3.2.1.- Costa Rica
The evaluation of the seventeen key aspects to determine the business competitiveness of Costa Rica is given in the table below.
1. Political aspects (3). Politics in Costa Rica are stable and democratic with a smooth take over from one government to another. Recently, politics become tenser because of the strong discussion on the possible ratification of DR-CAFTA. Although stability can be defined as very positive, bureaucracy can be regarded as fierce. Control on legislation is weak, legislation as such is apparent.
2. Social aspects (3). Costa Rica is an example for obligatory education although not all children fulfil there studies. Quality is acceptable although bilingualism can mostly be found amongst youths going to private schools. A tendency that can be noted is the diminishing middle class. Labour unions are not very strong except for in the public sector which can create problems due to the fact that many state monopolies still exist, enabling unions to paralyze the country.
3. Safety (2). Safety can be regarded as regular but is decreasing. Especially small crime due to the large number of tourists starts to become a serious problem.
4. Economic aspects (3). Costa Rica has a stable economy and most indicators are positive. Foreign investments, mainly focused on the service and tourism sector, are still increasing. Government spending on facilitating economic growth is a weak point in Costa Rica. It is hard to predict what effects will have the acceptance or the rejection of CAFTA. Opinions are mixed but it will definitely affect the position of various international companies active in Costa Rican agriculture.
5. Fiscal aspects (3). Costa Rica no longer has special incentives for the agricultural sector (corporate taxes). Tax exemption for purchase and import of agricultural supplies are available. Free trade zones are present and under certain conditions can be used for agricultural activities.
6. Investment capital (2). Investment capital for the agricultural sector is available if guarantees based on fixed assets can be given. There is an interest of banks for the agricultural sector and interest rates have been lowered over the past years.
7. Infrastructure (local, 2). Although literature qualifies Costa Rican local infrastructure as acceptable, most interviews have led to the conclusion that infrastructure (roadworks) is considered to be one of the weaker points of national agriculture. The lack of planning to deal with increasing traffic and the lack of quality materials to construct roads have turned Costa Rican roads into Dutch cheese as commented during one of the interviews.
8. Infrastructure (export, 3). Harbours are of good quality for agricultural exports. Although Limon and Moin are not opened year-round and the threat of strikes is always present. The availability of containers and destinations is good compared to most other competitors in the region, with the exception of peak season. The international airport Juan Santamaria is being renovated and the number of carriers to Europe appears to be increasing although there is still quite some uncertainty.
9. Communication (2). During the interviews, it became clear that most arguments in favour of the Costa Rican communication system are based on the fact that cost is low and very competitive within Central America. However, quality of services and availability of lines is lower than in other Central American countries.
10. Trade agreements (2). Costa Rica has various trade agreements as described in chapter 1. Nevertheless, the final (dis)approval of DR-CAFTA will determine the future exports of Costa Rica and thus foreign direct investments.
11. Climate and natural resources (3). Costa Rica has a very favourable climate for all kinds of fruits, vegetables and ornamentals. Although the climate can be considered as excellent, the availability and increasing costs of land are considered a problem.
12. Agricultural sector organization (3). Although a wide range of public and private organizations are present in Costa Rica, there is a lack of strategic plans and subsequent actions to define the position of Costa Rican produce in the world market and to detect competitiveness of its produce in comparison to other regional countries.
13. Phytosanitary service (2). Bureaucracy is fierce in Costa Rica and imports (registration) of goods can be a long and difficult process. There is little digitalization so far and in many cases, various Ministries are involved in obtaining the right permits. On the other hand, exporting produce from Costa Rica is much easier. For this reason, this parameter has received a final appreciation of being regular.
14. Agricultural supplies (3). Costa Rica has a large agricultural sector and as a result, a well developed supply sector. Prices are competitive and most materials are available. There is a lack of recent and innovative technology as the market is too small for many major suppliers to have their own subsidiaries. Local distributors are responsible for most sales and some of them have sales all over Central America.
15. Labour (unskilled, 1). Probably the main reason for the increasing pressure on Costa Rican horticulture is unskilled labour. Costs are rising, there is an increasing legal problem with immigrants from primarily Nicaragua. On the other hand availability is decreasing due to the legal problems that immigrants and employers are facing and besides that, competition from other sectors like the construction sector.
16. Labour (management, 4). Education on university level is good and besides that, there is a big market for agricultural engineers. It is not very hard to find people with a degree and experience in the agricultural sector. However, people will have to be trained to translate international knowledge and techniques to local conditions. Few people have received training neither in study programs at foreign universities nor in private companies abroad.
17. Subsidies (1). Costa Rica is regarded as a well developed country and therefore, hardly any international subsidies and financial aid are available. Besides that, there are very few national programs to stimulate certain types of innovative production because they are less needed. From the Netherlands PSOM funds are not available.
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