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COSTA RICA
Country Presentation
Agenda
Country overview
History and Politics Economical indicators
Business outlook
SWOT analysis
country snapshot
Costa Rica has no army and a strong tradition of democratic and economic stability in the region as well as a record of high achievement in education, health and social security reflected in his high ranking in the UNDP Human development index. European Commission, http://ec.europa.eu http://ec.europa.eu
Profile
democratic republic
Geography
Area: 51,100 sq. km (4 times smaller than Kansas). Timezone GMT -6 Cities: Capital--San Jose (greater metropolitan area pop. 2.1 million, includes the cities of Alajuela, Cartago, and Heredia). Climate: Mild in the central highlands, tropical and subtropical in coastal areas.
People
Population: 4.02 million. +15% Immigrants Annual growth rate: 1.48%. Ethnic groups by origin: white (including mestizo) 94%, African 3%, Chinese 1%, Amerindian 1%, other 1%. Languages: Spanish (official), English widely spoken. Average age: 26 yo
Sources: US Dept of State http://www.state.gov World Bank worldbank.org
Timeline
a few historic highlights
200 BC
1502
1821
1899
1949
Christopher Columbus
arrives. The Spanish optimistically called the country "Rich Coast.
Pacific Independence
from Spain
First democratic
government
Who is who?
Government Branches: ExecutivePresident (head of government and chief of state), two vice presidents, Cabinet (15 ministers).
President: Oscar ARIAS (re elected 2005) First Vice-president: Laura CHINCHILLA Ministry of Foreign Affairs: Bruno STAGNO
As President, he intervened against the activities of U.S.-backed Contras on Costa Rican territory. Although critical of the political system in Nicaragua, Arias has concentrated on engaging Nicaragua and the other Central American states in a peacemaking process. The accord approved by the five Presidents in Guatemala on August 7 was based on President Arias's plan.
Source: Les Prix Nobel. The Nobel Prizes 1987, Editor Wilhelm Odelberg, Nobel Foundation, Stockholm 1988
Legislative57 deputy unicameral Legislative Assembly. JudicialSupreme Court of Justice (22 magistrates) and the independent Electoral Tribunal (4th power) that oversees elections.
Countries on the same level of HDI as Costa Rica can have very different levels of income and life expectancy.
Source: UN Human Development Report 2006 http://hdr.undp.org
Economy
lets slide the pie
Agriculture
Coffee, Pineapples, Flowers
Tourism
1.6 million tourists visit Costa Rica every year. 7.1% annual growth rate. Rooms expansion at an annual rate of 4.5%. Tourists come from: USA 48%, Europe 16% and Others 36%. Fast Real estate development: golf courses and marinas.
+4 % of the Biodiversity of the world 25% of the territory are protected areas 97.5% clean and redundant electric energy: hydroelectric, geothermic, wind Oil deposits not developed for environmental reasons
Headquartered in Costa Rica, the United Nations-mandated University for Peace was established in December 1980 as a Treaty Organization by the UN General Assembly. upeace.org/
International Political Analysis
1. Attracts FDI focused in Corporate Social Responsibility 2. Allows trade of Environmental services 3. Increases Capitalization in Ecotourism
Strengths
Open Economy
1200 1000 Millions of US$ 800 600 400 200 0
1990 1992 1994
FDI Inflows
1996
1998
2000
2002
2004
2006*
Foreign Direct Investment, has been growing steadily over the last 15 years. The peaks are from Intels investment in 1996, Abbott Laboratories and Procter & Gamble in 1999, and in 2002 the purchase of 25% of the Costa Rican Brewery by Heineken.
Best in class indicators in the Latin Globalization Index 2006 (Latin Business Chronicle): 2nd place in Exports, Tourism and Internet penetration, 3rd place in Imports and 5th in Investments.
Economic Stability
30% 20% 10% 0%
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 Inflation (Costa Rica) Devaluation (Costa Rica)
Costa Rica benefits from good access to the worlds capital markets and moderate risk premium. Costa Rican Long Term Bond Ratings: Moodys Ba1 (stable) Fitch Ratings BB (stable) Standard & Poors BB (stable)
Source: CINDE, based on Costa Rican Central Bank
Thailand Malaysia Indonesia Czech Rep. Phil ipines Korea Brazil Russia
A r g e n t i
The second foundation of the strategy is that efforts have been made to maintain reasonable macroeconomic stability
the recovery from the deep recession of 1982 was slow, and inflation has remained at comparatively high levels. Yet growth has picked up significantly during the last decade
The third foundation of Costa Rica's economic policy is its outward orientation Exports now represent around 50 percent of GDP,
compared to 30 percent of GDP in 1980 The large size of trade and the continuing long-term capital inflows have clearly reduced the Costa Rican economy's vulnerability to capital account shocks
Trade liberalization has been accompanied by structural Adjustment notably the dismantling of industrialization policies
aimed at import substitutionwhich has spurred investment, growth in total factor productivity, and significant economic diversification
Source: Agustn Carstens Deputy Managing Director, International Monetary Fund July 12, 2004
Investment Incentives
Agreements
82%
18%
New Investment
Human Resources
a qualitative approach
No Unions in private sector: Employer-sponsored workers associations (Credit Unions-Solidarism). Universal Health Care and Education System Academic Schools: Computer labs in 18% of the public primary schools and 82% of public high schools English teaching in 38% of public schools and all private schools Technical High Schools: 89 National Training Institute (INA)
the buzz...
The quality of education we found in C.R. is impressive. We have confirmed that the talent and training of the people is one of the best we have seen worldwide. Alfonso Cos, Vice President for GBS North America, Procter & Gamble
Technical Education:
The lowest bilingual labor costs in the Americas. Advanced telecommunications infrastructure among Latin American locations. Greg Betz HP Costa Rica Global Delivery Center
Universities: Total of 56 (plus regional branches): 4 public, 52 private INCAE Business School (FT Top 100 full time global MBA)
Sources: Ministry of Public Education, Cinde.org and Financial Times MBA 2006
youtube.com/watch?v=RxGj5bSvgNQ
IT Infrastructure
Telecommunications: Redundant fiber optic submarine cables (Maya & Arcos), satellite and terrestrial microwave network in place to meet demand in fixed, mobile and Internet services. Second largest Internet penetration in Latin America
Source: Latin Business Chronicle and International Communications Union
Quality of Life
San Jose is among the cities with the best quality of life in Latin America The Economist Intelligence Unit, Liveability Rankings 2005 San Jose is first among Latin America in the Worldwide Business Trip Index The Economist Intelligence Unit 2006 Costa Rica Ranked 36th in Political Stability out of 209 countries World Bank, 2005
Weaknesses
The challenge to reduce poverty
Costa Rica has a relative good position among developing countries (ranks 4th out of 102)
HOWEVER
The inequality in income distribution is growing, which is usually correlated with criminality
Costa Rica ranks 51th out of 158 countries in the corruption perception index second best in Latin America. Upcoming liberalization of State monopolies is likely to decrease bureaucracy and help fighting corruption.
Sources: Transparency International 2006 www.transparency.org UN Human Development Report 2006 http://hdr.undp.org The State of the Nation in Sustainable Human Development www.estadonacion.or.cr
Threats
Strongly linked to US economic performance " A cooling of the U.S. economy or a further increase in oil prices could adversely impact economic activity. " " Higher economic growth, combined with a significant reduction in inflation, would improve the living standards of all citizens and reduce poverty. " Need to align fiscal policy to country development agenda " Pass a comprehensive fiscal reform, with a focus on the income tax and the value-added tax.
IMF Staff Statement on the Conclusion of the Article IV Discussions with Costa Rica August 3, 2006 http://www.imf.org
Expected changes in tax policy in the upcoming months,however this may prove as the best decision as the government has been cutting expenses to reduce deficitwhich also affects investment in infrastructure, education, and other social needs.
Opportunities
3rd Most competitive country in Latin America and the Caribbean World Economic Forum, 2006
The ratification and implementation of the Central AmericaDominican Republic-United States Free Trade Agreement will open the state monopoly in Insurance, Telecom and Energy. The demand for sourcing in the Leisure, Manufacturing and Financial Services is increasing. Infrastructure upgrade needs for copying with economic growth, including: The countrys extensive road system (30.000km) lacks of maintenance due to the recent focus on central government expending reduction. The new mega harbor to be constructed in the Caribbean. New hydroelectric plans to consolidate the countrys position as an energy exporter in the region.
Costa Rica accounts for 60% of total exports from Central America to European Unionyet EU has a secondary position among trading partners
Strategic consulting in areas related to growth in urban areas: security modernization, waste management.
culture
some words that you will only (probably) hear in CR: Pura Vida = national greeting, means Pure Life or Dolce Vita Tico = how costa ricans call themselves Mae = Dude
leonorajimenez.com
edituscr.com edituscr.com
Leonora Jimenez
Miss Asia Pacific International 2005. You may watch her hosting a local Costa Rican TV Cuisine program, wrapping up with the typical: Coman rico! (eat delicious)
nasa.gov
Franking Chang
First Hispanic astronaut, veteran of 7 missions and former director of Nasas Jet Propulsion Laboratory. His new venture maintains research facilities in Houston an Costa Rica, where a plasma (clean energy, aiming to shorten space travel time) engine is under development.
deredia.com
nacion.com
Claudia Poll
Olympic Gold Medalist
+info
Thanks!