Costa Rica: FDI at its finest

FDI strategy focuses on the long term returns on every dollar arriving into a host country, the stock in Latin American FDI was estimated to be $2.3 tn as of 2018. The average return edged up-to 5.5%

Several countries attract most FDI in natural resource sectors where as Costa Rica concentrated its flow to the technologies and the differences accounted favoring Costa Rica. In Costa Rica FDI was estimated at $40 billion as of 2018. When compared the rate of return of European companies investing abroad raised from 5.7% in 2008 to a peak of 7% in 2011 before falling back to 3.9% in 2016 and rising back to 4.5% in 2018.

Inflow changes concentrating on agricultural products and textiles, garments to more diversified export structure evolved which brought profits with new technology-intensive products and services.

FDI also a positive impact of work-life quality with improved education and training standards therefore improving business environment. Increased labor productivity to produce great outputs for same level of inputs with innovations.

Highly skilled human capital is increasing the appeal to other efficiency seeking companies from Costa Rica’s FDI for ideal locations. A sense of reliability in seen in the host country which makes the foreign investors keen on it.

Notable effects of knowledge intensive FDI attraction related to value-added services export. One being non tourism services have grown and Costa Rican IT and IT-enabled services exports reached from than $4bn in 2018 holding a lead of 6.7% of Latin American GDP.

Second, Costa Rica being the net exporter of services, the surplus of trade balance reached 10% of GDP in 2018.

The trained and up-skilled human capital of Costa Rica by foreign companies makes all the difference.