Costa Rica, we are falling behind

Opinion article published in physical and digital newspapers on February 4, 2022
Costa Rica, we are falling behind… (larepublica.net)

Our small country has managed to evolve from a mainly agro-export economy of the 50’s to a diversified economy. In addition to agriculture, we have learned to be a global competitor in tourism, the export of technological devices and a wide variety of Services.

Our successes in attracting investment are not the work of chance. CINDE, COMEX, and PROCOMER have played a crucial role. Together with the private sector we have managed to develop a park of first-world multinational companies. As a country we have been recognized as the best in human capital, work skills and quality of the educational system in Latin America (WEF, 2019).

Seeing these results, anyone would think that we are making progress. However, our poverty indicators have been stagnant for two decades, and inequality indicators are increasing.

We have stopped being the country of opportunities, largely because we do not reward initiative, invention and entrepreneurship.

We create job opportunities, but not for everyone.

Let’s look up, not to the side

Territorially, Costa Rica is very similar to Ireland, we are 2.3 times larger than Israel and 71 times larger than Singapore. Our populations are similar in size. And yet, the differences in economic development are gigantic. With a GDP per capita of $12k, we are far below Israel ($44k), Singapore ($60k) and not to mention Ireland ($85k).

The reasons for our lag are many, but the two are clearest: economic freedom and ease of entrepreneurship. These countries are consistently classified as societies that facilitate and even encourage entrepreneurship and private initiative.

They do not persecute the entrepreneur to obtain more taxes, but they free them from obstacles, give them a platform of legal security, allow healthy competition and even provide them with facilities to access risk capital.

Just 9 years ago, the Irish economy was in recession. Today it has one of the most advanced economic indicators in Europe, through a significant reduction in state spending, the promotion of foreign investment and incentives for local consumers.

In Israel three decades ago they created programs to attract investment and encourage public-private alliances. They promoted economic opening and connected the lessons of this technological transfer with a local research and development (R&D) ecosystem.

The so-called ‘Silicon Valley’ of Asia, Singapore, has been characterized as a hub to attract talent, capital and strategic partners. They have an environment for startup financing and venture capital, a deep base of STEM talent, very active communities with cultures of innovation, a government with a clear vision and a robust intellectual property protection system.

If we are not moving forward, we are going backwards.

In business, as in life itself, everything changes, everything evolves.

Foreign investment must continue to be promoted, not only because it is a source of employment, but also because of the important transfer of knowledge. This sector is what has sustained our economy, especially during the last two years of the pandemic.

We must continue taking advantage of nearshoring to transform ourselves into the silicon valley of LatAm.

The how…

The next government has a fundamental role in this historic transformation and cannot do it alone. A public-private alliance could jointly outline a national entrepreneurship, research and development strategy, where as a starting point the following could be discussed:

• Financing for entrepreneurs. Let’s eliminate obstacles so that new companies have access to capital to undertake.
• Knowledge transfer. Incorporate SMEs within free zones so that they benefit from the innovation ecosystem that exists in these parks.
• Encourage innovation with tax benefits (tax-deductible seed capital meeting certain criteria).
• A sustained effort to simplify procedures.
• Reduce the obstacles to opening a business.
• Intense training in English for educators. Language is key to this transformation.
• Encourage and finance STEM careers without interest.
• Expand the coverage of public universities and technical colleges.
• Create “the version of CINDE” for entrepreneurship and innovation.
• And of course, we must continue to make public spending more and more efficient.

We are busy defining a vision