paid by local industry.

In 1999 Intel voluntarily began paying patent fees to the

county government, despite the corporations exempt status under the free zone
regime. Intels choice of locating in Belen has transformed the county into the epicenter of Costa Ricas infrastructure corridor. In addition to Intel, Belen County
hosts 87 corporate operations including well-known multinationals Kraft Foods,
Kimberly Clark, and Firestone and forms part of three important cross-county
clusters in electronics, medical devices and call centers.12

The Investment Climate

Before the project in Costa Rica was announced, Intels Perlman, VP of International
Tax and Licensing, provided his assessment of the countrys investment climate:
Costa Rica is a good product, he said. It has several green lights, some yellow
lights and no red lights. Intel, a sophisticated investor, considered the countrys
investment climate sufficient for the corporation to establish a new operation in
Costa Rica. However, the announcement in November 1996 was conditional, a
usual practice of Intel; the investment would materialize only if Costa Rica delivered
on certain provisions between November 1996 and March 1997. Both CINDE and
the government wanted to effectively land Intel, but they did not have much time
to make the necessary improvements in the investment climate. They needed to
organize the task at hand, execute in an unusually fast and resourceful manner,
and work diligently to turn the yellow lights into green.13 The results of their efforts
to improve the investment climate its infrastructure, incentives, business processes would become a legacy available to all foreign and domestic investors in
Costa Rica.14

Improving the Investment Climate

The conditional contract with Intel stipulated specific improvements that
prompted immediate government action, primarily in four main areas: technical
education and workforce skills, infrastructure and support industry, permits and
construction, and tax and incentives. The two examples of logistics and communications infrastructure and construction permits illustrate a few of the many facets
of important investment climate factors that Costa Rica addressed. In particular,
these efforts would help contribute toward the countrys simpler, more transparent procedures and regulatory system. (See Box 3: Enhancements in Costa Ricas
Investment Climate.)
Logistics and communications infrastructure. Intels immediate impact on Costa
Ricas logistics and communications infrastructure provided an impetus for
further development and exponential growth in these industries. In the seven years
between 1996 and 2003, communications and logistics spending in Costa Rica
nearly doubled, achieving an average annual compound rate of growth of about
10%. In 1998, the government passed the Public Concessions Law allowing private
investors, national and foreign, to participate in the construction and operation of
public works, such as roads and ports. The upgraded, world-class airport for passengers and cargo, while still under construction and remodeling, has improved
facilities and logistics for passengers and cargo, with higher frequency of flights
and the local establishment of leading international service providers, such as
FedEx, UPS, DHL, Danzas and AIG. Faster airport customs procedures, using the
Internet, were also established to allow for a 24-hour maximum lead-time.

INVESTING IN DEVELOPMENT INTEL COSTA RICA

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