It is a volatile time in the global economy and geopolitics. What is the impact on Costa Rica?
That is a great question. Ironically, for us, in terms of foreign direct investment (FDI), it has been actually positive in the sense that as companies look for reliable places to go and do business with, Costa Rica has a good track record. During the pandemic, for example, we had absolutely no business disruption for companies operating in Costa Rica. That sounds easy today, but if you go back to the early days of the pandemic, many countries had weeks or months of closures.
So the companies that are already in Costa Rica are wanting to continue growing in this geography, where they saw resilience to these supply chain disruptions, and of course that has also brought the nearshoring effect and the ‘friendshoring’ effect, for which Costa Rica is also a great destination. As companies look for like-minded countries in which to operate in terms of their values and culture, Costa Rica is a great place for those trying to serve the North American market. These are things that have helped Costa Rica.
Also, the strategic sectors that Costa Rica has been hot for in terms of FDI – medical devices, advanced manufacturing, like semiconductors, and of course, digital technologies – are all sectors that grew during the pandemic. Obviously, the medical sector has had a tremendous boost; our exports grew by around 30% during the pandemic, which meant growing the operations of all those companies in Costa Rica. Then digital technologies; as we all went to work from home, everything went digital, which also generated huge demand for those services.
From our perspective, this has all been positive. Does that mean it has been easy? No, not at all. It all depends on talent, and this global shortage of talent meant that we had to work more on the supply side of the equation than on the demand side. What are we going to do about supplying the talent these companies require? Today, about half of CINDE is the traditional investment promotion agency activities and aftercare, but then the other half is all about the investment climate, particularly focused on talent development.
We look at energy costs, and infrastructure and connectivity, and all those other things that are so important for investment and competitiveness. However, we dedicate the most time to developing talent and understanding the talent profiles that the companies require at university and technical levels. We have built more than 50 learning paths towards those profiles that the companies globally are requiring, as well as finding the providers of those courses, the academic partners for them and then the money to be able to train these thousands of people in the fastest way possible, so that we can meet the needs.
Investment Monitor published an FDI performance index about countries that punch above their weight as investment destinations and Costa Rica came out on top. How did you do that?
We are so proud of that. I talked about some of the tailwinds that have helped Costa Rica today, but also the job that CINDE has done, we cannot diminish the importance of that. In addition, we have invested very heavily over the past few years in digital marketing, everything that we do. If you have a chance to take five minutes to visit our website, you will see that it is really world class, where clients can come in and get a lot of very valuable and specialised information there by sector. Today, the site, using AI and all kinds of digital marketing strategies, generates around 30% of our leads.
What is also important is taking great care of our customers. We put a big focus on that. As a result, 25–30% of our inbound investment projects come from referrals from other happy clients.
We are also one of the better known countries in the world for sustainability. The fact that we have 99.5% renewable energy – very few countries in the world can say that – is a competitive advantage that is very hard to equal for other countries; they might take decades to get to that. So a company can go and plug into our matrix and they will be carbon free, at least in terms of electric consumption.
Then, of course, the main reason for companies from anywhere in the world to come to Costa Rica, which has always been the reason they go: our talent.
Costa Rica has done extremely well moving up the value chain, but what is next?
There is a lot of opportunity to continue moving up that value chain. We do have good examples of companies already doing research and development (R&D) in Costa Rica. Intel has more than 1,000 engineers doing R&D. Boston Scientific has an R&D centre with 200 engineers. HP is patenting the new chips out of Costa Rica, and I could go on with a significantly longer list of companies doing that, but more and more that is what we need to move to. Now, that means, as an investor told me once, that you have to buy your way into R&D. So more advanced economies, like your European countries, Ireland or Israel, definitely the US, they put hundreds of millions or billions of dollars to back investments in those areas, which obviously a small country like Costa Rica cannot afford to do.
This is a big challenge for us, meaning for CINDE and Costa Rica as a whole. How can we differentiate it and compensate for not having those cash grants to go into R&D? It has to do with working with academia, creating collaborative environments, articulating with the different players. What are the labs we have? What are the opportunities? What can we put on the table? Global companies are very used to having governments subsidise those investments in R&D. We need to find more creative ways of achieving that.
Of course, that also means more positioning for Costa Rica. For that, I think Costa Rica is very well-positioned today, for high-end jobs – cybersecurity, data analytics and the other 100 different services that are being delivered in Costa Rica. However, it is not that well-positioned in R&D, in developing new patents for those things. That is what we need to continue working on.
How is the growth outlook?
We continue to grow right now. Our two biggest export sectors are both knowledge-intensive services, of which this year we will export $7bn (4.25trn colons), and in medical devices this year, we will export $6bn – and they are both growing very fast. I mention this because when you compare it with what we export in, for example, coffee, which is around $200m, it is 20-times the amount. Bananas and pineapples is about $900m, so that is six or seven times more than those. Yet the perception is still that these are our main exports. So we need to change. We need people to start taking Costa Rica as a different place, because it is a different place today than it was 30–40 years ago.