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RESEARCH AND ANALYSIS: WORKING PAPERS

Costa Rica: Trade Opening, FDI Attraction and Global Production Sharing

Costa Rica has managed to combine an active agenda in the Multilateral Trade Negotiations (MTNs) at the WTO with the negotiation of several Preferential Trade Agreements (PTAs).

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Such PTAs, most notably those with the US, China and the EU, will boost the share of total exports benefiting from preferential access in the destination markets from 24% to over 83%. Along this path of trade liberalization, the country has placed a strong emphasis on the attraction of Foreign Direct Investment (FDI) in high-tech manufacturing and services activities, producing a substantial transformation in the structure of its exports and inserting a fair share of the economy into Global Value Chains (GVCs) . As a result, about 43% of the country’s total exports are related to GVCs, with an average of 36% of such exported value being added domestically. Labor and capital employed by GVC-participating firms account for about 40% of the domestic contribution to exports, while locally-provided services and supplies account for almost one sixth and one tenth, respectively. In turn, the relative importance of different services is quite variable across the GVCs identified.

No: ERSD-2011-09

Author:
Francisco Monge-Ariño — Ministry of Foreign Trade of Costa Rica

Manuscript date: January 2011

Key Words:

Global value chains, Costa Rica

JEL classification numbers:

F13, F14
  

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This is a working paper, and hence it represents research in progress. This paper represents the opinions of the author, and is the product of professional research. It is not meant to represent the position or opinions of the WTO or its Members, nor the official position of any staff members. Any errors are the fault of the author. Copies of working papers can be requested from the divisional secretariat by writing to: Economic Research and Statistics Division, World Trade Organization, Rue de Lausanne 154, CH 1211 Geneva 21, Switzerland. Please request papers by number and title.

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