Costa Rica’s reputation as the “destination" ...

Costa Rica’s reputation as the “destination of the 90s“ has helped the economy. From 1993 to 1998 the tourism industry was the prime source of foreign capital. Because of its endless beauty, natural wonders and peaceful atmosphere, Costa Rica became very popular with nature lovers, adventurers and others. However the electronic sector, led by multinational microchip manufacturer Intel, became the country’s top foreign currency earner by the end of 1998.

The new Intel plant has turned Costa Rica into a leading exporter of computer parts. In 1999 microchips exported by Intel continued to drive the Costa Rican economy and were responsible for about half of the country’s booming 8.3 percent growth (GDP) which gave rise to rise to some of the decade’s best economic indicators. Hopefully this will lead to more foreign investment in this area.

Banana exports are the third major source of income. Because of ideal growing conditions, Costa Rica has produced some of the world’s best coffee for over a hundred years. However, worldwide fluctuations in prices have affected this export in recent years. Other exports include electrical components, sugar, cacao, papaya, macadamia nuts and ornamental household plants. Some of these non-traditional export items are beginning to rival such traditional exports as bananas, coffee and sugar.

Many new companies have invested in Costa Rica recently which should help the domestic and export economy. The California-based wholesale shopping chain Price Smart has opened three warehouse-style stores in San José area during the last three years. The Price Smart concept has revolutionized shopping in other Central American countries as well. In the wake of this U.S.-style shopping craze, a local company constructed two Hipermás Mega Markets which rival Price Smart.

The Swiss pharmaceutical giant Roche announced it would build its operations center in Costa Rica to service its plants in Central America and the Caribbean. U.S. health products manufacturer Proctor and Gamble opened a business center in Costa Rica last year. Several U.S. pharmaceutical companies also have opened plants in Costa Rica.

U. S. all night diner franchise Denny’s opened its first restaurant and will open several more in coming years. The GNC vitamin chain opened its first store in the Multiplaza mall. Multinational tire manufacturer Bridgestone Firestone inaugurated a new plant in April of 1999 which promised to double its exports. This wave of new foreign investment will create thousands of jobs for Costa Ricans.

The Marriott Corporation considers Costa Rica to have one of the strongest business climates in Latin America. So, they have built a couple of large hotels in Costa Rica including a five-star Renaissance hotel and a lower priced, four-star Marriott Courtyard.

Despite having the new areas of investment and exports just mentioned, Costa Rica is still heavily dependent on foreign investment and loans to help fund its social programs and keep its economy afloat. However, the country no longer receives as much foreign aid as it used to and still has one of the highest per capita debts in the world. The government has, at times, been hard-pressed to meet loan payments from abroad, which take up most export earnings. So, foreign debt has hindered economic development to some extent. The currency has been regularly devaluated to help the country meet its obligations. Fortunately, these devaluations have been in small increments.

It is hoped the present growth in tourism and continued foreign investment will help the country’s economic future. One bit of encouraging economic news was president Clinton’s trip to Costa Rica in May of 1996. He set the wheels in motion for a free-trade treaty with the Central American countries by the year 2005. It promises to be much like the NAFTA treaty between the U.S., Canada and Mexico.

According o the Central Bank, inflation was 22.56 percent in 1995, almost double what the government hoped for. In 1996 inflation was about 14%, dropped to 11.2 percent in 1997, was around 12.6 percent in late 1998, 10 percent in 1999, 10.3 percent for 2000 and 11 percent for 2001. The inflation was around 9 percent for the year 2000. Gross domestic product (GDP) grew 3.2 percent in 1997, 4.5 percent in 1998, 8.3 percent in 1999, 2.2 in 2000 and .3 for 2001. Central Bank economic indicators and other financial information are available (in Spanish) on the bank’s web site: www.bccr.fi.cr.