Costa RicaCosta Rica

business investment
 - Costa Rica

Direct Foreign Investment

Direct Foreign Investment

Costa Rica is referred to as the "Silicon Valley of Latin America," a reflection of the nation's reputation for attracting investment from high technology corporations. According to the World Bank's World Development Indicators 2011, Costa Rica is Latin America's #1 high-tech exporter and the fourth high-tech exporter in the world. The Costa Rican Foreign Trade Ministry (COMEX) and the Costa Rican Investment Board (CINDE) stated that Costa Rica’s foreign direct investment reached more than $1.5 billion during the first nine months of 2011.

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As one example, IBM plans to invest some $300 million in information technology services in Costa Rica over the next decade. Yet the country is more than a hub for microchip production and software development: it is also a hotspot for investments in tourism, customer service, pharmaceutical and biotechnologies, and other industries.

CINDE identifies four main investment sectors in Costa Rica: Services, Advanced Manufacturing, Life Sciences, and Clean Technologies. The organization tracks the development and growth of each sector, which have flourished in the past decade – just the Services industry alone has grown 2160% since 2000. CINDE attributes Costa Rica's successful investment atmosphere to an excellent business climate, strategic location, proven track record, modern infrastructure, and highly qualified work force.

Independent international publications agree with CINDE, ranking Costa Rica among the top ten countries in the world to invest. London-based Euromoney declared Costa Rica to be the seventh safest country in Latin America for investment. FDI Intelligence, a publication by the Financial Times, named Costa Rica the "Best Country of the Future for Foreign Direct Investment in Central America and the Caribbean." Within the region, FDI Intelligence also ranked Costa Rica #1 for Best Human Resources, #2 for Best Economic Potential, and #2 for Best Business Friendliness. The Global Competitiveness Report 2011-2012 asserts that Costa Rica offers the greatest potential for innovation in Latin America, while AT Kearney 2010-2011 ranked the nation as the 5th best Global Services Location in America.

Several factors contribute to Costa Rica's successful business climate. The nation's largely bilingual workforce is highly educated, boasting a 95% literacy rate. The World Economic Forum's Global Competitiveness Report ranks Costa Rican education as the best in Latin America, and the 22nd best in the world. Many of the country's 60 universities and 95 technical colleges focus on training students specifically for employment with foreign investors.

Costa Rica's 14 free trade zones, also known as industrial parks, offer additional advantages to businesses, including a 100% exemption on corporate income tax; 100% exemption on import duties for raw materials, components and capital goods; 100% exemption on capital taxes; and 100% exemption on export taxes, local sales and excise taxes, and also taxes on profit repatriation. There are no restrictions on capital/profit repatriation or foreign currency management, and free trade zone companies receive expedited on-site Customs clearance.

A stable economy and political environment complement the nation's solid education system. Costa Rica has enjoyed over 100 years of democracy and abolished its army in 1948, garnering a worldwide reputation for peace. The World Bank's Worldwide Governance Indicators 2010 ranks Costa Rica 2nd for Political Stability and Absence of Violence Index in Latin America, and poverty rates have been reduced to below 18%.

Costa Rica operates at Central or Mountain time zones year-round, which is one or two hours behind the United State's East Coast, depending on time of year. This provides the ideal climate for near-shore outsourcing and communications with foreign-based offices during normal business hours. Daily worldwide air cargo is available on at least 14 international flights, and at least 24 international cargo-shipping lines depart from the Caribbean and Pacific coast ports. High technology offerings include redundant fiber optic submarine cables, as well as a satellite and terrestrial microwave network to provide speedy telecommunications options.

Despite all its advantages, Costa Rica also presents certain challenges to doing business. One major hurdle is that investors must deal with the nation's bureaucracy at almost every turn, from setting up a telephone line to obtaining export permits. Additionally, the country needs to train more technicians and engineers in order to satisfy the needs of technology companies looking to hire qualified personnel.

Costa Rica continues to grow and foster its competitive advantage by creating solid investment policies and educating its citizens for employment with international companies. With a solid infrastructure, relatively low costs for businesses, and advantageous tax policies, Costa Rica is poised to become one of the world's top countries for foreign investment.

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