STRONGER TIES
Though Costa Rica has benefitted from CAFTA-DR more than any other regional signatory, adding high-tech jobs and increasing exports to the US, it should be careful not to rely too heavily upon an asymmetrical relationship with its northern neighbor.
CAFTA-DR, the Dominican Republic-Central America Free Trade Agreement, is a free trade agreement between the US, the Dominican Republic, and five Central American countries: Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Ratified in 2007, CAFTA aimed to “strengthen the special bonds of friendship and cooperation" among its signatories by promoting regional economic integration through clear and mutually advantageous trade rules. Though the last country to ratify the accord, Costa Rica has been one of the biggest beneficiaries in the nine years since it took effect. A look at the results and current state of the agreement shows that it has led to growth across several sectors. That being said, careful planning will need to be taken to ensure that these gains are equitably spread throughout the Costa Rican economy. When announced, CAFTA was controversial for a number of reasons. Costa Rican unions balked at the requirement to end telecommunications and insurance monopolies, and other politicians worried that the trade deal put the country at the whim of the US government. Moreover, since Costa Rica's economy was doing better than its Central American neighbors at the time, this fed concerns that the country would be dragged down by its neighbors. A referendum to ratify the accord led to heated rhetoric, but the deal ultimately passed with tight 51.56% of the vote. Yet nine years later, Costa Rica is reaping the fruits of the agreement. It is the source of 40% of CAFTA exports to the US, above and beyond any other Central American country. It has also helped diversify exports, adding products like computer processors and medical supplies to the country's more traditional export profile of coffee, bananas, and pineapples. By 2013, the country's trade surplus with the US had risen to USD4.7 billion, making the country by far the country's biggest export partner. FDI has also risen in recent years, reaching a new high of USD2.8 billion in 2015. President Luís Guillermo Solís Rivera sees this as evidence that the country is economically on the right track. “[Foreign] investment numbers have been steadily climbing in Costa Rica at a rate of around 14% per year," President Solís told TBY. “That has been the case for the last two or three years. This is important because it indicates that the strategy we are pursuing is successful." Private industry would seem to agree; three-quarters of firms surveyed by a Costa Rican newspaper in 2013 said that CAFTA had had a positive impact on their operations, against one-quarter that said that it had not had any affect.
STRONGER TIES
TABLE OF CONTENTS
Focus: REGIONAL INTEGRATION
The Ties that Bind
Though a late partner to some of the regional alliances that are defining Central American integration, Costa Rica has been a strong and outspoken member that will continue to play a critical role in ensuring these pacts unite the region on a sound footing.
read articleGuest Speaker
Tabaré Ramón Vázquez Rosas, President , Oriental Republic of Uruguay
TBY talks to Tabaré Ramón Vázquez Rosas, President of the Oriental Republic of Uruguay, on the expansion of trade between the two countries and where more potential for further strengthening these connections lies.
read articleInterview
Dennis Whitelaw, President , Costa Rican-American Chamber of Commerce (AMCHAM)
TBY talks to Dennis Whitelaw, President of the Costa Rican-American Chamber of Commerce (AMCHAM), on some of the successes seen in bilateral business across a number of sectors, and what else AMCHAM can do to help develop sustainable growth.
read articleInterview
Dr. Edgar E. Gutiérrez-Espeleta, Minister, Environment, Energy, Oceans, Coasts and Wetlands
TBY talks to Dr. Edgar E. Gutiérrez-Espeleta, Minister of Environment, Energy, Oceans, Coasts and Wetlands, on the highlights of the National Energy Plan and attracting FDI to the sector.
read articleFocus: Highly Skilled Workforce
Ready, steady… go!
Despite being a small country, Costa Rica tops the world in several important categories; it is considered the “greenest" country on the planet, is number one on the World Happiness Index, and has one the most qualified labor forces in the region.
read articleInterview
Marcelo Jenkins Coronas, Minister, Science, Technology and Telecommunications
TBY talks to Marcelo Jenkins Coronas, Minister of Science, Technology and Telecommunications, on enhancing the country's development, the national 2015-2021 plan, and opportunities for foreign investors.
read articleFocus: Green Housing
Green Buildings
The construction sector is one of the key sectors in a country focused on sustainability and carbon neutrality. Green buildings are in the spotlight for current and future real estate developments. A sustainable building is one that achieves a balance of financial, social, and environmental requirements.
read articleInterview
Dr. María del Rocío Sáenz Madrigal, Executive President, Caja Costarricense de Seguro Social (CCSS)
TBY talks to Dr. María del Rocío Sáenz Madrigal, Executive President of Caja Costarricense de Seguro Social (CCSS), on its initiatives to increase life expectancy in Costa Rica, address long patient waiting lists, and its priorities for the year.
read articleFocus: High Standards in Education
Education First
One of the first countries in the world to provide free public education, Costa Rica has the highest literacy rate in Central America and now competes with the world's most industrialized nations. Since 1970, it has invested 28% of its national budget in education, a percentage unthinkable were the military still in existence.
read article
