Costa Rica: A
Coast Rich in Agriculture and
Technology
by Katie Lyons
Export America
The United States is Costa
Rica’s most important
trading partner. In 2001,
Costa Rica imported $2.5
billion worth of U.S. goods
and services, constituting
nearly half of the country’s
total imports. U.S.
technology, products, and
services are welcomed due to
the proximity of the United
States to Costa Rica, as well
as the high quality and wide
selection of competitively
priced products. U.S.-style
marketing techniques and malls
are the norm. E-commerce is a
small, growing sales channel,
but it is constrained by Costa
Rica’s telecommunications
infrastructure, lack of
legislation, and inefficient
local delivery services.
 Historically
known as a producer of bananas
and coffee, Costa Rica has in
recent years earned a
reputation as an attractive
location for foreign
high-technology investment as
well as a popular destination
for tourists. The country’s
relatively well-educated and
productive work force,
favorable tax and customs
regimes in free trade zones,
and central location in the
Western Hemisphere have
attracted foreign investors.
The 1998 opening of Intel
Corporation’s $200 million
microprocessor finishing and
testing facility was a
milestone in the country’s
transition to high-technology
industry and was followed by
large new investments by
Abbott Laboratories and
Procter & Gamble, among
others. Costa Rica’s tourism
industry has successfully
marketed the country abroad
and garnered this sector more
foreign exchange than the
traditional agricultural
sector. More than 30,000 U.S.
citizens are Costa Rican
residents who, like the
tourists, are attracted by the
climate, political stability,
and hospitable atmosphere.
It is predicted that by 2005
Costa Rica’s export earnings
will amount to $15.7 billion,
about four times the current
figure. The Costa Rican
Investment and Development
Board (CINDE) has worked
closely with the Costa Rican
government and actively
recruited most of the large
U.S. companies now located
there.
After expanding more than 8
percent annually in the late
1990s, Costa Rica’s gross
domestic product (GDP) growth
slowed to less than 1 percent
in 2001 but is expected to
increase to 1.4 percent by the
end of 2002. Costa Rica has
been affected by the slowdown
in the U.S. economy, the
decline in agricultural
commodity prices, particularly
for coffee and bananas, as
well as the increasing costs
for imported petroleum. In
2001–2002, currency
devaluation increased to 9.4
percent compared to 7.4
percent for 2000–2001 and is
expected to rise slightly.
Roughly 60 percent of all bank
deposits are in U.S. dollars.
The colon is the official
currency, but people are able
to make payments in U.S.
dollars.
Regional integration of
Central American markets is
progressing with the
resolution of internal
political conflicts, lowered
tariffs and other trade
barriers, and renewed
attention to economic
development. Approval of the
Caribbean Basin Trade
Partnership Act (CBTPA) of
2000 will increase free trade
between the United States and
Caribbean countries. The CBTPA
should also increase trade
within the region for
components of products
destined for the U.S. market.
The act proves to be
especially attractive for
those firms operating in the
garment assembly and tuna
processing industries.
Costa Rica’s growing economy
also attracts investors,
because there are numerous
free trade zones that offer
tax holiday opportunities and
other benefits, such as
exemptions from import duties
on raw materials, capital
goods, parts, and components.
Free trade zone benefits are
expected to phase out by 2007.
Free trade zones have been
incorporated in the port
cities of Limón and
Puntarenas as well as some
locations in the Central
Valley.
There are no significant
trade barriers to the entry of
most goods and services.
However, all essential
services, such as
telecommunications,
electricity, insurance, and
petroleum, are state
monopolies. Privatization
continues to be a politically
divisive issue in Costa Rica.
Currently, the government
grants few concessions to
operate on behalf of the legal
state monopolies, rather than
opening these institutions to
private participation.
In 2001, tourism earned
$1.3 billion, despite the
terrorist attacks of September
11. Tourism employs of 152,000
people. Four U.S. carriers
currently service Costa Rica.
Tourism is a market that
provides good opportunities
for U.S. investors and
companies. Currently
there are several developments
under consideration, such as
Four Seasons hotels and golf
courses by Jack Nicklaus and
Arnold Palmer.
For more detailed information
visit http://www.export.gov
and select the link to country
and industry market research,
and then chose the Country
Commercial Guide or
industry-specific reports for
Costa
Rica.
TIPS FOR DOING BUSINESS
Distribution/Establishing
Representatives
- Although it is possible
to export directly to
Costa Rica, U.S. companies
should find a local
representative and/or
establish a local sales
office.
- Having a local
representative is a
requirement for companies
that would like to
participate in the
government’s procurement
system.
- Costa Rican law provides
two main forms of
representation: a
representative and a
distributor.
- Domestic laws allow for
foreign ownership of most
business activities.
There are a few
exceptions, including
legal monopolies or
services to Costa Rican
citizens (electrical
power, broadcasting, and
wholesale distribution).
Marketing
- Direct marketing has
limited success due to the
difficulty in obtaining
comprehensive and reliable
client lists and
addresses.
- Marketing in Costa Rica
is similar to marketing in
the United States. Costa
Rica has many large
franchise outlets,
shopping centers, and
malls.
- Sales catalogs should be
translated into Spanish,
and products must be
priced competitively.
- Costa Rican newspapers
are the best way to
promote sales of products
or services.
Other Considerations
- Personal Relationships:
Business in Costa Rica
depends heavily on
establishing personal
relationships with foreign
suppliers.
- Work Force: Costa Rica
has one of the highest
literacy rates and most
productive work forces in
Latin America. Many
employers are working
together with the
government to promote
education in technology to
help satisfy demand for
labor in that sector.
Business Customs
- Costa Rican business
executives place great
importance on personal
contact, and appointments
should be made at hosts’
facilities instead of
hotels.
- A business suit is
appropriate attire.
- Working hours are from
8:00 a.m. to12:00 p.m. and
from 2:00 p.m. to 6:00
p.m.
- The Costa Rican
government has a
continuous working
schedule from 7:30 a.m. to
4:00 p.m.
- Banks are open from 9:00
a.m. to 3:00 p.m.
Please visit our companion WebGuide
Costa Rica for additional
information.
Date Updated: March 27, 2007
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