Manufacturing Innovation in Costa Rica is Key to the Country’s Economic Progress

Traditionally, Costa Rica has been known for the export of agricultural commodities such as bananas and coffee.  By the 1990s, however, manufacturing innovation in Costa Rica took the form of the production of microchips by the global company, Intel. 

Over the years since then, Costa Rica has become increasingly recognized for the export of services and advanced technology.  Its talented, educated, and bilingual workforce has made it the second leading exporter of medical device technology in Latin America, second only to Mexico.  Costa Rica has followed a different path from that of its neighbors such as Nicaragua, Guatemala, El Salvador, and Honduras.

According to Costa Rica’s Export Trade Promotion Agency (Procomer), the fact that companies such as Microsoft, Intel, Hewlett Packard, Google, and Amazon are present in the country is due to the high level of educational achievement of its population, as well as to the nation’s economic and political stability.  In addition to fostering manufacturing innovation, Costa Rica is becoming a hotspot location for the establishment of shared services operations facilities.

In addition to its demographic advantages, the country has also been favored by its geographical location and convenient connectivity to large Latin American and US markets. 

Since the economic and trade opening that the nation experienced three decades ago, Costa Rican innovation has made it a magnet for large technology multinationals.  According to the Global Innovation Index’s 2019 rankings, Costa Rica ranks second to Chile as Latin America’s most innovative nation.  As such, Costa Rica remains engaged in its plan to attract more foreign investment, to encourage the creation of new homegrown technology companies, and to export a greater volume of value-added products.

Manufacturing innovation in Costa Rica:  A rocket to Mars in 39 days

One of the symbols of manufacturing innovation in Costa Rica is the Ad Astra Rocket Laboratory which was established by Costa Rican scientist Franklin Chang.  Chang is a mechanical engineer, a physicist, a former NASA astronaut, and the founder and CEO of Ad Astra.  In addition to creating hydrogen technologies to reduce transport pollution, one example of Chang’s flagship manufacturing innovation in Costa Rica is a revolutionary invention that could transport a rocket to Mars in 39 days through the use of plasma engine technology.   Ad Astra’s facility is located approximately 10 kilometers to the west of the city of Liberia, the capital of the province of Guanacaste, on the campus of EARTH University.

In addition to playing a pioneering role in the development of plasma engine technology, manufacturing in innovation in Costa Rica brought about the launch of the first Central American satellite in 2018.  The projectile was developed by scientists at Costa Rica’s Technological University. 

In addition to innovations in manufacturing developed by Ad Astra and at the nation’s Technological University, Costa Rica has been the source of innovation in other areas in recent years.  Among them are:

• Pancreas, liver, and ovarian cancer treatments;
• Blood products (medicines made from human blood);
• Insect-based foods, such as cookies, smoothies, and cricket bars;
• Teeth created from cow bones and other dental biomaterials;
• Software to improve the country’s electrical systems and to digitally manage information systems in hospitals;
• Genetically engineered products;
• Serum to treat snake bites;
• Digital applications for business and artificial intelligence development;
• Electricity and heat generation from coffee residuals.

Manufacturing innovation in Costa Rica takes place in the country’s free zones

Free commercial zones in Costa Rica were developed in the late 1990s, this was the first time that the country’s government took decisive strategic action to attract foreign direct investment to within its borders.  The first major company to locate in a Costa Rican free zone was Intel.  As the world’s largest producer of microprocessors, the factory that the company opened in the Central American nation accounted for 20% of its domestic exports for several years after its founding.  Intel moved its operation to Asia in 2014 in order to take advantage of that region’s cheaper production costs.

Today, manufacturing innovation in Costa Rica continues as there are approximately 100 companies in the country that are dedicated to the generation of products that belong to what is known as the “life sciences”  industry.  One of the best-known firms in Costa Rica’s life sciences sector is Establishment Labs.  The company is listed on the NASDAQ and is a global, high-tech medical device and aesthetics company that designs, develops, manufactures, and markets an innovative product portfolio that consists of advanced silicon-filled breast and body shaping implants.  The products manufactured by Establishment Labs are sold in more than 70 countries. 

Innovation driven by a diversified economy

Costa Rica has been expanding its trade opening for decades.  To date, the country has signed approximately 50 free trade agreements.  In order to stay at the forefront of regional innovation, Costa Rica invests 8% of its GDP in education.  This is possible because the country disbanded its armed forces in 1948.  In addition to investments in its educational system, funds saved from the lack of a military to support are also dedicated to investment in research and development. 

In addition to manufacturing innovation in Costa Rica, foreign companies have also brought investment to the country in the form of back-office operations such as customer service, accounting, financial services, tech support, and human resources management.