On the side of big business and free markets the country has successfully capitalized on its human resources to become a credible force in a technology and knowledge driven global economy.
Costa Rica’s lasting commitment to peace and negotiation, reflected above all in its refusal to arm, pervades the national psyche. The Costa Ricans are a peaceful people, viewing their country as an oasis of calm in a land ravaged by war and conflict and have managed to avoid most of the public security and violence issues experienced by their neighbors, thereby freeing up both financial and human resources for investment into social welfare and public infrastructure particularly in health and education.
As early as 1870 primary education was made free and compulsory and by 1900 the country had the highest rate of literacy in all of the Americas. The abolition of the military in 1948 marked a further consolidation of this program of social reform and investment that would continue until the 1980s and included the establishment of universal healthcare, a national social security system and a nationalization of the electricity, telecommunications and banking systems, which also offered training and education programs for their employees.
The results of this investment in its people are a positive social image, well-educated workforce, stable financial institutions, enduring democracy and higher standard of living. These have been instrumental in enabling Costa Rica to create a friendly investment climate, thereby achieving economic growth through a policy of attracting foreign direct investment (FDI) into export-oriented industries.
Since the 1980s this strategy has involved offering a series of incentives including reducing tariffs on imports, loosening international trade barriers and establishing free trade zones in which foreign-owned export manufacturing companies can import all of their inputs, equipment and transport needed for production, tax free and avoid paying income taxes on their revenues for eight years, paying only 50% of these for the following four years.
In recent years the country has particularly focused on the development of the high-technology manufacturing industry and on establishing regional support and service centers, capitalizing on its skilled workforce to make the transition from a largely agrarian to technology and service driven economy.
Microchips and other computer components have now supplanted bananas and coffee as Costa Rica’s primary export products, with figures from 2005 showing the agriculture sector to represent only 9% of GDP as opposed 30% from the electronics sector.
As early as 1870 primary education was made free and compulsory and by 1900 the country had the highest rate of literacy in all of the Americas. The abolition of the military in 1948 marked a further consolidation of this program of social reform and investment that would continue until the 1980s and included the establishment of universal healthcare, a national social security system and a nationalization of the electricity, telecommunications and banking systems, which also offered training and education programs for their employees.
The results of this investment in its people are a positive social image, well-educated workforce, stable financial institutions, enduring democracy and higher standard of living. These have been instrumental in enabling Costa Rica to create a friendly investment climate, thereby achieving economic growth through a policy of attracting foreign direct investment (FDI) into export-oriented industries.
Since the 1980s this strategy has involved offering a series of incentives including reducing tariffs on imports, loosening international trade barriers and establishing free trade zones in which foreign-owned export manufacturing companies can import all of their inputs, equipment and transport needed for production, tax free and avoid paying income taxes on their revenues for eight years, paying only 50% of these for the following four years.
In recent years the country has particularly focused on the development of the high-technology manufacturing industry and on establishing regional support and service centers, capitalizing on its skilled workforce to make the transition from a largely agrarian to technology and service driven economy.
Microchips and other computer components have now supplanted bananas and coffee as Costa Rica’s primary export products, with figures from 2005 showing the agriculture sector to represent only 9% of GDP as opposed 30% from the electronics sector.
