Regional Dialogue on
Promoting Services Development and Trade
in Latin America and the Caribbean
12−13 November 2013
Room Raul Prebish, ECLAC, Santiago
The Case of Services in Costa Rica:
Improving the competiveness and
insertion in Global Value Chains
Mr. Francisco Monge
Deputy Director General of Foreign Trade,
Ministry of Trade of Costa Rica
This presentation is reproduced by the UNCTAD secretariat in the form and language in which it has been received.
The views expressed are those of the author and do not necessarily reflect the view of the United Nations.
The Case of Services in Costa Rica:
Improving the competiveness and
insertion in Global Value Chains
Francisco Monge, Deputy Director
General
Ministry of Foreign Trade
Costa Rica
Services: an opportunity for
development
The unbundling of global production has created an
opportunity for countries to drive development focusing
on the tasks in which they have comparative advantages.
Two types of services that are important:
Services that are
tradable inputs in
GVCs
R&D, design, marketing,
sales, business and IT
processes.
Services that enhance
the competitiveness of
countries in GVCs
Transportation, logistics,
communications,
financial, etc.
Services
integrated
in GVCs
The evolution of service
exports in Costa Rica
Costa Rica: Composition of service
exports (2000-2012)
Costa Rica: Service Exports
(1999-2012)
6,000
6,000
5,482.6
5,000
US$ milliones
5,000
US$ millions
4,000
3,000
4,000
3,000
2,000
2,000
1,000
1,952.3
1,000
0
2000
0
2000
2002
2004
2006
2008
2010
2012
2004
Viajes
Other
Otros
servicios
empresariales
Business
services
Los
demás
Tourism
Source: Constructed by COMEX with data from BCCR
2002
2006
2008
2010
2012
Informática e información
Transportation
Transportes
IT
based
The evolution of service
exports in Costa Rica
Costa Rica: Share of exports integrated in GDP by sector (20002012)
10.0%
9.0%
8.8%
8.0%
7.0%
% PIB
6.0%
5.0%
5.7%
4.0%
3.0%
2.0%
1.6%
1.0%
0.0%
2000
2002
*Data from the Central Bank of Costa Rica (BCCR).
2004
2006
2008
2010
2012
Computer, information services and other business services
Agriculture
Costa Rica´s upgrading path
in offshore services
Industry Specific
Activities
General Business Activities
ITO
KPO
Broad
Spectrum
792
$66.1
1,123
10,472
Back Office
BPO
890
6,034
$223.4
$51.3
$638.2
d
Call Centers IT
$84.5
Call & Contact
Centers
Value Added
(ITO, BPO & KPO)
6,106
7,753
$186
$140.8
6
Breakdown of Costa Rica´s participation in
offshore services, 2011
Second Stage
First Stage
(60 companies Eg. Convergys,
Teleperformance, AvVenta, Amba
Reserach, HP, Intel, IBM))
(13 companies Eg. Western Union,
Equifax, P&G, Sykes)
14
Number of Companies
12
10
8
6
4
2
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Year of Establishment
BPO
ITO
Broad Spectrum Services (ITO-BPO-KPO)
KPO
Ver cals
2011
The
evolution of
facilitating
services
Facilitating services
High quality and low cost
facilitating services are
critical to competitiveness
in GVCs.
In Costa Rica the opening
of the telecommunication
and the insurance markets
in 2009 enhanced
competitiveness and the
facilitated insertion in
GVCs
Liberalization of
telecommunications market
BEFORE
AFTER
Monopoly market.
Competitive market (119 companies).
7,4% of GDP in 2007.
9,1% of GDP in 2011 and 2012.
Limited FDI (only cable internet).
US$913,4 million in FDI recieved in 2011,
2012 and the first half of 2013.
Long wiating list for land lines and cel
phones (1 year, with 150 requests in
celphones).
A phone line can be obtained in minutes.
34,4% of population has cell phone in
2007.
116% of population has cell phone in
2012.
13% of households have internet access in
2007.
47% of households have internet access in
2012.
9% of (non-wireless) internet connections
were over 2Mb/s in 2007.
53%
of
(non-wireless)
internet
connections were over 2Mb/s in 2012.
10
Liberalization of
insurance markets
BEFORE
AFTER
Only 1 insurer in 2008
12 insurers in 2013
147 types of policies offered in 2009
442 types of policies offered in 2013
$612 million in total received insurance
premiums in 2008
$929 million in total received insurance
premiums in 2012
$83 million in personal premius received
in 2008
$187 million in personal preiums received
in 2012
4,3 million policyholders in 2010
5 million policyholders in 2012
11
Success
factors
and
priorities
for the
future
Costa Rica´s policies to foster
services in and for GVCs
Strategic vision proactive and coordinated
approach
Sound business
environment
Educated work force
• Attraction of FDI
• Interagency execution
• Political and economic stability
• Export processing zone regime
• Quality of educational system - 1st in LA (WEF)
• Cost competitive
Privileged geographical
location
• Middle of the Americas
• Proximity to US time zones
Deep trade integration
• WTO + 14 PTAs
• TiSA negotiations
• Liberalization commitments stemming
from CAFTA-DR
Policies moving forward
Continued attraction of FDI in strategic
niches
Strengthening human capital
Further liberalization of facilitating service
markets
TiSA
Need for international investment
agreement
The Case of Services in Costa Rica:
Improving the competiveness and
insertion in Global Value Chains
Francisco Monge, Deputy Director
Ministry of Foreign Trade
Costa Rica