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Foreigners who want to invest in Costa Rica can do so through or, they can invest in Tourism, Agriculture, residential or commercial real estate, and manufacturing, where there are many opportunities. But they might also consider establishing a business or a branch of a business there, with the help of welcoming and tax-friendly government policies.
Top investment opportunities in Costa Rica are:
- Tourism
- Agriculture
- Real Estate
- Manufacturing
Why You Should Invest In Costa Rica
Costa Rica offers an attractive proposition for foreign direct investment, due to its establishment of several free zones. These are essentially duty-free geographic areas where some 400 businesses foreign and domestic now operate, tariff-free, sales-tax-free, and, in some cases, income tax-free, in return for creating jobs for Costa Ricans.
Investment in Tourism:
Tourism is one of Costa Rica's most important businesses, and they are blessed to contain all the key ingredients of the perfect tourist destination. Ecotourism is Costa Rica's No 1 business and with good reason since Costa Rica is home to several pristine beaches, volcanoes, hot springs, caves, rainforests, mountains, waterfalls, and more. Costa Rica's impressive biodiversity is what makes it a key destination. Ecotourism is over a billion dollar a year business and has complimented Costa Rica's economy, growing at a steady and increasingly high rate per year over the last 10 years.
Investment in Agriculture :
Costa Rica's temperate (warm) climate and fertile soils are suitable for agricultural production. There is an abundance of water yearly rainfall averages 4 meters and irrigation has been successfully applied to develop the more arid regions. The government supports growers through research, training, and technical assistance even though the agricultural sector in Costa Rica has been declining in importance since the 1950s. However, in 1998 still accounted for 15 percent of GDP and employed one-fifth of the labor force. Almost 10 percent of the country's land is used for agriculture. Agriculture is still an important contributor to foreign trade. Excluding free zone companies, agricultural exports represent approximately 60 percent of export flows. Traditional crops, like coffee and bananas, have been the staples of agricultural production since the 18th century. However, a wide range of nontraditional products has appeared since the 1980s that have begun a revival in agricultural exports.
Investment in Real Estate
One option, the most popular option in fact, for investment in Costa Rica is real estate. Hotels and vacation rentals are easy to pursue and are thriving because Costa Rica is one of Central America’s leading vacation destinations. With the number of tourists coming through, the ex-pat community is only growing. The coast towns are mainly owned by foreigners as investment abroad. Property taxes sit at a low rate of 0.25 percent of the registered property’s value. The savings from taxes and the low cost of living make for the perfect storm for ex-pat retirees looking to stay in paradise. A real estate investment is pretty safe and guarantees huge returns.
An investment in Costa Rican real estate will generate income all year long. The country is a vacation destination that sees visitors every month, in any season, unlike some other places around the world. In certain areas of the country, the rainy season is not as bad and you can expect income flow for about 10 months out of the year.
Costa Rica has one of the fastest-growing real estate markets worldwide! As stated earlier, the tourism industry really helps out with that. It also helps that foreigners are allowed to hold land in the country. The existing infrastructure is already outstanding, so there aren’t a lot of improvements needed.
Investment in Manufacturing
There are also many opportunities to invest in businesses in Costa Rica. Intel Corporation is an example of a company with a plant in the country. Costa Rica has been pretty appealing for investments because of the open investment and trade policies. It’s also good to note that foreigners are governed under the same laws as local investors.
Costa Rica is home to some advanced electronic and technological industries, as well as the Free Zone Corporation. Investment in Free Zone totaled around 500 million dollars, mostly from U.S. businesses.
Other very viable investment sectors in Costa Rica include: Service Industry and Trade To Retail
Costa Rica is a country located in Central America that is ranked as one of the most visited international destinations. One of Costa Rica’s main sources of income is tourism. Costa Rica is a democratic and peaceful country and it has not had an army since the year 1948.
Although the country is small and it covers only 0.03 percent of the surface of the globe, it proudly shelters 5 percent of the existing biodiversity in the entire world. Twenty-six percent of the country is composed of conservation and natural protected territory.
Costa Rica is also an attractive country for investment and offers great potential for the establishment of important multinational companies, thanks to the outstanding academic level of its population, as well as the high standard of modern services and social and political stability.
Costa Rica extends majestically from the Pacific Ocean to the Caribbean Sea with a width distance of barely 200 miles. Its land portion occupies only 20 thousand square miles. The variations in landscape and climate from province to province are truly amazing.
Costa Rica is one of the most highly valued tourist destinations on this planet. This small piece of land has all the necessary components to intrigue and continually satisfy the millions who visit each year. Costa Rica has extensive tourism offerings, including rainforests, volcanoes, rivers traveling through the mountains, beaches, national parks, and forest reserves.
Officially known as the Republic of Costa Rica, it is a country in Central America, bordered by Nicaragua to the north, the Caribbean Sea to the northeast, Panama to the southeast, the Pacific Ocean to the southwest, and Ecuador to the south of Cocos Island. It has a population of around 5 million in a land area of 51,060 square kilometers. An estimated 333,980 people live in the capital and largest city, San José, with around 2 million people in the surrounding metropolitan area.
The sovereign state is a unitary presidential constitutional republic. It is known for its long-standing and stable democracy, and for its highly educated workforce, most of whom speak English. The country spends roughly 6.9 percent of its budget on education, compared to a global average of 4.4 percent. Its economy, once heavily dependent on agriculture, has diversified to include sectors such as finance, corporate services for foreign companies, pharmaceuticals, and ecotourism. Many foreign manufacturing and services companies operate in Costa Rica's Free Trade Zones where they benefit from investment and tax incentives.
Costa Rica was sparsely inhabited by indigenous peoples before coming under Spanish rule in the 16th century. It remained a peripheral colony of the empire until independence as part of the First Mexican Empire, followed by membership in the Federal Republic of Central America, from which it formally declared independence in 1847. Following the brief Costa Rican Civil War in 1948, it permanently abolished its army in 1949, becoming one of only a few sovereign nations without a standing army.
The country has consistently performed favorably in the Human Development Index, placing 62nd in the world as of 2020, and fifth in Latin America. It has also been cited by the United Nations Development Programme as having attained much higher human development than other countries at the same income levels, with a better record on human development and inequality than the median of the region. It also performs well in comparing the state of democracy, press freedom, and subjective happiness. It has the 7th freest press according to the Press Freedom Index, it is the 37th most democratic country according to the Freedom in the World index and it is the 12th happiest country in the World Happiness Report.
FOREIGN DIRECT INVESTMENT IN COSTA RICA IS ONE OF THE MAINSTAYS OF THE CENTRAL AMERICAN COUNTRY’S VIBRANT AND DIVERSIFIED ECONOMY.
As one of Latin America’s most favored investment destinations, Costa Rica is widely recognized for the quality of its workforce, the sustainability of its economy, its long history of democracy, the peace and stability that the nation has enjoyed for over sixty years, as well as the dynamism of its business sector.
Numbers related to foreign direct investment in Costa Rica back up this assertion. According to the Costa Rican Investment Promotion Agency, Multinational companies supported by the Costa Rican Investment Promotion Agency created a gross figure of 16,718 new jobs and 10,141 net jobs in 2019.
Additionally, as of the end of 2019, The Costa Rican Investment Promotion Agency now supports a client base of over 300 international companies that represent an aggregate of 118,245 direct jobs and 58,980 indirect positions.
According to Dyalá Jiménez Figueres, Costa Rica’s Minister of Foreign Trade, a significant part of the effort to secure foreign investment in Costa Rica consists in making trips to strategic partner countries such as Germany, which is the second-largest source of FDI for the Central American nation.
Most of the job creation that has resulted from foreign direct investment in Costa Rica is in advanced and light manufacturing, food processing, medical device manufacturing, life sciences, and the service sector.
The most dynamic industries of the Costa Rican economy in terms of FDI are the medical device and life sciences industries. For, example between the years 2015 and 2018, these sectors experienced a growth rate of 11 percent. This was followed by services which grew at a 10.1 percent pace. Light manufacturing and food processing activities both grew by 7.8 percent, while advanced manufacturing expanded by 3.1 percent.
MANUFACTURING: THE LARGEST RECIPIENT OF FOREIGN DIRECT INVESTMENT IN COSTA RICA
The sector which has consistently demonstrated the greatest capacity for growth in the country is manufacturing. This area of the Costa Rican economy is comprised of several subsectors. As stated previously, the most prominent among them are the medical device and life sciences industries and advanced manufacturing. The former of which experienced a 13 percent growth rate in employment between the years 2000 and 2015, as well as an increase in productivity per employee of 30 percent over the same time period. Today, Costa Rica is home to six of the 20 largest medical device manufacturing companies in the world and has emerged as a leader in hosting medical technology foreign direct investment in Latin America.
As for advanced manufacturing, two firms that are prominent in this subsector are AdAstra Rocket and CASIMIR. Both are active in the development of technology for aerospace propulsion.
Companies that have made the decision to engage in foreign direct investment in Costa Rica demonstrate both high levels of complexity and diversity. In addition to this economic activity, the arrival of foreign manufacturers in Costa Rica has spurred the development of a robust base of local suppliers that have enabled multinationals to reduce their costs.
In addition to more advanced industrial activities, Costa Rica also has a base of light manufacturers that produce items that are less complex. Among these are baseballs, handmade tailored suits, and other textiles, as well as steel and plastic products.
The positive effects of foreign direct investment in Costa Rica have also been felt in the food processing subsector. The nation currently produces agricultural products and processed foods that are exported to a total of more than 130 destinations around the world. The most notable companies that have installed facilities in Costa Rica in this area are, for example, Kraft, Cargill, Mondelez, Unilever, Bimbo, Chiquita, and Dole. These firms benefit from conditions offered by the country that include access to high-quality raw materials and an agile system of logistics and transportation. They can export their products from either a Pacific Coast or Atlantic Coast port.
THE EVOLUTION OF FOREIGN DIRECT INVESTMENT IN COSTA RICA
Costa Rica gained prominence as a destination for FDI when Intel installed a microchip manufacturing facility in the Central American nation in 1997. Its presence motivated many other well-known multinationals to take the country into consideration. By the year 2012, Intel accounted for a full 6 percent of Costa Rica’s Gross Domestic Product as well as 20 percent of its exports. Although the closure of the plant in 2014 instigated the creation of a corporate mega laboratory and other business units, 1,200 production workers were dismissed from their manufacturing positions. Despite this setback, foreign direct investment in Costa Rica recovered quickly with the attraction of new manufacturing activities to the country.
Most prominent among these were export-led industries such as the production of medical devices and precision equipment, and agricultural and food products. Companies involved in these areas have been able to create sophisticated links for the Costa Rican economy in global value chains and have instigated sales in a wide array of foreign markets that include countries such as the United States, Japan, China, the Netherlands, as well as the European Union as a whole.
Today, Costa Rica has succeeded in becoming a regional leader in quality, efficiency, workforce experience and education, and innovation.
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Conclusion
Costa Rica is one of Latin America's most favored investment destinations. Foreigners can invest in Tourism, Agriculture, residential or commercial real estate, and manufacturing. The most dynamic industries of the Costa Rican economy in terms of FDI are the medical device and life sciences industries.
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