After an analysis of its market structure, this chapter focuses on policies and regulation shaping the Costa Rican semiconductor ecosystem. It starts by taking a holistic perspective with a review of the institutional framework in Costa Rica, which guides overall policymaking, before discussing policies related to foreign direct investment, trade, innovation, talent and the recent Semiconductors Roadmap. After this holistic view, it zooms into policies that are targeted at the semiconductor ecosystem, discussing policies directed at human capital and infrastructure policies, as well as an overview of the legal and regulatory framework.
Promoting the Development of the Semiconductor Ecosystem in Costa Rica
Abstract
3.1.1. Institutional framework
Costa Rica launched the Semiconductors Roadmap on 21 March 2024, alongside the decree highlighting the importance of the semiconductor and related industries (SCIJ, 2024[1]).
Over the years, Costa Rica has pursued specific policies, strategies and actions aimed at attracting investment, which have resulted in the development of some semiconductor supply chain segments. Costa Rica has further pursued the creation of an electronics cluster, which has helped develop a strong medical device industry.
The range of Costa Rican institutions important to the semiconductor ecosystem is extensive and covers areas such as skills and talent, education, infrastructure and regulation, among others. Nevertheless, specific entities are particularly well-positioned to manage the key policy levers or co‑ordinate policy actions for a more robust semiconductor ecosystem, notably in terms of trade and investment, innovation and overall planning and co‑ordination.
A key institutional actor is the Ministry of Foreign Trade (Ministerio de Comercio Exterior, COMEX), responsible for the national foreign trade and investment policy. Its actions are co‑ordinated with other ministries to ensure a unified approach with a view to promoting Costa Rica’s integration into the global economy and the diversification of its export supply and destination markets, thereby seeking to generate greater economic growth and development (COMEX, n.d.[2]; SCIJ, 1996[3]).
COMEX has recently been entrusted with co‑ordinating policies and initiatives focused on the semiconductor industry, offering direction for inter-institutional collaboration and partnerships with academic institutions and industry players. The designation of one single entity co‑ordinating all semiconductor-related policies is welcome. In this context, COMEX prepared the Semiconductors Roadmap and will subsequently oversee its implementation (as discussed below).
The Foreign Trade and Investment Promotion Agency (La Promotora de Comercio Exterior de Costa Rica, PROCOMER) is the export and investment promoter of Costa Rica, an autonomous entity that remains part of the public sector (non-state public entity). PROCOMER is not strictly part of the administration so it enjoys greater flexibility to support foreign trade and investment objectives (PROCOMER, 2023[4]). PROCOMER’s mission includes promoting trade and investment, nurturing export firms, diversifying exports and streamlining the import and export processes. PROCOMER manages the free trade zone (FTZ) regimes, export promotion programmes, digital one-stop shops and business matchmaking platforms, amongst other instruments.
The Ministry of Science, Innovation, Technology, and Telecommunications (Ministerio de Ciencia, Innovación, Tecnología y Telecomunicaciones, MICITT) governs science, technology, and innovation in the country (SCIJ, 1990[5]) and is therefore a key player in the semiconductor ecosystem.
MICITT’s mission is to enhance productivity, competitiveness and quality of life in Costa Rica through strategic objectives such as strengthening science, technology, telecommunications and digital governance, promoting social appropriation of scientific and technological knowledge and encouraging the application of this knowledge in productive processes and public management, thereby underlining its instrumental position in fostering a robust and innovative technology sector in the country (MICITT, 2019[6]). MICITT is also an important player in developing a semiconductor workforce through support for educational programmes and scholarships for students pursuing technological degrees.
The Costa Rican Innovation and Research Promoter (hereafter Promoter)1 is an autonomous public agency that promotes innovation and scientific development as essential pillars for the country’s productive and social development, operating under guidelines set forth by MICITT (SCIJ, 2021[7]).
Promoter is responsible for designing, managing, preparing and executing funding instruments and other programmes in support of: i) basic research, applied research and technological development; ii) innovation; iii) innovative and technology-based entrepreneurship; iv) technology transfer; and v) human capital specialised in the areas of science, technology and innovation (SCIJ, 2021[7]). Similarly, it promotes the strengthening of capabilities for innovation management through the design and execution of support and training plans. Promoter also collaborates with institutions that develop technology transfer processes and finances scholarship programmes for technical, specialised, undergraduate or postgraduate training (SCIJ, 2021[7]).
Other key institutional actors in the semiconductor ecosystem
The semiconductor ecosystem builds on the actions of a large set of institutional actors. In addition to those described above, the following entities also play an important role:
The Ministry of Economy, Industry, and Commerce of Costa Rica (Ministerio de Economia, Industria y Comercio de Costa Rica): MEIC aims to contribute to the economic, social, and cultural development of Costa Rica by promoting competitiveness, innovation and consumer protection sustainably and inclusively. It is the governing body for promoting private initiatives, business development and entrepreneurial culture in the industry, commerce and services sectors and small and medium-sized enterprises (SMEs).
The Ministry of Public Education (Ministerio de Educación Pública): MEP aims to facilitate comprehensive education that promotes human development, knowledge, and citizenship, ensuring access, permanence, promotion and graduation throughout life with equity, quality, relevance and efficiency. MEP’s mandate covers primary, secondary and vocational education and training (VET).
The National Council of Rectors (Consejo Nacional de Rectores): CONARE is the constitutional co‑ordinating body of the State University Higher Education Information System in charge of adequate planning and development. It manages the systemic action of the state university higher education institutions to promote national development according to the mandates established in the political constitution. CONARE’s board is comprised of the rector of the following universities: the University of Costa Rica (Universidad de Costa Rica, UCR), the Costa Rica Institute of Technology (Instituto Tecnológico de Costa Rica, TEC), the National University of Costa Rica (Universidad Nacional de Costa Rica, UNA), the Distance State University (Universidad Nacional de Educación a Distancia, UNED) and the National Technical University (Universidad Técnica Nacional, UTN), as well as the Director of the Office of Higher Education Planning (Oficina de Planificación de la Educación Superior, OPES) who does not have voting rights.
The National Learning Institute (Instituto Nacional de Aprendizaje): INA is an autonomous public entity whose mission is to contribute to the social and economic development of Costa Rica by providing professional technical training and education as well as lifelong training that responds to the needs of all sectors of the economy, promoting employment, social inclusion and competitiveness. Its board is comprised, among others, of the Ministers of Education and of Labor and Social Security, as well as the Costa Rican Union of Chambers and Associations of the Private Business Sector (UCCAEP).
The Ministry of Labour and Social Security (Ministerio de Trabajo y Seguridad Social): The MTSS seeks to ensure decent work for all, promoting comprehensive employment policies, social dialogue and compliance with labour rights, contributing to social peace and economic development.
The Ministry of Public Works and Transport (Ministerio de Obras Públicas y Transportes) and the National Concessions Council (Consejo Nacional de Concesiones): The MOPT’s mission is to develop and maintain the national transport infrastructure to facilitate mobility and connectivity, while the CNC focuses on promoting the participation of the private sector in the development of public infrastructure projects through concessions, ensuring efficiency, quality and public interest.
The Ministry of National Planning and Economic Policy (Ministerio de Planificación Nacional y Política Económica): MIDEPLAN provides advisory and technical support to the Presidency of the Republic and is responsible for formulating, co‑ordinating, monitoring and evaluating the strategies and priorities of the government. MIDEPLAN defines medium- and long-term visions and goals that inspire the actions of the executive branch.
The Ministry of Environment and Energy (Ministerio de Ambiente y Energía): MINAE’s mission is to ensure the protection and sustainability of Costa Rica’s natural resources, promoting a balanced environment that supports sustainable development and the well-being of its population. MINAE analyses the relationship between productive processes and environmental impact, including environmental impact evaluations, through its National Environmental Technical Secretariat (Secretaría Técnica Nacional Ambiental, SETENA).
The Ministry of Health (Ministerio de Salud): The Ministry of Health is committed to protecting and improving the health of the Costa Rican population through the promotion of healthy lifestyles, disease prevention and the provision of comprehensive, equitable and timely health services. The Ministry of Health is responsible for approving the use of hazardous materials, including chemicals used in semiconductor production.
The Ministry of Public Security: The ministry’s mission is to serve and protect people’s individual rights and guarantees, preserve democracy and Costa Rican sovereignty. It is responsible for overseeing immigration and border management.
The National Trade Facilitation Council (CONAFAC): The council is the permanent decision-making and inter-institutional co‑ordination body between government agencies that have jurisdiction over foreign trade procedures, including those related to export, import and transit of goods. It also helps co‑ordinate projects to improve processes and infrastructure (both physical and technological) to facilitate trade.
3.1.2. Relevant national strategies, policies and actions
The National Strategic Plan (PEN)
The National Strategic Plan 2050 (Plan Estratégico Nacional, PEN), approved in April 2022 (MIDEPLAN, 2022[8]), is a key instrument for the development of Costa Rica and thus very relevant to the semiconductor ecosystem. Prepared by MIDEPLAN, the PEN constitutes the main long-term planning instrument and, for the first time in the country’s history, was built from a comprehensive, structured and prospective set of information collected for the purpose.
The primary goal of the PEN is to establish a long-term vision for developing a new territorial economic model to transition towards a digitalised, decentralised, and decarbonised (3D) economy. This vision of enhancing regional development aligns well with PROCOMER’s foreign direct investment (FDI) strategy.
The plan includes five macro-clusters, one of which is advanced manufacturing. Within advanced manufacturing, relevant micro-clusters include high technology and information and communication technology (ICT), where integrated circuits are considered an inherent ICT activity.
In terms of governance, the PEN outlines a framework of core principles encompassing essential aspects such as coherence, co‑operation and co‑ordination, alongside transparency and accountability. It also highlights that public interventions should be aligned with the PEN’s objectives and goals across all planning levels.
Effective co‑ordination among various stakeholders is regarded as a crucial element for successfully implementing the PEN. Within this framework, the private sector is recognised as a strategic ally. The PEN acknowledges the importance of creating conducive conditions for the private sector’s active involvement, contributing to the country’s envisioned future.
Moreover, the plan advocates for enhanced integration between planning and budgeting processes. MIDEPLAN, with its dual role as the governing body of the National Planning System and the National Public Investment System (SNIP), is ideally positioned to foster this integration and co‑ordination. This presents a valuable opportunity to ensure that investments entering the SNIP, such as those concerning semiconductors or necessary infrastructure for this industry, are aligned with the established planning goals.
The PEN is structured around four axes: i) social inclusion; ii) human capital and innovation; iii) infrastructure and connectivity; and iv) economic development and decarbonisation. Each axis includes measurable goals and indicators to monitor their implementation for the short (2023), medium (2040) and long (2050) terms. While all axes are important for the semiconductor ecosystem, infrastructure and connectivity as well as human capital and innovation are key enablers. Infrastructure and connectivity focuses on closing multisectoral infrastructure gaps across Costa Rican territory and proposes macro actions to provide road, energy and digital connectivity to regions, including road, energy, communications, logistics and education projects.
Human capital and innovation focus on closing gaps for developing the potential workforce in response to the future demand of the “3D economy”. It includes planned improvements in early education and training programmes in the short and medium terms and support for advanced training in the long term. These goals are well-aligned with the importance of human capital for the semiconductor industry.
While the plan’s macro actions for each axis align with the needs of the semiconductor industry, there are no specific measures related to productive linkage and the development of local industry around foreign investment. However, according to the PEN’s general guidelines, modifications to the PEN 2050 are allowed as long as they are consistent with the strategic elements of the plan. Costa Rica’s commitment to developing its semiconductor ecosystem could be reflected in minor adjustments to the PEN, to align it with specific goals included in the Semiconductors Roadmap (see the next section).
A noteworthy feature of the PEN is that it instructs public institutions to develop an institutional matrix to adjust their public interventions, according to their area of competency, to the strategies and goals of the PEN, with clear and measurable baselines and targets set for 2030, 2040 and 2050, along with decade-specific budgets. For example, for foreign trade, the PEN includes indicators for 12 public interventions including investment promotion, trade platform modernisation, export promotion, productive linkages and administrative simplification. Additionally, each intervention is risk-categorised, including country, governance, geopolitical, economic, legal operational and reputational risk (MIDEPLAN, 2022[8]). The PEN’s governance requires both national and local institutions in charge of its execution to be in line with the goal of decentralisation.
The PEN 2050 helps provide a solid and visionary framework for supporting the semiconductor industry in Costa Rica, particularly through its focus on advanced manufacturing, infrastructure, connectivity, human capital and innovation. The alignment with regional development and digital economy goals sets a positive environment for semiconductor firms looking to establish or expand in Costa Rica.
However, the PEN’s success in attracting such industries will likely depend on the specific measures and reforms implemented to address the industry’s unique needs, including enhancements to the educational system, infrastructure development and fostering an innovation-centric ecosystem under the responsibility of the relevant government institutions. This strategic approach and adjustments to keep pace with the rapidly evolving semiconductor industry, can help position Costa Rica as a competitive location for the semiconductor industry and related activities.
The Semiconductors Roadmap
The recent challenges in the semiconductor value chain and the potential for Costa Rica to enhance and broaden its role in the global value chain have motivated Decree 44409 of 21 March 2024, declaring the semiconductor and related industries to be of public and national interest (SCIJ, 2024[1]). This decree outlines the role of COMEX in co‑ordinating with governmental institutions and stakeholders and promoting international collaboration in semiconductors.
In this context, Costa Rica launched the Semiconductors Roadmap (hereafter the Roadmap) under the responsibility of COMEX (COMEX, 2024[9]). The Roadmap includes targeted actions and expected outcomes and identifies responsible institutions. It involves actions required by ministries and other relevant institutions under the co‑ordination of COMEX.
The strategy underlying the Roadmap consists of two phases: the first focuses on the design of short-, medium and long-term actions and the second on gathering more technical information and implementing the actions with the support of working groups composed of representatives from the government and semiconductor stakeholders such as academia and the private sector (COMEX, 2024[9]). In setting up these working groups, Costa Rica might wish to consider whether the perspective of labour representatives and civil society should also be included. For example, the views of labour representatives on workforce and training would be important for the discussions on talent and workforce development. The perspective from civil society on the socio-economic and environmental impact of developing the semiconductor ecosystem more broadly would also be important.
The Roadmap is a comprehensive document that envisions transforming Costa Rica into a key global player in the semiconductor industry. It builds on the nation’s established strengths (including political stability, legal certainty and a highly skilled workforce), aimed at addressing the vulnerabilities in the global supply chain of semiconductors. Key components of the Roadmap include:
1. Human talent and workforce development: This pillar emphasises education and training to create a skilled workforce for the semiconductor industry. Specific actions include enhancing existing educational programmes, promoting bilingualism (notably English proficiency) and encouraging research and development (R&D). This approach is crucial to ensuring a steady supply of qualified professionals capable of supporting industry needs.
2. Incentives 2.0: Costa Rica plans to modernise and introduce new incentives to attract FDI and foster R&D. This pillar is critical for making the country more attractive to international investors and encouraging the growth of a domestic high-technology (high-tech) industry.
3. Investment attraction and prospecting exercise: Efforts here are focused on making Costa Rica an appealing destination for semiconductor investments through targeted investment prospecting and collaboration strategies. The goal is to attract projects that contribute to developing the country’s semiconductor industry.
4. Regulatory improvement and investment facilitation: This involves streamlining procedures and enhancing the transparency and efficiency of the regulatory environment. Strategic areas include health registrations, immigration procedures, intellectual property (IP) protection and trade facilitation.2
The Roadmap also highlights Costa Rica’s readiness to leverage its geographical and strategic position to help mitigate global supply chain vulnerabilities. It presents an opportunity for the country to diversify and expand its semiconductor industry by attracting investments that foster economic growth and technological advancement.
For the first phase, COMEX has initiated several projects, which include conducting a talent survey (for more details, see section on skills supply in Chapter 2) to understand current needs, profile requirements and future skills from semiconductor firms; a study to assess the available engineering and technical talent relevant to semiconductors, identifying talent distribution across the country; designing new incentives that could focus on areas such as R&D; and co‑ordinating with other institutions to support firms in their semiconductor operations (COMEX, 2024[9]). By 2025, COMEX had also coordinated a Semiconductor Working Group bringing together academia from 12 public and private institutions and semiconductor firms.
FDI strategy
A new FDI strategy introduced in June 2023 (PROCOMER, 2023[10]) provides a broad framework aimed at attracting and retaining investments across diverse sectors, including advanced manufacturing. The strategy aims to enhance critical levers such as talent development, fiscal incentives and supply chain linkages (PROCOMER, 2023[10]). Meeting the strategy’s goals for 2023-2026 could further bolster Costa Rica’s attraction of semiconductor FDI. The FDI strategy was integrated into the Semiconductors Roadmap to capitalise on the actions being implemented through this strategy.
The FDI strategy emphasises the importance of human talent, particularly in science, technology, engineering and mathematics (STEM), upskilling and reskilling programmes, and the combination of financial incentives with Costa Rica’s political and social stability (PROCOMER, 2023[10]).
Diversification is another cornerstone of the FDI strategy, reflecting Costa Rica’s intention to promote the growth of the domestic industry through new investment models, including joint ventures, mergers and acquisitions (PROCOMER, 2023[10]). This flexibility in investment modes creates a variety of opportunities for Costa Rican firms to collaborate with foreign investors. Diversification also refers to the origins of investment, with goals set for 2023-2026 on diversifying the countries of origin of investment and elevating the country’s competitiveness.
The FDI strategy also highlights geographical diversification in Costa Rica (PROCOMER, 2023[10]), with particular emphasis on extending investment beyond the Greater Metropolitan Area (Gran Área Metropolitana, GAM), which is the most important urban system in the country due to its scale, population and strategic location, made up of the four historic cities of the central region: Alajuela, Cartago, Heredia and San José (INVU, 2014[11]). This approach could provide interesting new strategic locations for semiconductor firms to base manufacturing operations insofar as roads, public transport (for labour mobility) and other enabling infrastructure are further enhanced.
Costa Rica’s FDI strategy also acknowledges the importance of further enhancing the development of the industry after attracting investments. Access to a reliable network of suppliers is critical to the success of semiconductor firms and the FDI strategy seeks to meet this need by supporting the development of local suppliers and creating productive supply chain linkages.
PROCOMER has a dedicated business linkage unit that levers a set of tools to strengthen links to domestic industries, including exploration of local offerings, advice and support for new projects, a matchmaking database, business rounds, open houses in leading firms and capacity to generate relevant information and research for the industry (PROCOMER, 2023[10]). Information on firm-to-firm transactions through value added tax (VAT) records provides a solid basis for analysing the potential for linkages with domestic firms (Box 2.2).
The Encadenados programme serves as a meeting space for firms in the FTZ regime and firms involved in export activity with local Costa Rican supplier firms (see section on legal and regulatory framework below for details). The goal is to facilitate successful negotiations and provide insights into the capabilities of the national SME ecosystem to meet the needs of exporting firms’ future projects (PROCOMER, 2023[12]).
Trade
Free and frictionless trade supports integration into global value chains. Costa Rica has done important work to remove trade barriers, including by signing the Trade Facilitation Agreement, and is considering measures to facilitate trade through further improved customs processes (see section on customs for details).
Costa Rica is part of the World Trade Organization and has 18 treaties and free trade agreements. These include bilateral trade agreements with several economies, such as the United States, Korea, Singapore and the European Union, as well as multilateral trade agreements such as the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR, Box 3.1) or industry-specific agreements relevant to semiconductors such as the Information Technology Agreement. Costa Rica is also in negotiations to join relevant agreements, including the Asia-Pacific Economic Cooperation (APEC) forum.3
CAFTA-DR, which Costa Rica joined in 2009, is a multilateral treaty that has enabled deeper trade relations with the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and the United States (U.S. Department of Agriculture, 2010[13]). According to Camacho (2022[14]), the effects of CAFTA-DR have increased exports and elevated bilateral trade between Costa Rica and the United States. CAFTA-DR has also contributed to competition in industries such as mobile telecommunications (OECD, 2020[15]).
In addition, the treaty is claimed to have raised the average annual foreign investment from the United States to Costa Rica, mostly to the industrial sector, followed by services and tourism (Camacho, 2022[14]). CAFTA-DR has also benefitted domestic-based firms by aiding importers, amplifying export volumes and diversifying the exportable supply.
Moreover, the CAFTA-DR agreement played a central role in the telecommunication liberalisation process of the country (Vidal, 2016[16]), as it included specific commitments of Costa Rica, as well as in the privatisation of insurance state monopolies, through provisions in which Costa Rica committed to open state-owned markets to foreign and private investment. The treaty’s tax relief provision has also incentivised trade, creating a more open trade relationship between Costa Rica and other CAFTA-DR member countries (Camacho, 2022[14]).
Sources: USDA (U.S. Department of Agriculture, 2010[13]), CAFTA-DR Free Trade Agreement, https://fas.usda.gov/data/cafta-dr-free-trade-agreement; Camacho, C. (2022[14]), “The CAFTA-DR Free Trade Treaty: A lawyer’s perspective”, https://www.thecentralamericangroup.com/cafta-dr-free-trade-treaty/; OECD (2020[15]), OECD Economic Surveys: Costa Rica 2020, https://doi.org/10.1787/2e0fea6c-en; Thornburn, C. (2016[17]), “Insurance: The end of a monopoly, and a new beginning for a market”, https://doi.org/10.1596/978-1-4648-0568-4_ch3; Vidal, E. (2016[16]), “Telecommunications and the end of another monopoly”, https://doi.org/10.1596/978-1-4648-0568-4_ch4.
Innovation
Costa Rica’s National System of Science, Technology and Innovation (Sistema Nacional de Ciencia, Tecnología e Innovación, SNCTI) encompasses public institutions, private actors and public policies, where research centres and public universities play an important role (Figure 3.1). Rather than being a single institution, the SNCTI represents an overarching conceptual framework that aims for strategic alignment among its constituents. This alignment is geared towards enhancing the country’s productivity and competitiveness through intensive use of knowledge (MICITT, 2022[18]). MICITT acts as the SNCTI’s governing ministry through its Directorate of Innovation, ensuring proper co‑ordination with each of the actors within this system (SCIJ, 2021[7]).
Costa Rica’s national innovation system faces challenges, as pointed out in the OECD Reviews of Innovation Policy: Costa Rica (2017[19]) and more recently in the Innovation Atlas prepared by the governing body for public higher education (CONARE, 2023[20]). A significant challenge in effectively governing the SNCTI relates to its structure. The different public and academic entities comprising the SNCTI remain independent, which has implications for its governance by MICITT, including the capacity to achieve consensus and secure commitments that align with the country’s strategic goals (OECD, 2017[19]).
Source: OECD based on governance structure of SNCTI, SCIJ (2021[7]), Ley de Creación de la Promotora Costarricense de Innovación e Investigación, Ley 9971 de 2021, http://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?param1=NRTC&nValor1=1&nValor2=94421&nValor3=0&strTipM=TC.
In parallel, the National Plan for Science, Technology and Innovation (PNCTI) (MICITT, 2022[18]) provides a strategic blueprint from the government. Although it does not reference specific actions for the semiconductor industry, its strategic focus areas have a bearing on it. The plan’s transformative innovation section is a call to action for Costa Rican firms, especially those with a technological foundation, to foster innovation. The aim of this component, according to the PNCTI, is “to promote the incorporation of innovation in the country’s productive processes as a means to generate a productive, social and environmental transformation in all territories” (MICITT, 2022[18]).
The PNCTI advocates for a co‑ordinated approach involving the public, private and academic sectors. It also enunciates the country’s desire to cultivate an integrated ecosystem for advanced manufacturing. Besides, the cross-cutting themes of artificial intelligence (AI) and digital technologies identified in the plan (MICITT, 2022[18]) align well with the semiconductor industry’s trajectory.
The plan’s emphasis on international partnerships (MICITT, 2022[18]) could also encourage greater foreign expertise and investment in the high-tech and capital-intensive semiconductor industry. These initiatives will enhance the country’s global standing in the country’s science and technology industry, supporting Costa Rica’s broader goal of integrating into the global semiconductor supply chain.
Finally, ensuring the PNCTI supports the Semiconductors Roadmap to meet innovation needs in the semiconductor ecosystem will be crucial.
Employment and human talent
In July 2023, the Costa Rican government announced the National Strategy for Employability and Human Talent (Brete Strategy).4 The main objective of the Brete Strategy is to improve the employability of people who are most excluded from the labour market, promoting their access to job opportunities and boosting the country’s productivity and competitiveness based on human talent (MTSS, 2023[21]). The strategy includes six components with their expected outcomes, objectives, success indicators and activities: i) labour market intelligence; ii) prioritisation of populations; iii) training for employment; iv) intermediation; v) entrepreneurship and self-employment; and vi) cross-cutting components.
The Brete Strategy is led by the Ministry of Labour and Social Security and implemented by a taskforce, including COMEX, MICITT and PROCOMER,5 to develop actionable and progressive key performance indicators. It is organised by clusters and can help co‑ordinate the efforts of the different institutions involved in generating human capital for the semiconductor industry by creating a dedicated semiconductor cluster.
The Brete Strategy emphasises “improving labour market intelligence”, which includes collecting, analysing and disseminating information about the labour market. This initiative could directly support the semiconductor industry by providing targeted data on industry-specific employment trends and talent requirements.
The strategy includes a relationship protocol with the productive sector (Activity 3.1), aimed at strengthening engagement to better identify occupational demands and anticipate employment trends. By aligning the educational objectives with the semiconductor industry’s needs, this protocol can help ensure that the training and skills development are relevant and up to date.
In terms of training and educational programmes, there is a strong focus on promoting institutional synergies and intersectoral actions aimed at closing qualification gaps. Integrating dual Education and Training Programmes (Educación y Formación Técnica Profesional EFTP)6 in collaboration with industry partners could provide practical experience and specialised training crucial for semiconductor manufacturing roles.
The Brete Strategy has laid a foundational framework that, with specific enhancements towards the semiconductor industry, could significantly boost Costa Rica’s potential as a hub for semiconductor manufacturing and attract more FDI in this high-value industry. The strategic alignment of educational programmes with industry needs will be crucial in ensuring that the local talent pool can meet the specific demands of this sophisticated industry.
3.1.3. Conclusions
Overall, the existing institutional framework, strategic plan, innovation and FDI strategies, alongside the Semiconductors Roadmap, provide a solid basis for further expanding the semiconductor ecosystem in Costa Rica.
Co‑ordination across the different policy areas relevant to semiconductors and under the responsibility of different ministries and governmental agencies will be key to success. The Roadmap is instrumental in this regard and could be reinforced by considering roadmap goals and milestones in future revisions to the PEN.
It will be equally important to involve key semiconductor ecosystem stakeholders in discussions on how to leverage Costa Rica’s capacities and benefit from opportunities in the semiconductor industry. Relevant stakeholders include business associations in related technological areas, labour representatives, civil society and academia. An informal platform for convening semiconductor stakeholders could help inform the overall direction of the implementation of the Roadmap while assessing its impact not only in terms of jobs and economic growth but also environmental and social development goals.
The Roadmap already foresees the creation of working groups involving industry and academia stakeholders to support the implementation of the four policy pillars (talent and workforce development, incentives, investment attraction and regulatory framework). A similar type of platform could provide a holistic view of the overall implementation of the Roadmap, including perspectives from government, academia and industry, labour representatives and civil society.
The informal multistakeholder platform could be one piece of the semiconductor policy monitoring and evaluation framework. The evaluation of semiconductor policies, in line with the goals established in the Roadmap and the overarching strategy provided by the PEN, could build on the available disaggregated data (Box 2.2) to develop additional key indicators while respecting privacy and confidentiality constraints. Such indicators could, for example, measure the changes in skill needs, business dynamism (including innovative start-ups) and job creation by domestic firms (based on employer-employee data), the strength of linkages between multinationals and domestic firms (based on VAT data), firms’ energy- and water use performance (based on energy and water use data linked with the Registro de Variables Económicas (REVEC) database, amongst others.
This section focuses on selected key policy areas that can support the development of a semiconductor ecosystem in Costa Rica. While the selected policy areas focus on key enabling factors for a semiconductor ecosystem, they can also contribute to developing other industries and the country’s broader social and economic development. The focus areas, organised into sections, include human capital, enabling infrastructure and the regulatory framework, and are further divided into detailed action areas that can help ensure that the appropriate enabling environment is in place for the development of the semiconductor ecosystem. Some of the recommendations included in this section entail expenditure in key areas to develop the Costa Rican semiconductor ecosystem, which is important given the country’s potential for development. Nevertheless, the Costa Rican government should assess all spending decisions carefully to maintain fiscal prudence and macroeconomic stability (OECD, 2025[22]).
3.2.1. Human capital
As noted in the report OECD Economic Surveys: Costa Rica 2023 (OECD, 2023[23]), education and training are a high priority for Costa Rica, which devotes one of the highest spending shares among OECD countries. However, educational outcomes remain poor and firms sometimes struggle to fill their vacancies, particularly in technical and scientific positions (see Chapter 2).
Semiconductor design, fabrication and, to a lesser extent, ATP require workers with advanced university degrees (see the discussion on scientific and academic education below). For some segments of the supply chain, such as ATP (and to a lesser extent fabrication), technical skills are particularly important; thus, enhancing the provision of technical skills through VET will be key (see the discussion on VET below).
There are two main types of potential sources of new talent: i) domestic, which takes time to develop; and ii) foreign, which in the short term is limited and entails a global zero-sum game.7 Tapping into the Costa Rican highly skilled diaspora should also be considered within the latter.
Further developing the pool of domestic talent would require Costa Rica to enhance the education pipeline, notably working with higher education institutions and VET providers to broadly raise education levels and specifically strengthen the curricula of academic degrees related to the semiconductor industry, as well as dedicated VET courses. Domestically, semiconductor firms would also need to compete with other industries with high technological content requiring seemingly related skills (e.g. the medical device industry).
Making the most of talent available from abroad (foreign and Costa Rican) would require looking into the economic and other incentives that Costa Rica has to offer to experts currently living abroad, as well as the procedures in place to obtain working visas in Costa Rica (see the discussion on permits for skilled foreign labour below).
Co‑operating with like-minded neighbouring countries for talent development is another avenue to explore. Costa Rica could further engage in partnerships with countries in the Latin America region to develop joint programmes for training semiconductor talent (see the discussion below on attracting workers from abroad for more details).
Scientific and academic education
Governance
Public universities in Costa Rica are members of the National Council of Rectors (CONARE).8 CONARE focuses on developing public higher education institutions and co‑ordinating efforts between them.
The Office of Higher Education Planning (OPES) is a component of the CONARE that directs joint efforts between public institutions, prepares a five-year strategic plan, collects data on academic achievement and enrolment, and submits development projects proposals for public universities to CONARE, among other aspects. These projects are wide-ranging: some examples include collaborations between universities, social action initiatives, student life improvement and research promotion. The current ‑five-year strategic plan provides focus areas that are relevant to the semiconductor industry, such as implementing an interuniversity plan for encouraging high school students into STEM careers, enhancing the inclusion of women in scientific and technological areas, and adjusting university activities to be in line with United Nations Sustainable Development Goals (CONARE, 2023[20]).
CONARE also maintains the National Center for High Technology (Centro Nacional de Alta Tecnología, CeNAT) to develop research and education in advanced scientific and technological areas.
Moreover, CONARE collects data on the labour market for university graduates through its Labor Observatory of Professions (Observatorio Laboral de Profesiones, OLaP), which helps guide higher education policies and priorities (CONARE, 2023[20]).
Current initiatives are underway to improve professional training in response to the rapidly evolving needs of the high-tech sector. For instance, CeNAT launched a Learning Factory, which will provide specialised training for professionals based on industry needs in high-tech areas. This includes legislative follow-up on projects like the National Digital Literacy Programme, collaboration with the Human Talent Commission to assess training needs in the industrial sector amid COVID-19 and digitalisation, and support for the institutional framework for innovation (CICR, 2022[24]).
Private universities in Costa Rica are regulated by the National Council of Private University Higher Education (Consejo Nacional de Enseñanza Superior Universitaria Privada, CONESUP).9 CONESUP is responsible for inspecting and regulating private tertiary education institutions by providing degree certifications, approving the creation of new study plans, sanctioning the opening of new private universities and generally promoting the advancement of private institutions, among other objectives and responsibilities (CONESUP, 2023[25]).
The National Higher Education Accreditation System (Sistema Nacional de Acreditación de la Educación Superior, SINAES), created in 1999, evaluates the quality of both public and private university and para‑university courses, intending to provide accreditation (SINAES, 2023[26]).10 The evaluation is conducted by course and voluntarily to identify courses that meet the quality requirement set out by SINAES. SINAES covers the five public universities, 22 private universities, six para-universities and three international universities. It has been a member of the International Network for Quality Assurance Agencies in Higher Education since 2010 and the Ibero-American System for Quality Assurance in Higher Education (SIACES) since 2023.
SINAES evaluates study plans on a case-by-case basis and has been questioned for failing to standardise study plans and quality of education across different programmes (Bado et al., 2020[27]). As the main accreditation entity in Costa Rica, SINAES can play an important role for academic institutions seeking to adapt or create new curricula to focus on semiconductor-related education. Other accreditation organisations exist in Costa Rica. For example, the electrical engineering programmes at the UCR and the TEC are accredited by the Accreditation Council of Engineering and Architecture (Agencia de Acreditación de Programas de Ingeniería y de Arquitectura, AAPIA) (2024[28]). SINAES, as the national accreditation agency, has a dedicated process to recognise the accreditation provided by other organisations, including AAPIA. Such recognition is formalised in a memorandum of understanding following technical evaluation and a decision by the SINAES board and may be subject to monitoring, review and renewal.
Curricula
Semiconductors require a workforce and university curricula aligned with the specific demands of this highly specialised, rapidly evolving and globally integrated industry. The internationalisation of curricula, in particular, can be a strategic response to the shifts brought about by globalisation (Zapp and Lerch, 2020[29]). These shifts change the skillsets required by the market, calling for an educational approach that prepares graduates for the challenges of working in globalised knowledge economies where international competencies are required (Zapp and Lerch, 2020[29]).
In discussions, stakeholders noted that the process of updating curricula for university programmes to adapt them to the needs of the market (especially undergraduate careers) in both private and public education was slow and complex.
In July 2023, changes were made to the regulations that govern CONESUP, the body tasked with regulating and supervising private university education (SCIJ, 2023[30]). While it is too early to assess this recent reform, information gathered from stakeholders suggests that it is helping improve flexibility and the timeliness of the process for approval and modification of academic programmes.
Additionally, the reform introduces several enhancements for private universities that could help generate a larger pool of skilled talent for the semiconductor industry, including: i) embracing virtual education and providing the option to offer programmes in this format; ii) the ability to offer programmes in any language; iii) facilitating partnerships with foreign universities for dual degrees; and iv) allowing private universities to employ guest professors from international institutions. This reform is expected to provide the necessary flexibility and responsiveness of private universities to the talent requirements of firms in the semiconductor value chain.
Being able to offer programmes in any language is a major advantage for Costa Rican universities. A few public universities offer English for Specific Purposes courses, including a master’s degree at UNA.
Engineering majors in Costa Rica sometimes do not have an English course in their curriculum and graduates from some public Costa Rican universities face challenges with employability because of their lack of English proficiency (Agüero and Rodríguez, 2021[31]). Providing more courses in English as part of graduate programmes in public and private universities would help raise this proficiency.
The UCR offers short-term, supplemental training to engineers in semiconductor-related topics, which can encourage undergraduate degree holders to pursue graduate study and, through their continuing education programme, provide lifelong learning and upskilling (UCR, 2023[32]).
Universities also collaborate on initiatives with each other, with earlier stages of the education pipeline and with industry for scientific and technical training. For example, the Stay in STEM programme is a partnership between universities and industry to promote gender inclusivity in technical careers (Rojas Gómez, 2023[33]).11 Playful STEM Promotion is another noteworthy initiative led by public universities to encourage boys and girls in primary education to participate equally in STEM-related subjects (Rodriguez et al., 2020[34]).12
Both public and private universities in Costa Rica struggle to co‑ordinate with industry to supply both: i) the number of STEM graduates; and ii) graduates with the needed skillset. For private universities, the authorisation process for new courses, under the responsibility of CONESUP, has been slow and complex. New or revised curricula in public universities also follow a challenging approval process in which multiple actors have veto rights (OECD, 2023[35]). Co‑ordination between multiple regulatory bodies for different types of universities with occasionally overlapping roles can be challenging, as can co-ordination between public and private universities (e.g. for joint semiconductor curricula). These complexities hinder the universities’ ability to respond to the needs of the labour market and industry’s human capital requirements and should be addressed.
Finance
Costa Rica invests an important share of its gross domestic product (GDP) in education, including higher education, ranking amongst the highest spenders amongst OECD countries (see section on skills supply in Chapter 2). However, public university budgets in Costa Rica have historically been hampered by inefficient spending, rigid wage and bonus mechanisms and low revenue collection (OECD, 2023[23]). Public universities in the country are mainly funded through the Funding for Higher Education (Financiamiento de la Educación Superior Estatal, FEES) agreement, which comes from the country’s national budget (Programa Estado de la Nación, 2023[36]). The amount awarded varies yearly due to negotiations between the executive branch and CONARE. In 2023, the amount reached 1.2% of the GDP and 1.1% in 2024 (Figure 3.2). Effective spending on wages by public universities has been declining over the years, given budget constraints introduced in 2021; however, compensation in the form of bonuses has increased over time and outweighs basic remuneration (OECD, 2023[23]), highlighting the need to reform the wage structure at public universities.
The 2016 FEES agreement included, for the first time, seven commitments by public universities alongside goals matched with specific metrics (CONARE, 2015[37]). The 2024 FEES agreement contains an annex with specific indicators, responsible parties and dates for follow-up, which the universities assume as a mechanism of accountability regarding the investment of the FEES (CONARE, 2023[38]). Compliance with these goals is monitored through a liaison commission, which includes the five public universities (CONARE) and MEP, the Ministry of Finance, MICITT and MIDEPLAN.
The 2024 FEES agreement included three indicators and goals that are relevant to this report: i) the increase in the percentage of people enrolled in campuses outside the GAM; ii) the increase in the percentage of graduates with proficiency in English at a B2 level,13 and iii) the increase in the percentage of first-time students enrolled in high-demand career fields, such as STEM areas. Specifically, for the latter, it proposes to increase the percentage from 40.8% in 2023 to 45% of first-time students enrolled in these careers by 2026 (CONARE, 2023[38]).
Student loans for university education are provided through the National Commission for Education Loans (Comisión Nacional de Préstamos para Educación, CONAPE). It is reported that, in 2024, CONAPE planned to support more than 6 000 students with CRC 46 billion (a 21% increase from 2023) in loans for various educational programmes in both Costa Rica and abroad (Madrigal, 2024[39]), the majority of which in support of STEM careers. CONAPE has created flexible programmes to help students obtain funding. As an example, TEC undertook a pilot programme in conjunction with CONAPE that required no collateral from students to obtain a loan (OECD, 2023[35]). Scholarships for students from disadvantaged backgrounds and/or high-performing students are also available from a wide range of institutions, including MEP, public universities and private organisations.
Promoter also provides support for STEM by promoting educational programmes in high demand, incentive funds (Fondo de Incentivos) that support short training, internships, postgraduate degrees and scholarships, and scholarships for STEM education for women and doctoral (PhD) research.
Notes: The figure shows education financing ratios. Higher education spending (Funds for Higher Education, FEES) corresponds to tertiary education funding in public universities, and total education spending (Ministry of Public Education, MEP) corresponds to total education spending for other segments up to tertiary education.
Source: OECD based on statistics provided by the National Council of Rectors (Consejo Nacional de Rectores, CONARE) for this report.
Scientific high schools
MEP’s National Science, Technology, Engineering, the Arts and Mathematics (STEAM) Education Strategy promotes STEM learning and gender representation in STEM fields within public schools and high schools (MEP, 2022[40]). One initiative undertaken through this strategy was the Engineering Projects in Community Service (EPICS) project: a collaborative project between Arizona State University, the United States Embassy and six high schools in Costa Rica’s metropolitan area to provide opportunities and a platform for female students in Costa Rica to learn and possibly pursue a career in STEM (ASU, 2020[41]).
Scientific high schools are a specific type of high school that is public and free, in which students study intensively with emphasis on mathematics, physics, chemistry, biology and computer science (MEP, 2024[42]). There are only ten of these schools across the country and they operate in public universities (TEC, UCR, UNA and UNED) due to the need to use chemistry, physics, biology and computer laboratories. Students who graduate from these scientific high schools have a higher chance of being admitted to public universities, specifically in STEM careers (see Chapter 2) but these high schools are unable to accommodate all of the students who apply (Cerdas, 2021[43]). Enhancing specialised scientific education to help generate highly talented individuals would require replicating the scientific high school model and increasing the capacity of higher education institutions. Addressing underlying socio-economic disadvantages that might hinder learning outcomes would also need to be included in the strategy (Maravalle and González Pandiella, 2023[44]).
Recommendations
Better co‑ordination amongst governing bodies for universities could yield important gains for the future of Costa Rican talent, including for the semiconductor industry. CONARE and CONESUP have complementary roles and responsibilities for public and private universities respectively. Working together and co‑ordinating their efforts could result in successful projects to enhance education in semiconductor-related areas. Examples could include semiconductor equipment sharing agreements between public and private universities for education and research, jointly agreed curricula approved by SINAES, semiconductor projects directed by CeNAT, and including private universities and joint efforts to tap into the potential of female students in STEM fields.
Streamlining the process for updating curricula at universities, embracing virtual education, increasing the availability of English for Specific Purposes courses and fostering international co‑operation could also help meet the needs of the semiconductor and other rapidly evolving and globalised industries.
Standardising accreditation and ensuring the quality of education in semiconductor-related fields could provide a reliable talent force and could be articulated as part of the efforts of the Brete employability strategy in aligning skills to the labour market needs.
STEM enrolment rates for women in Costa Rica are lower than for men and women face higher obstacles to finishing their career paths, as shown in Chapter 2. Increasing the number of female graduates in STEM as outlined in the Brete Strategy, specifically Indicator AE2 is another important goal that can contribute to enlarging the domestic pool of talent for semiconductors while increasing diversity (MTSS, 2023[21]). Examples of programmes that could be enhanced to support girls in STEM include Stay in STEM to promote technical careers for women and Playful STEM Promotion to incentivise young children.
Financing for public universities could be geared towards supporting STEM disciplines, including semiconductor-related areas. Goals and specific indicators written into future FEES agreements could help universities access earmarked funding dedicated specifically to base semiconductor courses such as electronic engineering, mechanical engineering, mechatronics or materials science, as well as semiconductor-specific programmes (see Chapter 2 for an overview of semiconductor-specific skills). Focusing resources on a centre of excellence for engineering sciences could help scale the necessary infrastructure for semiconductor talent provision. The recently announced plans to create a Costa Rican centre of excellence focused on key technologies, including semiconductors, is a step in the right direction (MICITT, 2024[45]).
Further engaging in international partnerships with other countries in the region and beyond could help bring specialised university teachers and researchers to Costa Rica to help train students in relevant academic degrees and research projects relevant to semiconductors.
Raising education outcomes would benefit from an enhanced focus on teachers. This could be achieved, for example, by improving the hiring system – e.g. by implementing the eligibility test to select new teachers (as established by law in 2020) – providing more opportunities for career development and training while strengthening the teacher appraisal process, as noted in the latest OECD Economic Survey (2023[23]).
Finally, the scientific high school model seems to successfully prepare students for higher education. Enhancing these high schools while ensuring equal access to affordable and quality education could also help better prepare students for higher education while widening the pipeline of talent in STEM areas.
VET
Relative to chip design and fabrication, ATP is less demanding in terms of skills (Varas et al., 2021[46]), which, combined with high labour intensity, means that ATP includes semiconductor value chain segments that can be developed more quickly, with the appropriate workforce education (Saif, Peterson and Mann, 2021[47]). While businesses will always need to invest their part in training technicians (including with the dedicated machines), it is important to have a framework that provides the baseline technical and vocational skills needed for semiconductor businesses.
Costa Rica has an established VET policy framework comprised of a mix of post-secondary institutions – including the UTN and para-universities, technical high schools and dedicated institute INA. Currently, INA, MEP and UTN administer VET programmes particularly relevant for semiconductors skills (see Annex E).
It is also worthwhile mentioning the Get a Job (Empleate) programme, launched in 2011 and managed by the MTSS, which provides access to (including through scholarships) training for young individuals (17-24 years) who are unemployed and not in education but wish to enter the labour market (ECLAC, n.d.[48]). This programme targets vulnerable groups and, in 2013, it was extended to cover individuals up to 35 years old with disabilities.
Costa Rica has dual education programmes that directly target the semiconductor ecosystem. For instance, industrial maintenance includes 1 572 hours of training, with students working part-time in firms. In 2022, industrial maintenance students spent 20% of their time in class and 80% in onsite work at the firm (AMCHAM, 2022[49]). Another example is electromechanics with 1 228 hours of training (EFTP Dual, 2024[50]).
VET has been a priority for Costa Rica over the last decade (Álvarez-Galván, 2015[51]). Compared to other Latin American countries, Costa Rica has historically made important investments in direct support to institutions providing VET. In 2017, Costa Rica ranked first among Latin American and Caribbean countries with available secondary-level VET data, spending 0.71% of its GDP; Uruguay ranks second with 0.43% (Hanni, 2019[52]).14
MEP has been actively working on enhancing the technical education landscape to better align with the growing needs of the semiconductor industry. Various educational modalities exist within the country, encompassing education in public, private and subsidised private institutions, along with 139 technical colleges offering 246 programmes.
A notable challenge identified by MEP is the shortage of qualified human talent to serve as instructors due to more lucrative opportunities in the private sector. The recent OECD Economic Survey also notes challenges with qualified instructors and highlights the need for closer collaboration between the educational system and the industry to provide training aligned with the ever-evolving demands of the labour market (OECD, 2023[23]). This issue is compounded by the closure of the Centre for Research on the Improvement of Technical Education (Centro de Investigación y Perfeccionamiento para la Educación Técnica, CIPET), previously responsible for training teachers, leaving a significant gap in the formal training and development of educators in these specialised areas.
Enhanced international collaboration can help. For example, the memorandum of understanding between MICITT, COMEX and Arizona State University to design technical education programmes to train semiconductor talent in Costa Rica and the recent memorandum of understanding between COMEX and Purdue University are important steps to help bridge the semiconductors trainer gap (COMEX, 2024[53]; Purdue, 2024[54]).
The Centre of Excellence is an initiative under the leadership of MICITT and INA to develop training and research programmes for key industries in partnership with the industry and international stakeholders, that has been identified as part of the overall Costa Rican strategy to support the development of the semiconductor ecosystem (COMEX, 2024[9]). The centre can greatly contribute to the needed semiconductor workforce development by including semiconductor-related actions.
In terms of specific skills, the National Qualifications Framework for Technical and Vocational Education and Training in Costa Rica (MNC-EFTP-CR) has put in place a national qualifications framework which considers five levels of technical qualifications, each of them with different descriptors, minimum entry education requirements and programme duration ranges (OECD, 2023[23]). Level-1 technicians apply basic competencies and specific procedures in various contexts, whereas Level-5 technicians apply advanced capabilities for comprehending and applying principles and procedures in technical processes across diverse contexts.
Building on this framework, a comprehensive talent needs survey, conducted by COMEX with input from semiconductor firms, revealed a significant gap in the availability of qualified professionals. Notably, there is a pronounced shortage of Level-5 technicians, whose advanced expertise is critical to addressing the growing demand of the labour market. Targeted skill development initiatives aimed at bridging this gap could strengthen workforce capabilities and better meet industry needs.
The FTZ regime, described in detail in the legal and regulatory framework section below, includes incentives for workforce training. Firms within the FTZ can request training and education programmes, as well as incentives for workers to take advantage of these opportunities (PROCOMER, 2023[4]). One of the key initiatives in this area is the Human Talent Training Incentive programme, developed by COMEX and PROCOMER, which supports firm-led tailored learning and development initiatives aimed at upskilling and reskilling their workforce, including interns and entry-level candidates. This programme is endowed with a budget of USD 6 million to support between 60% and 80% of the total cost of each project for high-demand training initiatives identified by companies in alignment with their talent development strategies. COMEX and PROCOMER also provide end-to-end guidance to companies with a view to maximise the programme’s impact. So far, the programme benefited more than 6 500 people (PROCOMER, 2026[55]). In addition, public–private collaborations help strengthen talent development under the FTZ regime. For example in 2022, a partnership between the Coyol Free Zone, INA and a local technical high school to offer a manufacturing-operator course, have contributed to expanding the skilled workforce for medical devices firms.
Post-secondary institutions
Costa Rica has several post-secondary education institutions offering VET programmes, including public universities and para-universities. The UTN is one of the five public universities represented in CONARE. It specialises in technical diplomas and bachelor’s programmes, including electronic, electromechanics and electrical engineering (see Annex E). Programmes are practical and hands-on, in collaboration with the industry (e.g. the Stay in STEM programme partnership with Intel), including through internships and apprenticeships that are part of the requirements for graduation. The UTN also offers lifelong learning opportunities, including courses offered outside working hours, and collaborates closely with The National Learning Institute (INA).
Para-universities are post-secondary institutions that offer VET but do not have the same autonomy or academic focus as universities. Both public and private para-universities are supervised by the Higher Council for Education (Consejo Superior de Educación, CSE), which is comprised of the current Minister of Public Education, representatives from institutions and other appointed positions, including former ministers (CSE, 2023[56]). Para-universities are required to implement curricula that adequately represent market demands (CSE, 2023[56]). For public para-universities, the CSE is represented on the institution’s board of directors and is thus able to influence the implementation of training curricula.
Para-universities’ curricula must be revised every six years and the CSE must approve modifications (Article 37 of Reglamento a la Ley que Regula las Instituciones de Enseñanza Superior Parauniversitaria, 2014). The executive authority of the respective para-university implements changes to the curriculum (Camacho-Calvo et al., 2019[57]). Para-universities can offer dual training, which aligns with the Dual Technical Education and Training Law of 2019 (SCIJ, 2019[58]).
Short-cycle vocational programmes (Programas de Ciclo Corto, PCCs) provide occupational and salary perspectives, with graduates from PCCs reaching average lifelong earnings around 40% higher than those of students who have only completed secondary schooling (OECD, 2023[23]). However, SCVPs are chosen by very few students, possibly reflecting a perception that PCCs are inferior to academic programmes (OECD, 2023[23]). Efforts to demonstrate the long-term career prospects and benefits of such programmes could help incentivise students to consider the PCC path.
Technical high schools (CTPs)
MEP offers VET as an alternative to upper secondary academic education. The Technical High School (Colegios Técnicos Profesionales, CTPs) programme covers 138 daytime technical schools (colegios) and 91 evening technical education sections, and typically enrols students aged 15-18. In 2024, it offered 66 specialisations across agriculture, trade and services, and industry. CTP courses are popular, enrolling almost 27% of all upper secondary students in 2025 (MEP, 2024[59]). Since 2022, CTPs have started offering dual training, initially with 12 industrial electronics and eight web development students, in collaboration with six firms (MEP, 2022[60]; Programa Estado de la Nación, 2023[61]). It would be important to continue expanding dual training offered at CTPs, including specialised training on semiconductors, in collaboration with semiconductor firms.
The process of creating new VET curricula is initiated by the Bureau of Technical Education and Entrepreneurship (Dirección de Educación Técnica y Capacidades Emprendedoras, DETCE) at MEP, which is responsible for analysing the current state of Costa Rican VET education (DETCE, 2023[62]). The DETCE must adhere to Costa Rica’s National Qualification Framework, which is guided by a five-year strategic plan (ILO/Cinterfor, 2020[63]). The curricula then undergo several rounds of industry consultation with various groups (Camacho-Calvo et al., 2019[57]), before eventually being approved by the CSE.
Updating curricula can take some time. Establishing a new training standard can take up to 12 months for the first draft, but regulatory approvals can significantly extend the timeline for an extra year. Standards had to be reviewed every three years in the past, but this has been extended to five years with Law no. 8868 of 2010.
The exact timing of proposals for a new training standard is also important because any changes would need to be approved before the start of the school year (February). This means it could take up to five years from inception to the first cohort’s graduation (three years) in a technical programme. Providers of technical education in STEM areas also face the challenge of setting up laboratories that are costly to equip.
CTP dual programmes were piloted in 2019 and have continued since. Dual education sectors for CTPs are selected based on demand, with a commission composed of public and private organisations deciding on industries such as metal mechanics, agribusiness, advanced manufacturing, medical equipment, information technology (IT) and tourism.
CTP programmes also include an internship. Students partake in the práctica professional programme led by the DETCE. Students in their final year spend 320 hours in an internship programme with the private sector, supervised by a professional in the host firm and co‑ordinated by a dedicated member at the school (DETCE, 2023[62]).
A notable challenge to the CTPs is the shortage of qualified human talent to serve as instructors because of the salary gap compared to job opportunities in the private sector. This challenge is compounded by the closure of the CIPET, which was previously responsible for training teachers.
The National Learning Institute (INA)
INA offers free, non-formal training in vocational skills and lifelong learning to any Costa Rican over 15 years of age. Scholarships for dual programmes are available to help with living expenses, especially for low-income students (Camacho-Calvo et al., 2019[57]). INA aims to promote economic development and a better life for Costa Ricans, especially those without adequate education (UNESCO, 2022[64]). INA is funded through a tax on private employers and state firms based on payroll. In 2019, INA had a budget of USD 194 million and sometimes reported a surplus (UNESCO, 2022[64]). It allocates its annual budget guided by the Training and Education Services Plan (Plan de Servicios de Capacitación y Formación Professional, PASER). Labour market analysis performed by INA informs PASER and is often aligned with defined clusters (INA, 2022[65]).
INA established and directly manages vocational training institutions, with 54 education centres in Costa Rica (UNESCO, 2022[64]; INEC, n.d.[66]). Historically, INA training typically took place at its training institutions. Reforms in 2020 allow the INA to contract with third-party entities (including foreign entities) to provide training, giving INA more flexibility to respond to workforce demands (UNESCO, 2023[67]).
INA offers several specialisation curricula through its centres, focusing on 12 training areas (or productive sectors), one of which (electrical) is directly related to semiconductors. Within the electrical area, three programmes are particularly relevant for semiconductors: electromechanics, industrial electronics and mechatronics (INA, 2022[65]).
The method of instruction for each curriculum is either: i) a full classroom-based learning course; ii) a classroom learning course and a final practical evaluation; or iii) a two-three-year dual training programme that combines education at vocational institutes with firm apprenticeship. The latter aims to help graduates enter directly into the workforce (Camacho-Calvo et al., 2019[57]). Recently, INA has also started implementing several virtual courses.
INA can co‑ordinate with firms to update curriculum and forge partnerships for its dual training programmes (Camacho-Calvo et al., 2019[57]). It has dedicated liaison committees (Comités de Enlace) that link it with the productive sector to foster direct collaboration with different industries (including electronics). Liaison committees include representatives from industry stakeholders, academia and government and they can advise on changes to INA’s programmes.
INA has established specialised academies and training programmes in collaboration with major technology firms such as AWS, Cisco, Google and Microsoft in areas such as cloud computing and cybersecurity. These partnerships not only provide students with dual diplomas and access to online training modules but also enable INA to offer tailored job opportunity information and performance tracking for students, thanks to the substantial curriculum contributions from these firms. Additionally, INA is developing partnerships for trainer and student exchanges with Germany and there are plans to formalise agreements with Arizona State University and Purdue University. INA also represents international organisation WorldSkills Costa Rica and is actively developing partnerships to exchange trainers and students through this model with countries such as Korea.
INA is working with the National Women’s Institute (Instituto Nacional de las Mujeres, INAMU) to support women in STEM, and specialised programmes and scholarships are available to encourage female participation in STEM fields. INA has English for Specific Purposes programmes in specific fields such as telephone service and facilities assistance (Agüero and Rodríguez, 2021[31]).
The work of INA in providing VET has faced a number of challenges and the 2019 Dual Technical Education and Training Law (SCIJ, 2019[58]), and the subsequent creation of the Vocational Education and Training Commission (Comisión Asesora y Promotora de la Educación y Formación Técnica Profesional Dual) in 2020 introduced changes to the programme to increase firm participation. Firms had been hesitant to engage in dual training programmes because of the requirement that the firm appoints a teacher-tutor responsible for training a maximum of two students, a lack of clear roles and requirements to be filled by the firm, the high financial cost undertaken by firms to pay apprentices – including social security contributions – and a generally inconsistent and mediocre standard of education (Camacho-Calvo et al., 2019[57]). The reform must still produce the intended results, with only a few firms participating during the first three years (OECD, 2023[35]) (see Chapter 2). While the COVID-19 pandemic might have delayed the rollout, as of early 2024, 15 dual programmes are available, with 7 being relevant to advanced manufacturing processes (Educación y Formación Dual, 2024[68]).
The 2019 law also changed apprentice pay to a stipend from the INA Special Scholarship Fund (instead of a contribution by the firm). It standardised the process for INA certification of teacher tutors (Central American Group, 2020[69]).
The changes to VET programmes introduced in 2019 also allow dual training programmes to be run by universities, MEP and other educational institutions in addition to INA vocational schools. INA provides accreditation for teachers and mentors and distributes financial aid and grants. Dual training courses are now designed to be flexible and adaptable to a firm’s needs rather than based on a predetermined number of hours for an apprenticeship (OECD, 2023[35]).
INA’s quality of VET has room for improvement, which would be needed to support the development of an effective semiconductor workforce in Costa Rica. Retaining high-quality teachers has been challenging but reforms introduced in 2021 allow INA to outsource training to other organisations, hire short-term teachers for specific courses and remove the exclusivity clause from teacher contracts, allowing teachers to engage in other professional activities, including in the industry. These changes were introduced to help INA attract high-quality teachers with relevant industry experience but the procedure for hiring external teachers is complex and happens only rarely (OECD, 2023[35]).
Recommendations
According to the latest OECD Economic Survey of Costa Rica (OECD, 2023[23]), the VET system in Costa Rica supplies mostly low-skilled technicians, provides little work practice and offers too few opportunities to acquire advanced digital skills or specialise in STEM sectors, fuelling a mismatch between labour demand and supply. The lack of talent in regions outside the GAM limits their possibility of attracting FDI (OECD, 2023[23]).
Addressing the VET challenges requires a multi-layered approach, including enhancing the collaboration with the private sector, streamlining the curriculum development and approval process, promoting scholarships and ensuring the technical education system is equipped to prepare students for the demands of modern industries like semiconductors.
MEP’s efforts to promote STEM in all tracks (both academic and technical) for both boys and girls, alongside initiatives to foster partnerships with local municipalities to leverage Community Innovation Laboratories (Laboratorios de Innovación Comunitaria, LINC) for educational purposes, are notable developments. Community Innovation Laboratories are an initiative led by MICITT in collaboration with municipalities, universities, public libraries and community organisations that aim to reduce digital gaps and promote technological inclusion for students, entrepreneurs and SMEs. However, a clearer focus on programmes tailored for the semiconductor industry (e.g. technicians and the track for engineers), coupled with an increase in the speed and agility of curriculum development and equipment provisioning, will be critical for Costa Rica to fully leverage its potential as a key player in the global semiconductors value chain.
A more agile adjustment of CTP curricula would be important to meet the rapidly evolving skills needs. Identifying steps that could be expedited in the process of creating new CTP training standards (e.g. streamlining the timeline for regulatory approvals) could provide the necessary responsiveness while enhanced collaboration with semiconductor-related firms and with similar institutions in other countries in the region and beyond could help ensure that the curricula are adequate to meet the industry needs.
Strengthening and regularly updating the National Qualification Framework could help better align training to needs. An effective CTP course for semiconductor workforce development could benefit from considering semiconductor skills training (see Chapter 2) as one of the priorities in the national qualification framework.
Enhanced collaboration with the industry could help align the supply of VET with the demand, notably in high demand fields such as mechanics, electromechanics and robotics. Implementing dual education in certain specialities would be important to address this mismatch.
Moreover, strengthening the role of INA’s liaison committees in identifying required curricula changes and ensuring the co‑ordination and alignment between these committees and the key clusters identified by the National Cluster Policy (see section on legal and regulatory framework below) would help ensure that INA can better meet the industry’s workforce needs and support the development of key clusters (OECD, 2023[23]).
In this respect, INA and the UTN could further enhance their apprenticeship programme and tailor it to the semiconductor industry. Collaboration with the semiconductor industry in this area would enable INA and the UTN to implement flexible, easily adjustable apprenticeship programmes that give students a direct pathway into the industry. INA could also expand its inclusion of English for Specific Purposes programmes into fields related to the semiconductor industry. Training technicians in English enhances their employability and makes firm-specific training by international semiconductor firms easier and more effective.
Enhancing technical training for the semiconductors workforce will also benefit from leveraging the centre of excellence initiative led by MICITT and INA, which can also help materialise international collaboration opportunities in this area.
Last but not least, ensuring the availability of qualified teaching staff is key. Deploying measures to attract, certify and train VET teachers would be important. Building on the flexibility to have teachers from industry part-time and engaging in partnerships with the industry for teachers (and apprenticeship) would be an important avenue to pursue. Seeking highly specialised “trainers of the trainers” from abroad to fill in existing gaps domestically would need to be part of a broader strategy for attracting workers from abroad.
Efforts to ensure high teaching quality, including through regular teacher assessments and support for the training of VET teachers in collaboration with universities and industry, would be particularly important to ensure high-quality training. Aligning the requirements between VET teachers in INA and the CTPs and working with foreign institutes to engage in exchange teacher programmes for learning in a technical foreign language would also be considered. The latest OECD Economic Survey also underlined the need to strengthen VET provision by enabling institutions to hire specialised staff externally, as envisaged in the 2021 INA reform. New initiatives such as the creation of the National System of Technical Vocational Education and Training (SINEFOTEP) and the 2023-2033 National Policy for Technical Education and Training (PNEFTP) also provide a framework to enhance programme quality and expand the supply of technical training (OECD, 2025[22]).
Attracting workers from abroad
The FTZ regime, described in detail in the legal and regulatory framework section below, includes incentives for training the workforce. Firms within the FTZ can request training and education programmes, and incentives for workers to take advantage of these opportunities (PROCOMER, 2023[4]). For example, in 2022, the Coyol Free Zone worked with INA and the CTPs to offer a manufacturing operator course to help create the necessary workforce for medical device firms, resulting in thousands of trained workers (Coyol Free Zone, 2022[70]).
Costa Rica also offers immigration facilitation for firms in the FTZ regime. Individuals required to work at the firm are provided temporary and renewable two-year residencies. The temporary residency typically takes between two and four months to receive. Firms must register with the General Directorate of Migration and Immigration (Dirección General de Migración y Extranjería, DGME) to receive these benefits. There is nevertheless room for improvement and streamlining of the residency and visa process (see the legal and regulatory framework section below), including, for example, how to prioritise highly skilled workers (e.g. special process for researchers and highly qualified experts). At the time of writing, the president signed an executive decree to create a new category enabling professors and specialised talent (including students) in STEM fields to access the immigration facilitation processes under the FTZ regime (SCIJ, 2008[71]), an important step to help attract talent.
Facilitating the recognition of higher education degrees (e.g. PhDs) obtained abroad could also help attract highly skilled professionals from foreign countries and Costa Ricans working abroad. Recognition and equivalency of foreign diplomas can facilitate the engagement of workers with specialised skills, as well as teachers and “trainers of the trainers” from abroad. This applies to both foreign experts and Costa Rican nationals who are trained and living abroad. CONARE is responsible for the official recognition and equivalence of tertiary education diplomas obtained abroad through its Office for Recognition and Equivalence of Degrees and Certifications (Oficina de Reconocimiento y Equiparación de Grados de Títulos) (ORE, n.d.[72]). At the time of writing, a bill of law to reform the process for recognition and equivalency of tertiary education diplomas was under discussion in the Costa Rican Legislative Assembly (Legislative Assembly, 2023[73]). The bill aims to streamline and expedite the process, with responsibility for title recognition falling under MEP. MEP officially recognises primary and secondary education titles obtained abroad (MEP, n.d.[74]). The timely recognition and equivalency of these degrees and titles have been identified as a challenge (MEP, n.d.[74]). Streamlining and expediting the process for the recognition and equivalency of diplomas obtained abroad while maintaining quality standards would help ensure that Costa Rica can tap into the pool of talented foreign and Costa Rican individuals currently living abroad.
Providing the necessary social infrastructure and safety can also help attract talent. Considerations such as the availability of healthcare, childcare, education and other facilities, alongside language and cultural proximity, are important considerations for workers when deciding to relocate (including with their families). The availability of good international transport (e.g. international flights), good infrastructure for households (transport, connectivity, energy and water) and safety are also prioritised in the increasingly global labour market. Swiftly addressing the recent increase in criminality should continue to be a top priority for Costa Rica (Reuters, 2024[75]).
Finally, Costa Rica has important natural strengths that could play a role in attracting foreign talent. The Costa Rica Tourism Board has placed Costa Rica as a worldwide destination of excellence for tourism. A strategy to welcome talent to not only visit but also stay and work in Costa Rica could help expand the pool of talent available to the semiconductor and high-tech industries.
Recommendations
Attracting talent from abroad (both foreign and the Costa Rican diaspora) would benefit from a well-designed strategy to promote Costa Rica as a country in which to live and work. Tools such as cultural and language programmes, support for families, relocation and settling-in services, as well as other services provided in a co‑ordinated manner to help integrate into local communities and society, would also be important incentives for talented individuals to join the Costa Rican semiconductor ecosystem. Additional efforts to ensure the necessary infrastructure, not only in terms of transportation but also connectivity, education, childcare and healthcare near the designated areas for semiconductor investments, is key to attracting talent from abroad. In parallel, working with tourism to promote Costa Rica as a workplace could be envisaged. Swiftly and decisively addressing security concerns should remain a priority at the highest level.
Efforts should also be made to develop an instrument to attract the Costa Rican diaspora back home, notably those with STEM backgrounds and semiconductor skills. Streamlining and expediting the process for the recognition and equivalency of diplomas obtained abroad should also be considered.
While Costa Rica does not seem to be as affected by the “brain drain” phenomena as other Latin American and Caribbean countries (see the discussion on migration in Chapter 2), measures to limit the potential for “brain drain” would still be important to consider. Actions should focus on providing incentives to stay, including improving local labour market conditions rather than imposing measures to prevent emigration (OECD, 2012[76]). Encouraging circular migration and programmes to bring back talent should focus on ensuring long-term positions for those returning. Enhanced efforts to support business creation and promote entrepreneurial activity in the Costa Rican semiconductor ecosystem (see section on legal and regulatory framework below) could provide new opportunities for highly talented individuals.
3.2.2. Infrastructure policies
Several critical components must be considered when assessing the infrastructure needs of the semiconductor industry. These components are essential for the smooth operation of semiconductor facilities. This section presents the policies put in place by Costa Rica to enable the infrastructure needed for semiconductors, with a particular focus on energy, water, transport and connectivity.
Energy
Semiconductor manufacturing is energy-intensive, notably in front-end and back-end manufacturing (Wang et al., 2023[77]), and power reliability is particularly important for firms that require unwavering energy reliability. Manufacturing semiconductors is exceedingly sensitive, requiring precise power conditions to ensure product quality and minimise costly downtimes or damage. Fluctuations or disruptions in power supply can lead to significant production challenges, including defects in the chips being produced or even complete production halts (Turk, 2024[78]).
Strengths
Costa Rica operates under a unified and interconnected electrical grid overseen by the Costa Rican Electricity Institute (ICE, 2020[79]). This grid, with its extensive coverage reaching 99.4% of the population, is likely a result of Costa Rica’s commitment to energy accessibility (IEA, 2023[80]). Electricity generation in Costa Rica builds on a model of sustainability, primarily relying on a blend of renewable sources. These include hydropower (67%), geothermal (12%), wind (10%), biomass (0.5%) and solar (0.07%), listed in order of their contribution volume in 2023 (ICE, 2023[81]). Figure 3.3 shows the electricity generation sources for selected Latin American economies, including renewable energy, based on 2021 data from the International Energy Agency (IEA).
Costa Rica achieved a 99.93% renewable and carbon-free electrical grid in 2020 (ICE, 2020[79]). This remarkable feat aligns with the global goals for sustainability. It has been steadily maintained, with renewable electricity production reaching 99.91% in 2021 (CENACE, 2022[82]) and 98.7% in 2022 (CENACE, 2023[83]). In addition, Costa Rica is the largest producer of geothermal energy in Latin America and the Caribbean (CSIS, 2023[84]). It also leads the region in the electrification of buildings (ICE, 2020[79]).
Energy consumption for the nation was recorded at approximately 11.958 kilowatt-hour (kWh) per capita in 2021 (Ritchie, Roser and Rosado, 2022[85]). The industry share in the total final energy consumption was 22.6% in 2021, second after transportation, which has a share of 49.9% (IEA, 2022[86]). Industrial consumption is predominantly concentrated in the GAM. Despite its geographic concentration, efforts are made to maintain the robustness and quality of electricity service throughout the national territory (ICE, 2020[79]).
Costa Rica has implemented strategic policies with a long-term view to address future energy requirements proactively. A notable example is the Electricity Generation Expansion Plan 2022-2040 (PEG 2022-2040), approved in July 2023 (ICE, 2020[79]). This comprehensive plan includes various projections of electricity demand over the next 18 years, considering the expected increase in demand from electromobility and distributed generation (ICE, 2020[79]). PEG 2022-2040 is reviewed and updated every two years as part of the energy requirement Roadmap (Mongan, 2022[87]).
Note: The most recent data available for Panama and Uruguay is from 2023.
Source: OECD calculations based on country data listed in IEA (n.d.[88]), Countries and Regions, https://www.iea.org/countries.
Challenges
Nevertheless, the electricity supply in Costa Rica faces its share of challenges. The impact of climate change on the frequency and volume of rainfall, and consequently on electric generation that is highly dependent on hydro sources in Costa Rica, represents a key challenge the country must address to develop a semiconductor ecosystem.
Energy quality and reliability are significant goals of Costa Rica’s hydroelectric system. Critical challenges usually emerge during water shortages in the dry season,15 leading to constraints in energy availability. The Continuity Indicators of the Electricity Quality Report, prepared by the Regulatory Authority for Public Services (ARESEP, 2022[89]), reveals that, in 2022, the average frequency interruptions per subscriber (SAIFI) was 6.98 times per year, predominantly due to external factors, such as environmental events and human activities, among others. The annual average perceived interruption time (System Average Interruption Duration Index) per subscriber in 2022 was reported as 8.37 hours over the whole year, an improvement from the 8.60 hours recorded in 2021.
Extreme climate events can have an important effect on the electricity supply in Costa Rica. In June 2023, the country faced a tariff increase to help meet the increasing operational costs of the El Niño phenomenon (ARESEP, 2023[90]). This weather phenomenon triggered a pronounced dry season, significantly reducing rainfall and subsequently limiting water resources. These conditions not only resulted in the rationing of drinking water but also critically impacted the generation capacity of hydroelectric plants, which typically contribute the biggest share (ARESEP, 2023[90]). Due to the aforementioned factors, in 2023, the country lowered its renewable energy production compared to 2022 (ICE, 2023[81]), resulting in 91% of the electricity demand for 2023 being met with renewable sources, a difference of 7 percentage points compared to 2022 when the demand met with renewable sources was 99% (ICE, 2023[81]).
As a result of these climatic adversities, ICE incurred additional operational costs to fulfil domestic energy demands. These costs were primarily due to an increased reliance on fossil fuels (which need to be purchased) for thermal electricity generation and, more substantially, to the necessity of importing electricity from the Central America Regional Electricity Market (ARESEP, 2023[90]). The first half of 2023 saw an unprecedented thermal energy production by ICE, surpassing the total thermal energy generated in the previous seven years combined (2017-2022).
In May 2024, Costa Rica faced a critical energy shortage that forced ICE to announce countrywide rationings, which had not been seen in 17 years in the country. According to ICE, the rationings were due to the El Niño phenomenon and the low levels of water in the reservoirs of the country’s most important hydroelectric plants (CNN, 2024[91]). The situation prompted a call for action from different productive sectors to prevent and reduce vulnerabilities due to its potential impact on production (Bloomberg Línea, 2024[92]). In late May 2024, ICE announced that rationing would no longer be needed due to rainfall. Nevertheless, ICE is projecting tariff increases of 4.2% for 2024, 3.4% for 2025 and 3% for 2026 (Cordero Perez, 2024[93]).
This energy crisis suggests that climate phenomena, like El Niño, need to be better accounted for in the generation expansion plans and consider diversifying renewable energy sources to reduce dependence on hydropower.
Additionally, despite its robust renewable energy infrastructure, electricity prices have been reported to be higher than in other countries in the region (OECD, 2023[23]). ARESEP has recently updated the regulatory framework for electricity markets, with a view to promoting cost efficiency with financial balance for electricity generating firms and affordable prices, as well as incentivising investments by electricity generating firms (La Gaceta, 2021[94]).
Recommendations
Possible options to further enhance the resilience of the energy infrastructure in Costa Rica include: i) promoting investment in other energy sources; ii) expanding and improving the transmission system; and iii) overcoming hurdles in the supply chain for generation and transmission equipment.
Developing hydroelectric power plants can be challenging due to their large scale and the significant investment required and they are vulnerable to the climate challenges described above. Greater diversification of renewable energy sources could help the grid meet increasing needs, such as those coming from the electrification of transport and, most importantly, balance disturbances resulting from climate events. For example, incentivising investments in solar and, to a lesser extent, wind power could help meet electricity demand during the dry season when hydro sources struggle to meet demand. This requires enhanced strategic planning and investment to increase renewable energy sources’ capacity, diversity and reliability.
Additionally, enhancing and expanding the electricity transmission infrastructure would help ensure electricity can be efficiently distributed across different regions, meeting the demands of energy-intensive industries like semiconductors. Addressing the identified supply chain issues in the generation and transmission of equipment is also vital. Finding solutions to these challenges, such as fostering partnerships with suppliers and innovating in logistics and procurement strategies, can help mitigate the impact of cost escalations and delivery delays, as the ecosystem actors interviewed for this report suggested.
Addressing energy sector challenges is essential. It involves a concerted effort from the government, energy providers and the private sector to invest in sustainable energy infrastructure, diversified sources and improved transmission. Promoting more competition in the electricity market, notably on generation and retail supply, and relaxing barriers to private sector participation would boost innovation and competitiveness in the sector (OECD, 2023[23]). According to information provided by ICE in the context of this report, efforts have been made to revise the electricity tariffs on distributed generation in line with ARESEP requirements and building on the 2022 law for distributed renewable energy resources (SCIJ, 2022[95]). In 2024, more than 1 500 clients provided electricity to the network, accounting for 0.45% of the total electricity produced by ICE. Further efforts by ICE to understand the hosting capacity for expanding the engagement of distributed generators in the network are underway.
The Electricity Generation Expansion Plan, emphasising reliability, demonstrates Costa Rica’s efforts to consider the impacts of climatic events and the intermittency of renewable sources (ICE, 2020[79]), with challenges already highlighted. The plan sets thresholds for weekly energy deficits, assessing whether these criteria align with the semiconductor industry’s needs or if adjustments in generation policy would be important to accommodate the growing energy demands of the industry.
Given the recent events, it would be important to continue modernising the regulatory and policy framework to incentivise distributed generation in the country, opening the electricity market to additional players and promoting investments in wind and solar projects. These measures could improve electricity resilience and increase the country’s attractiveness for semiconductor firms. Fostering greater competition in the electricity sector could also help improve efficiency and diversification of sources, as current regulations still limit the scope for private participation in electricity generation (OECD, 2025[22]). Reducing these barriers, while considering the transfer of electricity planning to an independent body, as recommended in the OECD Economic Survey 2025, would support the development of a more transparent and efficient medium‑term strategy for expanding and diversifying renewable energy sources.
Water
The semiconductor industry’s dependence on a consistent and sustainable water supply, particularly in the front-end manufacturing process, is critical for its operations (Gradiant, 2022[96]). Water is essential when making chips because silicon wafers must be rinsed and cleaned. Not just any water will do, though; ultrapure water (UPW), which is thousands of times purer than drinking water, is required. An average factory making advanced electronic products uses up to 5 million gallons of municipal water daily, meaning that 1 400 to 1 600 gallons are needed to produce 1 000 gallons of UPW (Gradiant, 2022[96]).
The role of advanced water and wastewater treatment is increasingly crucial to meet the global demand for semiconductors. The growing stringency of environmental regulations (Gradiant, 2022[96]) aimed at ensuring the availability of clean water sources is also an important consideration. While front-end semiconductor manufacturing is the most water-intensive segment (Meixner, 2023[97]), water remains a relevant and necessary resource for the back-end segment as well.
In Costa Rica, water is considered a public good and its usage, whether by individuals or legal entities, requires a concession granted by the government (SCIJ, 1942[98]). This framework was reinforced in 2020 with a constitutional reform that established a fundamental right to water, declaring it a national asset with priority given to human consumption over other uses, such as industrial, commercial or agricultural (Law no. 9849 recognising and guaranteeing the human right of access to water, reform of the Political Constitution, 2020).
Water from surface and spring intakes, grouped as surface sources, is equivalent to 86% of the total water extracted annually, while 14% corresponds to water extracted from wells, classified as underground sources (CTIE-Agua, 2023[99]).
Water availability
The country’s demand for water is the highest in Central America, both in total volume and per capita (Water Action Hub, n.d.[100]). Water consumption from human activities represents 12% of the total available water (surface and groundwater) and is estimated at an annual average of 57 cubic metres per capita (CTIE-Agua, 2023[99]).
Costa Rica benefits from a significant water endowment. In 2021, Costa Rica received an average annual precipitation of 197 cubic kilometres (km3). Subtracting losses due to evapotranspiration, exits to the sea and neighbouring countries, the balance of total available water endowment was around 19 km3, of which 1.6% was intended for human consumption (CTIE-Agua, 2023[99]).
Nonetheless, water availability varies considerably across different basins in the country. Additionally, the natural distribution of rainfall in space and time, coupled with challenges in resource management, means that water is not always readily accessible to all inhabitants (AyA/MINAE/MS, 2016[101]).
The growing demand for water for economic activities highlights the importance of integrated water resource management. Of the total water dedicated to consumptive uses, human consumption represents 13%, agriculture, livestock, forestry and fishing represent 72%, manufacturing, mining and construction 11% and services 4% (CTIE-Agua, 2023[99]).
Governance and regulation
The Costa Rican Institute of Aqueducts and Sewers (Instituto Costarricense de Acueductos y Alcantarillados, AyA) and the Ministry of Environment and Energy (MINAE) are the key governmental bodies responsible for the administration and management of water resources. These institutions play a critical role in overseeing policies, plans and regulations related to water supply, sanitation and conservation.
Most firms in industrial parks and within the FTZ regime ensure their water supply through self-sourcing, using their own wells or surface water sources. Wells require a drilling permit and then a water concession. The process can take up to two months. In the case of surface water supply, securing a water concession is associated with a fee. Industrial use is priced differently from irrigation and other uses, and there is also a distinction in charges between groundwater and surface water usage.
Industrial firms in Costa Rica and the semiconductor industry are no exception, arguing that navigating the comprehensive regulatory landscape to obtain water permits is a complex process (May, 2021[102]). An analysis of environmental legislation from 1942-2015 revealed 522 laws or regulations related to environmental matters in Costa Rica, with more than half (53%) directly pertaining to water resources (Arguedas Marín, 2023[103]).
Obtaining the necessary permits from AyA, MINAE or local water boards involves a multi-step process that demands strict adherence to legal and environmental standards. This is especially challenging in rural areas or drought zones where AyA struggles to provide services and firms often consider drilling their own wells, requiring additional permits and environmental impact assessments. This assessment is particularly important because it lays the groundwork for meeting other requirements. The timelines for the assessment depend on the associated risk and the specific environmental impact assessment, varying from 14 to 28 days. However, in exceptional cases, the National Environmental Technical Secretariat (Secretaría Técnica Nacional Ambiental, SETENA) may require additional information, granting firms a deadline to comply (Bonilla-Murillo, Monrós and Marín, 2022[104]). The effectiveness and efficiency of meeting these deadlines largely depend on the professionals’ expertise, as highlighted by SETENA. Once approved, firms have a five-year window to initiate activities based on this approval.
Wastewater management is another crucial aspect of semiconductor fabrication, and Costa Rica has made significant strides in this area. The country has developed and optimised the National Water Policy (Política Nacional de Agua Potable) and the National Wastewater Sanitation Policy (Política Nacional de Saneamiento en Aguas Residuales), underpinned by a comprehensive National Sanitation Investment Plan (Plan Nacional de Inversiones en Saneamiento) that spans from 2017 to 2045 (AyA/MINAE/MS, 2016[101]). Recent developments in this sector include feasibility studies for constructing wastewater collection and treatment systems, underscoring a growing emphasis on improving sanitation infrastructure (AyA/MINAE/MS, 2016[101]).
According to water regulations, any firm responsible for the reuse of wastewater or its discharge into a receiving body or sanitary sewer shall treat its wastewater to comply with the provisions of Regulation No. 33601 on the Discharge and Reuse of Wastewater. This involves analysing and complying with universal parameters such as flow rate, biochemical oxygen demand (BOD5,20) and chemical oxygen demand. There are also specific limits for water discharge depending on the medium it releases (aquifer, river, sewer, etc.) and the economic activity. In addition, there is a periodic obligation to prepare operational reports when the effluent is disposed of in the receiving body, sanitary sewer, or reused.
For semiconductor factories in Costa Rica, considering adherence to environmental regulations, especially regarding water management, can be beneficial. While compliance with these regulations might entail some costs, it helps meet environmental, social and governance goals while ensuring a sustainable use of water that guarantees that Costa Rica can continue to cover water needs in the future.
Challenges
Despite Costa Rica’s reputation as an environmentally conscious nation, issues such as river contamination, droughts, rationing and conflicts over water resources serve as a reminder of the need for effective actions in land use planning, defining institutional responsibilities and investing in infrastructure (AyA/MINAE/MS, 2016[101]), in tandem with good management of water resources.
The lack of wastewater treatment is a major issue affecting public health and water quality. Only about 15.5% of the sewage collected receives some treatment, a low share compared to OECD countries and others in the region. A large share of wastewater from homes and industries flows into rivers without treatment. The majority of Costa Rica’s population has independent wastewater treatment (septic tanks), while 24% are connected to a public sewage collecting network and less than 10% to public wastewater treatment plants (OECD, 2023[105]).
The pattern of wastewater treatment in Costa Rica, with many small-capacity systems using mostly activated sludge technology, has important consequences for the operating costs of the country’s sanitation sector. It is unclear whether the selection of this technology for most treatment systems in Costa Rica responds to a project-specific evaluation of technological alternatives or whether it is due to a trend driven by local experience and market conditions (Centeno Mora and Murillo Marín, 2019[106]).
An increase in sanitary sewer coverage with the construction of higher capacity systems and a properly justified selection of treatment technology best suited to the local context could allow for less costly operation and more sustainable and universal wastewater sanitation in Costa Rica. Both proposals were set out in the National Wastewater Sanitation Policy (AyA/MINAE/MS, 2016[101]), which is expected to guide the development of Costa Rican wastewater sanitation for the next 25 years.
In the context of the semiconductor industry, it is also important to consider the interplay between water availability and electricity reliability, given the significant dependence of the Costa Rican electricity system on hydropower. Therefore, effective water resource management becomes critical for environmental sustainability and for ensuring a stable electricity supply, particularly when climatic challenges affect rainfall and river flows and increases supply risks. Given the semiconductor industry’s electricity needs, any disruption in electricity supply, potentially caused by water scarcity, could have significant operational impacts, as discussed in the dedicated energy section above.
Recommendations
Considering the water intensity of semiconductor fabrication, the government could consider policies that promote investment in water recycling and reclamation technologies. Such policies could include incentives for firms that implement these technologies, thereby reducing overall water consumption and mitigating environmental impacts. The experience of Singapore’s NEWater management programme (Box 3.2) can offer valuable insights (Davis, 2022[107]). Water recycling programmes can help countries meet industrial demand for semiconductors while preserving long-term sustainability.
Semiconductor firms require UPW (above network grade). Therefore, the filter systems and water treatment capacity available at existing semiconductor firms could be part of an integrated local water treatment and management system. The plans by Skyworks to treat local wastewater, working on the municipal wastewater treatment system together with the local authorities in Mexicali, Baja California, Mexico, is an interesting example (Skyworks, 2023[108]). Preferential water tariffs to incentivise public-private co-investment into water treatment units would be some of the instruments that could be considered.
For semiconductor firms, particularly those contemplating drilling their own wells, the complexity and duration of the permit process can be an important consideration. Simplifying and expediting this process while focusing on sustainable water management could enhance Costa Rica’s attractiveness to potential investors in the semiconductor industry.
Policy actions to accelerate and scale up investment in water infrastructure to expand access to sanitation services, extend wastewater treatment, reduce water losses and ensure resilience to the impacts of climate change would be important to help meet environmental goals (OECD, 2023[105]), while further increasing the attractiveness for semiconductor investments. Achieving Costa Rica’s decarbonisation and climate‑adaptation goals will also require improving the management of waste and water, alongside expanding and diversifying renewable energy (OECD, 2025[22]).
Launched in 2003, the NEWater programme was a key initiative in Singapore’s long-term water sustainability plan.
How it works
NEWater is an advanced water reclamation process. It uses dual-membrane (via microfiltration and reverse osmosis) and ultraviolet technologies to purify treated used water. This makes the water ultra‑clean and safe for drinking and industrial use.
Benefits
Provides a sustainable and resilient water supply, reducing reliance on rainwater.
Delivers high-quality, ultra-clean water suitable for industrial and potable purposes.
Enhances Singapore’s water self-sufficiency and resilience against climate change.
Promotes sustainable and efficient resource use, aligning environmental, social and governance goals.
Boosts public confidence in recycled water, helping to close the water loop in urban environments.
Public education and community engagement help build public acceptance and trust in recycled water.
Financing
The financing of the NEWater programme involves a combination of public-private partnerships, government funding and specific government support for water technology development and sustainability.
For some of the NEWater plants, Singapore’s Public Utilities Board (PUB) adopted a public-private partnership approach. In this model, the private sector is responsible for designing, building, owning and operating the plants. They also handle the project financing and supply NEWater to PUB under long-term contracts (LegCo, 2016[109]).
PUB actively supports innovation in water technology. This includes open grant calls to develop breakthrough technologies in areas such as energy and waste reduction, decarbonisation and water quality improvement (PUB, 2021[110]).
Additionally, PUB has established a Green Financing Framework to support future green projects that align with its sustainability efforts. This approach includes plans for issuing green bonds, reflecting a commitment to sustainable development and climate action (SMART, 2022[111]).
Sources: LegCo (2016[109]), “Fact Sheet - Overview of water resources management in Singapore”, https://www.legco.gov.hk/research-publications/english/1516fsc19-overview-of-water-resources-management-in-singapore-20160226-e.pdf; PUB (2021[110]) , 5 Things You May Not Have Known about NEWater, Singapore’s National Water Agency, https://www.pub.gov.sg/Resources/News-Room/Featured-Stories/2021/5-things-about-NEWater; SMART (2022[111]), “PUB establishes Green Financing Framework to advance sustainable development and climate action”, https://smartwatermagazine.com/news/pub-singapores-national-water-agency/pub-establishes-green-financing-framework-advance.
Other key actions could include adequate supervision of the construction, operation and maintenance of septic tanks to minimise risks of contamination; progressively raise water supply and sanitation tariffs to better reflect the costs of service provision based on long-term strategic investment plans with independent oversight of the regulator and expand targeted social measures to address affordability issues (OECD, 2023[105]).
Engaging in partnerships with global semiconductor firms and water treatment experts can yield insights into best practices and innovative solutions appropriate for Costa Rica’s unique context. Such collaboration could also extend to R&D initiatives in water management technology.
Transport
Costa Rica has a developed transportation infrastructure network (see Annex J for a detailed map of the transportation infrastructure network in the GAM area and across the country). The Ministry of Public Transport is currently overseeing 71 infrastructure projects that will help enhance transport infrastructure in Costa Rica, also listed in Annex K. The sub-sections below discuss road, port and airport infrastructure priorities.
Roads
Costa Rica has commercial access by sea, land and air. In terms of roads, it offers 47 905 km of road network. It has Latin America’s fifth densest road network (Barrantes, 2018[112]); it does not have a national freight train, so land routes and their good condition are essential for transporting merchandise.
About 3.5% of the road network is catalogued as high-capacity network, making it a vital element of the country’s international trade, as it connects the land borders (Nicaragua and Panama), the ports (Pacific and Caribbean) and Costa Rica’s main international airport, Juan Santamaría. However, 89.5% of the total high-capacity network does not meet the minimum lanes standard (two lanes in each direction) outlined in the 2011-35 National Transportation Plan. This is detrimental to travel times and efficiency and worsens road congestion (Barrantes, 2018[112]).
The country has 19 primary routes, that is, those characterised by relatively high traffic volumes and a high proportion of international, interprovincial or long-distance trips (Asamblea Legislativa, 1972[113]). Specifically in the FTZ, the most used routes are Route 1 (connecting San José to the north, including Liberia Airport, all the way to the border with Nicaragua), Route 2 (connecting San José to the south, through Cartago to the border with Panama), and Routes 39 (around San José), 27 and 32 (Barrantes, 2018[112]). Routes 27 and 32 represent the most direct routes to the country’s most important ports, Caldera on the Pacific coast and Moín on the Caribbean coast respectively.
Expanding road infrastructure also comes with a longer-term cost, given the extensive maintenance and management efforts required. Maintenance of the existing road infrastructure already entails significant challenges because of insufficient investment (Chacón Soto, 2023[114]).
Finally, a good public transport system is important for workers, especially if the semiconductor facilities’ location is outside the main urban centres. Costa Rica is grappling with an outdated public transport system that encompasses a range of issues, including overcrowding during peak hours, insufficient routes and frequencies and congested roads shared with other vehicles. Despite decades of discussions and planning for an efficient, sustainable and accessible transportation system, practical implementation has fallen short. This situation underscores the need for a modern mobility system that meets current demands, as stressed by the UCR and highlighted by the World Bank’s emphasis on the critical role of public transport in economic growth and access to essential services (UCR, 2023[115]; World Bank, n.d.[116]).
Ports
Costa Rica has six ports on both the Pacific and Caribbean coasts. The main cargo ports are Puerto Moín, with access to the Caribbean Sea, and Puerto Caldera, with access to the Pacific Ocean. The remaining ports are smaller and are used for recreational activities, except for Puerto Limón (next to Puerto Moín), the country’s largest international passenger port.
Even though Puerto Caldera is known as the second-largest international port in the country, consultations with stakeholders suggest that important challenges must be addressed. Currently, the port operates at 90% of its capacity, when 65% and above is considered congestion (Q Costa Rica, 2023[117]). More so, the firm managing the port estimates that it will not be able to handle all incoming and outgoing goods in acceptable timeframes by the end of 2024 because the flow of exports is increasing and the port capacity is not growing (Alvarado, 2023[118]). On the contrary, Puerto Moín achieved a 30% reduction in the length of stay of vessels in the port, exceeding its objectives a year and a half ahead of plan (Mundo Maritimo, 2023[119]). The Puerto Moín cargo terminal operates through a concession that seems to have been quite successful in leveraging investment to expand capacity both in the past and in terms of future investment commitment (Box 3.3).
A modernisation plan is in place for Puerto Caldera through the International Finance Corporation, overseeing the current port’s concession, which is set to end in 2026. The strategy involves a new concession in 2026 to commence implementation in 2027. The feasibility of initiating the concession in 2027 is under consideration, with efforts that commenced in 2024 to ensure the process is well underway by the time the current concession concludes in 2026.
Engagement with private sector players for the provision of infrastructure, as is the case, for example, in concessions for port terminals, should be in line with the OECD Recommendation of the Council on Principles for Private Sector Participation in Infrastructure (2007[120]).
The Moín Container Terminal (Terminal de Contenedores de Moín, TCM) concession project in Costa Rica resulted from an effort to modernise and expand the country’s port capacity, part of a broader plan to improve critical infrastructure and foster economic development by increasing competitiveness in international trade.
Project initiation
The TCM project officially began with the signing of the concession contract in 2011 between the Costa Rican government and APM Terminals, a subsidiary of the multinational Maersk Group. Construction began in 2015 after clearing all of the legal and environmental steps, and the terminal began partial operations in 2018, with a formal inauguration in 2019. The concession term is 33 years.
Current capacity and expansion
The TCM project was designed to be carried out in several phases, starting with an initial phase that included the construction of a 650-metre (m)-long pier and a container yard with a capacity for 26 000 twenty-foot equivalent units (TEUs). This initial phase also highlighted the incorporation of advanced technology, including 6 gantry cranes and 29 cranes, with an investment of nearly USD 110 million.
As of 2024, the TCM reports a total annual capacity of 1.2 million TEUs, occupies some 40 hectares (with a potential for 2.5 million TEUs and 80 hectares) with a 650-m pier and a depth of 14.5 m. The access channel has a depth of 18 m. Equipped with 29 electric container cranes and 6 Super-Post Panamax gantry cranes, the maximum capacity of an individual vessel is 8 500 TEUs and the terminal operates 24 hours a day, 7 days a week.
Foreseen expansion
The concession contract anticipates a second expansion phase once a cargo volume of 1.5 million TEUs is reached and a third phase upon reaching a volume of 2.5 million TEUs. This foresight for expansions from the project’s inception and concession contract reflects proper planning to accommodate increased commercial transactions and international trade through the terminal.
Productivity and benefits
TCM ranks 87th worldwide in the World Bank Container Port Performance Index 2022 and 14th within Central America, South America and the Caribbean.
Some of the benefits of the investment resulting from the concession reported by the MOPT of Costa Rica include: reduction of logistic costs due to economies of scale, reduction in waiting and docking times and the ability to receive and operate larger ships than those previously accommodated; attraction of investment by enabling an efficient, effective and high-tech port; socio-economic development of the region, through the generation of direct and indirect employment and supply chains; and opening of new markets for Costa Rican exports, through new maritime connections made possible.
Sources: CNC (2023[121]), Terminal de Contenedores de Moín, https://www.cnc.go.cr/proyectos/en-marcha/tcm; Blackwood, A. (2024[122]), TCM alcanza su 5° aniversario con grandes proyectos, https://www.apmterminals.com/es/moin/practical-information/news/2024/240318-apm-terminals-moin-gives-costa-rican-economy-6-million-container-boost; World Bank (2023[123]), The Container Port Performance Index 2022: A Comparable Assessment of Performance based on Vessel Time in Port, https://documents1.worldbank.org/curated/en/099051723134019182/pdf/P1758330d05f3607f09690076fedcf4e71a.pdf.
Airports
There are four international airports in the country, of which only the largest and most transited, Juan Santamaría International Airport, receives significant cargo (DGAC, 2022[124]). The Daniel Oduber Quirós International Airport (Liberia) has served as an alternative for contingency situations for some industries (including semiconductors) but the expansion of the cargo terminal would be an important step for this infrastructure to be considered as a more regular option.
Challenges
In terms of logistics, in 2022, Costa Rica received a score of 2.20 out of 5 (1 being the lowest) in the World Bank Logistics Performance Index (LPI) (2023[125]). LPI data presented in Figure 3.4 shows that Costa Rica presents some areas for improvement compared to other Latin American countries. Road quality is a particular challenge, with Costa Rica lagging behind the OECD average (OECD, 2023[23]).
Low public investment and inadequate planning are the most prominent challenges for merchandise transportation. Currently, only 2% of the GDP is allocated to infrastructure, but experts consider it needs to be at least doubled (Chacón Soto, 2023[114]). Traffic congestion is a challenge: Costa Rica has the slowest traffic in Latin America and one of the slowest in the world, ranking 144th out of 162 countries (Moszoro and Soto, 2022[126]). This issue is generally attributed to poor urban space planning (Rodriguez, 2018[127]), which also affects the country’s development of adequate infrastructure.
Note: The Logistic Performance Index (LPI) is based on logistics professionals’ replies to a survey that takes into account six different dimensions (as listed in the figure) of a country’s overall logistics performance. The score within each category goes from one (very low quality) to five (very high quality).
Source: OECD calculation based on World Bank (2024[128]), Logistics Performance Index (LPI), https://lpi.worldbank.org/international/scorecard/radar/C/CRI/2023.
Recommendations
While the stakeholders consulted do not consider transport infrastructure a key challenge, some transportation challenges remain. These could be potentiated by expanding the semiconductor ecosystem (and other industrial sectors), if not met with a strategy to further develop and expand the existing infrastructure. Examples of concrete actions that could be considered include:
Improving the road infrastructure, notably routes connecting the main ports and airports with industrial clusters. Such investments should be commensurate with the relatively short distances and small size of the country.
Investing in the expansion of the capacity of Caldera’s port terminal.
Increasing the capacity of a secondary airport.
Investing in public transportation and reducing traffic congestion to facilitate workers’ commute.
While the recent fiscal situation in Costa Rica has been improving, it is expected to remain constrained for some time (OECD, 2023[23]). While this might limit the scope of available public funding for infrastructure investment, the underinvestment in infrastructure is a longstanding challenge that predates the recent fiscal challenges.
Nevertheless, it should be noted that some long-term projects are being undertaken, although they are still in their early stages. That is the case of the expansion of an airport in Limón, the construction of an airport in the south of the country (Ruiz, 2023[129]), the expansion and reconstruction of the runways at Liberia Airport in Guanacaste (Bnamericas, 2023[130]), and the modernisation of Puerto Caldera (Alvarez, 2023[131]). Finally, constructing an airport in Orotina, closer to the Pacific ports, has been considered in the past (Rojas, 2023[132]).
3.2.3. Legal and regulatory framework
Regarded as one of Latin America’s most appealing countries for business, Costa Rica boasts a stable economy and political environment (TMF Group, 2023[133]). In the World Bank Doing Business ranking, the country takes 74th position among 190 economies evaluated but ranks 144th in the “Starting a business” subcategory (World Bank, 2019[134]).
Costa Rica is open to foreign investment in the electronics sector. According to the OECD Foreign Direct Investment Regulatory Restrictiveness Index, Costa Rica does not present any equity, screening, foreign staff or other statutory restrictions to FDI in the electronics sector (OECD, 2024[135]).
Investment incentives and trade facilitation regime
Costa Rica provides three special regimes that include incentives, in particular for export-oriented investments: free trade zone (FTZ), inward processing (INP) and duty drawback (DD). However, the FTZ regime described below encompasses the benefits of the INP and DD regimes (see Annex L) and is, therefore, the preferred option for any new business in Costa Rica.
The FTZ regime
The country actively encourages multinational corporations to establish operations under the FTZ regime, a cornerstone of its export and investment strategy. This regime offers incentives and benefits, such as export tax exemptions, overseen by PROCOMER and other entities (TMF Group, 2023[133]). The FTZ is not a specific physical zone but an incentive regime, even if several firms benefitting from the FTZ regime might co-locate in designated Free Zone areas.
Costa Rica uses the FTZ regime, established by Law no. 7210 of 1990 (SCIJ, 1990[136]), to promote strategic sectors aligned with the National Development and Public Investment Plan. These strategic sectors were initially defined in 2010 (SCIJ, 2010[137]), but the law establishes the possibility of revising and updating the sectors, according to the country’s priorities and global environment. The strategic sectors include the advanced electronics sector, covering a broad spectrum of technologies, including microprocessors, integrated circuits and digital audio and video equipment (PROCOMER, 2020[138]). Table 3.1 summarise the main incentives and requirements applicable to manufacturing firms and Table 3.2 offers additional information by location and FTZ firm category. Tax exemptions granted to FTZ firms amounted to about 1% of GDP in 2021 (OECD, 2023[35]). The analysis of the FTZ regime in this report focuses on manufacturing firms, notably those in a strategic sector, under which most firms in the semiconductor ecosystem would fall (shaded cells in Table 3.2). Incentives for other economic activities that may supply or buy from semiconductor firms can be relevant but fall outside the scope of this report.16
Notes:
1. Corporate income tax (CIT) in Costa Rica is tiered but for firms with annual gross income over CRC 120 582 million (approximately USD 235 617 as of January 2025), the default CIT rate is 30%.
2. A withholding tax on remittances abroad applies to income from Costa Rica that is transferred overseas. Depending on the type and reason for the payment, this tax varies between 5.5% and 50%.
3. Municipal business licenses differ widely in Costa Rica, depending on the municipality. For example, in the municipality of San José, business licence tax is 0.25% for the first year, 0.30% during the second year and 0.35% as from the third year on sales or gross income (Law no. 5694, San José Municipal Tax Law).
4. Real estate transfer tax in Costa Rica is 1.5% of the value of the transaction (Law no. 6999, Real Estate Transfer Tax Law).
5. Strategic sectors are defined by a Special Commission on the Definition of Strategic Sectors (PROCOMER, 2020[138]).
Sources: OECD based on SCIJ (1990[136]), Free Trade Zone Regime Law, Law No. 7210, http://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?nValor1=1&nValor2=11593 and its subsequent amendments, and PROCOMER (2022[139]), Guía Régimen Zona Franca - Regímenes Especiales, https://www.procomer.com/wp-content/uploads/Guias-Zonas-Francas-junio-2022.pdf.
The activities eligible for benefits under this regime include manufacturing, which consists of converting raw materials into finished or semi-finished goods, hereafter referred to as “manufacturing firms”. Notably, since 2010, it is no longer necessary to demonstrate a minimum export level to benefit from the regime, provided that the firms either fall within a strategic sector or are situated outside the GAM (Law no. 8794 of 12 January 2010). This exemption also extends to manufacturing firms that supply a minimum of 40% of their total production to other entities within the FTZs.
Notes: FTZ categories are classified as follows under Law 7120 (SCIJ, 1990[136]): a) export processing industries that produce, process or assemble for export or re-export; b) marketing firms; c) services in strategic sectors; ch) park managers; f) manufacturers in strategic sectors; g) firms that provide human health service centres; h) firms that provide agricultural, livestock and fishing inputs; i) firms that develop sustainable adventure parks; j) firms in the film, audiovisual and recording industries that are permanently located outside the GAM.
Source: Table provided by COMEX, for the purpose of this report.
Additionally, the Free Trade Zone Regime Law specifies certain activities excluded from participating in the regime (SCIJ, 1990[136]).17
For the eligible enterprises defined above seeking to benefit from the FTZ regime, a stipulated minimum new initial investment is mandatory (SCIJ, 1990[136]). This investment must be substantiated through new fixed assets subject to depreciation, real estate and the proposed number of jobs created.18 The law mandates a maximum period of three years from the submission date to implement this investment under the following terms (applicable to the semiconductor industry):19
Inside the GAM:
Within industrial parks: Minimum investment of USD 150 000.
Outside industrial parks: Minimum investment of USD 2 million.
Outside the GAM:
Within industrial parks: Minimum investment of USD 100 000.
Outside industrial parks: Minimum investment of USD 250 000.
Enterprises that wish to be categorised as “megaprojects” in high-level manufacturing are required to invest a minimum of USD 10 million in depreciable fixed assets, irrespective of their location (SCIJ, 1990[136]). Additionally, these firms must maintain a minimum workforce of 100 employees from the commencement of their productive operations. Megaprojects are given up to 8 years to complete this investment (instead of 3) and benefit from income tax exemption for the first 8 years if located inside the GAM and for the first 12 years if located outside.
The investments underlying the request for FTZ status should adhere to the following criteria:
Asset ownership by the applying entity from the date of application to the regime.
Movable fixed assets, which should comprise either new or used items sourced internationally or new items procured domestically.20
Fixed assets subject to a trust agreement as collateral are permissible, provided that the trust’s settlor and/or beneficiary is a beneficiary of the FTZ regime and the assets are duly recorded in the beneficiary’s financial statements.
The application process for the FTZ status is electronic and relatively straightforward, managed through PROCOMER (2022[139]). The process includes technical and legal reviews and, ultimately, authorisation by the Ministry of Foreign Trade and the president of Costa Rica. Firms are advised to engage in pre‑operational activities such as staff training and facilities setup during this process. For semiconductor firms, the emphasis of the review is usually on a robust business plan and strategic commitments, considering the complexities of the semiconductor industry. The application process normally takes between three to six months and provides time for firms to prepare their operations, a critical phase for high‑tech industries like semiconductor manufacturing.
In addition, the application process and regulatory procedures have been simplified and streamlined through an online platform called Single Investment Window (Ventanilla Única de Inversión, VUI), which serves as a one-stop shop for most of the necessary procedures. The VUI is discussed in detail in the business creation sub-section below.
A firm or investment project that has already benefitted from the incentives of the FTZ regime cannot enjoy the benefits again once they have expired. However, there is an exception if the applicant demonstrates that it is applying for a new project or when the nature and magnitude of the additional investments justify renewing the incentives. The Ministry of Foreign Trade assesses at discretion each case based on a set of key factors, including the total investment in the country versus the new investment offered, the relevance and purpose of the new division or project, its location, the production process and the types of goods or services involved. Moreover, regardless of whether a new project or an additional investment, the application must at least satisfy the baseline requirements for a new initial investment as outlined in the regime’s regulations (SCIJ, 2008[71]) and described in Table 3.1. Finally, it is worth noting that some free trade zones in Costa Rica focus on sustainability, environment and innovation (TMF Group, 2023[133]).
Customs
Customs regulations represent a critical aspect for businesses, especially those involved in the global value chain of semiconductors. In Costa Rica, these regulations are shaped by a combination of national legislation and international treaties, creating a framework that firms must navigate for their import and export activities.
The cornerstone of this framework is the Customs Law (SCIJ, 1995[140]), supplemented by Costa Rica’s participation in several international trade agreements, such as CAFTA-DR. These agreements define the rules of engagement for firms and often offer preferential treatment in terms of tariffs and duties.
The first step for a firm looking to enter the Costa Rican market is to register with the Customs Authority (SCIJ, 1995[140]). This is an essential prerequisite for any import or export operation. Once registered, the firm must prepare for the meticulous process of documentation. This includes ensuring that the correct paperwork, such as commercial invoices, bills of lading and certificates of origin, accompany all shipments. Additional certifications, often related to safety, health or environmental standards, might be required for certain special products.
Costa Rican firms benefit from the Foreign Trade Single Window (Ventanilla Única de Comercio Exterior, VUCE) for processing permits, licenses and trade documents and other administrative requirements to engage in foreign trade, bringing together procedures required by different government institutions (Box 3.4).
Costa Rica is moving forward with important trade facilitation reforms This includes the forthcoming Single Window for Foreign Trade 3.0, currently under development, aims to streamline import, export and transit procedures by expanding electronic and automated processes (DevelopmentAid, 2023[141]).
Ventanilla Única de Comercio Exterior (VUCE)
Costa Rica’s Foreign Trade Single Window (VUCE) was created in 1996 by Law no. 7638 creating COMEX and PROCOMER. VUCE is one of PROCOMER’s directorates and its main objective is to centralise, streamline and simplify foreign trade procedures.
VUCE involves the different institutions that control the entry and exit of certain products to safeguard human, animal, plant and environmental welfare. It also involves the private sector in the compliance of such controls and carries out other functions such as the Single Exporter Registry, the certification of controlled origin for export and the administration and maintenance of computer systems for the electronic transmission of data as part of the logistics of international trade.
VUCE’s main objectives are to:
Centralise previous foreign trade procedures for authorisation by different governmental institutions.
Streamline and simplify previous foreign trade procedures.
Guarantee the existence of at least one office located in strategic geographic areas where a significant number of firms make its establishment economically feasible.
Implement the necessary mechanisms to carry out previous foreign trade procedures through compatible electronic means.
Disseminate information on the procedures and requirements to be carried out in the VUCE system.
Sources: Information provided by Costa Rica in the policy questionnaire used for this report; VUCE (2024[142]), Acerca de VUCE, https://www.vuce.cr/acerca-de-vuce/.
While VUCE helps firms with permits and licences, the Tecnología de Información para el Control Aduanero (TICA) electronic customs information system facilitates the management of import and export duties and customs procedures in Costa Rica. Importers must declare all goods entering Costa Rica using TICA through an electronic declaration entitled Declaración Única Aduanera. This declaration must be submitted before the goods arrive in the country and should detail the goods’ description, value, origin and other pertinent information.
In terms of customs inspections in Costa Rica, the country employs a risk management system that helps streamline this process while ensuring compliance and safeguarding against illegal trade.21 However, random physical inspections are still possible and can occur without prior notice.
A novel import protocol is currently being implemented for most goods arriving through the terminal management firm APM Terminals in Port Moín on the Caribbean coast, involving mandatory scanning by customs and the Drug Control Police (PCD). The Costa Rican government aims to comprehensively scan all imports and exports, irrespective of their entry points, whether arriving by land, sea or air. This initiative starts with the Moín Container Terminal, managed by APM Terminals, with partial scans of government-pre-selected shipments (ITA, 2023[143]). In addition, Costa Rica started equipping all entry and exit points for goods with non-intrusive inspection systems to strengthen supply-chain security while maintaining trade fluidity in the context of ”Operation Sovereignty”, an initiative primarily focused on security while preserving trade fluidity (RACSA, 2023[144]).
The FTZ regime distinguishes itself significantly from the regular customs regime. In addition to reduced customs duties, firms in the FTZ regime are regarded as an “auxiliary to the customs public function”, which grants them certain advantages. Among these is the autonomy in handling their processes without the need for external operators such as customs agents, bonded warehouses and other foreign trade intermediaries. This independence in managing imports and exports enhances the efficiency of their operations, as it reduces reliance on third-party logistics services within Costa Rica.
There are nevertheless some vulnerabilities in Costa Rica’s customs system, which were exposed by the 2020 COVID-19 pandemic and the 2022 cyberattack on the Ministry of Finance (AP, 2022[145]).
Persistent infrastructure challenges and outdated equipment hamper customs operations, affecting their overall efficacy. The Operational Audit on the Effectiveness of Customs Management report by the Comptroller General of the Republic of Costa Rica in 2016 revealed concerning statistics. It was found that during the audit period, all customs offices experienced customs clearance delays exceeding 96 hours in 25.7% of cases and over 120 hours in 15.3% of cases. Particularly, the customs offices in, Caldera, Central and Limón were responsible for 38.7%, 15.5% and 37.9% of declarations respectively, with clearance times surpassing 120 hours.
Acknowledging these challenges, the National Customs Service has been working towards adopting modern and efficient computer systems, and simplifying and clarifying regulations and procedures. A pivotal step in this direction is the Bicentennial Digital Treasury project, initiated in 2020, which is a concerted effort towards digital transformation (Ministry of Finance, n.d.[146]). This project aims to replace the outdated TICA system (which has been in place for 18 years), enhance customs control and services, facilitate trade by leveraging technology and implement an efficient risk analysis system. This is envisioned to establish robust, efficient controls and enable streamlined customs management processes. The project, supported by a loan from the World Bank, was adjudicated in September 2023 and is foreseen to be concluded in March 2026, with a first stage of deployment foreseen for November 2024.
Revamping the customs IT systems and platforms constitutes a priority for Costa Rica. A recent incident involving a glitch in the TICA system, crucial for customs operations, impacted activities at the Moín terminal (Monge, 2024[147]). Such technical issues can lead to delays in the processing of goods, resulting in increased costs for firms due to demurrage charges and potential spoilage of perishable items. For industries that rely on just-in-time supply chains, like automotive or electronics, these delays can significantly affect production lines, leading to significant financial losses. The TICA system incident underscores the critical need for robust, reliable customs systems and the swift resolution of technical issues to maintain the seamless trade flow.
Costa Rica is gradually replacing its TICA customs system with the new ATENA platform, launched in October 2025, as part of the country’s broader Hacienda Digital modernisation efforts (Hacienda, n.d.[148]). The new ATENA platform introduces full digitalisation of customs procedures, real‑time data validation, improved cargo traceability, and new electronic payment options. It also incorporates advanced technologies, including AI‑based risk controls, and aligns with international standards to enhance efficiency and transparency in customs operations (BLP Business Law Partners, 2025[149]).
Recent reforms in customs law (Law no. 10271, Amendment of the General Customs Law, 22 June 2022) aim to modernise procedures, including through an authorised economic operator (OEA) programme under the SAFE Framework of Standards of the World Customs Organization, offering benefits such as extended customs hours and simplified procedures. These reforms, alongside advancements in providing “advanced rulings”, can help reduce review times from 120 to 20 days and reflect a commitment to facilitating trade.
The OEA is a free and voluntary programme that simplifies and accelerates customs procedures for certified operators, such as priority and reduction in the number of controls. To be certified as OEA, operators must meet specific criteria to show that they have: i) a good track record of compliance with customs procedures; ii) a good administrative management system; iii) a solid financial position; and iv) a sound system of security measures in place (Customs Authority, 2024[150]).22
Efforts to facilitate trade are illustrated by the recent completion of the Paso Canoas control point on the land border with Panama (IADB, 2024[151]). The new Paso Canoas border customs consists of an integrated control centre with digitised processes and a dual-facility system where the two countries can carry out joint and simultaneous control at a single point. This arrangement is expected to significantly reduce average cargo transit times, lower transportation costs and promote integration with the Panamanian economy and its logistical infrastructure. Partnering with neighbouring countries such as Panama and, more broadly, in the Latin American region, to identify synergies and complementarities would be an important consideration.
Costa Rica has made significant progress in trade facilitation, as shown by the United Nations Global Survey on Digital and Sustainable Trade Facilitation, obtaining an overall score of 82.8% for 2023, a notable improvement from the 2022 score of 77.42% (UN, 2023[152]). The progress was mainly obtained in the “Paperless trade” and “Cross-border paperless trade” components of the survey. However, there is still room for improvement, for example, with the implementation of the electronic application and issuance of a Preferential Certificate of Origin. It would similarly be important to fully implement the foreseen digital platforms for trade facilitation with regard to the electronic application and issuance of import and export permits, electronic application for customs refunds, and electronic exchange of customs declarations.
On the other hand, factors like institutional arrangement and co‑operation have not changed since 2019, according to the United Nations survey (UN, 2023[152]). Further work to ensure that customs authorities can seamlessly implement specific border requirements under the responsibility of other governmental institutions and the finalisation of the alignment of formalities and procedures with neighbouring countries at border crossings would be important.
While there are opportunities for improvement, customs management in Costa Rica is efficient, notably under the FTZ regime. Continued efforts to automatise the clearance process and use digital approaches can further expedite the time to clear. Deploying technologies for scanning products that avoid physical checks could also help expedite the process while ensuring that sensitive products maintain their characteristics (e.g. semiconductor inputs sensitive to air or light).
In the semiconductor manufacturing process context, firms rely heavily on various specialised chemicals, many of which might be categorised as hazardous or controlled substances. These chemicals are essential for processes like bonding, soldering, moulding or cleaning.
The import of certain chemicals in Costa Rica, especially those considered hazardous, is regulated to ensure safety and environmental protection.23 This involves obtaining special permits and adhering to strict safety standards. While the procedures for importing non-dangerous chemicals can be done through VUCE (PROCOMER, 2022[153]), interviews with stakeholders suggested that obtaining special permits can be burdensome and lengthy. Delays can lead to increased costs due to production downtime, expedited shipping for delayed chemicals or the need to source alternatives at short notice. This is particularly important in the global semiconductor industry, where time to market is critical. Streamlining the processes related to special permits for importing certain chemicals used for semiconductors could help increase the efficiency of local semiconductor businesses and their integration into the global value chain. Identifying the key chemicals and inputs required by the semiconductor industry and adopting a model for streamlining the processing of special permits and registrations, such as validating the registries recognised international organisations have made of those same inputs, could be a solution.
Customs procedures for specific semiconductor inputs/outputs could also benefit from efforts to move towards specialised customs that allow for procedures to be managed by specialised staff who are knowledgeable about the specific products traded, conditional on available resources, considering that, for example, hybrid integrated circuit products were the second most imported product in 2021 (INEC, 2022[154]).
Business creation
Creating a business in Costa Rica involves various procedural steps, including registering the firm, obtaining necessary permits and meeting other regulatory requirements. The process is streamlined compared to many other countries in the region but not as much as in other OECD countries like Chile, Colombia or Mexico (OECD, 2018[155]). According to the OECD Product Market Regulation Indicators (2018[155]), the administrative burden for start-ups in Costa Rica is higher than the OECD average. These include administrative requirements for limited liability firms and personally owned enterprises, as well as licenses and permits they need to comply with. The time and cost can vary depending on the business type and scale, and there are important challenges to address.
The Ministry of Economy, Industry, and Commerce of Costa Rica (MEIC) has been updating its Trámites platform, an online national catalogue of administrative procedures launched in 2018 (MEIC, n.d.[156]), which also includes information on all of the procedures required to start a business, as well as conducting efforts to reduce the time required to start businesses, e.g. an SME can reportedly be created within five days.
Administrative complexities, particularly the licensing and permits system, can present barriers to business entry in Costa Rica (OECD, 2020[15]). Establishing a business in Costa Rica is more challenging than in other OECD countries. The most substantial expense in initiating a business is associated with the requirement for a notary responsible for preparing and authenticating public documents. Once the firm signs these documents, the notary proceeds with their registration.
Additional administrative steps for starting a business in Costa Rica include verifying the payment of all existing social security contributions, obtaining certification for account books from the tax office, applying for a tax identification number, securing mandatory pension and civil insurance, and notifying the social security office. These requirements are generally absent in most OECD countries, particularly for individually owned businesses (OECD, 2020[15]).
The process of founding a firm in Costa Rica also involves other important administrative steps. According to a 2020 report by the World Bank, it takes approximately 23 days to establish a business in Costa Rica (World Bank, 2019[134]), with a significant portion of this time (about 15 days) entailed by issuing a municipal business license (patente municipal). The cost of obtaining this license can reach up to CRC 100 000 (approximately USD 220 as of 2024), varying based on factors such as business type, employee count and location (World Bank, 2023[125]).
OECD countries have made strides in reducing administrative burdens by creating virtual single-window systems, enabling all administrative procedures to be completed simultaneously and online. PROCOMER has advanced in streamlining and digitalising business processes for firms in FTZs, including online completion of registration phases, licenses and permits, covering areas like construction, health and environmental concerns (OECD, 2020[15]). These efforts resulted in the implementation of the VUI. This digital one-stop shop centralises procedures and requirements needed to install a business in the country (Box 3.5). While the VUI was initially created to support FDI and cater to firms in the FTZ, local new firms outside the FTZ regime can also benefit from the VUI (SCIJ, 2016[157]).
Adjustments in the business creation and registration process could help Costa Rica attract investment into the semiconductor industry and facilitate a start-up-friendly environment. The current system, characterised by some length and complexity, especially regarding notarial and administrative requirements, could result in challenges for firms (including from the semiconductor ecosystem) that often seek quick and efficient startup processes.
Ventanilla Única de Inversión (VUI)
The VUI (“one-stop investment window”) is a centralised digital platform that allows firms to formally carry out the processes and procedures required to set up, operate and function in Costa Rica. The VUI seeks to improve institutional processes and services and work in an agile and simple way to help firms follow their procedures, interact with the relevant institutions and access permit and certification approvals.
To date, 25 procedures have been classified as a priority to be included in the VUI, of which 4 are related to immigration and 3 are related to health. As of March 2024, based on the publicly available information at www.vui.cr, there are five “before-firm registration procedures”, which include permits for waste management, wastewater treatment systems and water self-consumption tanks, among others. Five “firm creation procedures” can be done through the platform, including sanitary operating permits and municipal business licenses. The application for the FTZ regime can also be made through the VUI.
Source: Information provided by Costa Rica in the policy questionnaire used for this report; VUI (n.d.[158]), Sobre VUI, https://vui.cr/sobre-vui/.
A constructive approach might involve exploring ways to streamline or even remove the notarial process while also considering a reduction in related costs. This could be inspired by simpler systems implemented in some OECD countries, such as New Zealand or the United Kingdom (Box 3.6). A notary is unnecessary for straightforward incorporations in other OECD countries such as Colombia, Estonia and Portugal. In Belgium, Italy and Spain, notaries have become intermediaries for electronic filing (Dayan and Bolislis, 2017[159]).
Additionally, the consolidation of a digital one-stop shop for all business-related administrative procedures could be a significant step forward (OECD, 2020[15]; 2023[23]). Such a platform, encompassing everything from registration to the acquisition of necessary permits, could emulate the successful practices of PROCOMER in FTZs. In that regard, the VUI could be leveraged to become a true digital one‑stop shop for all new firms, foreign or national, regardless of whether they are a part of the FTZ regime.
Costa Rica ranks low in the 2023 OECD Digital Government Index (2024[160]). In 2021, Costa Rica created the National Agency for Digital Government (Agencia Nacional de Gobierno Digital) (SCIJ, 2021[161]) and approved its regulation only very recently, in August 2024 (SCIJ, 2024[162]).
Efforts to expedite the deployment of the National Agency for Digital Government and implement the adjustments described above could potentially reduce the time and complexity associated with starting a business in Costa Rica while signalling to semiconductor firms and local businesses potentially relevant for the value chain that Costa Rica is dedicated to fostering a more conducive business environment.
New Zealand
In New Zealand, to register a firm, founders must first create an online services account with the Companies Office and secure a RealMe® login. Once they have an account, they reserve a firm name for a fee and check its availability. After reserving a name, founders have 20 working days to complete their firm incorporation, which includes providing details of directors, shareholders and firm addresses and signing and returning consent forms for all directors and shareholders. The registration process can be completed online and when a firm is registered, it automatically receives a New Zealand Business Number (NZBN), a unique identifier. The process emphasises keeping firm information up to date, including filing annual returns to confirm the firm is still operating. Compared to many other countries, the entire process is noted for its simplicity and efficiency. The firm registration process does not require the involvement of a notary.
United Kingdom
In the United Kingdom, registering a firm can be fast and is complemented by supportive tax policies for new firms. Registering a firm within 1 hour with a fee of GBP 20 is possible. The authorities offer flexibility for new businesses with regard to the type of business model and activity (e.g. changing from manufacturing to services), allowing for innovative business models and recognising that new firms might not be profitable in the initial years. Various tax incentives are available for investors, founders, employees and foreign entities. The process is designed to be straightforward, encouraging entrepreneurs to establish their businesses in the United Kingdom.
Sources: New Zealand Companies Office (2024[163]), Incorporating a Company: Registering Your Company with the Companies Office, https://companies-register.companiesoffice.govt.nz/help-centre/starting-a-company/incorporating-a-company/; New Zealand Ministry of Business, Innovation and Employment (2024[164]), Starting a Company, https://www.business.govt.nz/getting-started/choosing-the-right-business-structure/starting-a-company/; International Wealth (2024[165]), “Which country is best for startups in 2023?”, https://internationalwealth.info/en/offshores-for-beginners/which-country-is-the-easiest-to-start-a-business/; Dayan, Z. and W. Bolislis (2017[159]), “Business registration pillars: Good regulatory practice for ASEAN”, https://doi.org/10.1787/971154c7-en.
Integrating local firms into the semiconductor value chain
Developing the local supply chain around large multinational enterprises (MNEs) is an important endeavour. In the evolving landscape of the global semiconductor industry, Costa Rica may benefit from prioritising the integration of its local industry in the electronics sector and semiconductor industry. Regardless of their size, these firms could emerge as vital contributors, potentially serving as suppliers and partners of semiconductor firms in both the front and back ends.
Costa Rica provides several mechanisms to link MNEs and local firms. This includes the National Cluster Program (Programa Nacional de Clústeres, PNC) and the Linkages (Encadenados) programme.
The PNC initiative is driven by public, private and academic stakeholders to facilitate collaboration and improve productivity, competitiveness, innovation, linkages and employment at the national and regional levels (Box 3.7). An example of a success story is the development of the medical device cluster (see Chapter 2).
The Linkages programme, led by PROCOMER and its dedicated linkage unit, is an important initiative that helps connect local firms, helping make the most of potential spillovers from FDI and the presence of MNEs in Costa Rica (PROCOMER, 2024[166]). Linkages operates in two main areas:
Matchmaking: This approach focuses on a single entity to provide a comprehensive view of exports, investment and potential linkages. PROCOMER facilitates the interaction between the entity that requests a good or service and a potential local supplier. The Linkages programme includes business matchmaking events and trade fairs to help connect local suppliers with MNEs.
Development: This approach addresses more complex linkages where greater added value could be generated. PROCOMER supports initiatives that often require financing, certifications, knowledge transfer needs and the involvement of more than two supplier firms to meet the entity’s needs.
Cluster formation is crucial in driving economic growth by establishing a closely-knit network of interconnected firms and relevant institutions in determined areas. These clusters facilitate collaboration and foster innovation in Costa Rica, where economic activity is highly concentrated in the GAM. However, bridging the gap between large MNEs and local businesses remains a significant challenge that requires a strategic approach.
The National Cluster Program (PNC) is an inter-institutional programme supported by the Inter‑American Development Bank and led by the Ministries of Labor and Social Security (MTSS) and of Economy, Industry, and Commerce (MEIC), supported by PROCOMER and COMEX, which seeks to promote the consolidation of cluster initiatives as a mechanism to articulate collaborative networks between actors in the business sector, public institutions, academia and other types of actors linked to the main driving activities of the Costa Rican economy, through a logic of productive transformation with a territorial approach (MTSS, 2024[167]).
Clusters are comprised of public, private and academic entities that self-organise to collaborate in identifying needs, opportunities and improvement capacities within value chains. In this context, the government is responsible for creating public policies to fund and develop infrastructure, technology and learning. The private sector executes business operations, strategic planning and collaborates with suppliers and clients. The academic sector, including universities and research institutions, prepares human capital and engages in research, development and innovation processes.
The process of forming a cluster initiative requires years of work and each one’s level of maturity and consolidation is different. One of the main success stories of the Costa Rican economy, the medical device cluster, is still being further developed. On the other hand, the biotechnology cluster in the Central region has reached maturity, whereas the cybersecurity (Central), logistics (Caribbean) and agroindustry (Caribbean) clusters are being developed. In general terms, most cluster initiatives in Costa Rica are still in incipient stages. Before reaching a cluster level, the interconnected firms are classified as agglomerations, which is the case of the aerospace sector. No semiconductor cluster has been initiated yet.
Source: MTSS (2024[167]), Inicio - Programa Nacional de Clusteres, https://sites.google.com/mtss.go.cr/pnc/inicio.
Through the Linkages programme, PROCOMER maps the needs of MNEs in terms of local supply, identifies specific opportunities for local product or service providers in a matchmaking database and provides technical assistance and training to local suppliers to help meet the high-quality standards required by MNEs.
An analysis of the productivity spillovers from FDI to local firms in Costa Rica conducted in 2018 identified significant spillover effects from FDI on the productivity of local firms (OECD, 2018[168]). In general, local manufacturing and services firms that supply foreign-owned firms were found to have higher labour productivity than those that do not have any business relationships with foreign-owned firms, regardless of the size of transactions and the number of years the relationships last. However, the results varied across sectors and local firms in high-tech manufacturing activities did not seem to benefit from higher levels of productivity resulting from their business relationships with foreign-owned firms (OECD, 2018[168]). Subsequent work focusing on the economic impact of the FTZ regime (see above), highlight the importance of the linkages of FTZ firms with local firms (Morales, Marín and Coto, 2022[169]).
SMEs in Costa Rica constitute 99.3% of all businesses, with micro firms making up 84%, small enterprises 12.7% and medium-sized enterprises 2.7% (OECD, 2021[170]). Despite Costa Rica’s reliance on foreign trade – imports and exports account for about two-thirds of Costa Rica’s GDP – SMEs remain underrepresented in cross-border operations. Targeted strategies would help SMEs’ enhanced integration in global value chains (OECD, 2021[170]), including in the semiconductor value chain. OECD calculations based on data from REVEC (Box 2.2) suggest that the contribution of SMEs to exports (imports) in the electronics sector has been reduced from 15% of total exports (imports) in 2010 to less than 1% in 2022 (Figure 3.5).
Note: Panel A shows the export and Panel B the import composition between 2010 and 2022 by firm size classification (micro-small-medium: 1-100 workers; large: 101 or more workers). Intel was removed from this sample to comply with Costa Rican statistical data anonymisation laws. Data reflect the structure of the broader electronics sector (ISIC 26) rather than the semiconductor industry alone.
Source: OECD calculations based on REVEC. See Box 2.2 for additional details.
The role of the Mixed Advisory Council on SMEs (Consejo Asesor Mixto de la PYME) is pivotal in co‑ordinating between various ministries, agencies and private sector representatives on policies affecting SMEs. This council is also responsible for evaluating and monitoring the effectiveness of SME support programmes (OECD, 2021[170]). A thorough assessment by the council is essential to understand these programmes’ impact and efficacy and identify areas for improvement.
Enhanced collaboration with national research centres, including CeNAT and financial support to mitigate access to finance constraints faced by smaller and younger firms would help realise the potential for local firms to integrate the semiconductor ecosystem (CONARE, 2023[171]).
Initiatives to improve all firms’ access to international markets would support the objective of building strong linkages among different firms on the semiconductor supply chain. This could involve better access to financing (credit and equity), providing targeted export assistance, creating platforms for partnership and collaboration with global semiconductor firms and leveraging available data on VAT for analyses (see Chapter 2).
Access to finance is one of the main bottlenecks for firms in general, especially SMEs and start-ups in high technology and specialised industries. Tailoring public loans, guarantees or equity instruments for firms aiming to enter or expand in the semiconductor industry could alleviate some financial barriers. Channelling venture capital funds through Promoter and MEIC can significantly support that goal. Funding could also benefit from engaging the Costa Rican network of development banks and financial institutions (Sistema de Banca para el Desarrollo), for example, to develop dedicated financing instruments for innovative start‑ups in semiconductors and other advanced technologies.
For innovative start-ups in particular, efforts should include better aligning the priorities of higher education institutions with national innovation priorities, including the governance of research and its funding, as well as improving administrative capacities for IP examination and litigation (see the discussion on IP regulations below). Funding innovation in related semiconductor technologies (e.g. through targeted R&D grants and public-private R&D programmes) and cutting-edge technologies (e.g. new materials, AI, quantum) could also be considered.
In conclusion, a multifaceted strategy encompassing regulatory reform, market access, skill development, financial support, innovation, and enhanced local linkages and matchmaking opportunities can notably enhance the participation of Costa Rican firms in the global semiconductor value chain. Such an approach would benefit SMEs, start-ups and other firms and contribute to the country’s broader economic development.
Permits for skilled foreign labour
As described in the section on human capital, tapping into the expertise available abroad is one of the important levers to help develop the local semiconductor ecosystem.24 This sub-section looks into the immigration process in detail; the data presented in Chapter 2 and the above discussion on attracting workers from abroad complement this discussion with a view also to tapping into the Costa Rican diaspora. Costa Rica’s immigration regulations present two distinct pathways depending on the firm’s registration with the immigration authorities, as summarised in Table 3.3 (SCIJ, 2009[172]).
For expatriates employed by firms not registered with the General Directorate of Migration and Immigration (DGME), their stay is governed by standard immigration law and its regulations. The procedure is comprehensive, encompassing various requirements, and the processing time can extend between 12 to 18 months despite the legal provision for a maximum length of three months. This route often covers personnel categories such as executives, managers, technical staff, specialised employees, scientists, professionals and their dependents, as outlined in the immigration regulations.
Individuals working for firms that are already registered with the DGME follow a different set of procedures. These procedures align with the Immigration Law but specifically adhere to the DGME Regulations for the Registration of Companies and the COMEX Migration Regulation of Personnel. This process, streamlined for registered firms, involves fewer requirements and promises a quicker response time, typically around three months. This is the case for most firms in the FTZ regime (see section above).
Source: SCIJ (2009[172]), Migration Law, Law No. 8764, http://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?param1=NRTC&nValor1=1&nValor2=66139&nValor3=0&strTipM=TC.
The choice between these two procedures hinges on the firm’s registration status with Costa Rican immigration authorities, with the procedure for DGME-recognised firms entailing reduced visa requirements and faster turnaround. Understanding this distinction is pivotal for firms in the semiconductor industry looking to bring in foreign talent, as it directly impacts the ease of entry and integration of these professionals into their Costa Rican operations.
Further simplifying visa procedures and creating dedicated pathways to facilitate the entry of highly qualified individuals could help attract talent, with priority given to senior experts that could act as trainers of the trainers. A special scientific-technological visa for researchers and highly qualified experts could benefit the semiconductor and other high-tech industries, with possible positive spillovers for the national innovation system. Partnerships with countries in the Americas region that help train the trainers should also be further enhanced, as described in the section on human capital above.
Intellectual property regulations
Costa Rica’ legal and institutional framework for Intellectual Property Rights (IPRs) aims to support economic development, innovation and investment attraction, with important actions to create a modern and strong IPRs system over the years. Article 47 of the Constitution of the Republic of Costa Rica provides exclusive rights over works, inventions, trademarks and trade names for authors, inventors, producers, or merchants (SCIJ, 1949[173]). In addition, Costa Rica participates in multiple international treaties administered by the World Intellectual Property Organization (WIPO) and is bound by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) under the World Trade Organization (WTO) framework. Costa Rica additionally engages in several free trade agreements containing IPRs commitments (see Trade subsection).
IPR administration is carried out by the Intellectual Property Registry (Registro de la Propiedad Intelectual), within the National Registry (Registro Nacional), and co-ordination is supported by the Inter-institutional Commission for the Protection of Intellectual Property (Comisión de Enlace Interinstitucional para la Protección y Promoción de la Propiedad Intelectual, CIPPI), established by the Executive Decree No. 35631-J-COMEX-MICIT-SP-H (SCIJ, 2009[174]).25
Costa Rica has followed international developments in the protection of semiconductor layout designs. However, specific regulations on copyrights and neighbouring rights, confidentiality and trade secrets, and integrated circuit layout design systems can be strengthened, along with aspects of enforcement and the overall framework for IP protection (WIPO, 2015[175]). At the time of writing, Costa Rica was working on a project to revise the current provisions in the Law on Procedures for the Enforcement of Intellectual Property Rights (SCIJ, 1999[176]).
Costa Rica’s efforts towards the domestic protection of integrated circuits26 began in 2000 with Law no. 7961 on the Protection of Layout Designs of Integrated Circuits, supplemented by Executive Decree no. 32558 of 8 March 2005, which sets out regulations for integrated circuit layout designs. Protection is granted on the basis of originality and lasts 10 years, starting on the last day of the civil year when the integrated circuit or layout designs were first exploited commercially anywhere in the world (SCIJ, 1999[176]). The definition of integrated circuits and layout designs, as well as the terms of protection under domestic Costa Rican law, is broadly aligned with that provided by the TRIPS Agreement. Aside from TRIPS, Table 3.4 lists key IP legislation applicable in Costa Rica.
According to Law no. 7961, layout design of integrated circuits must be original to be eligible for protection. Following provisions of the TRIPS Agreement, a design will be considered original when it results from the intellectual effort of its designer and is not common in the integrated circuits industry sector. The law protects the three-dimensional configuration of the integrated circuits, known as the layout design, which governs the semiconductor’s functionality rather than the semiconductor device itself.
Source: OECD based on the multiple sources listed in the table.
Despite this regulatory framework, certain cross-cutting ambiguities which may be influenced by the flexibility inherent in the minimum-standards approach embedded in the TRIPS Agreement and could be clarified to improve legal certainty at the national level. Key concepts such as “originality” lack sufficiently precise parameters, highlighting the need for clearer assessment guidelines and procedures, especially for layouts generated via software or AI tools. Likewise, the requirement that a design must be “non-commonplace” in the industry remains insufficiently defined, underscoring the importance of clearer benchmarks in this rapidly evolving technological context (Lizano and Torres, 2024[177]). International collaboration could help support efforts to enhance legal certainty for innovators and address these ambiguities.
Another area for consideration is provisions on reverse engineering. Article 11 of Law no. 7961 includes provisions on reverse engineering, allowing third parties to analyse a protected layout and develop a new design derived from that analysis, as long as the resulting layout meets the originality criteria (Lizano and Torres, 2024[177]). The swift pace of semiconductor advancements, coupled with their short lifespans and the protracted registration process, diminishes the practical benefits of layout protection, rendering it vulnerable to reverse engineering risks. It is nevertheless important to avoid patent thickets, ambushes and trolls, as these can hinder innovation and entrepreneurial activity.
Certain aspects of semiconductor-related know-how may also be protected through intellectual property rights. Elements like manufacturing processes, software source code, business strategies and even the integrated circuit layout designs may qualify as trade secrets under Law on Undisclosed Information no. 7975 (SCIJ, 1999[178]). This law prohibits the disclosure, acquisition or use of commercial and industrial secrets, provided the information is confidential, under the owner’s control and holds commercial value. This is particularly relevant for the semiconductor ecosystem, where sensitive technical and operational knowledge represents a key competitive asset. Implementing robust measures, including trade secret inventories, confidentiality policies, non-disclosure agreements and cybersecurity protocols, can strengthen the protection of these valuable assets.
The functionality of a layout design can also be considered an invention and be patented. Patent statistics provide insightful information on the general state-of-art in the concerned technology area and might help identify the maturity of certain technologies and technological trends (EPO, n.d.[179]; WIPO, 2023[180]). While patent data may not paint the full picture of the innovative nature of an industry in a given country, they are often considered the best proxy for measuring technological innovation. In evaluating technological progress, this information can be complemented with other indicators such as investments in R&D and digital technologies.
Moreover, Costa Rica is a Party to the Patent Cooperation Treaty (PCT), which facilitates the process for inventors to file international patent applications. Patenting activity has nevertheless remained limited over the last 2 decades, with fewer than 15 patents per year, except for notable peaks in 2014 and 2018-2019. With regards to patents related to semiconductors, only one was registered in 2014 (Figure 3.6). Moreover, most patent applications in Costa Rica are filed by foreign applicants (WIPO, 2024[181]). Patenting trends in Costa Rica also reflect earlier constraints in examiner capacity, which affected the number and timing of granted patents. Stakeholders consulted during the fact-finding mission noted that recent administrative improvements have brought processing times closer to international norms.
Note: Data refer to patent applications filed under the Patent Co-operation Treaty (PCT) by earliest filing date. Patents are assigned to the country where the applicant filing the patent is located, using fractional counts (if two firms located in two different countries jointly file a patent, each country gets assigned one half of a patent). The OECD patent database covers administrative records of patents applications filed under the PCT, based on the EPO PATSTAT database (PATSTAT global and PATSTAT Register). Comprehensive and granular by design, PATSTAT allows to produce detailed counts of patents according to the location of the applicants or of the inventors and the technologies protected. The figures presented in the report are of the same magnitude as the statistics collected by the WIPO, where out of 99 patents protected at the National IP office of Costa Rica, 15 were due to applicants located in Costa Rica.
Source: OECD (n.d.[182]), STI Micro-data Lab: Intellectual Property Database, http://oe.cd/ipstats (accessed in March 2026).
In terms of patent regulations, Costa Rica provides an appropriate protection framework. Protection terms and requirements are consistent with international agreements, at least in the de minimis standards.
Costa Rica has also made great efforts to implement technology in processing applications for IP rights. The implementation in 2021 of the online WIPO File platform for filing patents, designs and utility models (Registro Nacional, 2023[183]), alongside the homologation by Costa Rican IP offices of other databases available in other territories such as the European Union and the United States, has made access to information and applications easier. Regional collaboration, notably the efforts to maintain the Latipat platform for patent documentation in Portuguese and Spanish up to date on a monthly basis is also important (WIPO, 2024[184]).
The Intellectual Property Registry manages a network of Technology and Innovation Support Centers (TISC). The TISC headquarters are located at the IP Registry facilities, provides guidance and advice to inventors, attorneys and students in the application process for patents and other IP rights. This office also helps coordinate satellite TISCs that provide this type of support in selected national universities. In addition, the Registry also promotes capacity-building actions in firms, universities and research centres, including international training opportunities provided in the context of WIPO.
Discussions in the context of this report suggest that seeking patent protection may be relevant to protect IP rights for semiconductor-related technologies. Available resources might be sufficient but a potential increase in patent applications would require additional specialised examiners that would either have to be trained or outsourced.
There is room for improvement, notably in implementing the law and procedural aspects (OECD, 2017[19]). Efforts to improve IP enforcement would also be important. Expanded training and capacity-building for officials involved in IP-related dispute resolution could help improve the overall effectiveness of the system, including in technology-intensive industries such as semiconductors.
Costa Rica could further enhance international collaboration for training and continuous professional development for patent and layout design examiners. Fostering an exchange of knowledge and best practices that would significantly improve the precision and efficiency of patent and layout design examination in the semiconductor industry would also help expedite the process.
Enhanced stakeholder engagement could be beneficial. For example, academia and industry representatives could support the CIPPI (SCIJ, 2009[185]). While this commission is composed of public institutions, consultations with public and private stakeholders, in accordance with article 4 of Executive Decree 35631 may help inform its advisory functions. Such engagement is key to support functions, such as, formulating recommendations and mechanisms to ensure compliance with IP protection, collaborating and supporting campaigns to disseminate current legislation on IP, as well as promoting educational and informative campaigns on the protection of IP and promoting training and dissemination activities on IP.
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← 1. Formerly known as the National Council for Scientific and Technological Research (CONICIT). CONICIT was reformed in 2021, in line with recommendations to make it more flexible and agile (OECD, 2021[188]).
← 3. Other bilateral and multilateral treaties in place include for example those with Canada, Chile, Colombia, Dominican Republic, Ecuador, Mexico, Panama, Peru, United Kingdom, with the European Free Trade Association, with the Community of Latin American and Caribbean States (CARICOM), the Central American Integration System (CACM). Treaties in process or where accession was requested include for example a free trade agreement with the United Arab Emirates, the Digital Economy Partnership Agreement, the Agreement on Climate Change, Trade and Sustainability, the Agreement on Trade in Environmental Goods (EGA) or the Trade in Services Agreement. A detailed list of treaties and agreements is available from https://www.comex.go.cr/acuerdos-comerciales/.
← 4. The name of the strategy means “work” (“brete”) in colloquial Costa Rican Spanish. For more details, please see: https://www.mtss.go.cr/elministerio/biblioteca/documentos/ENETH-CR.pdf.
← 5. The institutions that take part in the BRETE Strategy with a focus on employment include: Ministerio de Educación Pública (MEP), Ministerio de Ciencia, Innovación, Tecnología y Telecomunicaciones (MICITT), Instituto Nacional de Aprendizaje (INA), Ministerio de Trabajo y Seguridad Social (MTSS), Comisión Nacional para el Seguimiento y la Implementación del MNC-EFTP-CR (CIIS), Cámara de Industrias de Costa Rica (CICR) and Unión Costarricense de Cámaras y Asociaciones (UCCAEP). Several other institutions are involved in other key areas of the BRETE Strategy, such as innovation, entrepreneurship or infrastructure. Key ministries participating in BRETE in these areas include for example Ministerio de Hacienda and Ministerio de Obras Públicas y Transportes.
← 6. Education and Training Programmes (EFTP) include dual vocational education and training programmes.
← 7. For example, the US and the European Union will likely need to increase the semiconductors workforce at a higher rate relative to other components of the semiconductor manufacturing process to meet their semiconductor production goals (Weisz et al., 2022[189]), thus leading to an increasingly tighter global market for semiconductors skills.
← 8. The CONARE is composed of the rectors of the signatory universities. Currently the CONARE is made up of the Rector of the University of Costa Rica who presides over meetings, the Rector of the Technological Institute of Costa Rica, the Rector of the National University, the Rectors of the State Distance University, the Rector of the National Technical University, and the Director of the Office of Higher Education Planning.
← 9. The CONESUP is composed of the Minister of Public Education who presides over it, a representative appointed by CONARE, a representative for each private university, a representative of the National Planning Office, and a representative appointed by the Federation of University Professional Colleges.
← 10. Para-universities are post-secondary institutions that offer VET but do not have the same autonomy or academic focus as universities.
← 11. Universities part of this programme include Universidad Técnica Nacional, Universidad Nacional Universidad Latinoamericana de Ciencia y Tecnología and TEC, in partnership with Intel.
← 12. The objectives of Playful STEM-promotion are to present basic STEM concepts to primary education students, promote STEM skills and capacities, and encourage students to familiarise themselves with these subjects through play, so they can consider STEM in future career decisions.
← 13. B2 English Level refers to an upper-intermediate level of English proficiency as defined by the Common European Framework of Reference for Languages (CEFR).
← 14. Similarly, Costa Rica ranked third among Latin American and Caribbean countries in direct financing of national training institutions for VET, representing 0.31% of GDP in 2017.
← 15. The dry season in Costa Rica typically runs from December to March (UNED, 2013[186]).
← 16. For example, the incentives arising from a recent reform regarding the three new categories eligible under the FTZ regime, namely health service centers (category g), providers to FTZ firms (category h), and sustainable adventure park developers (category i), as listed in Table 1.2, are beyond the scope of this report.
← 17. Examples of economic activities excluded from the FTZ regime: Mining and hydrocarbon exploration or extraction; Production or sale of weapons and ammunition that include depleted uranium; Businesses involved in any form of arms production or sales; Entities engaged in electricity generation, excluding self-consumption; Financial institutions, including banks and insurance firms; Entities or individuals offering professional services.
← 18. The analysis considers the type of business, including the level of specialisation and automation, the activities authorised under the FTZ and the expected volume to be handled. The proposal is also assessed on whether the proposed job creation is commensurate with the proposed activities. Location is also relevant, with proposals entailing job creation outside the GAM being positively valued. For services, a numeric formula is applied that considers parameters such as: i) the strategic nature of the activity; ii) the annual monetary value of total remunerations paid to employees in relation to the monetary value of the new investment in fixed assets; and iii) linkages to the local economy.
← 19. The analysis of the FTZ regime in this report focuses on manufacturing firms, notably those in a strategic sector, under which most firms in the semiconductor ecosystem would fall. Incentives for other economic activities listed in Table 1.2 fall outside the scope of this report.
← 20. To sell assets acquired or imported free of tax, the firm must first pay the corresponding taxes. Firms can request to apply their own asset capitalisation policy.
← 21. The system focuses on high-risk shipments while allowing low-risk ones to pass through more swiftly.
← 22. As of January 2024, the OEA certification was mutually recognised in several Latin American countries and in the People’s Republic of China.
← 23. Costa Rica has legal instruments that regulate certain chemicals (e.g. chemicals included in multilateral environmental agreements), groups of chemicals (e.g. pesticides, biocides, cosmetics; hygienic products; polychlorinated biphenyls), or individual chemicals (e.g. lead or mercury). Regarding industrial chemicals, Executive Decree 40705-S regulates the procedure for the registration (based on their hazardous properties), the provision of information about them (e.g. through safety data sheets), their classification and labelling (SCIJ, 2017[187]). Importing materials specified in Chapter 28 of the Harmonized System (in Raw Materials of Annex A) requires registration with the Ministry of Health.
← 24. This factor was also stressed by some of the stakeholders interviewed for this report.
← 25. The Commission is chaired by the Minister of Justice and Peace, or a designated representative, and includes participation from the Ministry of Foreign Trade (COMEX), the Ministry of Science, Technology and Telecommunications (MICITT), the General Directorate of Customs and the Prosecutors Office, among other entities.