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Jobs and Development Blog - The Jobs Knowledge Platform > Posts > Attracting Multinationals: How Costa Rica Fared
Attracting Multinationals: How Costa Rica Fared
March 10, 2014 | Contribution by LAURA ALFARO

Laura Alfaro is the Warren Alpert Professor of Business Administration at Harvard Business School

Intel Pentium III 866 Mhz
Intel Pentium III 866 Mhz, Costa Rica.
Photo credit: Flickr @Luigi Rosa (http://www.flickr.com/photos/lrosa/)



Why are some countries better able to attract multinationals than others? To explore possible answers to that question, the JKP recently looked at the case of Costa Rica, which in 1996 made headlines when it attracted Intel to invest and has since attracted enormous foreign investment. We asked Laura Alfaro – who was Costa Rica’s Minister of National Planning and Economic Policy (2010-2012) and is now back in academia as the Warren Alpert Professor of Business Administration at Harvard Business School – about the relative roles of the private and public sectors and what countries can do to attract multinationals.

She says that she welcomes developing countries’ renewed interest in industrial policy, but she insists that this shouldn’t mean a debate on public versus private sectors, given that each sector has a vital role to play. She also stresses Costa Rica’s efforts to create an enabling environment to both attract foreign investment and allow local entrepreneurs to benefit from the investment, rather than just tax incentives and subsidies.

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 on  6/7/2018 12:14:30 PM  
Johannes Georges Pius Jansen says
As a long-time Costa Rica resident, I agree that bringing Intel was a major "coup" for CR. I also agree that bringing in Intel had a huge demonstration effect whch in turn led to a spike in FD. However, at least in the case of Intel, favorable taxes and subsidies actually did play a crucial role in beating other country candidates (among which Chile). And not always without controversies. For example, the Costa Rican government assured Intel sufficient high-voltage power required in chips production - and the govt not only bore the cost of the infrastructure required to bring this power to the factory, but also ignored concerns of residents of neighborhoods through which the high-voltage power lines were drawn regarding the potential negative impact of such power lines. Costa Rica right now should be careful not to lose sight of the importance of a conducive (and stable) macro-environment which is correctly pointed out by Prof. Alvaro as crucial for attracting FDI.
 on  3/11/2014 12:19:45 PM  

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