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Costa Rica & The United States – Interview with Ann Andrews, US Ambassador

February 14th, 2010 Manfred Kissling Comments off

“Costa Rica is a leader in Central and Latin America for its democratic and economic stability, with opportunities for many of its residents. It is a valuable partner to share our values of democracy and economic prosperity”

Source: La Nacion

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Costa Rica elects new president

February 7th, 2010 Manfred Kissling Comments off

Today Presidential elections were held in Costa Rica.  Laura Chinchilla, former Vice President from the Arias administration won by a landslide 47% versus 25% of the socialist Otton Solis and 21% of libertarian Otto Guevara.  Chinchilla is the first female president of the country.

This vote represents the desire by a majority to continue with 4 more years on the current policies.  Some of the achievements of the Arias administration have been:

  • Approved CAFTA (free trade agreement with the US)
  • Brought back credibility and trust to the government therefore stimulating investment and growth
  • Restarted a stalled concession of the San Jose airport to a world class operator
  • Build the highway to the Pacific Ocean (road on the drawing board for > 30 years)
  • Did a good handling of the world economic crisis therefore minimizing negative effects on the country
  • Set a guide and engaged on actions to allow the country to reach carbon neutrality by 2021
  • Approved the new FTZ laws
  • Started diplomatic relations with China
  • Started and may end negotiation of a Free Trade Agreement with Europe, China and Singapore
  • Started a very successful program to allow High School students to continue their studies (Avancemos)
  • Had a fiscal surplus for the first years reducing the public debt significantly

On the negative side on the export driven economy of Costa Rica, the policies have brought a new strength on the Costa Rican currency.

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Costa Rica aims to be Carbon Neutral

December 9th, 2009 Manfred Kissling No comments

Costa Rica joins the Maldives and Norway in struggling to achieve “carbon neutrality” despite high cost and technological hurdles by 2021.

Source: Reuters

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Costa Rica @ 2 Cents per Minute

November 24th, 2009 Manfred Kissling No comments

I read this as the beginning of the end of a monopoly held by ICE.

Existing or new Verizon Freedom Essentials bundle customers who make frequent phone calls overseas can now do so at very low rates by adding the Verizon International Single Rate calling plan.

The Verizon International Single Rate calling plan allows customers in the U.S. to make low-price calls to 118 countries, including Costa Rica.

Customers with the Verizon International Single Rate plan who exceed their minutes, call “premium numbers,” such as wireless phone numbers served by a cellular carrier in another country, or call countries not included in the plan will pay additional charges at competitive rates on a per-minute-of-use basis.

Source: TMC News

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Costa Rica gets good rating on corruption levels according to Transparency International

November 22nd, 2009 Manfred Kissling 2 comments

According to Transparency International 2009 Survey, among 180 countries, Chile and Uruguay share the 25th position and may be considered somewhat like referring to the Latin American region, with a Index of Perception of Corruption (CPI) of 6.7 points.  Costa Rica trails third (43 with a CPI of 5.3) and Cuba fourth (61 and CPI of 4.4).  Behind them are Brazil, Colombia and Peru all in the position 75.

Mexico, meanwhile, stood at the post 89, passed by El Salvador, Guatemala and Panama, who occupy the position 84.

According to Transparency International 2009 Survey “indicate that corruption is seriously extended” in Latin America.

Venezuela is ranked 162 on 180 countries included in the study with an Index of Perception of Corruption (CPI) of 1.9%, just one place ahead of Haiti, with a CPI of 1.8 is in place 168 and is the worst in America.

Other countries with low scores are Bolivia (120th), Nicaragua (130), Honduras (130), Ecuador (146) and Paraguay (154).

These countries have “high levels of poverty and urgently require strong and transparent institutions that can facilitate economic development more than necessary,” according to Transparency International.

For its part, Argentina is ranked 106, a position which shows that “high levels of perceived corruption are not associated exclusively with poverty, a case similar to Venezuela, the organization warns.

The regional report by Transparency International also mentions the problems of press freedom in the region and its impact in the fight against corruption.

“Journalists in Latin America face an increasingly restrictive environment, and several countries have enacted or proposed laws to silence critical journalism, which threatens press freedom in general and the fundamental possibility of exposing corruption and its impact, “says the text.

The report also stressed that corruption is a major obstacle to economic recovery being recorded in almost all nations and is especially dangerous in the weaker countries, those located in regions of conflict throughout the globe.

To carry out its annual index, TI is based on surveys of experts, officials and heads of companies and administrations of each country

Source: La Nacion, Transparency International 2009 Corruption Index

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Costa Rican Broadband Connections Grow 27.3% During First Half of 2009

October 31st, 2009 Manfred Kissling No comments
  • Country Reaches 5.8% Overall Penetration, With Private and Public Schools Reaching 15% and 27% Growth, Respectively

SAN JOSE, Costa Rica, October 30, 2009 – Cisco today announced the results of the Cisco® Broadband Barometer, which reported a 27.3 percent growth in fixed broadband connections in Costa Rica during the first half of 2009.

The increase in broadband connections was mainly in the enterprise and home segments. According to the study, prepared by CAATEC Foundation and sponsored by Cisco, Costa Rica reached 270,757 fixed connections and a 5.8 percent penetration in its population.

The Cisco Broadband Barometer analyzed broadband penetration in public and private schools in the country. Public and private schools experienced a 15 percent and 27 percent broadband growth, respectively, during the first half of 2009.

Despite the growth, Costa Rica still needs around 52,000 new broadband connections  to reach the goal defined by the Cisco Broadband Barometer in conjunction with the government. That goal is 325,000 connections and 7 percent broadband penetration by 2010.

Highligths:

  • Nearly 52,000 connections were added to the fixed broadband market in Costa Rica during the first half of 2009. There was a 17.7 percent growth in connections with speeds between 512 kilobits per second (Kbps) and 1 megabit per second (Mbps) during the first half of 2009.
  • Connections with speeds between 512 Kbps and 1 Mbps represent 37 percent of the fixed broadband market. Connections with speeds higher than 1 Mbps represent only 27.7 percent. The home segment continued to concentrate the majority of fixed broadband connections during the first half of 2009, reaching 206,877 connections and attaining a 23 percent growth.
  • The enterprise segment experienced 28.6 percent growth during this same period.
  • Broadband connections continue to concentrate in the urban areas. The cantons with the greatest penetration were Montes de Oca (20 percent), Escazu (19.4 percent) and Santo Domingo (17 percent). The cantons with less penetration were San Mateo, Guacimo and Coto Brus, with only 0.7 percent penetration.
  • ADSL connections grew 32.2 percent and cable modem grew 19.8 percent. In the educational system. 39 percent of public schools and 61 percent of private schools have broadband connections.
  • The majority of public and private schools in the country have connections with speeds between 256 Kbps and 512 Kbps.
  • Mobile Internet is still at an early stage in Costa Rica, with only 6 percent of GSM cell phone lines having Internet access activated.
  • There are still 52,243 connections needed to reach the goal defined by the Cisco Broadband Barometer: 325,000 connections and 7 percent broadband penetration by 2010.

Source: CISCO

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San Jose stands out among the best cities for service companies

October 20th, 2009 Manfred Kissling No comments
  • Report highlights quality of staff, English and proximity to the U.S.
  • San Jose gained seven seats in 2008 compared with Rio de Janeiro and Budapest

San Jose is among the top cities to provide Outsourcing Services.   San Jose climbed seven places this year compared to 2008 and was ranked 20th among the top 50 cities, ahead of Rio de Janeiro, Brazil (21), Budapest, Hungary (22) and Toronto, Canada (23), according to a report by Global Services Media.

Global Services Media, which released the study last week, has published the study for the last 3 years for research focusing on outsourcing and technology markets.

The report states that the Costa Rican capital is attractive because of the availability of trained staff with good English skills as well as other languages, its time zone and geographical proximity to the U.S. in addition to attractive package of incentives.

The report also mentioned the success of Hewlett Packard (HP) and IBM, Sykes among others, which led them to continuously expand their businesses in the country.  HP, for example, recently opened a research and development to designed the software to their wireless networks and chips for connecting network devices.

The multinational companies in the service sector provide for almost 24,000 jobs among 81 companies.

Arturo Barboza, from Sykes said the company’s growth has been driven by the quality of its employees. Sykes grew from a staff of 150 people in 1999 to 2,800 this year. “We got to make our way here when services were just beginning. Ten years later we believe that the country still has conditions for further growth”, acknowledged Barboza.  However, he recommended the next government to strengthen the teaching of English in public schools to ensure the necessary workforce for the future.

Vanessa Gibson, Post-Care director at CINDE, said the study by Global Services Media is important for attracting investment into the country. “The document emphasize on the image and credibility of Costa Rica” she said.  San Jose was among the winner emerging cities in 2009, “despite the crisis, outsourcing showed signs of continued evolution and maturity” the report said.

Gibson said the financial crisis created opportunities for the country as “U.S. companies turned to outsourcing to save costs”.

Source: La Nacion

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Costa Rica ranked second-most competitive country in Latin America and the Caribbean

October 15th, 2009 Manfred Kissling No comments

According to the World Economic Forum’s Annual Competitiveness Report 2009-2010, Costa Rica climbs another four ranks World Economic Forum’s Annual Competitiveness Report from last year to reach 55th place, overtaking Panama (59th) as the best performer in Central America. It is worth noting Costa Rica’s remarkable evolution in the rankings since 2006, with an overall 13-position improvement since that year, demonstrating the success of the unique development strategy followed by the country over decades. This has consistently focused on high-quality education, good governance standards, and production and export diversification—notably toward high-tech products and eco-tourism. The GCI underscores Costa Rica’s fairly good institutional environment (47th), quality education at all levels (29th for primary education and 44th for higher education and training), and the sophistication of its businesses (41st) and innovation potential (34th) as areas of strength. On a less positive note, notwithstanding recent progress, macroeconomic stability, at 101st, remains a cause for concern, while the poor state of the country’s infrastructure (82nd) represents a potential bottleneck for further economic modernization and diversification. Finally, red tape and rigidities in different sectors continue to affect the country’s business environment.

For the past three decades, the World Economic Forum’s annual competitiveness reports have examined the many factors enabling national economies to achieve sustained economic growth and long-term prosperity. Our goal over the years has been to provide bench- marking tools for business leaders and policymakers to identify obstacles to improved competitiveness, thus stimulating discussion on strategies to overcome them. In the current challenging economic environment, our work serves as a critical reminder of the importance of taking into account the consequences of our present actions on future prosperity.

Since 2005, the World Economic Forum has based its competitiveness analysis on the Global Competitiveness Index (GCI), a highly comprehensive index, which captures the microeconomic and macroeconomic foundations of national competitiveness.

World Economic Forum Global Competitiveness Report 2009-2010

Source: World Economic Forum – Global Competitiveness Report 2009-2010

About: World Economic Forum

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Costa Rica: A Central American success story in competitiveness

October 13th, 2009 Manfred Kissling No comments

Blessed with rich natural resources and long standing political stability, Costa Rica is assessed by the GCI as one of the most competitive economies in Latin America and the Caribbean; at 59th position, it comes in ahead of Mexico (60th) and Brazil (64th), among others. Furthermore, an analysis of Costa Rica’s evolution in the rankings over the last three years highlights a remarkable upward trajectory, with a nine-place improvement since 2006.

The unique development strategy followed by the country since its return to democracy in 1948 has allowed it to build up important competitive strengths, thus providing the rest of the region with best practices examples in dimensions as diverse as education, public governance, and product and export diversification.

The importance of good governance standards, as well as high-quality education, are seen as prerequisites for a viable democracy, sustained growth and development. These elements have consistently underpinned the country’s policy agenda over the decades. In particular, the early and steady focus on education, with the creation of the first public university in 1940 (the University of Costa Rica) followed by three more in the 1970s, and the establishment of world-class private higher education and training and research institutions—such as INCAE, EARTH University, and INBio—equipped the productive system with a relatively large pool of highly qualified professionals.

The policy agenda has placed particular emphasis on diversifying the economy away from commodities toward more value-added products. In this sense, Costa Rica has been particularly successful in nurturing its high-tech sector over the last 15 years, with high-tech exports accounting for 30 percent and 40 percent of total and industrial exports in 2006, respectively, and with a 13 percent rise in the 2001–05 period. The development of the high-tech sector has been boosted by the establishment in Costa Rica of an important group of multinationals in the 1990s, with Intel at the forefront, investing first in a large assembly and testing plant, and later in a software development center. Instrumental in bringing about this development have been the targeted FDI promotion strategy pursued by the national investment promotion agency CINDE, the export fiscal incentives (namely the Export Processing Zone and the Export Contract regimes) adopted in the 1990s in parallel with trade liberalization, and Costa Rica’s geographical location and strong transportation logistics. Also critical have been the country’s political stability and respect for the rule of the law, coupled with the availability of a relatively low cost and educated labor force with good English language skills.

CINDE targeted high-tech FDI with a view toward diversifying Costa Rica’s production structure away from agriculture and unskilled labor-intensive manufacturing (i.e., apparel produced in the maquiladoras), in which the country was already losing its competitiveness, to skill-intensive industries. This leveraged the country’s educated labor force and ensured a more advantageous position in international markets. FDI was a crucial component of the cluster strategy envisaged by CINDE, since they were to develop backward linkages through the domestic suppliers and foster training and collaboration with national universities.

Another cluster that has been targeted and developed in a similar spirit of promoting higher value added industries is that surrounding the eco-tourism industry. Building on Costa Rica’s extraordinary biodiversity (accounting for 5 percent of the world’s total biodiversity), natural beauty, and pristine environment, the tourism sector has experienced an impressive dynamism in recent years, representing 6.3 percent of total GDP and 6.5 percent of total employment in 2007. Moreover, with 1.725 million tourist arrivals in 2007, bringing in an average US$940 in receipts per visitor, Costa Rica leads Central America and displays a more lucrative tourism sector than Mexico, the most-visited country in Latin America (with 21.35 million visitors), for which the average receipt per visitor is only US$570.6 It is not by chance that Costa Rica, at 44th, is the second highest ranking country in the LAC region, after Barbados (29th), in the World Economic Forum’s Travel & Tourism Competitiveness Index 2008.

The fairly successful economic diversification described above feeds into strong levels of business sophistication (42nd) and innovation (38th), particularly by regional standards. Companies established in Costa Rica are operating quite high on the value chain (34th), with comparative advantages based predominantly on sophisticated products and processes (30th). Further, their innovation capacity is assessed as being fairly high (43rd), thanks to high R&D spending (30th) and wide-ranging research collaboration with academia (33rd). The country gets good marks in the innovation and sophistication factors sub index (39th), the best showing across the three sub indexes composing the GCI, which bodes well for the preparedness of Costa Rica’s economy to evolve toward a higher, innovation-driven, stage of development.

Furthermore, Costa Rica has made important progress in the macroeconomic aspects of competitiveness, consistently improving its public finances over the last three years: public debt has been brought down from 55.2 percent of GDP in 2005 to 46.6 percent in 2007, while the government budget balance has been turned from a 1.6 percent (of GDP) deficit in 2005 to a 0.6 percent surplus in 2007. This has been facilitated by the strong growth experienced by the country in the last couple of years, but is also indicative of the current government’s effective tax administration, with reduced tax evasion and tight control on nonpriority spending.

On a less positive note, inflation continues to be a source of concern at 9.4 percent in 2007, reflecting high oil and food prices worldwide. Moreover, the poor state of the country’s infrastructure (94th) looms as a potential bottleneck for the further modernization and diversification of the economy, as well as for its overall growth prospects. The adoption of fiscal reforms broadening the tax base should therefore be high on the government’s agenda in order to free up important resources for investment in infrastructure and social programs, while not increasing the debt burden.

In addition, the long-awaited ratification of the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) could prompt the politically thorny liberalization of the telecommunications and insurance sectors, traditionally closed to private investors, thus enhancing their efficiency and eliminating important rigidities in the goods market. This should be done in parallel with efforts to reduce red tape and excessive regulation. This area remains a major concern in the country, as reflected by the disappointing marks registered by Costa Rica in aspects such as the number of procedures to start a business (12, corresponding to 103rd position), the time required to start a business (77 days, corresponding to 118th place), and the burden of government regulation (72nd).

By tackling such weaknesses, Costa Rica will further strengthen the foundations of its competitiveness and ensure sustained economic growth and prosperity going forward.

Source: World Economic Forum – Global Competitiveness Report 2008-2009

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Costa Rica: Fourth largest exporter of high technology in the world

October 13th, 2009 Manfred Kissling 1 comment
  • Almost half of local manufacturing is sophisticated and includes integrated circuits, medical devices (intravenous sets, orthopedic implants and breast)
  • Philippines, Malaysia and Singapore just above the country in percentage of sales

Costa Rica stands out in the world as the fourth largest exporter of high technology, surpassed only by three Asian countries: Philippines, Malaysia and Singapore.

The country can be located in this high range because nearly half of its sales from manufacturing (45%) relate to products developed with proprietary technologies. Another element is that there is innovation in production, which should be patented.

Philippines ranks first in the world, with 54% of its manufacturing being high tech, two percentage points lower ranks Malaysia and Singapore ranks third, with 46% of that produced with proprietary technologies.

Today, 90% of the 4,000 non-traditional products the country export to the world are medium and high technology products.

Emmanuel Hess, Procomer manager, said he also influenced the readiness of universities to adapt engineering professions, business and computing needs of enterprises.

Source: La Nacion

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