This country has a little less than 5 million inhabitants. But that has not prevented Costa Rica from being at the forefront of innovation in Latin America.
Aside from being known as exporters of coffee and bananas, “Ticos” evolved towards the manufacture of microchips in the 1990s; then towards the export of services and advanced technology, by taking advantage of the talent of an educated and bilingual population.
But that is just one of the many reasons that have allowed the Central American country to follow a path very different from that of neighbors such as Nicaragua, El Salvador or Honduras.
“That companies like Microsoft, Intel, Hewlett Packard, Google, Amazon are in Costa Rica, is thanks to the high educational level of the population, as well as social and political stability,” Pedro Beirute, general manager of the Promoter of Foreign Trade of Costa Rica (Procomer).
The Central American country has also favored its geographic location and good connectivity with the rest of the Latin American economies, and especially with the United States.
And those advantages, together with a commercial opening that began 3 decades ago, have made it a magnet for the great technological multinationals and in the most innovative country in Latin America after Chile, according to the Global Innovation Index (GII) 2019.
But not everything is perfect. This rapid economic transformation has occurred in a country that still has 20% poverty and 12% unemployment. And to its problems of infrastructure and bureaucracy, there is a galloping fiscal deficit of 6% of the Gross Domestic Product, which has put the government of Carlos Alvarado to cut public spending and collect more taxes through tax reform.
In the midst of these challenges, however, the country continues to embark on its plan to attract more direct foreign investment, encourage the creation of new technology companies and export value-added products.
A rocket to Mars in 39 days
One of the symbols of Costa Rican innovation is the laboratory Ad Astra Rocket that Costa Rica has the scientist Franklin Chang, one of the first Latin American astronauts who traveled to space.
In addition to creating hydrogen technologies to reduce transport pollution, one of Chang’s flagship projects is a revolutionary invention to take a rocket to Mars in 39 days, using a plasma engine. Also, Ticos are proud to have put the 1st Central American satellite in space in 2018, developed by scientists from the Costa Rican Technological Institute.
With the goal of “decarbonizing” its economy by 2050 -which means eliminating the use of fossil fuels- the country has also opted for biotechnology to develop renewable energy. And its scientists are working on innovations to realize the dream of becoming a “green country”.
“We have the talent; we just need more companies”, assures Cyndi Torres, a professor at the University of Costa Rica, dedicated to research on sustainable development.
For now, Costa Rica has been the scene of multiple inventions, as the only humanoid robot in Latin America that has smooth control hands for handling tasks.
And although many of the innovations are focused on computer development to improve the efficiency of companies, the list of inventions is long. Some of them are:
- Treatments for cancer of the pancreas, liver, and ovaries.
- Blood products (medicines made from human blood).
- Insect-based foods, such as crackers, shakes, and cricket bars.
- Teeth created from cow bones and other dental biomaterials.
- Development of software to improve the electrical systems of the country or to digitally manage the information systems in hospitals.
- Genetic improvement of species.
- Antivenom serum to survive snakes’ bites.
- Digital applications for companies and development of artificial intelligence.
- Generation of electricity and heat from coffee waste.
And although they are less visible, Costa Rica has made progress in the development of systems that make the production processes of the Business Process Organization (BPO) companies more efficient.
A small experimental laboratory
Since the late 1990s, the country took decisive action to get foreign companies settled in their free zones. This is how the US Intel, the world’s largest producer of microprocessors, opened a factory that became responsible for 20% of national exports in the late 1990s until in 2014 it closed to move to Asia, where the costs of production are cheaper.
Back, however, he left a research laboratory that employs highly skilled labor known as Intel’s Megalab. They took the production line, but left the added value to export knowledge”, Beirute emphasizes.
Like Intel, there are about 100 companies dedicated to generating products derived from the so-called “life sciences”, with applications in medical technology, agriculture, food or the pharmaceutical industry.
In fact, one of the symbols of successful start-ups is Establishment Labs, the first Costa Rican company to trade its shares in the Nasdaq. Its focus is the export of medical devices such as, for example, breast implants that incorporate a chip inside and are sold in about 70 countries.
And that is precisely one of the great bets of Costa Rica: the export of medical devices such as valves for the heart, instruments for examinations and other products used in hospitals.
Despite recent developments, the history of innovation began many years ago. “We have innovated since the army was abolished 70 years ago and those resources were invested in education”, says Luis Jiménez, director of the University Agency for Entrepreneurship Management of the University of Costa Rica.
Jimenez says that the country has one of the 3 largest medical equipment development centers in the world and highlights how the public sector, through universities, has led an investment in technological innovation. “Costa Rica is a small laboratory for the rest of the world”, concludes Jiménez.
Diversified economy
Costa Rica has been expanding its commercial opening for decades (it has signed about 50 free trade agreements), invests 8% of GDP in education and, since it does not spend resources in the Armed Forces, it has more money to invest in research and development. Its exports represent around 35% of GDP, a level that leaves them in a very good position compared to other developed countries.
The travel industry (tourism, education, and health) occupies first place in sales abroad, followed by business services and products in the field of information technology and telecommunications, according to Procomer data.
And if all the products of medical devices are grouped, the sector as a whole exceeds the export of pineapple and electronic components, with 28% of the total exported from the country.
Innovation in the midst of poverty
“Innovation has given us a comparative advantage over other countries and, although we do not have a channel like Panama, we have managed to take off”, comments Costa Rican journalist Esteban Mata, in conversation with BBC Mundo.
However, he warns that poverty continues to be alarming and that there is a setback in the economic situation that can have effects on innovative advances.
To the partial cut in the financing of university credits, other social problems are added like the increase of the violent deaths, a phenomenon that also plays against the development of new businesses. “It is sold to Costa Rica as a paradise, but in reality, it is not”, Mata adds.
The technological giants and local small businesses
Some of the large foreign companies have established their Latin American headquarters in Costa Rica, while others have brought to the country operations in the area of services such as customer service, accounting, finance, technological support, and human resources management.
“Many are technological multinationals that operate in free zones, have high productivity and pay their employees very well”, highlights BBC Mundo Galileo Solís, senior specialist in Competitiveness, Technology, and Innovation of the Inter-American Development Bank, IDB.
But as if it were a parallel reality, 95% of companies in Costa Rica live in another world. “Most of them are small or medium-sized local companies with low productivity”, explains Solís.
