#San Jose #Costa Rica #CINDE #FDI

Costa Rica's Resilient Foreign Direct Investment Landscape in 2024

Costa Rica has demonstrated remarkable strength in attracting foreign direct investment (FDI) in 2024, achieving significant growth despite a challenging global backdrop. According to a recent report from CINDE (Costa Rican Investment Promotion Agency), the country successfully supported a total of 73 investment projects, which include a mix of 21 new companies and 52 projects from businesses seeking to reinvest. This has resulted in the creation of approximately 5,500 new jobs, highlighting the nation's capacity to adapt and thrive.

Global Context

The global economic landscape for FDI in 2024 has been intricate, characterized by technological transformations, shifts in international politics, and competitive pressures from emerging markets. The United Nations Conference on Trade and Development (UNCTAD) recently noted a 12% decline in global FDI flows, underscoring the difficulty faced by many nations. However, Costa Rica has effectively navigated these challenges, remaining a prime destination for multinational corporations.

CINDE's managing director, Marianela Urgellés, emphasized the necessity of continuous improvement in local talent and competitive business environments to further bolster investment attraction. She remarked, "While we continue to attract investment, we must stay ahead in training our workforce and enhancing our business climate."

Sector Highlights and Job Creation

The services sector has emerged as the largest contributor to new projects, representing about 67% of total new investments. Life sciences also played a significant role, accounting for 19% of newly attracted companies. Meanwhile, advanced manufacturing introduced two new players into the market, and tourism infrastructure added another project.

In terms of reinvestment, corporate services dominated with 33 total projects, followed by life sciences with 14 and manufacturing at five. Notably, 40% of newly registered projects in the free trade zone were facilitated by CINDE, and a striking 78% of all reported reinvestment endeavors were linked to CINDE-supported companies.

The impact of these investments on job creation is telling. CINDE-supported companies created a net total of 5,482 jobs, with life sciences leading with 2,599 new openings, significantly contributing to the local economy.

Addressing Challenges

Despite these achievements, there are emerging concerns regarding FDI growth stagnation in Costa Rica over recent years. Job creation levels are not currently on par with the robust figures seen from 2020 to 2022, indicating a need for vigilant monitoring. Furthermore, increasing competition from nearshoring and friendshoring strategies, along with shifts in the policies of influential economies like the United States and the European Union, underscore the urgency for a comprehensive approach to strengthen the nation’s competitiveness.

Vanessa Gibson, CINDE's Investment Climate Director, noted, "Costa Rica must consolidate its talent ecosystem and enhance its competitiveness if it intends to remain an attractive location for global companies."

The Path Forward

To maintain its advantageous position in the regional investment landscape, Costa Rica must continue evolving. The combination of political stability, highly skilled workforce, and a robust business ecosystem remains crucial for attracting high-value investments.

Rodrigo Cubero, a partner at CEFSA, highlighted the essential challenges ahead, particularly concerning talent availability and labor costs. He stressed, "If we do not properly address the available talent issue, it could hinder the growth potential for both existing and new companies in Costa Rica."

Ultimately, Costa Rica's proactive approach in upgrading its workforce and optimizing operational cost structures will be pivotal in ensuring sustained growth and continued attractiveness to foreign investors. CINDE, celebrating over 43 years of experience within the investment ecosystem, has been instrumental in promoting talent initiatives and guiding multinational firms seeking to establish a foothold in the country.

The prospects for Costa Rica are promising if it remains committed to cultivating a conducive environment for foreign investment. By leveraging its inherent strengths while tackling emerging challenges, the nation is poised to solidify its reputation as a leading business hub in Central America.