enr

Country Profile: Costa Rica, EU & LAC region

By Luize Ferreira (Fraunhofer IPK)

“Costa Rica’s political stability, high standard of living, and well-developed social benefits system set it apart from its Central American neighbours. In recent decades, the Costa Rican government has focused on attracting investment from high-tech manufacturers, such as electronics and medical devices, as well as continued development of the dynamic tourism sector”.

Costa Rica, the oldest continuous democracy in Latin America, celebrated the bicentennial of its independence in 2021. The capital of San Jose is the largest city and home to approximately one-fifth of the population. In recent years Costa Rica has achieved moderate economic growth (2.1 percent in 2019). The country’s well-educated labour force, focus on English-language instruction, relatively low levels of corruption, geographic proximity to the United States, and attractive free trade zone incentives offer strong appeal to many exporters and investors.  In recent decades, the Costa Rican government has focused on attracting investment from high-tech manufacturers, such as electronics and medical devices, as well as continued development of the dynamic tourism sector. (ITA, 2021).

Costa Rica’s political stability, high standard of living, and well-developed social benefits system set it apart from its Central American neighbours. Through the government’s sustained social spending – almost 20% of GDP annually – Costa Rica has made tremendous progress toward achieving its goal of providing universal access to education, healthcare, clean water, sanitation, and electricity. Since the 1970s, expansion of these services has led to a rapid decline in infant mortality, an increase in life expectancy at birth, and a sharp decrease in the birth rate. Costa Rica’s poverty rate is lower than in most Latin American countries, but it has stalled at around 20% for almost two decades. Although it still maintains a large agricultural sector, Costa Rica has expanded its economy to include strong technology and tourism industries, and the standard of living is relatively high. (World Factbook, 2022).

The EU and Central America has maintained close and comprehensive relations for decades, reaching back to the EU’s support to the region’s successful peace process in the 1980s. The EU’s central trade policy objective for Central America are to increase bilateral trade and use it to strengthen the process of regional integration between the region’s countries. In practical terms this means the creation of a customs union and economic integration in Central America. The EU has supported this process through its trade agreement and its trade-related technical cooperation programs. (European Commission, 2021).

This new agreement aims at fostering sustainable development and deepening their process of regional integration. This closer economic integration between the countries of the Central American region is important for attracting investment to the region and helping local businesses develop the strength in their regional market to compete internationally. (European Commission, 2021).

Economic Forecast

The president, Rodrigo Chaves of the centre-right Partido Progreso Social Democrático (PPSD), is aiming to run a broadly market-friendly and orthodox economic agenda, which will ensure policy continuity. He will also seek to renegotiate the terms of Costa Rica’s International Monetary Fund extended fund facility to include more ambitious fiscal targets and more structural reforms (such as reducing tax exemptions on the wealthiest individuals and lowering payroll spending). The economy is highly exposed to a slowdown in global economic growth in 2023 but thereafter the country’s solid business environment and emerging tourism sector offer the promise of consistent economic expansion. (The Economist, 2022).

GDP will grow by 2.3% in 2023 and 3.7% in 2024. High inflation and a tight monetary policy stance will hold back private consumption in 2023, and fiscal restraint will contain public spending. Exports will be hampered by weaker global growth in 2023 but gain strength in 2024. Annual inflation peaked at 12% recently but is set to decline to 4.2% in year-average terms by 2024, still above the 3% target. (OECD, 2022).

Costa Rica’s Science Technology and Innovation (STI) Landscape

The MICITT is the governing body for Science, Technology, Innovation, Telecommunications and Digital Governance of Costa Rica. Their mission is to generate and promote compliance with public policies in the field of science, innovation, technology and telecommunications in the country through the exercise of sectoral stewardship and the effective execution of its substantive and management processes, to improve competitiveness for the benefit of well-being, social, equality and prosperity of Costa Rican society within the framework of digital transformation and the fourth revolution (MICITT, 2023).

The University of Costa Rica, in its research portal, provides a list of all research institutes and centres in the country, as well as research Centres. The following units work in fields of interest for European organisations:

In addition, the following research organisations are highly relevant for innovation and entrepreneurship development in Costa Rica:

National Science Technology and Innovation priorities

The Ministry of Science, Technology and Innovation of Costa Rica (MICITT) launched a 6-year national Plan for Science, Technology and Innovation. The PNCTI 2022-2027 sets out concrete actions, reflecting the first stage of the implementation of a vision embodied in the update of the National Policy on STI for a Knowledge-Based Society and Economy 2022-2050. It is also complemented by important public policy elements such as the National Policy for Equality between Women and Men in Education, Training and Employment (PICTTI 2018-2027); the National Bioeconomy and Territorial Strategy for an Inclusive and Decarbonized Economy 2020-2050 in Costa Rica, the National Plan for Telecommunications Development Plan 2022-2027, among other instruments. The priority areas of this plan are (PNCTI 2022-2027):

  • Bioeconomy
  • Research in Human Health and Life Sciences
  • Digital Technologies
  • Artificial Intelligence
  • Aerospace Development

Previous contribution in Horizon 2020

The EU has bilateral agreements with 20 individual countries around the world. These agreements are based on common interests and priorities, aiming to increase cooperation in research and innovation. Costa Rica still does not have a bilateral agreement with the EU, but it is included in the list of Non-Associated Third Countries.

In total 133 organisations from Costa Rica were involved in Horizon 2020 projects with a total of 1,35M Euro funding received by the project’s participants. Structured by thematic priority, projects were conducted mainly within the frame of (Horizon 2020 Dashboards, state of January 2023):

The three major organisations in terms of received funding were the Universidad Nacional (235,38k Euro), Universidad de Costa Rica (207,5k Euro) and Fundación Amor Esperanza y Vida (180k Euro). The main collaboration links with European Countries are Spain with 116, Germany with 87 and France with 84 collaborations (Horizon 2020 Dashboards, state of January 2023).

Funding opportunities in Horizon Europe

Horizon Europe is the biggest EU research and innovation programme ever with €95.5 billion of funding available over 7 years (2021 to 2027). It is open to the world. This means that participants from all over the world can participate in most calls. In many cases, the EU will fund at least partly the participation of the international partners. Most LAC countries, including Costa Rica, are also eligible for EU funding as per the Horizon Europe participation rules. The list of eligible countries can be consulted in the Funding and Tenders Portal.

Comments are closed.