Q&A with Minister Manuel Tovar of Costa Rica

Q. In recent years, Costa Rica has become the second-largest exporter of medical devices in Latin America. How did Costa Rica end up a hub for advanced manufacturing, including for computer chips?

A. Costa Rica’s economic transformation has been remarkable, turning into a sophisticated global hub for advanced manufacturing and services. A pivotal moment was Intel’s decision in 1997 to establish a semiconductor assembly and testing facility in Costa Rica, laying the foundation for an ecosystem of advanced manufacturing and innovation. Several key factors have driven this success: a stable political and business environment, a highly skilled workforce, strong trade agreements, and an attractive free trade zone regime, established in 1990, that helped attract over 500 multinational companies through tax incentives, tariff exceptions, and regulatory efficiencies.

Our country’s extensive trade network has ensured seamless access to international markets, reinforcing our role as a premier export-driven economy and making it an attractive destination for foreign investment, including from companies such as Boston Scientific, Medtronic, Abbott, and Baxter. Even so, human talent is Costa Rica’s greatest competitive advantage. The country has invested heavily in education and workforce development, ensuring that our people are equipped with the skills required by high-tech industries. We have prioritized STEM fields, including technical skills for advanced manufacturing, bilingual proficiency, and soft skills to enhance problem-solving and leadership capabilities. As a result, Costa Rica is the second-largest exporter of medical devices in Latin America. Over 100 medical device companies operate in the country, with the sector reaching record-breaking exports of nearly $9 billion last year.

Q. As Latin America promotes opportunities for nearshoring, what are the lessons from Costa Rica? What factors were most important in persuading companies such as Intel and Boston Scientific to invest?

A. Costa Rica is a model for attracting high-value foreign direct investment. Nearshoring requires more than just geographical proximity, but also a stable investment climate, skilled talent, competitive trade policies, and sustainability leadership. As the second-longest-standing democracy in the Americas, we provide political stability, transparency, and respect for the rule of law, all crucial elements in a favorable investment climate. As a member of the OECD, Costa Rica adheres to high standards of governance, economic policy, and social inclusivity. The government is forward-thinking, democratic, and stable, actively embracing business and public-private partnerships. In addition, Costa Rica’s free trade zone regime offers corporate tax benefits and exemptions, tariff-free access to imported materials and global markets, and simplified regulatory processes.

Another key factor has been our sustainability leadership. With nearly 100% of its electricity generated from renewable sources, Costa Rica offers a green supply chain, making it appealing for companies committed to high environmental, social, and governance (ESG) standards. Moreover, the Ministry of Foreign Trade and PROCOMER, a state agency specialized in attracting investments and promoting exports, help ensure that Costa Rica remains a top investment destination.

Q. Though Costa Rica is a nearshoring trailblazer, it has struggled at times to produce the components for technologies assembled in the country. That is despite increased investment in education following the abolition of the armed forces in 1948, a greater focus on science education in recent years, and attempts to attract venture capital and support start-ups. How could Costa Rica take full advantage of its advanced manufacturing sector?

A. Costa Rica is well-positioned to further expand its role in global value chains and capture new opportunities in high-tech manufacturing. To achieve this, we are strengthening key areas that enhance competitiveness and drive innovation. For one, we are modernizing talent development initiatives. Through the Ministry of Foreign Trade and PROCOMER, we have trained about 2,000 workers in a talent development program for free trade zone companies that provides funding for upskilling and reskilling initiatives in high-demand fields, such as technology and engineering. The National Employability Strategy involves additional education programs, focused on cybersecurity, artificial intelligence, and automation, addressing a global talent shortage and positioning Costa Rica as a leader in the digital transformation. This will help solidify our position as the “silicon rainforest,” where high-tech companies converge and innovation drives development. We have also developed industry roadmaps to support the growth of the semiconductor and life sciences industries to foster innovation and attract investment.

Finally, our Linkages (Encadenados) program, led by PROCOMER, helps connect local suppliers with multinational enterprises, fostering technology and knowledge transfer and industrial innovation. The supplier integration strategy is particularly relevant for high-tech industries, such as electronics and semiconductor manufacturing, where Costa Rica seeks to increase local participation in global supply chains.

Q. Through the CHIPS Act, the United States is supporting the expansion of Costa Rica’s microprocessor industry. How important is international cooperation in accelerating Costa Rica’s industrial development? 

A. Over 25 years ago, Costa Rica pioneered the region’s semiconductor industry, a bold move that changed our nation’s trajectory, shifted out capabilities towards advanced manufacturing, and opened doors to new economic horizons and international markets. Our ambition is to strengthen and grow the semiconductor ecosystem, understanding the global need for supply chain resilience. A year ago, we launched a Semiconductor Roadmap, the first of its kind in Latin America, to consolidate Costa Rica as a premier destination for semiconductor companies. Though Costa Rica has forged its own path in the semiconductor industry, international cooperation with allies like the United States is key, including to develop industry talent and refine the national strategy. In these areas, the CHIPS Act has already had positive results.