a medical device manufacturing plant in Costa Rica. This project represents the company’s most significant investment outside the United States.

“We are very proud of what this means for the country; a world leader in medical devices chose us to make its largest investment in history outside the United States. It will bring 3,000 jobs and opportunities for linkages and development,” said the president of Costa Rica, Rodrigo Chaves, in a statement.

The town of Grecia will be the site of Johnson & Johnson’s new Costa Rican manufacturing plant

According to information from the Costa Rican Government, the company will install the 205,000 square-foot manufacturing plant in Costa Rica in a free zone in the town of Grecia, province of Alajuela, located about 40 kilometers west of San José and is outside of what the Costa Rican Government calls the “Greater Metropolitan Area” (GMA).

The Costa Rican Government did not specify the investment amount in the facilities. However, it did highlight the importance of more and more companies establishing themselves outside the Greater Metropolitan Area of the country to expand opportunities and development to various regions that have historically yet to be the target of foreign direct investment.

Costa Rica is a strategic location for Johnson & Johnson

“Costa Rica is a highly strategic place where we have been present for 40 years. Our company has benefited greatly from the Costa Rican workforce’s local talent with specialized experience in our industry,” asserted the international vice president of Johnson & Johnson, Gustavo Galá.

With 130 years of experience, the company is dedicated to developing and distributing pharmaceutical products, medical devices, and consumer products. It currently has more than 85 manufacturing plants located worldwide.

From 2014 to 2022, Costa Rica’s medical device exports have had an annual growth rate of 17%, going from exporting 1.7 billion dollars to 5.9 billion dollars. In the first half of 2023, exports of medical devices totaled approximately 3.6 billion dollars, according to official data.

The medical device sector is the leading exporter of Costa Rica.

Why establish a manufacturing plant in Costa Rica outside of the Greater Metropolitan Area

The location of the Johnson & Johnson manufacturing plant in Costa Rica is a success for the government’s effort to create sources of employment for citizens who live outside of the country’s principal population center.

For several reasons, establishing manufacturing facilities outside of the Greater Metropolitan Area (GMA) in Costa Rica can be a strategic move. Among them are the following:

Cost Savings:

  1. Lower Labor Costs: Wages tend to be lower in areas outside the GMA, making it cost-effective to hire a skilled workforce.

  2. Reduced Real Estate Costs: Land and property prices are generally lower outside the GMA, allowing for more cost-effective facility construction and operation.

Infrastructure Development:

  1. Improved Infrastructure: The government often invests in infrastructure development in areas outside the GMA to encourage economic growth, making transportation and logistics more efficient.

  2. Reduced Congestion: The GMA can experience traffic congestion, leading to delays in transporting goods and materials. Operating outside the GMA can mitigate these issues.

Availability of Land:

  1. Ample Space: Rural and suburban areas outside the GMA typically have more available land for expansion, allowing businesses to scale their operations as needed. Companies that wish to establish a manufacturing plant in Costa Rica can take advantage of this feature of the country’s offerings to investors.

  2. Less Zoning Restrictions: In some cases, there may be fewer zoning restrictions outside the GMA, providing more flexibility in facility design and usage.

Access to a Diverse Workforce:

  1. Skilled Labor Pool: Costa Rica has a well-educated workforce, and skilled labor can be found in various regions, not just in the Greater Metropolitan America, which can benefit companies that choose to establish a manufacturing plant in Costa Rica.

  2. Local Talent Development: Companies can collaborate with local educational institutions to train and develop talent specific to their needs.

Environmental Considerations:

  1. Reduced Environmental Impact: Operating outside the GMA may have a smaller environmental footprint, with less congestion, pollution, and pressure on local resources.

  2. Potential for Sustainable Practices: Some rural areas may offer opportunities for sustainable practices such as renewable energy generation and eco-friendly facility design.

Business Continuity:

  1. Reduced Risk: Concentrating all operations within the GMA may expose a business to higher risks, such as natural disasters or civil unrest. Diversifying locations can mitigate these risks.

Government Incentives:

  1. Tax Benefits: The Costa Rican government may offer incentives, such as tax breaks and subsidies, to encourage businesses to invest in less developed regions outside of the GMA.

Local Community Engagement:

  1. Positive Public Relations: Expanding into rural areas can foster goodwill with local communities, leading to positive public relations and potential support for the business.

Supply Chain Diversification:

  1. Reduced Dependency: By having manufacturing facilities outside the GMA, businesses can reduce their dependency on a single location, which can be critical for supply chain resilience.

Market Access:

  1. Closer to Emerging Markets: Depending on the business’s nature, locating facilities outside the GMA may provide closer proximity to emerging markets and customers.

While there are several advantages to establishing manufacturing facilities outside of the Greater Metropolitan Area in Costa Rica, businesses should conduct thorough feasibility studies and consider their specific industry and operational requirements before making such a strategic decision. Additionally, they should assess the potential challenges and opportunities unique to the chosen location.

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circular economy in costa rica

A National Initiative Aims to Create a Circular Economy in Costa Rica by 2050

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Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.

To transform the current production model and promote economic strengthening, competitiveness, and social well-being in Costa Rica, the National Circular Economy Strategy (ENEC) was recently presented to create a circular economy in Costa Rica.

What is a circular economy?

A circular economy is a sustainable economic model designed to minimize waste and resource depletion by emphasizing the continual use, recycling, and repurposing of materials and products. Unlike the traditional linear economy, which follows a “take-make-dispose” pattern, a circular economy strives to keep resources and products in circulation for as long as possible. This concept promotes practices such as reusing, refurbishing, and recycling and the development of eco-friendly products and renewable energy sources. By prioritizing resource efficiency and reducing environmental impacts, a circular economy in the country aims to create a more resilient and environmentally responsible approach to economic growth while mitigating the adverse effects of overconsumption and waste generation.

This initiative, developed with the participation of institutions from the public and private sectors, academia, and non-governmental organizations, aims to turn Costa Rica into a leader in circular economy, innovation, and sustainability for Latin America through a sustainable and circular economic development model by the year 2050.

From the School of Economics of the National University, academics Marjorie Hartley and Rocío Hartley share a statement regarding the ENEC and the move towards a circular economy.

For a country like Costa Rica that has traditionally invested in conservation and more recently has committed to global initiatives such as decarbonization and the Sustainable Development Goals (SDGs), the circular economy in Costa Rica represents a challenge and an opportunity to continue on the path of environmental sustainability, social equity, and economic growth.

Linear mechanisms for satisfying needs have led societies to increasingly extract exhaustible resources, generating unmanageable amounts of waste that impede the resilience of ecosystems. The infrastructure for handling and managing this waste grows at a different rate than its quantity, thus becoming a significant financial burden for communities and local and national governments. At the same time, they are a heavy burden on ecosystems, which has taken them to the limit of their assimilation capacity. The waste generated by today’s lifestyle is an enormous financial burden on economies. It creates a loss of well-being for societies and the depletion and destruction of ecosystems.

Transition to a circular economy in Costa Rica makes economic sense

The shift towards a circular economy in Costa Rica that preserves the value of the materials and products that are generated challenges economies to innovate in processes for the transformation of traditional forms of production, consumption, and distribution that are putting at risk all the species that inhabit the planet.

The UNA School of Economics believes that a circular economy in Costa Rica will translate into a reduction in the use and consumption of materials and energy that enters the economic system in the form of inputs. Furthermore, by making more efficient and effective use of materials and waste, the circular economy contributes to reducing production costs and protecting ecosystems essential for life.

The transformation towards a circular economy in Costa Rica also challenges public policy, particularly from environmental and fiscal policy standpoints. The right signals must be sent so that the productive and social sectors reorient their decisions towards an economic shift.

Moving towards a circular model in Costa Rica is an opportunity to transform the current economic and social paradigm. It is an opportunity for the country to advance in achieving the SDGs because it involves all areas of life: production, consumption, employment, education, culture, and values in their interaction with nature.

What will be the results of implementing a circular economic model?

Thus, the circular economy in Costa Rica proposes the creation of new capacities of sectors and people and the development of local and national knowledge for transformation. In general terms, it is expected to:

  • Generate new non-polluting jobs.
  • Promote innovation of products and production processes.
  • Promote the emergence of new business models.
  • Encourage the creation of new economic and financial instruments.
  • Increase waste collection and reuse rates.
  • Promote the participation of people and communities.

The implementation of the circular economy in Costa Rica demands the participation of all social actors, including universities, which must contribute and accompany the various sectors to improve information and recommend strategies and public policies that facilitate the successful transition to the implementation of a circular economy in Costa Rica.

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investing in Costa Rica

Investing in Costa Rica with Procomer’s Monica Umaña

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Contact the Central American Group to begin starting up a manufacturing facility in Costa Rica in the Green Park Free Zone. 


Monica Umaña
Manager of Foreign Direct Investment
Procomer
San Jose, Costa Rica
mumana@procomer.com

 

The Central American Group: Today, we have Monica Umaña with us. She’s the general manager for Foreign Investment at Procomer, which is in Costa Rica, and it’s the government export and foreign investment promotion organization. Today, our conversation is about investing in Costa Rica. Monica, how are you today?

Monica Umaña: Good, Steve. Very good. Nice to speak with you again.

The Central American Group: Could you tell our audience a little about yourself and the organization you’re working for?

Monica Umaña: Sure, absolutely. Thank you, Steve, for this opportunity. As you said before, my name is Monica Umaña. I am the manager for Foreign Direct Investment at Procomer. Procomer is an entity that was created in 1996. We are responsible for the export promotion and the foreign direct investment attraction to Costa Rica.

The Central American Group: So, you must be excited. This is a new position for you. How are you acclimating to your new role?

Monica Umaña: It is new, and you know me. I have been working with foreign direct investment for the past eleven years, so I’m thrilled. It’s a big challenge, but I’m pleased because I think we have a very nice team inside Procomer, so we are creating a new unit to promote investing in Costa Rica, and we have the rest of the team working with us. So, it’s amazing.

Central American Group: I’m glad to hear that. We have a few questions to ask so you can give us more detailed information about your organization and investing in Cosa Rica. What is the main objective of the new foreign investment agency launched by Procomer?

Monica Umaña: Yes, absolutely. The main objective is to generate jobs, opportunities, and well-being for all the people. We are trying to create a sense of economic well-being in all the country’s regions. That’s really important for Procomer with very clear objectives that promote, attract, and retain investment that boost employment and exports with a solid and particular value proposition consistent with Costa Rica’s needs.

Central American Group: Given global trends, what are Procomer’s priorities with this new strategy as it applies to investing in Costa Rica?

Monica Umaña: That’s important, Steve, because, as I said before, we are trying to attract new foreign direct investment to Costa Rica, but, of course, that is linked with the generation of new employment and linkages economic growth throughout the country. We look to develop new strategic sectors to attract foreign direct investment towards the free trade regime. That’s also important— the new models for attracting foreign direct investment. We are trying to diversify the countries and projects that we are looking at opportunities for investing in Costa Rica. We are improving the investment climate to boost competitiveness and generate employment and linkages beyond the Greater Metropolitan Area (GMA). I think we are also trying to contribute to the development of human talent and to encourage a  better social and environmental return through foreign direct investment.

Central American Group: You just mentioned the Greater Metropolitan Area. One of the priorities of the current administration that is in place in Costa Rica is to get a diversity of investments throughout the country geographically, and these would be things in the more rural areas. Please address that a little bit.

Monica Umaña: Absolutely. You know, we have been very successful in terms of sectors such as advanced manufacturing, medical devices, services in general, not only services, corporate services, but also digital technology. We’re trying to focus on looking for agricultural projects and production value added outside the Greater Metropolitan Area. We have a new legislation to promote investment outside of the GMA. So that’s something that we are working hard on. But I think it’s essential that we also are, as I said before, creating a new team that is going to have not only people that are going to work with the investment outside the great metropolitan area, but we’re going to keep our eyes with the sectors, the strategic sectors like the medical devices and manufacturing and services. So, we’re trying to balance this since we are looking for projects in the rural areas and working with the strategic sectors that are important to investing in Costa Rica.

Central American Group: What kind of resources does Procomer have at its disposal to execute the strategies you will put into place?

Monica Umaña: We have been the number one trade promotion agency in the world according to the International Trade Center, and we have more than 25 years of experience in the administration of the free zone regime in Costa Rica. That is one of the main incentives for the companies when they choose Costa Rica because we offer fiscal incentives. But we also have more than 26 trade promotion and investment offices worldwide with extensive knowledge and international experience, which will be implemented in new markets. We also have experience with several regional offices outside the Greater Metropolitan Area, with firsthand knowledge of the needs of the different areas outside the GMA. And we are adding new colleagues to the team in those regions. So, we’re trying to improve what we already have had in the past to facilitate investing in Costa Rica.

Central American Group: Why would a company want to go to Costa Rica? What are the advantages of being there? What does the country have to offer investors? Please give us some information about that.

Monica Umaña: Yes, absolutely. I think that’s one of the greatest parts of my job, talking about Costa Rica and why a company should visit and invest in the country. I believe concerning investment attraction, Costa Rica has transformed itself to become a global hub for foreign direct investment. The country consistently outperforms competitors due to its unique brand, strategic geographical location, and strong value proposition. We are the number one performer in the global foreign direct investment landscape. The country is one of the strongest and oldest democracies in the Western Hemisphere. We stand out as a beacon in the region due to our political and economic stability. We uphold and respect the rule of law and enforce elevated standards of protecting the environment and defense of human rights. We also understand well how these characteristics weigh on consumer market demands, which are growing. Consumers care more about how and where things are produced. Costa Rica has an excellent track record as a suitable and competitive destination for FDI, with more than 400 multinational companies with a presence in the country with dynamic and productive operations. The fact of these companies demonstrates the viability of investing in Costa Rica.

They are continuously and successfully evolving and reinvesting in Costa Rica, which targets the attraction of specific sectors. As we were talking now, one of the efforts being worked on now is semiconductors with the announcement from the US. According to the Chip Act, Costa Rica will receive funds soon. This involves activities that help enhance and accelerate our country’s technological transformation and consolidation in the value chain in MedTech, pharma, and biomedical research in the health sector we discussed previously. In addition, there are intensive corporate and digital services in the services sector. Important, as I said before, semiconductors, but electronic components, technology, enhanced agribusiness in manufacturing. These sectors are also vital.

As the newest member of the OECD, Costa Rica is a reliable and trustworthy partner for parties seeking to pursue investing in Costa Rica. Again, we have a new legislation to attract new business outside the Greater Metropolitan Area. But Costa Rica offers the free trade zone regime to national and foreign companies that wish to develop their operations in the country to encourage FDI, commercial exchange, and job creation. Last but not least, the talent of the Costa Rican people is one of the greatest attractions for investors due to its high specialization in many sectors.

Central American Group: One of the things that I’ve always found interesting is that Costa Rica disbanded its military at the end of the 1940s and has been putting the percentage of money that the GDP would have dedicated to the military to education and health. Could you mention a little bit about that?

Monica Umaña: Yes, absolutely. Since 1948, we haven’t had an army. That made us one of the most stable countries in Latin America. As I said before, we are the oldest democracy in the region. And as you mentioned, we dedicate 7% of our GDP to education, which makes investing in Costa Rica a good option. Many companies choose Costa Rica because we are not the cheapest country in the region, but we know the high quality of our labor pool and why the companies analyze and choose Costa Rica. Education is free and mandatory, and we have a robust system with technical high schools and national training institutes. Of course, universities are another significant resource regarding education, labor pool, and healthcare. That is a universal system. We dedicate 8% of our GDP to the system. Thanks to what you mentioned before, it’s a national coverage and ranked one of the best in Latin America.

Central American Group: Many of the companies that we speak to as a Central American Group are impressed when they go to Costa Rica by the amount of bilingual talent that can be found there. Can you tell us about the education process for languages in Costa Rica?

Monica Umaña: Yes, absolutely. We have been making considerable efforts to include English in the curricula. There are high schools and many technical high schools dedicated to bilingual careers, for instance, preparing people for the services sector. They have outstanding performance records. When I take potential investors to technical high schools, and they listen to the students’ presentations, I mean they are very well prepared and have excellent standards. The National Training Institute also has specific courses for bilingual people. So that’s one of the main challenges and also one of the main goals in terms of education, to prepare the people for the request of the companies, the new companies that are investing in Costa Rica

Central American Group: Well, thank you for answering our questions. One of the things that’s consistent about these podcasts is that people who listen to them have further questions arising from the information they hear. How can people listening to this podcast contact you with additional questions about investing in Costa Rica?

Monica Umaña: Absolutely, absolutely. I can give you my direct email. You can write to me at mumana@procomer.com, and I’ll be more than happy to answer any other questions. And, of course, to promote Costa Rica as a foreign direct investment destination.

Central American Group: OK, thank you again. We’re going to put all your contact information in the transcript section on our webpage, and we’re also going to put a link to your LinkedIn profile if it’s OK with you. Is that fine?

Monica Umaña: That’s fine, and I appreciate that, Steve.

Central American Group: OK, well, thank you for joining us. Have a great day, and lots of luck in your new position.

Monica Umaña: Thank you, Steve.

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FDI in Costa Rica

FDI in Costa Rica is among world leaders

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Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.

In the second quarter of 2023, the fDi Intelligence website, one of the leading investment promotion and economic development solution sites, published an article analyzing the countries that have shown the best economic recovery and increased foreign investment after the pandemic. Several Middle Eastern nations and FDI in Costa Rica lead the way.

Of the countries evaluated, three from the Middle East obtain the first position while FDI in Costa Rica leads Latin America and obtains fourth overall place. Costa Rica is the only Latin American country in the Top 10. In addition to a summary of FDI in these countries, this blog post will also focus on the opportunities FDI in Costa Rica offers for international investors.

Investment in the Middle East and FDI in Costa Rica stand out

The COVID-19 pandemic has considerably affected the global economy, but certain countries in the Middle East have had a remarkable economic upturn after the crisis period ended. Costa Rica, for its part, has shown resilience and offers a favorable environment for foreign investment. Now that the world has emerged from the challenges of the pandemic, it is essential to examine the opportunities that these countries offer to international investors.

Position 1 – United Arab Emirates (UAE): The United Arab Emirates leads the ranking with an outstanding economic recovery and a significant attraction for foreign investment. Its diversified economy, with a focus on sectors such as tourism, technology, and finance, has attracted massive investment. With a focus on innovation and modern infrastructure development, the UAE has built investor confidence and attracted high-end investment.

Position 2 – Saudi Arabia: In the second position, Saudi Arabia has positioned itself as an attractive destination for foreign investment. With its vision of diversifying the economy and reducing dependence on oil, the country has made significant investments in sectors such as renewable energy, technology, and manufacturing. These initiatives have attracted substantial investment and have contributed to its economic recovery.

Position 3 – Qatar: Qatar occupies the third position in this ranking, focusing on economic diversification and attracting foreign investment. The country has invested in infrastructure projects, such as organizing international sporting events and developing special economic zones. These initiatives have generated significant investments and have contributed to its economic growth.

Position 4 – Costa Rica: FDI in Costa Rica is in fourth position. The country stands out in Central America with a solid economic recovery and attractiveness for international investors. The country has experienced growth in technology, life sciences, sustainable tourism, and agribusiness. Favorable government policies, political stability, and its focus on sustainability have attracted growth and foreign direct investment and contributed to its economic development.

What does this mean for FDI in Costa Rica?

Government policies and economic stability

Middle Eastern countries and Costa Rica have implemented investment-friendly government policies and maintained remarkable economic stability. In the case of FDI in Costa Rica, the country stands out for its commitment to democracy, political stability, and respect for the rule of law. In addition, it has established a series of tax incentives and support programs for foreign investment, which has created a favorable environment for investment and business development.

Infrastructure and technology

Middle Eastern countries have been noted for their investments in modern infrastructure and cutting-edge technology. Costa Rica, for its part, has developed a solid infrastructure that includes seaports, international airports, highways, and advanced telecommunications. In addition, the country has positioned itself as a technological center in Latin America, attracting important technology companies and promoting innovation and talent development in the sector.

Growth sectors and investment opportunities

Middle Eastern countries and Costa Rica offer various investment opportunities in growing sectors. In the Middle East, renewable energy, technology, tourism, manufacturing industry, and logistics sectors stand out. In the case of FDI in Costa Rica, the technology services, agribusiness, sustainable tourism, advanced manufacturing, and financial services sectors present significant potential for growth and profitability for investors.

Human resources and specialized talent

In both the Middle East and Costa Rica, the availability of human resources and specialized talent is a critical factor in attracting foreign investment. Both regions have a qualified and trained labor force, educational institutions, and training programs that promote the development of technical and professional skills. This ensures the availability of trained and talented personnel to support the operations of foreign companies.

In the case of Costa Rica, the country has stood out for its high level of education, with a highly educated and bilingual labor force. In addition, the government has promoted the creation of training programs in strategic areas, such as technology and innovation, to further strengthen local talent’s skills.

Business environment and ease of doing business

Both the Middle Eastern countries and Costa Rica have made significant efforts to improve the business environment and make it easier to do business. They have implemented reforms to simplify administrative processes, reduce bureaucracy, and promote transparency in business procedures. These measures have generated confidence among investors and streamlined the start-up and operation of companies, facilitating the inflow of FDI in Costa Rica and the nations of the Middle East.

Sustainability and environmental commitment

Currently, sustainability and environmental commitment are increasingly essential considerations for international investors. Middle Eastern countries and Costa Rica have demonstrated a commitment to protecting the environment and promoting sustainable business practices. They have implemented policies to promote renewable energy, the conservation of natural resources, and adopting responsible production and consumption practices.

Conclusion

In conclusion, the countries of the Middle East have experienced an outstanding economic recovery and present attractive opportunities for foreign investment. At the same time, Costa Rica stands out as a country with a favorable environment for foreign direct investment and a wide range of growing sectors. Its economic stability, favorable government policies, developed infrastructure, qualified human talent, and commitment to sustainability position it as an attractive destination for international investors.

The continued implementation of favorable policies, strengthening trade relations, and fostering innovation will be critical factors in driving economic growth and attracting investment in Middle Eastern countries and FDI in Costa Rica. Both regions offer exciting opportunities for investors looking to expand their businesses and take advantage of the growth potential in dynamic markets.

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project management services in Costa Rica

Project Management Services in Costa Rica

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Cristian Fernandez
General Director
Lean Consulting
San Jose, Costa Rica
cfernandez@leancr.com

The Central American Group: We’re fortunate to have Cristian Fernandez with us today. He’s the general director of a company called Lean Consulting. They’re located. And Christian, correct me if I’m mistaken, but I’m going to say San Jose, Costa Rica. The topic of our discussion today is project management in Costa Rica.

Christian, thanks for being with us today. Can you give us a little bit of background information on yourself and your company?

Cristian Fernandez: Sure. Okay, well, I’m a civil engineer by profession. I am the general director and founder of Lean Consulting, a Costa Rica firm that does project management. I’ve been working in project management for the last 16 or 17 years. That has been the background of my career path. I mostly specialize in life sciences and medical device facilities. Since I got started with project management in Costa Rica, I’ve been focused on those types of building construction, from the development of their planning phases to the construction phase.

The Central American Group: That’s very important because, as our listeners may or may not know, Costa Rica is the second largest exporter of medical devices in Latin America after Mexico. That being said, can you tell us some of your clients and some of the projects that you’ve done for them in the life sciences sector in Costa Rica?

Cristian Fernandez: Yes. Well, maybe I can give you the two types of clients. First, under the auspices of Lean Consulting, we have been working in the market for five years. We have worked for very important firms or companies such as Bayer, the pharmaceutical division, and a very large German group called Freudenburg Medical. We have also been working with Boston Scientific, Baxter Edwards, Life Sciences, and Creganna Medical. Currently, we’re working for a very large medical device corporation which is still confidential. We cannot mention their name yet, but it is one of the top ten major companies. So, it’s a significant client and investment going into Costa Rica. The other hat on my background experience before I founded Lean Consulting. As I mentioned in the beginning, I have a career path of around 16 or 17 years working in this type of industry. I was the project manager in Costa Rica for companies such as Abbott, Vascular, Medtronic, Phillips, Smith and Nephew.

The Central American Group: Well, that’s a very impressive slate of clients that you just communicated to us above and beyond project management in Costa Rica. Do you offer other services to your customers, and how do you add value to your efforts beyond project management?

Cristian Fernandez: Yes. Okay. This type of industry is very sophisticated, and clients require very complex services. We have understood this for many years, and we tried to apply some custom or tailor-made services for each client. We don’t limit ourselves only to project management in Costa Rica. We also try to figure out what are the true necessities of each client. For example, we provide services for design management, which is very common in the early phases of each project. It’s like some project management but more focused on the design phase, developing all the drawings. Also, there are other technical services, such as contracts and claim management. This is a fusion between the legal component of the contract and the agreement. It entails how they are structured and how they are applied during the process of construction. We also do claims management, which is more from the perspective of the changes in the agreement. Project management in Costa Rica is very dynamic. Because of this, we need to address a very specific service focused on the control and documentation of all the changes associated with the project. So those are very specific services that some clients have been requesting in the last few years.

We have been making a significant effort to promote those services because we believe they truly benefit the investors. This is the case because they come to Costa Rica looking for some serious support for their projects. Sometimes the services that other companies offer are more standardized. They limit themselves to project management in Costa Rica. We like to understand what the client truly needs in terms of their support and address those needs.

The Central American Group: Cristian, you’ve told us that you’ve been in this activity with respect to the life sciences sector for the last 16 or 17 years. Well, that creates an environment, obviously, where you’re not only able to hopefully explain to us the evolution of the life sciences sector in Costa Rica but also explain to us what you see going forward.

Cristian Fernandez: Okay, yes, it’s a very interesting question. In my humble opinion, what we have seen over these last two decades of the industry and the market around the life sciences sector is that it’s very interesting for our country. A lot of firms have been interested in starting their operations or expanding operations here in Costa Rica because of the very good conditions of the governmental tax incentives, very good labor, and the very technical and developed manpower that is found here. We have seen that this is also a very resilient and stable sector. We have seen that in the last 20 years, two major economic crises have happened. One of these was in 2008, and the second one was in 2020 due to the pandemic issue that had a worldwide impact. From our perspective, we witnessed that this sector was very stable because it was not significantly affected by those crises. The investment remained the same even in 2020. It was a surprise for us that we even saw growth in our company because of major companies’ trust in the country. That comes from several factors. It’s not only tax incentives, as I mentioned.

It’s also because of the professionalism that these companies find here. This is not only because of our stable market and the conditions the government has created. It is also reflected in the labor force. The professionals that you can find in Costa Rica are very capable from the perspective of engineering labor in all its forms. We also have all the required administrative personnel and all the different components different firms need.  These include construction companies, designers, and everything around project management in Costa Rica. The country offers a very high-end or very capable type of professional. That gives a lot of trust to these big companies that come here looking to take on big challenges and looking for sophisticated services. And I think that’s the reason why it has been so stable in the last two decades.

The Central American Group: Given the panorama of the life sciences sector you just described, what is your company’s and project management’s vision in Costa Rica for the medium to longer term?

Cristian Fernandez: Well, we have seen that the forecast appears to continue with some growth each year. The country is still looking to develop more and better conditions for investment. Regarding our perspective, we are a small firm, and we want to remain that way. Our company has just ten engineers, and we don’t expect it to become a very large firm. We are more focused on becoming great instead of big. What I mean about that is we always have in our vision to develop long-term relationships with our clients. For example, in the case of Bayer, we have been working with them for the last four years. In the case of Freudenberg Medical, we have been working with them for three years and with Boston Scientific for another four years. We truly understand their needs. We want to gain trust and develop long-term relationships. So that’s our vision for project management in Costa Rica. We like to give a very good service and rely on stability more than becoming big and focusing on our clients and not purely on sales and revenues.

The Central American Group: So, you’re describing that you like to offer boutique services to your customers. Are there any other differences that are very marked between you and the companies against which you compete?

Cristian Fernandez: Yes, I will mention a couple of them. The most significant one for us is that we specialize in this sector, in the life sciences sector. Several good or very good companies in the market provide project management services in Costa Rica. However, they are more diversified. They attend to residential, commercial, governmental buildings or facilities, or whatever. But since the beginning, the vision of Lean Consulting was to focus on a more specific sector: life sciences and industrial buildings. That’s our background. With our team and our engineers, we are all aligned with that mindset. So that’s our focus. That’s what we really understand, and we really know how to do it. So that’s why we decided to become specialists in providing project management services in Costa Rica in the life sciences market. As you know, when you become a specialist in something, you typically do better than the ones that try to do many things simultaneously. Our company is called Lean Consulting, and that is the reason. I am a true believer in the lean philosophy, including lean construction, lean manufacturing, et cetera. We truly believe in focusing on value and avoiding any waste.

We like to give the best possible service to our clients. So that’s what we try to do. We can adapt easily. We are very flexible. As you mentioned, we are a kind of boutique firm because we like to provide very specific services according to tailor-made solutions that our clients require. Those are the main differentiators of our company.

The Central American Group: You mentioned several international companies. I would imagine that in addition to that, you service the domestic market as well because most of the listeners that we get are international listeners. What value add is there for them through your company’s project management services in Costa Rica?

Cristian Fernandez: We have been working on this type of process for several years. I understand the complete cycle of when a company wants to start doing business in Costa Rica. We understand what needs to happen in each of the phases. We can take the company’s hands, guide them, and advise them on what they must do in each phase. That’s what I have been doing in the past, in my former job, before starting Lean Consulting. That’s something that I am trying to also offer to our clients. All of the advisory processes along the cycle of project management services in Costa Rica because we understand that they are coming to our country with a limited vision of what’s happening here. They don’t understand the regulations, the laws, the market, the prices, and what’s common. They need to know where good vendors are, et cetera. We understand how that works, and that’s why we like to be the partner of those clients through the entire process of project management services in Costa Rica.

The Central American Group: That’s a good overview that you’ve given us. Typically, when folks listen to these podcasts, the information that they get leads them to formulate further questions. That being the case, we like to ask the companies that we talk to number one to tell us if they have a website and what the address is. And number two, let the audience know how to reach our guests with their questions.

Cristian Fernandez: Sure. For instant responses, I would recommend sending us an email. It’s the easier way to communicate. We have an email address for that purpose it’s info@leancr.com. In that case, any questions, and I truly say this, any questions with no commitment, we can answer regarding what you need. That’s something that I always like to say to our potential clients for project management services in Costa Rica. There’s no commitment, and you just let me know where I can help you. I truly want to help you. If there’s something we can support you with our services in the future, that will be awesome. But now, if you have concerns about whom you can contact for something or if you are looking for some business park or something, just let us know. We can be your first point of contact if you require. We’re very transparent with the information that we can give you. So send us an email to the address that I mentioned

The Central American Group: I’m going to guess, given what your email address is, your website is www.leanlcr.com. Is that correct?

Cristian Fernandez: Yes, it is.

The Central American Group: Okay, thank you for speaking with us today about project management services in Costa Rica. It’s been informative and interesting.

Cristian Fernandez: Thank you for your time. It was a very big pleasure for us to have this conversation.

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foreign investment option in Costa Rica

The United States recognizes the strength of the foreign investment option in Costa Rica

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Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.

Costa Rica, a small country in Central America, has become a desirable destination for foreign direct investment (FDI) by manufacturers in recent years. Its strategic location, stable political climate, skilled workforce, and strong commitment to sustainability make it an ideal environment for businesses seeking to expand or establish their manufacturing operations.

The United States Department recently published a report recognizing the Central American country’s success in maintaining an attractive environment for multinational companies. According to the document, the foreign investment option in Costa Rica represents an enormous opportunity for international manufacturers.

Procomer points out why the foreign investment option in Costa Rica is a great opportunity

According to the Foreign Trade Promoter (Procomer ), the publication highlights that the country has had notable success in establishing and promoting an ecosystem of export-oriented technology companies, with providers of goods and services supporting public institutions, associated universities, and experienced human talent.

Among the other factors that make the foreign investment option in Costa Rica an attractive one are:

Investment in Education and Training:

Costa Rica prioritizes investments in education and vocational training, ensuring a continuous supply of qualified professionals for various industries. The government has actively collaborated with the private sector to develop programs that address the needs of specific industries, promoting a seamless transition of graduates into the workforce. This commitment to education is highly beneficial for manufacturers seeking to invest in a country with a steady supply of skilled labor.

Strong Infrastructure:

Costa Rica boasts a reliable and modern infrastructure, including well-maintained roads, ports, and airports. The country has invested significantly in upgrading its infrastructure, facilitating smooth transportation of goods and services domestically and for export. Manufacturers can take advantage of this infrastructure to streamline their supply chains and distribution networks.

Favorable Business Environment and Incentives:

Costa Rica offers various incentives to attract foreign investment, particularly in manufacturing. These incentives include tax benefits, grants, and other financial incentives to reduce business costs. Additionally, the government has established free trade zones, allowing manufacturers to import and export goods with minimal tariffs and customs duties, further enhancing the appeal for potential investors.

Green and Sustainable Practices:

Costa Rica has earned a global reputation for its commitment to sustainability and environmental preservation. The country generates a significant portion of its energy from renewable sources and has ambitious goals to become carbon neutral. Manufacturers seeking to align their operations with sustainable practices may find Costa Rica an ideal destination to establish eco-friendly manufacturing facilities.

Procomer offers a one-stop shop for investors

The report also highlights the importance of Procomer’s services to investors, including access to the Single Investment Window, the management of special regimes, and productive chain programs.

The Minister of Foreign Trade, Manuel Tovar Rivera, expressed his satisfaction with the results of the report, highlighting that “from the foreign trade sector we have worked and will continue to do so consistently to improve our investment climate and the competitiveness of foreign investment in Costa Rica, to be the option preferred by more multinational companies.”

“We are pleased that our main business and investor partner (the United States) recognizes our success as a strategic ally of more companies that generate employment, prosperity, and economic development in the country,” he added.

The report is available on the United States Department of State website, highlighting other Costa Rican public policy successes. Among them are:

  • Public institutions maintain strong communication channels with investors and ensure they reinvest in the country.
  • The agenda of new trade agreements promoted by the Government of the Republic favorably affect business opportunities for foreign investment in Cosa Rica.
  • The country references the best practices of the Organization for Economic Cooperation and Development (OECD) for the generation of laws and regulations, which positively impacts legal certainty and generates a culture of continuous improvement.
  • Costa Rica encourages responsible business conduct (RBC) so that companies enjoy a positive reputation as engines of economic growth inside and outside the country.
  • The country’s accounting, legal and regulatory procedures are transparent and consistent with international standards.
  • Costa Rica has a solid legal framework to protect intellectual property rights. In fact, the advances to implement said regulatory body have been recognized through the Special Report 301 of the Office of the United States Trade Representative (USTR, for its acronym in English).

The attractive business environment for the foreign investment option in Costa Rica results from a stable political climate, skilled workforce, favorable incentives, and commitment to sustainability, making it a highly sought-after destination for international manufacturers.

As the country continues to develop and invest in infrastructure and education, it will likely maintain its status as an appealing investment hub in the region and beyond. Manufacturers exploring expansion opportunities should consider Costa Rica a potential gateway to tapping into the growing Latin American and global markets while operating within a supportive and stable business environment. Potential investors are invited to consult with The Central American Group.

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ferry between el salvador and costa rica

Operations of the ferry between El Salvador and Costa Rica are set to begin

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The ferry between El Salvador and Costa Rica will begin operations on August 10, 2023, as confirmed recently by Blue Wave Corporation, the company that will operate the new maritime transport service.

The ferry between El Salvador and Costa Rica will begin operations on August 10, 2023, as confirmed recently by Blue Wave Corporation, the company that will operate the new maritime transport service.

During the month of July, authorities from the two countries reported that, after ten years of preparations, the route between the ports of La Unión in El Salvador and Caldera, in Costa Rica, utilizing the ferry, would finally start operating in August.

“To enter into service, you must utilize a particular kind of ship. It just so happens that we had one operating in a Mediterranean port that meets the required characteristics and technical requirements suitable for an El Salvador to Cosa Rica route. This is the case because the tides and currents are unique but similar in the two ports,” said Michael Volks, CEO of Blue Wave Corporation.

“There is no ferry industry. It is a completely new mode of transportation that requires many details that must be addressed and worked out to be ready for when the ferry arrives; that’s why the project has been delayed,” explained Volks.

According to the executive, the company will have its administrative offices in Panama and the headquarters of operations in the port of La Unión.

Rates for the ferry between El Salvador and Costa Rica

Blue Wave Corporation indicated that there will be two departures from the port of La Unión to Puerto Caldera in Costa Rica. These will take place on Mondays and Thursdays. If there is demand, they will add a third weekly round trip. The voyage is expected to last 24 hours; the company estimates that the current journey by road takes around five days. The charges will be $1,145 (low category) for trucks of lesser weight and length and $1,360 for larger units (high category).

Regarding the charges, Raúl Alfaro, representative of the Salvadoran Association of International Cargo Carriers (ASTIC), expressed his doubts since, as they understand, the $1,360 charge will apply to 40-foot units. Still, they handle 48-foot and 53-foot containers, so they are unsure how much they will charge. Currently, freight to Costa Rica costs between $1,400 and $1,500. “If I get on the ferry, I will be charged $800 for the land portion of the trip (from San Salvador to the port of La Unión and from the Caldera port to San José). That means the freight will increase for the exporter,” Alfaro estimated.

With this increase, the total freight (maritime plus land) would cost approximately $2,160, according to the company’s estimates for the difference.

For ASTIC, it will also be necessary to consider the time it will take to get to the port of La Unión and the hours it will take to disembark from Puerto Caldera, a saturated port. Regarding this point, the ferry operating company said that the dock planned for the ferry is not the problem, but the entrance through the channel and the availability of the pilot who must assist with the docking. The concessionaire will help “define the ideal docking windows for the operation.”

Alfaro estimates that due to these situations, the cargo that goes by ferry will arrive in around three days versus the four days it takes by road. “The current problem is delays at the borders,” he said.

We are not opposed as a transport sector,” Alfaro insisted. However, he criticized that the income that previously went to national transport companies will now go to a foreign company. ASTIC estimates that for each trip they make via the ferry between El Salvador and Costa Rica, the domestic cargo transport sector will lose $600.

El Salvador’s Autonomous Executive Port Commission (CEPA) began talking about a project for a ferry between El Salvador and Costa Rica in 2013 when Alberto Arene chaired this public company. The idea was to connect the port of La Unión with Puerto Corinto in Nicaragua. That year, the extinct Maritime Port Authority (AMP) approved the first list of rates for the ferry. Over time, several companies showed interest in offering the service, but the project did not prosper. Therefore, CEPA began talks with the Costa Rican authorities.

Ferry operations will benefit both countries

It is expected that the ferry between El Salvador and Costa Rica will result in the following benefits:

Improved Connectivity: A ferry between the two countries would enhance transportation multimodal connectivity, providing an alternative travel option to move cargo between El Salvador and Costa Rica without using land routes.

Trade and Commerce: The ferry service could facilitate the movement of goods and products between the two countries, potentially promoting bilateral trade and economic cooperation.

Time and Cost Savings: For shippers, a ferry service could save time compared to traveling overland, It could be a more cost-effective option for those who prefer not to drive long distances.

Environmental Impact: Depending on the efficiency and energy sources of the ferry between El Salvador and Costa Rica, it could be a more environmentally friendly mode of transportation than shipping by ground.

Redundancy and Resilience: Establishing a ferry service provides an additional transportation option, adding redundancy to the overall transportation network and improving regional resilience against disruptions caused by natural disasters or other emergencies.

It’s important to note that the actual benefits would depend on various factors, including the frequency and reliability of the ferry service, its capacity, safety measures, environmental considerations, and the level of interest and demand from travelers and businesses in both countries.

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technological development in costa rica

Technological development in Costa Rica: a current perspective

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Technological development in Costa Rica is crucial to its economic growth and plays a significant role in shaping the country’s progress and competitiveness in the global market. Over the past few decades, Costa Rica has recognized the importance of embracing technology and innovation to diversify its economy and improve living standards.

How has Costa Rica managed to advance in this area?

Connectivity and Internet access

Although, as of September 2021, the percentage of Costa Rica’s population with access to high-speed Internet stood at approximately 45% to 50%, high-speed Internet access has been a priority for the Costa Rican government. The expansion of infrastructure and initiatives to bring Internet access to rural areas have allowed many Costa Ricans to access information and opportunities online. This has fueled online sales growth and lets local businesses expand their reach.

Investments in technology and education

Costa Rica has made significant investments in technology and education. These investments have translated into the development of a highly skilled workforce and growth in the number of technology companies.

The Costa Rican government has promoted the creation of technology parks and free zones that house national and international companies, promoting innovation and economic development. Technological development in Costa Rica is evidenced by the in-country presence of several globally recognized firms. Among them are:

Intel Corporation: Intel is one of the most prominent technology companies in Costa Rica. They established a significant manufacturing and assembly operation in the country, producing microprocessors and other electronic components.

Hewlett-Packard (HP): HP has a presence in Costa Rica with customer support, technology services, and business process outsourcing operations.

IBM: IBM has a technology services delivery center in Costa Rica, providing IT services and support to clients worldwide.

Amazon: The e-commerce giant Amazon has customer service centers in Costa Rica, supporting its customers in different regions.

Accenture: Accenture, a global management consulting and professional services firm, has a delivery center in Costa Rica, providing technology and business solutions to clients.

Microsoft: Microsoft has a presence in Costa Rica, primarily focused on customer support and services.

VMware: VMware, a leading software company specializing in virtualization and cloud infrastructure, has a presence in Costa Rica.

Infosys: Infosys, an IT services and consulting company, has set up a technology delivery center in Costa Rica.

Sykes Enterprises: Sykes, a multinational business process outsourcing company, has a significant presence in Costa Rica, providing customer support and services for various clients.

Cognizant: Cognizant, a multinational IT services and consulting company, has a delivery center in Costa Rica.

Intelixit: A Costa Rican software development company providing IT solutions and services.

GFT Technologies: GFT is a global IT services and software engineering company with a presence in Costa Rica.

Development of technological startups

In recent years, Costa Rica has experienced a boom in technology startups. These startups span various industries, including software development, artificial intelligence, renewable energy, and biotechnology.

The Costa Rican startup ecosystem has been supported by several government and private programs that offer financing, training, and resources to help companies grow and prosper. Some of the programs that foster technological development in Costa Rica include:

Law 7799 for the Promotion of Competitiveness and Innovation: This law promotes research, development, and innovation activities in Costa Rica. It offers tax incentives for research and development (R&D) companies. Eligible companies can deduct a percentage of their R&D expenses from their income tax.

Seed Capital Fund: The Costa Rican government has established a Seed Capital Fund (Fondo de Capital Semilla) to support early-stage startups. This fund provides financial resources and investments to innovative startups, helping them grow and develop their ideas.

Acceleration and Incubation Programs: Several public and private organizations run acceleration and incubation programs to support startups. These programs offer mentorship, training, office space, and access to networks and investors, helping startups to develop their business ideas and become more competitive.

Booming digital marketing

Technological development in Costa Rica has resulted in an environment in which digital marketing has gained significant importance. This state of affairs is thanks to the growing penetration of the Internet and the widespread use of social networks.

Costa Rican companies have adopted various digital marketing strategies, such as online advertising, content marketing, and social media, to reach new customers and stay competitive in the global marketplace.

Impact of technological development in Costa Rica on society

The growth in technology and marketing in Costa Rica has significantly impacted society. Digitization has generated greater inclusion and access to information and employment opportunities.

Likewise, education in technology has allowed many young Costa Ricans to acquire valuable skills that will enable them to compete in the global labor market. The country’s commitment to technology education is reflected in its efforts to improve the overall digital literacy of its population. Costa Rica has been working to close the digital divide and increase access to technology and information for all citizens, further enhancing the technology education landscape in the country.

Challenges and opportunities

Despite the advances in technological development in Costa Rica, there are still challenges that the country must face. The digital divide, especially in rural areas and low-income communities, remains an issue that requires continued attention.

In addition, it is essential to focus on the education and training of the Costa Rican workforce to ensure that the workers’ skills are aligned with the market’s demands.

On the other hand, Costa Rica also faces significant opportunities in the technological and marketing field. As the country continues to develop its digital infrastructure and support startups, there is great potential for economic growth and job creation.

Additionally, by strengthening the online presence of local businesses and expanding their reach in the global marketplace, Costa Rican companies can increase their competitiveness and generate higher revenues.

Undoubtedly, Costa Rica has experienced remarkable technological development in a reasonably short time. The country has positioned itself as an important benchmark in Latin America through investments in education and digital infrastructure.

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foreign investment in Central America

Costa Rica establishes itself as a magnet for foreign investment in Central America

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Foreign direct investment (FDI) inflows to Costa Rica reached $3.7 billion in 2022. This information regarding foreign investment in Central America was presented in a report by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) on July 10, 2023. Recent data demonstrate that reinvestments of existing companies and the medical device sector have played a substantial role in this growth in FDI.

Costa Rica is a magnet for foreign investment in Central America

Costa Rica established itself as Central America’s primary recipient of foreign investment. The country has reached the highest flow in the region for three consecutive years. This is according to the annual report entitled Foreign Direct Investment in Latin America and the Caribbean 2023, which was presented on Monday, July 10, by the Economic Commission for Latin America and the Caribbean (ECLAC).

Last year, capital inflows and reinvestments in Costa Rica reached $3.7 billion; in 2021, the figure was $3.5 billion. These amounts exceeded the $2.5 billion that entered Panama, a country that ranked second in 2022, and the $3.5 billion received by Guatemala. in 2021.

The executive secretary of CEPAL, José Manuel Salazar Xirinachs, explained that Costa Rica experienced a slight growth of 2% from 2021 to 2022 but stressed that it remained in the lead for foreign investment in Central America. In addition, he added that Guatemala registered a more pronounced fall due to an exceptional result in 2021, although it eventually returned to its historical levels of investment.

Salazar Xirinachs expressed that Costa Rica’s success in bringing investment to Central America has to do with the fact that the country has solid foreign direct investment policies and systematic programs in place to promote the country.

Reinvestment of profits is a significant portion of new FDI

According to the report, regarding the components of FDI in Costa Rica, the reinvestment of profits (companies already installed in the country and that reinvest additional money) was the one with the most significant weight, with 71% of the total and a growth of 30% compared to 2021.

On the other hand, capital contributions concentrated 18% of the total, and loans between companies represented 12% of the annual record. However, both dropped 28% and 39%, respectively, compared to the data for 2021.

Salazar Xirinachs highlighted the importance of having a “critical mass” in the country, referring to the medical device sector. Medical devices make up Costa Rica’s main class of export. The country is home to more than 50 multinational companies in its national territory. Costa Rica has attracted many medical device manufacturers due to its skilled workforce, favorable business environment, and proximity to major markets. The country has established itself as a prominent player in the medical device industry in Latin America.

In fact, Costa Rica stood out as the leading destination for foreign investment in Central America and Latin America in the medical device sector. It successfully attracted 52% of the total amount, according to the annual ECLAC report.

In addition, the executive secretary of ECLAC emphasized the growth of the services sector, which represents 25% of Costa Rican total exports. He explained that once a critical mass of multinationals is established, the reinvestment of profits by these companies becomes one of the main drivers of economic growth and foreign investment in Central America.

As a result of this dynamism, most of the investments were directed toward the manufacturing sector (68% of the total). This result was due mainly to the behavior of the medical devices sector, while investments in services represented the remaining 32%.

According to the report, the United States is the origin of most of the investments received by Costa Rica, with 73% of the total. The country’s advantageous geographical location mainly explains this. There was also an increase in investments from Switzerland (9%), as well as from other countries such as Colombia (3%) and Mexico (2%).

Growth in Latin America and the Caribbean

At the regional level, in 2022, $225 billion of foreign direct investment (FDI) entered Latin America and the Caribbean. This figure is 55.2% higher than that registered in 2021, and the highest value since records have been kept, according to the ECLAC report.

This dynamic is consistent with the recovery after the pandemic and responds mainly to the increase in FDI in countries like Brazil. It is also due to the growth of all the components of FDI, especially the reinvestment of profits and the rise in FDI in the service sector.

Since 2013, FDI inflows in Latin American and Caribbean countries have been at most $200 billion. The weight of these flows in regional GDP also increased in 2022, reaching 4.0%. Brazil was the leading country, with 41% of the total, according to the ECLAC document.

The executive secretary of ECLAC emphasized that there are incentives that promote FDI in the countries of the region, including effective development policies in the area of science, human resources, and cluster initiatives, as well as the need to strengthen FDI agencies and the creation of incentives such as special economic zones, among others.

This year’s ECLAC report comes at a particularly turbulent time for Costa Rica regarding investment attraction policies.

President Rodrigo Chaves’s government decided on May 3, 2023, to unilaterally break the agreement to attract foreign investment through the Costa Rican Coalition for Development Initiatives (CINDE). CINDE is a private, apolitical, and non-profit organization that advises and guides international companies to establish or expand their operations in Costa Rica.

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economic growth in costa rica

Diverse activities will drive economic growth in Costa Rica in 2023 and 2024

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The Central Bank raised its growth projection for the country’s economy for this year from 2.7% to 3.3% and from 3.5% to 3.6% for 2024.

Diverse sectors drive economic growth in Costa Rica

Economic growth in Costa Rica in 2023 will continue to be led by business services, information and communications, manufacturing, and commerce activities for the remainder of the year. This assessment is according to the most recent Monetary Policy Report (IPM) issued by the Central Bank of Costa Rica (BCCR).

According to the most recent April report, 6.5% and 6.8% growth are estimated for business services activity expansion in 2023 and 2024, respectively. Last January, the estimates were 5.6% and 6%, respectively. Economic growth in Costa Rica in these activities has been, thus far, greater than what was projected at the beginning of the year.

Free zone companies propel the export sector

This economic growth in Costa Rica would be driven by exports of services from companies in free zones, among which financial management consultancy and business support activities stand out, and by domestic demand for advertising, legal and accounting services, as well as by the increase in vehicle rental services and travel agencies associated with the expected increase in tourist arrivals

Regarding information and communications, the Costa Rican Central Bank forecasts an acceleration in average economic growth in Costa for the 2023-2024 biennium. It projects that it will be located at 8.1% against the 6.7% estimated in the previous January.

This performance would be associated mainly with greater external demand for information, programming, and computer consulting services. This set of circumstances is in accordance with the technological innovations fostered by the global advance of the digital economy.

Costa Rica companies are keeping up with new technology

Added to this are the investments made by Costa Rican companies in technological infrastructure for reliable data processing, storage, and connectivity due to the prevalence of remote work and the transformation of applications towards cloud-based solutions to meet the growth of the country’s internal demand.

The BCCR also revised upwards the manufacturing growth estimates for 2023. The projected growth for this year is 3.5%, compared to the 1.4% estimated in the MPI last January.

This result would be due to a better company production performance under the free trade zone regime. This performance has attenuated the lower forecast for the activity of companies under the definitive regime, which domestic companies mainly utilize. The latter would be affected by a weak growth in local demand, given the link with the agricultural activity that was added to the lower external demand for tires and sugar.

By 2024, economic growth in Costa Rica is expected to be 1.2%. This projected performance is consistent with the evolution of external demand supplied by companies in the free zone regime and by companies in the definitive regime that produce for the domestic market.

Meanwhile, the BCCR forecasts that commercial and vehicle repair activity will grow 2.9% in 2023, which is 0.3 percentage points more than the estimate in the January IPM. This aligns with the evolution projected for general economic growth in Costa Rica.

The expected growth for 2024 is 2.8% and is linked to the evolution of construction, agricultural, accommodation, and restaurant services.

The Central Bank raised, from 2.7% to 3.3%, its growth projection for the overall national economy for this year and from 3.5% to 3.6% for 2024, compared to estimates last January.

The projected growth for 2023 is due to a greater external demand for medical devices, business, and computer services. A more significant expansion of internal demand is also estimated as a result of the improvement in disposable income due to the more substantial gain in terms of trade.

For the remainder of 2023 and into 2024, economic growth in Costa Rica will be characterized by a stable and diversified economy, a strong services sector, a vibrant tourism industry, high-tech and knowledge-based industries, renewable energy production, and the development of a workforce that can keep up with the country’s economic expansion.

 

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