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Doing Business in Costa Rica: 2011 Country Commercial Guide for U.S. Companies
INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2011. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

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Chapter 1: Doing Business In Costa Rica Chapter 2: Political and Economic Environment Chapter 3: Selling U.S. Products and Services Chapter 4:Leading Sectors for U.S. Export and Investment Chapter 5: Trade Regulations, Customs and Standards Chapter 6: Investment Climate Chapter 7: Trade and Project Financing Chapter 8: Business Travel Chapter 9: Contacts, Market Research and Trade Events Chapter 10: Guide to Our Services

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Chapter 1: Doing Business In Costa Rica
• • • • Market Overview Market ChallengesMarket Opportunities Market Entry Strategy

Market Overview •

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The United States is Costa Rica’s main trading partner, accounting for about 40% of Costa Rica’s total imports. According to U.S. Census Bureau trade data, the U.S. had a US$3.5 billion trade deficit with Costa Rica in 2010, as compared with a deficit of US$897 million in 2009, surpluses of US$1.742 billion in 2008,US$637 million in 2007, US$288 million in 2006, US$183 million in 2005, and a deficit of US$27 million in 2004. New foreign direct investment in Costa Rica from all countries was US$1.45 billion in 2010, US$ 1.35 billion in 2009, US$2.07 billion in 2008, US$1.9 billion in 2007, US$1.5 billion in 2006, and US$861 million in 2005. Just over half of that investment has come from the United States. DelMonte, Dole, and Chiquita have a large presence in the banana and pineapple industries. In recent years, Costa Rica has successfully attracted important investments by such companies as Intel Corporation, which employs 3,200 people at its major fabrication plant; Procter & Gamble, which employs about 1,200 in its administrative center for the Western Hemisphere; Hewlett-Packard (6,500), and BostonScientific, Allergan, Hospira, Baxter Healthcare and others from the healthcare products industry. According to the US Census Bureau, 2010 data show that two-way trade between the U.S. and Costa Rica exceeded $13.8 billion during that timeframe. After experiencing positive growth over the previous several years, the Costa Rican economy shrank slightly in 2009 (-2.5%) due to the global economiccrisis. The services sector--around 68% of GDP--was the most affected, with tourism falling by 8%. The economy experienced a rebound in 2010 with a 3.6% GDP growth rate. Costa Rica enjoys the region’s highest standard of living, with a per capita income of about US$10,569, and an unemployment rate of 6.7%. Consumer price inflation is high but relatively constant at about a 10% annual rate over thelast decade. According to the latest National Population Census of 2010, the percentage of population living in poverty in 2010 was estimated at 18.3 percent in the urban areas and 26.3 percent in the rural areas, with 4.2 percent in extreme poverty in the urban areas and 9.0 percent in extreme poverty in the rural areas. Inflation reached 13.9% at the end of 2008, dropped during 2009 to 4.0% byyear’s end, and reached 5.8 percent by the end of 2010. Inflation rate was 5.8 percent during 2010. During 2010 the unemployment rate reached 7.3 percent, an increase from the 2009 year-end figure of 7.0 percent. The Government of Costa Rica has been running budget

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deficits in 2009 and 2010 but is currently capable of borrowing the necessary funds to do so.

Market Challenges •Return to top

While Costa Rica’s close trading and investment relationship with the United States has long benefited both nations, the recession that affected the U.S. in 2008-2009, began to be felt in Costa Rica after some lag time and has diminished the level of bilateral trade and investment activity to an extent. A bright spot is that there was an upturn in Costa Rica’s economic...