ECONOMY

Status : A significant aggregate growth due mostly to the presence and production of Intel's microprocessor plant made Costa Rica's economy peak in the late 90's; other contributors were tourism and exports, and lastly, traditional sectors. Costa Rica also sought at the time to widen its ties by signing several agreements with Mexico, other Central American countries and the U.S., Canada, Chile, etc. It is currently negotiating a free-trade agreement with the U.S. along with its Central American neighbors, and not only is it participating in the Free Trade Area of the Americas negotiation, but it is also a member of the Cairns Group, which seeks trade liberalization in the WTO.

Chief Economic Resources : When we speak of the chief economic resources of Costa Rica, we immediately think ' Tourism' ; one-fourth of Costa Rican territory is reserved for national forests, it has splendid picturesque beaches, year-around mild climate and trade winds, all-weather road access to most parts of the country and, in another vein, it is conveniently located in the Central American isthmus, all of which account for its popularity among affluent retirees and eco-tourists.

Furthermore, its significant rainfall levels and mountains have been paramount for the construction of hydroelectric power plants that have allowed Costa Rica to be self-sufficient enough to even export electricity to neighboring Nicaragua . If Costa Rica 's plans for regional distribution carry through, it may become a major electricity exporter.

FOREIGN DIRECT INVESTMENT (FDI)

Once known as a bananas/coffee producer, Costa Rica has steadily started to attract foreign investment of significant importance: Intel, with a $300 million microprocessor facility; Procter & Gamble, with a 1,000 employee center for the Western Hemisphere; plus Abbott Laboratories and Baxter Healthcare, to name a few. In terms of contribution by sectors, investments in electronics accounted for 22% of the total FDI in the late 90's and beginning of the millennium. Manufacturing and industry surpassed agriculture, although the presence of Dole and Chiquita has been of paramount importance in the banana industry. More than half of the aforementioned investment has come from the U.S.

Costa Rica's competitiveness in exports is primarily due to FDI in general and to Intel's million-dollar investment project for a microprocessor assembly/testing facility, which is 28th in sales in Latin America and the region's 27th in exports in 2000. Even though Costa Rica's domestic technology market is incipient and mostly of foreign origin, and even if managerial/business preparation are at low levels, which have a bearing on limited dot-com competition (Dot-com Competition Ranking: 66), it is a fact that Costa Rica's 150 software companies have begun to export more and more within Latin America and the U.S. Proof of this is Costa Rica's ranking as one of the six most successful countries, along with Mexico, Korea, China, Ireland and Hungary, in attracting FDI, according to the World Investment Report 2002 (UNCTAD).

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