Costa Rica is known around the world for having an impressive variety of sectors that are showing growth, with large investment being pumped into the economy as a result. Examples of these industries include the production and exportation of coffee and bananas and a booming tourism industry. However, it is worth adding, there is also growth being shown in more modern service base sectors as Costa Rica strives to respond to new market necessities.
Costa Rica is considered an emerging country with principal economic activity being the service sector, agriculture and tourism. Although these are the main sources of income for the country, with the emergence of better and more advanced technology in the last two decades or so, Costa Rica has steadily increased its investment in the general and specialist industrial manufacturing. This has revolutionised the economy.
We have decided to create a 2 part series that will focus on all facets of the Costa Rican industry so that can learn more about the remarkable variety of commercial opportunities in this brilliant nation. We will focus on fields ranging from more traditional industries such as tourism to more innovative and contemporary markets such as the production and exportation of electronic components.
For decades now, tourism has been one of the most important contributions to the Costa Rican economy. In 2015, tourism represented 5.8% of the GDP, being the second largest proportion in Latin America behind only Panama. Since then, it has only increased. During the first quarter of 2018, the country registered income of $1.181 million, representing an increase of 7.2% compared to the same period in 2017. This trend has been seen in the last 9 years and has been a response to an impressive commercial effort to improve the image of the country, and the significant improvement in infrastructure, with many new air routes being commissioned.
Opening up the Sector
The tourism sector is greatly aided by a population that speaks a fantastic level of English and a very high quality of life. Costa Rica has been ranked as one of the happiest countries in the world in recent years, and according to the latest study, holds the number one spot in Latin America. This high life index has played an important role in ensuring a constantly increasing number of tourists into the country.
Tourist Categories in Costa Rica
- Coastal: Costa Rica, as hinted at in the name, is a country rich in natural resources and has many areas of natural beauty. The country borders both the Pacific and Atlantic oceans, meaning there are a plethora of beaches with the much-fetishized combination of crystal-blue seas and extensive sandy beaches. As expected, these beaches are hugely popular with European and North American tourists. Furthermore, the country is a perfect destination for one of the most practised and growing sports in the world; surfing. Owing to the strong tides that characterize many of the beaches, it has a growing reputation amongst surf enthusiasts. The country has twice hosted the World Surf Championship!
- Adventure Tourism: Costa Rica is known for having vast mountain ranges and as mentioned, magnificent coastlines. Especially in mountainous regions, this allows for many adventurous sports such as ziplining, abseiling, rafting, etc. Monteverde is the main destination for this type of tourism.
- Medical Tourism: This new trend is growing in popularity due to the low cost of medical care in Costa Rica (similar to Mexico) compared with the high quality of professional doctors and private health institutions. Procedures such as dental surgery, plastic surgery and other minor operations are being sought after more and more by tourists who are also looking to combine a procedure with tourism.
- Hosting Conventions and Conferences: This is a very new trend- Costa Rica recently sanctioned the building of the 5600 capacity National Centre for Conventions and Conferences. This is the latest development in Costa Rica’s expansion into the world of conventions. Despite not being a traditional sector in tourism, the Costa Rican Tourism Institute invested $35 million, suggesting there is a lot of opportunity in this new progression.
Beginnings of the industry
The growth of electronic component manufacturing dates back to the arrival of Intel at the end of the 20th century. It was a moment that firmly placed the country on the map in terms of good production and as a provider of innovative technological services. Over the years, Costa Rica increased global competition in these sectors, attracting global conglomerates to invest in the national industry.
The growth of the electricity production sector
In the last decade, Costa Rica has been one of the largest global providers of electronic components, shipping their products to some of the leading countries in the world. In 2010, Costa Rica became the US’ second largest provider of electronic components, only beaten to top spot by the superpower China! Costa Rica provided over 10% of the products imported by the US.
Why is Costa Rica so competitive in electronic component manufacturing?
There are many reasons ranging from a stable political system to the population itself. See some of the main reasons below:
- A highly educated population, with almost no illiteracy, free primary and secondary education, and investment in professionals with careers in technology. These careers were supported by the government as a strategy to align the country amongst the most economically liberal and advanced in the world
- Ease of finding skilled and bilingual labour is used at the moment of exporting and creating relationships with English-speaking or bilingual markets, making Costa Rica a Latin American leader in the sector. highly qualified and bilingual workforce which can easily be solicited. This is one of the biggest strengths in the country, it allows for seamless interactions between the Hispanic country and English speaking clients, and has positioned the country as one of the Latin leaders
- The political and legal climate of the country is incredibly favourable and open to exporting these products. There are various tax exemptions through customs-free zones, free market spaces which bring large amounts of business to the country, and the public, political and economic security to Costa Rica, especially when compared to other Latin countries.
- The eroding relations between Mexico and the US have also been crucial in boosting Costa Rica’s platform. With the former losing favour with the latter, Costa Rica has positioned itself as the major player in the market. Trade in this sector has doubled between Costa Rica and the US since 2000.
Heavy investment from companies
An example of the growth in the production of precision goods is the 15 million dollar announced by Microtechnologies this year. This investment will be used to develop a new, high-tech manufacturing plant and will represent a boost of 30% of its current locations. The US-based multinational has pledged to produce and assemble parts used in the automotive, medical and aerospace sectors.
This sector is considered a non-traditional export market, compared to fruit or coffee, however, it has progressively become a strategic business opportunity and an important source of Foreign Direct Investment (FD), as well as creating jobs domestically. One final benefit, is that the steady trajectory the world economy is taking, becoming more and more dependent on technology, the electronic component industry will only grow.
Need Personalised Business Information?
To start developing your company in Costa Rica, it is necessary to do some groundwork on the best investment opportunities in the country and to work out how to enter the market.
Don’t hesitate to reach out to our team that can offer localized expert support in a wide range of market entry and back-office services. Reach out to Josseline, our bi-lingual Country Coordinator at [email protected] to see how we support you in Costa Rica.
Interested in accessing a Costa Rican market but are unsure where to start? Check out the video below and see how we can support you.