Costa Rica

American Airlines

Flight # 971Depart MiamiMay 7, 9:45

AM

Arrive San Jose 10:35 AM

Costa Rica• Population:

4,253,877• Size: 19,560

square miles (one-third the size of Florida)

• Capital: San Jose• Languages:

Spanish (official), English

• Government Structure: Democratic Republic

• President: Óscar Arias Sánchez

• President from 1986 – 1990, and from 2006 to present

• Winner of 1987 Nobel Peace Price for negotiating the end of the civil wars in Nicaragua and El Salvador

Government

Economic Statistics • Gross Domestic

Product: $45.8 Billion (U.S. Dollars)

• GDP Per Capita PPI-Adjusted: $10,300

• GDP Real Growth: 6.8%

• Unemployment: 6.4% (2010)

• Inflation: 9.4%• Trade Balance: -

$2.68 Billion• Foreign Reserves:

$2.31 Billion

• Currency Unit: Colón

• Value: U.S. $1 = 556Colones

• Currency Value: depreciates 5%/year under a crawling exchange rate peg (1997 = 232; 2000 = 308; 2003 = 382; 2007 = 500; today: 550)

• Currency Notes: 10000, 5000, 2000, 1000

• Currency Coins: 500, 100, 50, 25, 20, 10, 5

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Major Costa Rican Industries

• Coffee• Eco-Tourism• Bananas• Pineapples• Papayas• Wood Carvings

Famous Costa Rican Brands

• Café Britt

• Imperial

• TACA

• Costa Rica does not have an Army per its constitution

• San Jose is only a 2½ hour flight from Florida

• It is 74 miles between the Pacific Ocean and Caribbean Sea (Atlantic Ocean)

Interesting Facts

Volcano Arenal erupted in 1968, and is still active today, erupting approximately every 10 minutes. Its lava heats the rainwater that

forms many hot springs.

Interesting Facts

Interesting Facts

There are hot springs

throughout Costa Rica, such as the

Tabacon Hot Springs shown

here

Canopy Tours were started in Costa Rica

and involve flying 120 feet over the rainforest tied to a

rope.

Interesting Facts

• A food tax of 13% and a service charge of 10% are added to restaurant bills.

• Internet cafes abound, at around 500 colones ($1.00) per hour

• Taxis are inexpensive (3000 colones or $6 to the city center)

• Drinking Age: 18• Gambling Age: 18• Departure Tax: $26

(paid upon departure at airport)

Interesting Facts

What are some of the biggest trade disputes between the U.S. and Latin America?

• Many countries, like Brazil, claim that U.S. farm subsidies are unfair. They claim the U.S. government prevents their agricultural products from being exported to the U.S.

• The WTO recently sided with Brazil on cotton subsidies

• The U.S. counters that Latin American countries do not protect IPR enough, which also amounts to unfair trade

• These disputes largely resulted in the failure of the FTAA

Trade Disputes

Major Trade Agreements in North/South America:

• NAFTA: U.S., Mexico, Canada• Mercosur: Argentina, Brazil,

Uruguary, Paraguay, with associate members Chile, Bolivia, Ecuador, Peru, Columbia

• DR-CAFTA: Dominican Republic, Costa Rica, Nicaragua, El Salvador, Guatemala, Honduras, and U.S.

• CARICOM: Bahamas, Jamaica, Barbados, Belize, Dominica, Guyana, St. Lucia, Trinidad & Tobago, St. Vincent, St. Kitts

• FTAA: Does not exist, but would integrate all 34 countries

Economic Integration

Development Strategies

• Export-oriented markets vs. import substitution: – Export-oriented countries such as

Costa Rica have low trade protection, and a strong emphasis on trade

– Import-substitution countries was common in South American countries in the 80s and 90s; the idea was self-reliance by promoting industrial development and restricting trade

• Costa Rica has a low overall average tariff rate of 3.8%

• By ratifying DR-CAFTA, over 80% of goods are now traded without trade restrictions

• Foreign Direct Investment: $653 million inward investment in 2006

• $5.1 billion in total assets owned by foreigners

• Foreign companies treated as domestic companies

• No restrictions on land ownership, capital flows, and foreign exchange

• 12 free trade export zones• Top income tax bracket =

25% and top corporate tax bracket = 30%

• Immigration: 90% from Nicaragua; illegal immigration is a problem

Factor Mobility in Costa Rica

• Price controls on state-controlled industries (oil, telecom, energy, & water)

• Government-owned banks control 58% of assets in Costa Rica

• Slow judicial system and poor property rights enforcement

• Moderate corruption index (46 of 180 Transparency International ranking; USA is ranked 20th)

• Very small capital (stock) market

Key Economic Obstacles of Costa Rica

THE END