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Due to its inability to compete against low wage countries (Costa Rica has higher wages than all of its Central American neighbors and the majority of the South American countries) and the lack of domestic capital , Costa Rica has been aggressively pursuing FDI from high technology companies over the last ten years (see R&,D Software and Hardware). Hence, the United Nations Conference on Trade and Development in its 2002 World Investment Report classified Costa Rica as one of the six most successful countries in the attraction of FDI. Costa Rica also seeks and obtains aid from international institutions such as the World Bank and the Inter-American Development Bank. International Financing and Aid The Costa Rican government monopolizes the fixed telecommunications sector, thus the financing of projects relies heavily on loans provided by multi-lateral development organizations such as the World Bank or the Inter-American Development Bank (IDB), or government-to-government loans. Foreign Direct Investment (FDI) FDI is the most important form of IT financing in Costa Rica. Overall FDI reached an estimated $447 million in 2001. Even though this represents a significant amount, it was a decline compared with the $614 million invested in 1999. The decline is partly due to a reduction in initial investments in connection with the new Intel plant.21 Internal Financing Costa Rica’s internal technology market is small and predominantly foreign. The local venture capital community is still in its early stages. Most companies finance themselves with loans and operating income, making investment in research and development difficult. Equity is not an option because the stock market is also in its early stages and none of the Costa Rican IT companies are listed in it.39 |
