Costa Rica: A hub for client-centric design

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| The European | 12th October 2018
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Rich in the most bewildering array of tropical flora and fauna, Costa Rica is home to around 5% of the world’s biodiversity and has more than 500,000 species in just 0.03% of the planet’s surface. From forested mountains to idyllic beaches and lush jungles, this small country is not only a leading tourist destination but one of the world’s most exciting FDI destinations. In fact, FDI inflows for 2017 were 5% of GDP, twice as much as any other country in Latin America. So, what is driving this innovation?

An army of talent

Costa Rica has a proud tradition of peace. Its 120-year-old democracy and world-renowned political and economic stability certainly helps mitigate the risk of doing business here. The secret is something that virtually no other country in the world can claim – no standing army. In 2018, the Institute of Economics and Peace recognised Costa Rica as the most peaceful country in Central America and the Caribbean. The decision to get rid of armed forces in 1948 has allowed the country to channel resources where it matters the most – the people.

According to the World Economic Forum (WEF), this small landmass concentrates one of the most productive labour pools in Latin America. Costa Rica has a total population of five million, 25% of which are millennials – therefore, it’s safe to say the nation has a young and creative talent pool. Education is free and mandatory since 1870 and stands as one of the country’s main pillars. Costa Rica allocates 7.3% of its GDP to education. A 2017 report by the WEF ranked Costa Rica’s education system number one in Latin America and 27th in the world, above countries such as France, China and Japan.

Costa Rica’s timeline shows a country develop from a four product export base of coffee, banana, beef and sugar in the 1980s, to one that exports over 4,000 goods to 150 countries today. Knowledge-intensive services are now Costa Rica’s main export, but arriving at this point hasn’t been easy. However, strong policies, governance strategies and public-private partnerships were put in place to fulfill the country’s new objective of “achieving sustainable socio-economic development”.

Medical and pharmaceutical industries, biotechnology, food research, IT and digital technology were identified as the country’s main weapons in the battle to attract foreign investment. Costa Rica quickly achieved this by attracting nine of the world’s top 20 OEMs (original equipment manufacturers) along with 70 other medtech companies. Reinforced by a strong pool of talent, it was just a matter of time to consolidate its status as a global hub for excellence.   

From integrated circuits to R&D

Intel was one of the first IT giants to arrive in the late 1990s. The largest manufacturer of microprocessors established three plants outside of the US: one in Costa Rica, one in China and another in Malaysia. In Costa Rica, this plant had an immediate positive impact on the country’s economy. The “Intel effect” initially contributed roughly 30% of the country’s GDP.

When Intel relocated its chipset production unit to Asia in 2014, they not only kept the Costa Rican operation open, but added the very first IT R&D megalab of its kind outside of the US.     

Other companies like Amazon, IBM, Accenture and P&G followed. These corporations, anchored in Costa Rica for several years now, started off with basic support processes. Today, they’ve been fully transformed into business centres of excellence, serving global customers.  Multinational companies are carrying out 75 processes in over 10 different languages worldwide and moving up the value chain when it comes to business sophistication.

The dynamism of the services sector is evident with the exponential growth that companies have shown compared to 20 years ago. Telecommunications, computer, IT and other business service exports represent 7.5% of the GDP and groups almost 160 companies. The number of IT graduates grows at a promising annual rate of 5.6%. You might find it surprising that a country of 4.8 million is already the third largest exporter of IT in Latin America in overall dollars with $1.27bn in 2017, just behind Brazil and Argentina. Total service exports without taking tourism into account amounted to $5.2 bn.

A melting pot of collaboration

Quality, innovation and productivity are ingrained in Costa Rica’s DNA. The WEF Global Competitiveness Report 2018-2019 illustrates this, ranking Costa Rica first for innovation, productivity and quality of scientific research institutions in Latin America. The nation’s millenials rank second for availability of engineers in the region.

A successful collaboration between multinational companies, the government and academia has resulted in a significant upgrade in the business climate and country’s competitiveness. Its compact scale and commitment to innovation allows it to facilitate collaborations between key clusters such as medtech, IT and biotech, creating ecosystems for client-centric design.   

Achieving partnerships with internationally renowned universities has been a key driver in continuously enhancing the talent pool. No wonder the University of Minnesota collaborated with Instituto Tecnológico de Costa Rica (TEC), one of the top public universities of Costa Rica, to launch the first master’s degree in Latin America in medical devices engineering. This course is one of the three programmes they will develop as a part of the rigorous agenda to train professionals throughout the region.

In recent years, Georgia Tech, Wisconsin Stout and Rice University have designed tailor-made curricula to provide top quality training spaces in a variety of formats, specifically in STEM fields (science, technology, engineering and maths) to suit the diverse needs of the evolving labour market and compete in a global economy. Just recently, Texas Tech University chose Costa Rica as the location for its first international satellite campus.

The Copenhagen Institute for Interaction Design, one of the top 10 design schools globally, is another to deploy their inaugural international summer school to Costa Rica. Its prestigious educational programme is centred on innovation and disruptive thinking, tackling topics including analytics, data visualisation, user-experience and interaction, and machine-learning.

From Class I to Class III: the natural choice for business testing and scaling

Knowledge, expertise and productivity are paving the way for innovation. Costa Rica leads the World Intellectual Property Organization’s ranking for innovation efficiency. In other words, this takes into consideration the ability to generate results in areas such as human capital, market and business sophistication, institutions and infrastructure. It also won the silver medal in Latin America for competitiveness in the WEF’s Global Innovation Index, 2018.

This nation’s exploratory background as a natural testing lab and its profound interest in prioritising research and development has yielded significant results in the life sciences sector. Within the sector there are 32 research institutions and almost 7,000 specialised researchers in various fields, all unlocking bright new investment opportunities and positions in the country as an R&D hub. All the pieces in the puzzle come together when you discover that they dedicate almost 10% of their GDP to its healthcare system. 

The medtech industry has evolved from high-volume less complex operations focused on cost reductions – like Baxter’s class I and II medical devices known as disposables – to more sophisticated value-added activities like Boston Scientific’s Class III implantable. Both are embedded in the current national medical cluster along with companies like Abbott, Edwards Science, and Medtronic.    

Medical devices have become Costa Rica’s main export product with close to one third of total exporting goods in 2017, carrying Costa Rica’s label of quality to the United States, Europe and Asia. Since 2007, exports within the life sciences sector have tripled and the amount of active companies has grown by 900%.

A great example of Costa Rica’s potential is Establishment Labs. Last July, it became the first Costa Rican company to go public on the NASDAQ stock exchange. This global medtech company operates in the breast aesthetics and reconstruction market. With a focus on consumer needs, it arrived at a truly innovative solution using nanotechnology and 3D printers: a cell-friendly surface on smart breast implants. This resulted in a more biocompatible product, improving patient safety and bringing satisfaction to customers and surgeons around the world.

biotech 2post - Costa Rica: A hub for client-centric design

A hub of sustainability

Operating on 100% of renewable energy for the last two years, Costa Rica has a firm commitment to sustainability. The expanding focus on research makes fertile ground for new developments and the nation is betting on a future where biodiversity, sustainability and technology pave the way for development. Whether it’s the next superfood innovation that changes the pharmaceutical, beauty or personal care industry, a trendy app startup or the plasma engine that might takes people to Mars in 40 days. 

Costa Rica has undergone a profound transformation, demonstrating its value to investors every step of the way. The nation is not only equal to the challenges of an increasingly globalised society, it always seems to be one step ahead.

Further information

www.cinde.org/en

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