Friday 2 December 2022

Costa Rica a Possible Silicon Valley of Latin America

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2 December 2022 - At The Banks - BCCR

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Tuesday, October 23, 2012 – QNews Costa Rica | Source:  Fijatevos

This week, BBC Mundo included Costa Rica as one of the top places in Latin America for technology start ups, in an article titled “What is the Silicon Valley of Latin America?”.  This was a follow through based on an Economist article on Chile, dubbing it “Chilecon Valley”.

The BBC piece highlighted Chile, Colombia, Brazil, Argentina, Costa Rica and Mexico.

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Chile made a strong case for being the Silicon Valley, the Economist article pointed out that Chile aims to take advantage of Silicon Valley’s one major weakness, the US immigration policies, that make it difficult for companies to hire skilled workers they need. Chile also has passed a net neutrality law, unique in Latin America.

Colombia, offered Medellin as a candidate, but their main claim is an office park called “Espacio”, which appears to be in the initiative stage, along with the proposal to install fiber optic throughout the country.

Brazil has several cities with hi-tech centers. Sao Paolo has Villa Madelena with several education and innovation centers.  Recife has the Puerto Digital, a duty-free zone hosting training centers for Motorola, Microsoft and Ericsson.  Florianopolis in the south of Brasil has been an incubator for several start-ups and boasts the Parque Sapiens, a $1.3 billion government project to promote science and technology.

Argentina could be a strong candidate, with Cordoba hosting 250 technology companies. However, most seem to be multinationals rather than start-ups, although the province does offer tax breaks for start-ups.

Mexico boasts the Centro de Software in Guadalajara, with 35 software companies, and also has the largest Intel design center in Latin America. The proximity to the US and the NAFTA agreement are also advantages.

Costa Rica is somewhat of a surprise on this list, given its relatively tiny size and population. BBC Mundo mentions Intel, IBM, Oracle y Amazon as companies having research centers in Costa Rica.

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They also classify Costa Rica as a technology products exporter, and quote the R & D Director at HP as saying that the company chose Costa Rica because of the skilled labor force and its location close to California.

Duty free zones also are an attractive feature to the companies thinking about locating in Costa Rica.

Analysis: Clearly Brazil and Chile seem to be the winners in this “contest”, with start up stories rather than aspirations.  But it seems clear that with a little initiative, Costa Rica is very close to competing fiercely.  The government has done a good job of attracting hi-tech multinationals here through several administrations.

But we don’t see that there are incentives, subsidies or initiatives to locate start-ups here, or to promote locally grown hi-tech companies. What’s going on with the 2020 Carbon Neutral Policy announced by Oscar Arias, for example?

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Alternative energy would be a natural fit with this project, and with Costa Rica’s green image.  China has trillions in subsidies for this sector, a fact brought up by President Obama in the 2nd US Presidential Debate in the  “tough-on-China” skirmish.

Costa Rica already has technical high schools and the ITEC University, from which many students have participated in international science fairs and have gone overseas to bring inventions to market.  The UCR and UNA are leading research centers for Latin America in some areas as well.

It seems that some program to encourage technology start ups in the alternative energy sector would be fairly simple to implement. Obviously the administration would have a hard time finding money at this point to subsidize such a sector, but tax exemptions and breaks should be doable, not to mention the long-term opportunity to create jobs and economic benefits in what is a sure-fire growth industry.

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