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Generally speaking, Costa Rica is, and has been, actively engaged in research and development (R&D) activities. Specifically, as of late 1996 GDP per capita spent on R&D activities was much higher in Costa Rica compared to other Latin American countries. Software development continues to gain in importance: presently, over 100 software companies produce various kinds of software products. The realm of hardware development in Costa Rica was significantly influenced by the Intel’s coming into the Costa Rican market in 1997. This resulted in positive trends in the balance of payments and led to a sizeable increase the GDP.
Research and Development18
Finding information on R&D in Costa Rica is very challenging. The only study that seems to be available is one that compares the increase of R&D between 1990 and 1996. Even though the study is relatively old to paint a clear picture of the present R&D expenditures of Costa Rica, it makes clear that the country is committed to R&D. From looking at the graphs below, the following conclusions can be reached:
1. Costa Rica's R&D expenditures in 1996 were $248 million, more than double their level in 1990. Its R&D expenditures accounted for 2 percent of total R&D spending by these six countries due to the small size of its economy.
2. The ratio of R&D to GDP was less than 0.8 percent in 1996 in five of the six Latin American countries. Costa Rica was the only country in the entire Latin American region, where R&D exceeded one percent of GDP. While the share of R&D to GDP, particularly in Brazil and Costa Rica, was generally comparable to some developing countries, it was far below that of Asian tigers, such as Taiwan and South Korea or upper income countries, such as the United States.
3. Governments and universities — the traditional sources of R&D financing in Latin America — provided the bulk (68.2 %) of R&D funding in 1996.
4. R&D performed by US affiliated firms is very low. However, it increased one hundred percent from 1990 to 1996.
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Source: National Science Foundation. Latin America: R&D Spending Jumps in Brazil, Mexico and Costa Rica
Source: National Science Foundation. Latin America: R&D Spending Jumps in Brazil, Mexico and Costa Rica
Source: National Science Foundation. Latin America: R&D Spending Jumps in Brazil, Mexico and Costa Rica
Source: National Science Foundation. Latin America: R&D Spending Jumps in Brazil, Mexico and Costa Rica
Source: National Science Foundation. Latin America: R&D Spending Jumps in Brazil, Mexico and Costa Rica
Software
Currently there are over 130 software companies in Costa Rica, employing more than 1,000 professionals and developing software for a wide variety of areas including bank and finances, human resources, health, education, artificial intelligence, data migration, communication, tourism, Internet applications, and others. The wide variety and quality of the software produced in the country has allowed Costa Rica to become a recognized software producer internationally. Hence, 70% of the firms export their products to countries in Latin America, the Caribbean, North America, South East Asia, Europe and even Africa.4,19
The total exports of the six largest software development companies in 1997 surpassed US$25 million. The target for 2001 was to export over US$200 million. According to the Costa Rican government, "software is destined to become in the coming century what coffee represented for the Central American country for over two centuries".4
Two very significant signals of the country’s potential in software and design are associated with two recent decisions by Intel: first, it decided to invest in Costa Rica in the establishment of a center to develop software for the company and also to contribute in its semiconductor design processes, clearly moving beyond the assembly and testing plant it established just three years ago; second, through its venture capital fund, it invested in one of the most promising software companies in the country.20
The most important players in the software sector of Costa Rica are:21
Artinsoft
http://www.artinsoft.com
CODISA
http://www.codisa.com
Exactus
http://www.exactus.com
Soluciones Integrales S.A. (Soin)
http://www.soin.co.cr
Syde
http://www.sysde.co.cr
TecApro Internacional
http://www.tecapro.com
Hardware
Over the last few years Costa Rica has been able to attract an important amount of high technology manufacturing companies, mainly thanks to its ICT policies as well as its aggresive marketing of the country. Some of those companies include::22
AETEC
AETEC’s Costa Rica location started up in January '99 doing Media Cleaning and Recycling. It now offers high volume surface mount and Throughole PC Board Assembly, as well as Conformal Coating, Electrical and RF Testing Services. The company has one plant that runs 4 automated SMT lines operates on a 24/7 schedule. The all new state-of-the-art lines include MPM Ultraprint 3000 screen printers, Electrovert reflow ovens and Quad QSP 2 + pick-and-place machines.23
Intel Corporation
In November of 1996 Intel announced it had chosen Costa Rica to build a microchip manufacturing plant above Argentina, Brazil, Chile, China, India, Indonesia, Korea, Mexico, Puerto Rico, Singapore, Taiwan, and Thailand. The country was chosen because it offered important location-specific advantages. Among these, the most important ones were the already existing tax exemptions, the high educational level of the labor force, a stable political scenario, and a relatively corruption-free environment. Also, executives of the company seem to have valued the fact that Intel’s bargaining power would be greater in a smaller country like Costa Rica. 20
When Intel announced its decision to invest in Costa Rica, it projected its investment to be somewhere between $300 and $500 million. By December of 1999, it had already invested $390 million and was employing more than 2,200 people with wages much higher than the average wage in the manufacturing sector. For an economy with a GDP of less than $12.5 billion in 1997 and a labor force of just above one million people, this was an extraordinarily large investment. In fact, in the year 1999 Intel accounted for more than 60% of the total growth experienced that year and almost 40% of total exports. 20
Source: Central Bank of Costa Rica
Intel has helped Costa Rica’s efforts in attracting other international high tech companies to the small Central American country: Intel’s decision to invest in Costa Rica became news worldwide, and it tremendously improved the country’s image as a viable economy and as an attractive investment location for high tech companies.20
Motorola
First international technology company to open operations in Costa a in 1979. However, the plant was closed in 2001.24
Photocircuits Corporation
Photocircuits has based a circuit board manufacturing plant in Heredia. It employs 210 people that work on a 50,000 square feet facility.25
Reliability Incorporated
Reliability is based in Houston, Texas, USA and is a leading provider of semiconductor processing equipment and DC-to-DC power converters. The DC-to-DC converters are manufactured by and sold through RICR de Costa Rica, S.A., which is a wholly owned subsidiary of Reliability Incorporated.26
Remec, Inc. SA
REMEC's Costa Rica manufacturing site is a 60,000 sq. ft. facility. The site is a high volume RF hybrid circuit manufacturer that combines conventional assembly processes with a wide range of advanced automated processes. The products assembled, tuned and tested at in Costa Rica include Low Cost Amplifiers, Block Amplifiers, Filter Products, Integrated Multifunction Assemblies, Bias T, Dielectric Resonators, Oscillators, Mast Head Amplifiers, Transmit / Receive Modules and Switch Assemblies.27
TriQuint Semiconductor Inc. (Sawtek S.A. Division)
TriQuint Semiconductor, Inc. is a leading supplier of high-performance components and modules for communications applications.28
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