Bộ Giáo dục và Đào tạo
TRƯỜNG ĐẠI HỌC NGOẠI THƯƠNG
A brief study on public FDI facilitation
by means of trade agreements and
Nguyen Phuong Khanh Tung
Student ID: 0951040062
Costa Rica: A brief study on public FDI facilitation by means of trade agreements and future political adjustments.
Being probably the most economically-advanced countries within the region of Central America, Costa Rica is a very interesting example of a how a developing country would manage and regulate its economic growth and stability, much thanks to its unique regime to attract and allocate FDI efficiently. Despite having ...view middle of the document...
The process of trade liberalization in Costa Rica started in the mid 1980’s and ever since has delivered positive results in terms of economic growth and a more robust and diversified production structure, particularly after the negotiation of several Preferential Trade Agreements (PTAs). This process has been complemented with a strategy to boost the attraction of FDI, thus allowing for further diversification of Costa Rica’s export portfolio, particularly of high-tech manufactured goods. In the last three decades, FDI has led to increased exports in knowledge-intensive sectors. The number of jobs created by FDI rose from 7 758 in 2003-05 to 34 385 in 2009-11. Costa Rica has also achieved exports’ sophistication, ranking today close to Croatia and Norway, but still below Malaysia.
FDI has also acted as a demand-push for improving education and training and has fostered knowledge adoption (at the level of workers, management and production), thus improving the business environment in the country. While the United States remains the most relevant investor for Costa Rica, the number of source markets for FDI rose from 8 in 2005 to 18 in 2009, including emerging markets such as China. Foreign companies in Costa Rica have recently been upgrading their business towards more knowledge-intensive activities, including software design and R&D. In order to accommodate this movement, the government is adopting a more selective approach to FDI attraction, with stronger focus on enterprise in the high-tech, high-grossing sectors. These two trends have contributed to creating incipient industrial clusters in business services, medical devices and advanced manufacturing.
II. Trade liberalization regime and trade agreements of Costa Rica and effects on the influx of FDI
Thanks to a strong course of political leadership since the early 1950’s, Costa Rica has been trailing the right path towards creating a diverse and dynamic economy; with one of the first step being gradual phases of trade liberalization. Even before the WTO was established, Costa Rica has actively participated in both multilateral and bilateral negotiations, and actually one of the countries that sparked the idea on the important implications of these political mutual commitments. This proves that the Costa Rican government had an early intention of constructing a sustainable and ever-growing economy, as PTAs allow for a deeper and faster liberalization of trade with certain strategic partners, it is worth having and strengthening multilateral rules that provide for security and predictability to trade, an efficient and reliable dispute settlement mechanism to enforce such rules, as well as a forum for multilateral negotiations towards further trade liberalization.
Starting from the mid 1980’s, the course of action for trade liberalization by Costa Rica was largely welcomed by a number of high-profile partnering countries, most notably the United States, Canada, Spain and...