CHAPTER I.

EXECUTIVE SUMMARY

 

 





----------------------------------------------------------------- 

This Country Commercial Guide (CCG) presents a comprehensive look 

at Costa Rica's commercial environment through economic, 

political and market analyses. 

 

The CCGs were established by recommendation of the Trade 

Promotion Coordinating Committee (TPCC), a multi-agency task 

force, to consolidate various reporting documents prepared for 

the U.S. business community.  Country Commercial Guides are 

prepared annually at U.S. Embassies through the combined efforts 

of several U.S. government agencies. 

 

----------------------------------------------------------------- 

 

 

The Republic of Costa Rica, the size of West Virginia (19,575 

square miles with an estimated population of 3.3 million), 

depends heavily on both agricultural and industrial imports. 

Although progress has been made in liberalizing its economy, 

promoting its domestic industry and enhancing its role as a 

global trading partner via bilateral and multilaterial 

agreements, the strong role of state monopolies and the current 

fiscal crisis (public sector deficit in 1994 was 7.5 percent) are 

also significant factors in the economy. 

 

As member and/or signatory of the World Trade Organization (WTO 

[and GATT]), the Central American Common Market (CACM) and 

numerous international agreements and treaties (involving 

intellectual property rights, the Uruguay Round, etc.), Costa 

Rica continues to play an important and positive role in efforts 

to promote a hemisphere-wide free trade area (Free Trade Area for 

the Americas). 

 

While foreign direct investment in Costa Rica is difficult to 

track, it is estimated that some $280 million flowed into Costa 

Rica in 1993, with the bulk of that investment from the U.S., 

Japan, Germany, Spain and Korea.  The growth of new investments, 

however, has slowed somewhat in the last two years.  Textile and 

electronic component maquilas, located in most cases in 

attractive free trade zones, employ over 70,000 Costa Ricans. 

 

With an unemployment rate of 4.2 percent, a few maquila companies 

have ventured to neighboring Nicaragua (where the unemployment 

rate is nearly 60 percent) in search of a more eager labor 

supply.  Costa Rica's economists lament the exodus, but at the 

same time see it as part of a natural evolution to a strengthened 

high-tech sector.  The country's GDP increased 4.5 percent in 

1994 and is predicted to increase between 2.5 and 3.5 percent in 1995. 

 

While Costa Rica's industrial base is growing, it is still an 

agriculturally-based economy where 47 percent of its economic 

base is food-related (imports and exports). 

 

However, in 1993 tourism surpassed banana exports as the nation's 

largest income producer.  Over 764,000 tourist 

visited Costa Rica in 1994 (with an additional 100,000 day 

visitors arriving via cruise ships).   While tourism continues to 

play a dynamic role -- producing revenue over $600 million in 

1994 and employing over 62,000 -- the tourism sector may have 

reached its saturation level.  Nonetheless, numerous, sometimes 





controversial, hotel and resort construction projects are still 

planned in the northwest, Guanacaste, region. 

 

According to the U.S. Trade Representative the U.S. trade surplus 

with Costa Rica in 1994 was $220 million (* See Note), or $214 

million more than in 1993.  U.S. merchandise exports to Costa 

Rica were $1.9 billion in 1994, up $320 million or 20.7 percent 

from 1993.  Costa Rica was the United States' thirty-seventh 

largest export market in 1994. 

 

Principal U.S. exports to Costa Rica in 1994 included: kraft 

paper and paper board, cars and other vehicles (primarily for 

transporting persons), corn, oil (from petroleum, not crude) and 

soybeans. 

 

U.S. imports from Costa Rica totaled $1.6 billion in 1994, or 6.7 

percent more than in 1993.  Principal imports from Costa Rica to 

the U.S. included: bananas, plantains, coffee, meat, melons, 

dates, figs, pineapples and avocados.  The Economic Commission 

for Latin America (CEPAL) reported that Costa Rica experienced 

Latin America's second largest export ratio per capita in 1994. 

 

Summary of Commercial and Major Project Opportunities: 

There are over 10 major infrastructure opportunities promoted by 

an interministerial commission which include enlarging major 

highways, designing and constructing new highways, designing and 

constructing the Tempisque Bridge, constructing additional piers 

and/or terminals at the country's three ports and constructing 

the proposed new international airport.  A new public works 

concession law should provide a mechanism to complete these major 

infrastructure projects without further exacerbating the 

government's precarious fiscal situation. 

 

Costa Rica's commercial environment is user-friendly with 

widespread national receptivity to U.S. products and services. 

Some best-prospect opportunities exist in telecommunication 

equipment, hotel and restaurant equipment, construction 

 

 

 

---------------------------------------------------------------- 

*  NOTE:  These figures differ from those provided by Costa Rican 

government sources which appear in other sections of this CCG. 

The differences are attributable to factoring in the maquiladora 

industry and trade with Puerto Rico. 

 

equipment, medical equipment, water resources equipment and 

services, sporting goods and recreational equipment, port 

equipment, franchising (especially non-food related) and 

commercial endeavors related to the nation's recent boom in large 

shopping malls -- a relatively new phenomenon in Costa Rica -- to 

name a few. 

 

In the agricultural area, bulk products such as yellow corn, soy 

beans, wheat and rice, as well as some consumer-ready products 

such as fresh fruits, canned fruits and vegetables, snack foods 

and fruit juices present good U.S. export opportunities. 

 

Other Commercial Considerations: 

Consistent with Costa Rica's overall affinity for the U.S., the 





Costa Rican consumer (said to be the most sophisticated and 

demanding in the region) has a strong appetite for U.S. products 

and services. 

 

Commercial activity, in all sectors, is supported by numerous, 

organized chambers and associations.  There are approximately 85 

U.S. Fortune 100 and Fortune 500 companies operating in Costa 

Rica.  Most have been in this market for 10-25 years.  The 

dynamic and politically active Costa Rican-American Chamber of 

Commerce (AMCHAM) is composed of some 290 companies. 

 

With some of the world's highest rainfall (59"-177" annually) 

Costa Rica's richly diverse and attractive topography provides 

opportunities not only in "eco-tourism," where it has gained 

fame, but also in joint implementation initiatives whereby 

foreign firms are able to participate in the creation of "carbon 

sinks (sequestering)" in Costa Rica to offset greenhouse gas 

emmissions produced in the U.S.   As well, it remains, by far, 

the Central American country with the best infrastructure, 

electrical, telecommunication, health and educational systems. 

 

Due to its perennial spring climate, stability and hospitable 

atmosphere, the country has attracted some 30,000 U.S. ex- 

patriates as well as immigrants from such countries as Spain, 

Israel, Germany, China and Japan, all of whom play a role in 

creating competition for U.S. products and services. 

 

While there are few significant tariff or non-tariff commercial 

trade barriers, some U.S. citizen property owners have had to 

contend with difficult and lengthy land expropriation cases. 

Another investment dispute involves the court-ordered termination 

of a U.S. cellular telephone company's concession to provide 

cellular services.  The matter is currently under negotiation. 

 

With the exception of the country's monopolies on some critical 

services (e.g. telecommunications, electricity, insurance, 

petroleum refining, banking services, etc.), and deficiencies in 

the intellectual property regime, there are no trade barriers 

that affect the importation of most goods to Costa Rica. 

 

Caution, and the use of reliable lawyers, is strongly encouraged 

prior to investing and/or doing business in Costa Rica. 

 

 

"COUNTRY COMMERCIAL GUIDES ARE AVAILABLE ON THE NATIONAL TRADE 

DATA BANK (NTDB) ON CD-ROM OR THROUGH THE INTERNET.  PLEASE 

CONTACT STAT-USA AT 1-800-STAT-USA FOR MORE INFORMATION.  TO 

LOCATE COUNTRY COMMERCIAL GUIDES VIA INTERNET, PLEASE USE THE 

FOLLOWING WORLD-WIDE WEB ADDRESS: WWW.STAT-USA.GOV.  CCGS CAN 

ALSO BE ORDERED IN HARDCOPY OR ON DISKETTE FROM THE NATIONAL 

TECHNICAL INFORMATION SERVICE (NTIS) AT 1-800-553-NTIS."