Monday afternoon consisted of our first visit to a Costa Rican company, CINDE. I really had no idea what this business did in Costa Rica, but there presentation left me with a clear understanding of their important role in the developement of CR.
CINDE was founded in 1982. Originally it was an American organization that was set up in San Jose to explore different possibilities of where foriegn investment could benefit. Today, CINDE is a 30 person company with one employee in NYC that is ran totally by Costa Ricans. CINDE is a non profit organization that works off an endowment that the U.S. left when they got out of the business.
The main business operations of CINDE is to attract foriegn investment to CR. They focus in bringing in businesses in electronics, healthcare, and services. CINDE is supposed to help foriegn companies ffind the best situation for bringing there business to CR. They are a middleman with regards to negotiations with the government and people of Costa Rica.
CINDE has been helpful in Costa Rica´s transformation from a mostly agricultural economy to one that is growing more and more industrialized. Today, there are over 200 companies that are classified as Advanced Manufacturing. CINDE reported that Manufacturing attracts the highest amount of foriegn investment, with Real Estate growing quickly, and have high expectations for the Financial and Services sectors. For the large Manufacturing sector, CINDE believes automotive and aerospace companies will be the next to really begin investing in CR.
One of the things I found intriguing about the investment in Costa Rica is the amount of reinvestment vs. new investment. 86% of foriegn investment is reinvestment whereas new investment consists of just 14%. To me, this means that the companies that are investing here are findaing rewards for doing so and therefor are increasing there investment even more. This makes for sustainability of those industries in CR. This investment also benefits Costa Ricans who are able to get jobs with these companies. CINDE said that foriegn companies usually pay at least 20% above Costa Rican minimum wage.
The biggest reason why foriegn investment is so attractive in CR is because of the incentives a business recieves by moving there business processes here. According to CINDE, with as little investment of $150,000 in a certified Free Trade Zone, businesses can realize 100% exemption on duties and no corporate tax for the first 12 years and 50% discount after 12 years. These incentives seem like they would be a great reason for foriegn companies to invest in Costa Rica. The other reason that I see companies being attracted to invest in Costa Rica is the fact that CR generates 98% of it energy through renewable resources which is a fact in which it seems like a company could use, to make it help make it appear as thought it has gone green.
Overall, the visit to CINDE was very informative. Ontop of seeing their role in the Costa Rican economy, they gave an overwiew of the country and it developement from a banana republic to a developing industrialized country. What I found so interesting and unique about this organization, was the fact that they are basically trying to sell Costa Rica. They are promoters, even almost advertisers for theie country. It seems like the work CINDE does is very important to CR moving forward.
1 comment:
Dear Paul,
I'm glad everything is going well for you. Your visit to Cinde seems especially informative. It appears Cinde operates on a national scale similar to a local Chamber of Commerce promoting the benefits of a city or region to retain existing and attract new businesses.
Don't feel compelled to respond to the questions below, but they are for your consideration and discussion with your class:
1. What resources and infrastructure are available in Costa Rica to sustain a large, growing manufacturing base and diverse economy? For example, is land, capital investment and natural resources like oil, natural gas and fresh water plentiful? Does good infrastructure consisting of transportation networks (e.g., railroads, highways, airports and deep water shipping ports) exist or is it being developed?
2. Is educated, skilled labor readily available to support the growth of a diverse economy?
3. Is there a cost advantage to Costa Rican labor from a wage and benefits perspective? If yes, is Costa Rica experiencing wage inflation common to growing economies?
4. What government regulation exists or is proposed to support or hinder the economic growth?
5. What business opportunities do you believe an entrepreneur, say a young guy finishing college, could make successful in Costa Rica or elsewhere as a supplier to business needs in Costa Rica?
Continue to enjoy your experience and keep posting. I am eager to read more.
On a personal note, Amy danced again with New York City Ballet last night. Mom and Aunt Ellen went to see her perform. Also, Mom and I are going to the Indy 500 on Sunday with the Allen's. We have seats near where we sat when you and I went although not under the paddock roof. It should be fun!
Lastly, the Celtics won game 1 of their series with Detroit last night and the Reds are back to their routine losing ways having lost the first two of a three game series with the Dodgers. Tonight, the Pens open the NHL finals against Detroit.
Love,
Dad
Post a Comment