Address at the World Trade Center of New Orleans

Good health advice

I would like to begin my intervention by adding to some important and momentous news released a couple of weeks ago. As you may recall, according to the latest medical research, drinking an average of two cups of coffee a day is an effective way of preventing gallbladder stones. What the media did not say, however, is that for this preventive effect to be absolutely unfailing, the coffee must be Costa Rican coffee, the world’s best, the coffee Juan Valdez drinks …, in private, of course. And if, as they say, something does good, more does better, drink fours cups a day of Costa Rican coffee for a healthier and happier life. Guaranteed.

The Golden Bean

I also have to add that this news would have been better welcome some decades ago, when coffee exports were the strong backbone of the Costa Rican national economy. For about a century and a half, the material growth and social development of our country unfolded to the beat of our coffee trade, first with Britain, and soon after with Germany, the United States, and several other nations. It was the income produced by coffee, the grano de oro –the "Golden Bean," as we Costa Ricans have affectionately nicknamed it–, that allowed us to finally break away from long years of isolation and poverty as a remote backcountry of the far-flung Spanish New World empire. Coffee exports began to thrive in earnest some twenty years after we achieved political independence, and Costa Rica proudly became a coffee Republic.

The grano de oro has left an indelible mark in our history and culture, from the glorious marble, bronze, and crystal beauty of our National Theater –built at the turn of the century through the tireless efforts of the coffee growers’ wives– to our charming and painstakingly hand-decorated oxcarts, stylized versions of the simpler and sturdier vehicles used to carry coffee from the central highlands to Puntarenas, our main seaport on the Pacific, there to be loaded on cargo ships for a months-long trip around the Horn Cape to Europe and the Eastern United States. The building of a railroad to the Caribbean coast in the 1880’s and the completion of the Panama Canal in 1914 further expanded our coffee trade and opened the way for the development of a new cash crop, bananas. By the 1960’s and ‘70’s, tiny Costa Rica was engaged in close competition with Ecuador and Honduras to become the world’s largest producer of this delicious –and, by the way, very healthy– tropical fruit.

From coffee to microchips

Things have changed a lot since then. Now, don’t get me wrong, we still produce coffee fit for the gods (remember, four cups a day –at least); and we still grow bananas dubbed with good reason "quite possibly, the world’s best food." But we can no longer say that the Costa Rican economy is based on these two crops, or any other cash crops, for that matter. Computer microchips, electrical devices, textiles and apparel, tourism, and pharmaceuticals have become our country’s leading exports, and together with tourism, our main sources of hard-currency income. We live now in this new age of globalization and high-tech, and Costa Rica has again plunged wholeheartedly –as it did one-hundred and fifty years ago with coffee– into the vast ocean of opportunities offered by the world market.

One of Latin America’s hottest business spots

And so, let me now move on to a couple of very important questions: Why is Costa Rica one of Latin America’s hottest spots for doing business? Why is Costa Rica an ideal destination for international investments? There are several good reasons why doing business in Costa Rica is an attractive and promising option. In a nutshell: a dynamic and fast-expanding economy; a reliable, qualified, and versatile labor force; an effective network of public services and utilities –health care, education, transportation, and telecommunications– and, last but not least, the Latin American region’s oldest and most stable democratic system. Add to all this a climate of freedom and tolerance, plus an open-minded receptiveness to new ideas and know-how.

High levels of human development and an extremely well qualified labor force

Our remarkable achievements in key areas such as education, health services, and employment guarantee our international standing as a stable, reliable trading partner and an ideal destination for international investments. At 95 %, our literacy rate is the highest of Latin America. The high-quality standards and nationwide coverage of our education system have nurtured a labor force extremely well prepared for complex work operations and easily retrained to accommodate the needs of new businesses coming to our country. Fully aware of the importance of keeping up the good work in this field, this year the Costa Rican government is investing in education a total amount of 6.5 % of our GDP, the largest proportion of the national budget ever assigned to education.

Our government is thus committed to raise even higher the standards of public education, especially primary and secondary. It is worth noting that 45% of our children in primary schools study English as a second language and learn computer skills; whereas the corresponding figures for our secondary school youngsters are 96% for English and 30% for computer skills. Some private schools follow the U.S. calendar and offer a full American curriculum in English. Additionally, full curricula are also offered in German and French, making the transition for incoming and outgoing students easy and smooth.

Technical and on-the-job training are very important in our educational programs. Private companies are making major contributions to this endeavor. Public officials and entrepreneurial leaders work together to make sure that the training programs effectively satisfy the needs of employers. Our purpose is to make sure that investors and entrepreneurs coming to Costa Rica are able to rely on a well qualified, well prepared, and highly productive labor force, making it possible to carry out complex operations at competitive costs and enabling companies to reach and maintain high productivity standards.

Costa Rican workers have a reputation for quickly learning new technologies and operations. Most foreign corporations rely on local managers and supervisors. In fact, the United Nations Human Development Index has invariably ranked Costa Rica as having the best professional quality of human resources among developing nations.

Widespread access to technical and higher education has also made available a large pool of qualified, bilingual professionals. Several public and private colleges and universities, such as the Costa Rican Technological Institute and the University of Costa Rica, offer undergraduate and graduate studies in business administration, engineering, and computer sciences. A strong emphasis in these fields has developed in response to the rapid growth certain industries have experienced in Costa Rica in recent years. Vocational training is also provided by a network of technical schools and the National Institute of Learning.

Management degrees are also granted by several universities. In addition, the Central American Institute of Business Administration, a well-known and extremely prestigious institution with close ties to the Harvard University Business School, offers intensive short-term courses in specialized areas for practicing managers.

Health care has been another major area of public investment throughout the years. Costa Rica has one of the most advanced public-health systems in the world. Our life expectancy is 76 years, one of the very highest. The infant mortality rate, at .1 per thousand, is, again, one of the world’s lowest. The percentage of the national population with direct access to public medical care is above the 95% mark. In sum, all these factors have led the Economist Intelligence Unit to declare Costa Rica as the country with the highest health standards of Latin America. We are committed to keep up that position.

In addition to this, it deserves to be mentioned that the same situation occurs for public utilities and services, namely, direct access to clean water (96%), electricity (mostly generated by hydrographic and thermal power sources), telephone services (92%), and transportation.

All in all, Costa Rica has one of the most advanced infrastructures of the Caribbean basin. Two major seaports, two international airports (the larger one presently under expansion), nineteen authorized airlines, and a modern system of national and local highways facilitate business operations. In the field of telecommunications, we must add that an advanced fiber-optic network covers all the main industrial areas of the country. Direct dialing is available to every nation in the world, as well as computerized packet switching, frame relay, internet access, and direct satellite links for voice, data and video transmissions.

Low rates of unemployment and inflation

The significant accomplishments of our economic policies are evident in the percentages of employment and inflation. At about 5%, unemployment is one of the lowest in Latin America; the same applies for inflation, which is expected not to exceed 10% at the end of this year, and that, hopefully, will be reduced to a much lower rate by the year 2000. For this purpose, we have adopted sound fiscal policies. The control of public expenditures is a top priority of our agenda; we want government expenses to be more rational, more focused on education and health. The overall aim is to contain the deficit at around 3% of GDP this year and to bring it down even further next year.

We are determined to stick to an economic policy especially designed to maintain and even improve Costa Rica’s international ranking as a top-quality destination for international investments. We compete internationally on the sound bases of a growing economy; a well prepared labor force; and a deeply-rooted tradition of rule of law and constitutional government.

A dynamic high-tech based export economy

We are well on our way to transforming Costa Rica into an industrial and high-tech based export economy. To be sure, agricultural and agro-industrial products still count for some 30% of our foreign trade –bananas, coffee, flowers and ornamental plants, fruits and vegetables, processed and canned foods. But at least 60% of our exports are made of manufactured goods, such as computer michochips, electrical devices, textiles and clothing, chemicals and pharmaceuticals. And this proportion has been increasing significantly as Intel, Lucent Technologies, Acer, Abbott Laboratories, H. B. Fuller, Microsoft, and other high-tech companies start and expand operations in Costa Rica. Our software exports are also growing fast. By the year 2000, they are expected to produce some $200 million. It is a very telling fact of this trend that Microsoft is establishing a capital-risk fund to finance and back up Costa Rican software companies.

Costa Rica’s well-deserved reputation and the widespread confidence of international investors and major corporations is attested to, once again, by the recently announced decision of Procter & Gamble to conduct a vast investment program that includes the construction of a state-of-the-art Western Hemisphere corporate business center and the creation of approximately 2,000 new jobs.

Extremely positive economic perspectives

Our efforts have been highly successful so far. The economic perspectives are extremely promising. Last year’s GDP was of US$10,438,000. At US$3,124, our per capita GDP is the highest of Central America. The overall economic growth reached 6.2% in 1998 - the second highest in the Western Hemisphere -, and throughout that same year, Costa Rica attracted over $600 million from direct foreign investment –presently, the highest DFI as percentage of the GDP in Latin America. Our country exports more than $6 billion annually –reaching the first-highest ranking export-per capita rate in Latin America. And of these exports, more than half come to the American market, whereas 20% go to Europe and 15% to the other Central American countries. Emerging export markets are the Caribbean, South America, and East Asia. In 1998, total exports grew by 30.6%; imports by 26.5%. And, according to the most recent official data available, during the first five months of this year exports have grown by 36.4% –with an accumulated worth of US$2.8 billion– generating a trade surplus of about US$192 million. Computer microchips are way ahead as the most important export product, with over 37% of total sales (already surpassing the one-billion dollar mark). Textiles and bananas rank second and third, respectively.

Excellent business environment

Costa Rica boasts one of the best business climates, entirely open to international companies and investors. In fact, foreign corporations enjoy the same rights and protection as local businesses under the country’s legal framework. There are no limitations on corporate ownership, no performance requirements for any activity, and no minimum investment levels. We have a free currency exchange system that guarantees the free transfer of capital or funds associated with any investments. There are still some exceptions for total foreign ownership in sectors that have been traditionally reserved for the government, such as insurance, telecommunications and oil refining. However, actions have been taken lately to change this. During the most recent years, formerly state-owned companies have been opened to the private sector, and new laws have been enacted in order to allow the private sector to participate, through a public-bidding process, in areas previously reserved for the government. All of this makes for an outstanding business environment, renowned by its stability and friendliness.

Programs providing significant incentives have been set up for those companies using Costa Rica as an operational base for the production and exportation of goods and services. Our Free Zone System, for example, grants companies financial and operational benefits such as:

• First class industrial infrastructure
• In-house customs clearance
• No import duties on raw materials, parts or components
• No taxes on profits for determined periods of time
• No taxes or limitations on remittances abroad
• No export taxes
• No sales tax on local purchases

Today companies like Baxter Health Care, Intel, Conair, Abbott Laboratories, C&K Components, Acer America, DSC Communications, Sawtek, Bourns Inc., Panduit, US Warnaco and Sara Lee Knit Products, among others, enjoy the benefits of Costa Rica´s free zone system.

A reliable and strategically located trading partner

Costa Rica has been firmly committed, for twenty years now, to trade liberalization. Since the 1980’s, Costa Rica began to participate in multilateral trade negotiations within the framework of the General Agreement on Tariffs and Trade (GATT), becoming a Contracting Party in 1989, and a founding member of the World Trade Organization (WTO), in 1995. To date, Costa Rica has clearly demonstrated its willingness to follow the rules of the multilateral trading system, and to comply with the obligations acquired under such system.

Costa Rica is located right at the center of the American continent. With major seaports on both the Pacific and the Caribbean, our country serves as an operational base for markets all over the world. In addition, Costa Rican products enjoy duty-free access to the United States under the Caribbean Basin Initiative legislation, to the European Union Market under the Generalized System of Preferences, to Mexico and the Dominican Republic under free trade agreements, and to Central America within the framework of the Central American Common Market.

The preservation of our ecological richness

Environmental protection has been one of our top priorities. We were amongst the first nations to understand that the preservation of nature and human development are inextricably intertwined. Thirty-five years ago, we created our first natural preservation area. Today, over 25% of the national territory is either protected or under a resource management program. The Costa Rican system of national parks and biological reserves is widely recognized as one of the most advanced in the world. In its small 20,000 square-mile land area, Costa Rica has at least twelve clearly distinct life-zones and is home to 5% of the Earth’s total biodiversity. As an example of this, our territory –roughly the size of West Virginia– shelters more bird species than the United States and Canada combined, and has more butterfly species than the entire African continent. We remain strongly committed to protect these ecological treasures, for ourselves, for the world, and for the world’s children.

The unique characteristics of our ecology, together with scenic views of astonishing beauty and the warm, friendly nature of our people, account for a booming tourist industry which is fast reaching the mark of one million visitors per year –half of them from the United States– and is generating an income of about $1 billion. Tourism is expected to keep growing at a vigorous pace, thus creating more jobs for Costa Ricans and more business opportunities for international investors.

New challenges ahead

Although we have been successful in achieving many of our goals, there are still a number of challenges to overcome in the following years. We must raise the income levels of about 20% of our labor force, which is currently working for the standard minimum wages and a few other benefits. We are committed to increase and expand the opportunities for them.

We must also find a way to cope with the hundreds of thousands of refugees who, fleeing from political turmoil, economic adversity or natural disasters, have established themselves in Costa Rica to begin building their lives anew. The Costa Rican Government has shouldered the social and financial costs of providing these immigrants -which now account to close to 20% of our entire population - with the basic services of health care, education, and housing, among others, as mandated by our laws and by the international covenants we endorse. They represent, however, a heavy burden for a country like ours with already tight means. We need to create job opportunities for them, not only in Costa Rica but also in their homelands, therefore creating an incentive for them to remain in their originating countries.

We are convinced that the only way to succeed on these tasks is by increasing trade and investment in Central America. We shall prevail in this endeavor only by working together, particularly with the United States, putting up our best efforts towards the approval of legislation granting a meaningful enhancement of the benefits of the Caribbean Basin Initiative (CBI).

Conclusion: why business in Costa Rica?

In closing, I would like to address one of the most commonly asked questions about my country: Why is Costa Rica so unique, so exceptional? I believe that the key to understand Costa Rica is that long ago we learned how to prize diversity, pluralism, and individuality. Our society has provided ample spaces for people of diverse religions and origins, of different opinions and beliefs. And a nation where differences are respected, and individuals are cherished for their own worth, will always move ahead on the road to progress. Above all, a stable, law-abiding, and open-minded nation like ours will always offer to international business and investments with a safe and friendly environment. This spirit of freedom and tolerance is our true wealth, this spirit is what made our country a "rich coast." That’s why we are exceptional; that’s why we believe in our potential for growth in partnership with the entire world.

Costa Rica is ready to take up all the opportunities offered by the global market. We find confidence in our history of peace, freedom, and democracy. We are working at present to further modernize our expanding economy. We look at the future with optimism. It is with this enthusiasm, with this encouraging outlook, that I want to extend a warm invitation to all investors to come to Costa Rica, a beautiful land blessed by nature and history, where you will instantly feel right at home.