Thursday 29 September 2022

Costa Rica is tops in the world in attracting foreign investment

According to the Greenfield Performance Index, Costa Rica is attracting 11 times the amount of new investment that could be expected given the size of its economy. Medical technology has become a key part of Costa Rica’s economy.

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QCOSTARICA – Costa Rica is the country that attracted the most new foreign direct investment in the world, in 2020, in relation to the size of its economy.

Medical technology has become a key part of Costa Rica’s economy

This is reflected in this year’s Greenfield Performance Index, where our country obtained a score of 11.4, which means that it attracted 11 times the amount of new foreign direct investment that could be expected given the size of its economy.

The information was released by fDi Intelligence on August 16, a specialized publication on the subject.

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“Costa Rica, one of Latin America’s smallest countries, attracted 96 projects in 2020, according to fDi Markets data. While this represents a drop of 7.7% from 2019, it remains the country’s second-best year since records began in 2003 — a performance that stands out even more considering the challenging investment environment of last year, when greenfield FDI projects fell by about a third globally.

“The country has come a long way since being an exporter of agriculture commodities decades ago; in 2020, medical devices, software and IT and business service sectors accounting for 60% of its inward FDI projects,” the publication indicates.

The text adds that the country has come a long way since it was an exporter of agricultural products decades ago, until 2020 when the sectors of medical devices, software and information technology and business services accounted for 60% of its entry projects of IED.

The study analyzed 84 countries in the 2021 Greenfield Performance Index, of which 64 had an index score greater than 1.0, while 20 had a score of 1.0 or lower.

According to the magazine, “The resilience that Costa Rica has shown during the Covid-19 pandemic has secured it the top ranking as the world’s best performing location relative to its size … Costa Rica is attracting 11 times the amount of greenfield FDI that might be expected given the size of its economy”.

Jorge Sequeira, Managing Director at CINDE, celebrated the ranking, “We proudly celebrate being the #1 country in the world for attracting greenfield foreign direct investment (FDI). This is the result of Costa Rica’s proven track record and excellent human talent offering, as well as the daily efforts of our CINDE team, recognized as the global leading FDI promotion agency, according to the International Trade Center.”

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He added, “Costa Rica’s resilience, in the face of a global health crisis, has proven a determining factor in driving our goods and services exports: goods have a projected growth of 27%, as of July 2021, led by medical devices and significant increases in both the electronics and metalworking industries, which show a 41% and 63% increase, respectively, over 2020.”

Among others, the country managed to secure a US$600m investment commitment by Intel to reestablish assembly and testing operations in the country after a hiatus of seven years — the US company had terminated its local manufacturing functions in 2014 — to address the global shortage of microchips.

The Greenfield Performance Index uses a methodology devised by Unctad for overall FDI, and applies it to only greenfield FDI, excluding mergers and acquisitions, intra-company loans and other forms of cross-border investment.

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In a regional analysis of Latin America and the Caribbean, fDi Intelligence reports that Panama (3.30) pushed past Columbia (2.58) and Chile (3.03) to place second.

 

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