I chose Costa Rica for my country report because one of my close friends just got back from a year of studying abroad there. She told me all about the culture and the beautiful places that she went. Starting a little bit with the history, in 1502; Christopher Columbus visits the area, naming it Costa Rica. In 1821; Costa Rica declares independence from Spain and then in 1838; Costa Rica becomes fully independent. Moving onto the geographic and location, Costa Rica is part of the neotropical ecozone, and has both tropical and subtropical climates. The capital is San Jose, and the population is around 5.05 million. With the country being slightly smaller than West Virginia, roughly half of the population resides in urban areas. Looking at Costa Rica’s demographics, Costa Rica is home to about 104,000 indigenous or Native American people, most of whom live on reservations. There are eight indigenous ethnic groups: the Quitirrisi, Matambu, Maleku, Bribri, Cabecar, Guaymi, Boruca, and Terraba. Over half of the population in Roman Catholic, with the second being protestant. As for the languages spoken, around 80% speak English, and the rest are Spanish, Portuguese, and other.
Moving onto the political infrastructure, the President is Carlos Alvarado Quesada and the Vice Presidents are Epsy Campbell Barr and Marvin Rodriguez Cordero. Costa Rica is a democratic republic, with a multi-party system. There are four branches: the executive, the unicameral Legislative Assembly, the judiciary, and the Supreme Electoral Tribunal. Some facts about the government system are that the president of Costa Rica is both the head of government and state. The executive power is exercised by the president and his cabinet. The President and Vice Presidents are elected on the same ballot by popular vote for a single 4-year term and there is no military. Costa Rica is divided into 7 administrative provinces: Alajuela, Cartago, Guanacaste, Heredia, Limon, Puntarenas, San Jose. For the corruption index, the country ranked 48/180 countries and they were 56/100 for cleanliness. The legislative assembly consists of 57 persons, while the supreme court has 22. When it comes to top imports, refined petroleum comes first, followed by computers, then broadcasting equipment, and packaged medicaments. As for exports, Costa Rica is the second largest exporter of bananas in the world. Other export products include coffee, pineapples, melons, corn, sugar, rice, beans, dairy, potatoes, seafood, poultry, beef, timber, textiles, clothing and more (Costa Rica Exports, 2019). As for trading partners, The United States is Costa Rica’s largest trade and investment partner. Approximately 53% of all foreign direct investment, and 40% of all imports are of US origin. When I was researching trade regulations and areas of entry, there are no significant trade barriers affecting the entry of most goods and services into Costa Rica. One of the most common entries into the market is finding a local agent or distributor. Other approaches include licensing, franchising, and identifying local partners for market knowledge and contacts.
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Now that we’ve taken a look at Costa Rica’s geographic, demographics, political system, and economy, we can now take a closer look at the country's national competitive advantages. Costa Rica's main competitive advantages when compared with other countries, based on the Global Competitiveness Report: “Independency of public institutions and trust in politicians, health system, and quality of education”. According to the 2017-2018 Global Competitiveness Report Switzerland, Costa Rica ranks second among the most competitive countries in the region. Another large competitive advantage is the tourism Costa Rica has. Costa Rica has over 6% of biodiversity due to its geographical position. Costa Rica stands as the most visited nation in the Central American region, with 3.0 million foreign visitors in 2018. Not to mention the incredible number of things to see and explore while there. Costa Rica earnings from tourism amount to more than $1.7 billion US dollars per year, which gives a huge competitive advantage to other countries.
Looking further into Costa Rica’s economy and its growth, their GDP is 57.06 billion USD (2017), and the GDP per capita for 2018 was $12,027, which was a 2.33% increase from 2017. For the inflation rate its around 2.22%, and the employment rate for 2018 was 8.13%, a 0.01% decline from 2017. The average local salary of a middle-class salary in Costa Rica averages USD $750. In smaller cities, a monthly income is roughly $450. For economic freedom Costa Rica scores a 65.3, making the economy the 61st freest in the 2019 Index. One of the most common market entry options is finding a distributor or local agent. Other approaches to entering a market include franchising, licensing, and identifying local partners for inside market knowledge and contacts. Another fact that I though was interesting was in order to work in Costa Rica legally, you must either be a citizen or have legal permanent residence. In order to obtain a permanent residence in this country you must have held temporary residence for at least three years before applying.
Moving onto the last part and one of the most important, strategy analysis. When I examined the benefit, cost, and risk for this country I learned a lot about their economy and infrastructure. For the benefit, tourism is a huge component, a lot of it has to do with the fact that the industry is growing at a rate of about 8% per year over the last 10 years. The real estate market has risen due to the result of the Costa Rican government’s commitment to promoting the property sector. For the cost side, I noticed a lack of skilled workforce/ undeclared work, inadequate transport infrastructure and economically (FDI, exports) and financially (banks) depend on the United States. Lastly for one risk could be that public debt will continue to increase. The business environment will continue to be affected by infrastructure shortages (transport and telecommunications in specific) and pretty high energy costs (electricity).
If I were conducting business in this country, these are the things I would be looking at and I see some positives and negatives. I see the potential that this country has with tourism and location, but I also see the ups and downs with their economy.
References
- https://www.costarica.com/travel/geography-of-costa-rica/
- https://www.britannica.com/place/Costa-Rica
- https://www.everyculture.com/Bo-Co/Costa-Rica.html
- https://www.costarica.com/culture/national-flag
- https://www.bbc.com/news/world-latin-america-19414068
- https://www.isc.hbs.edu/resources/courses/moc-course-at-harvard/Documents/pdf/student-projects/Costa%20Rica%20Data%20Centers%202016.pdf
- http://costarica-information.com/about-costa-rica/economy/economic-sectors-industries/real-estate/purchase-investment/why-invest-in-costa-rica
- https://import-export.societegenerale.fr/en/country/costa-rica/economy-country-risk
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