Sector Diversification

During 1997 and 1998, the slump in the electronics industry and Asias financial
crisis sparked a realization in Costa Rica that reliance on one fast-growing and
promising sector could be risky in a volatile environment. Most of CINDEs top
prospects for high technology projects evaporated, as did the possibility of landing
another top MNC in electronics. Fortunately, CINDE had started moving in 1997
toward a more diversified investment promotion strategy after seeing indications
of an impending crisis in 1996. This strategy targeted sectors that were showing
steady, rather than explosive growth, including the medical devices industry and
call centers. To date, this diversification has helped CINDE weather downturns
in electronics investment and exports. CINDE has been able to attract important
anchor investors in the counter-cyclical medical sector, including Abbott

Box 2
Post-Investment Care and Policy Advocacy
The team that spearheaded the countrys follow-through on commitments made
to Intel during the conditional contract period evolved to become the governments Steering Committee for policy advocacy and implementation of necessary
improvements in the investment climate. In addition to the Local Industry Upgrade
program (initially called MIL, and later Costa Rica PROVEE), two important initiatives were directed at the increasing base of installed investors.
High-Technology Multinational Companies Committee. To help balance the needs
of new and existing technology investors, CINDE and the government created a
private-public sector committee to help channel feedback from existing investors.
Led by President Figueres, the Committee met once a month in the Presidential
House to discuss the needs for improvement in the operating environment.
Established investors, such as Intel, Motorola, Baxter Healthcare and Conair presented their concerns. Commitments made at these meetings were immediately
entered as tasks for the Steering Committee to execute.
CINDEs Investment Executives and the Post-Establishment Coordinator. As a
result of the successful Intel experience and an increased portfolio of expansion
projects reinvestments came to represent half of total FDI flows CINDE created
the position of Post-Establishment Coordinator in 2000 to augment the efforts of
its team of account executives. A country and its IPA cannot just attract a foreign
investor and leave it alone, Julio Acosta, CINDEs Managing Director at that time,
said of the program. They have to provide aftercare in order for investors to prosper
and become spokespeople in favor of the country. The executives responsible for
individual investor relationships, called Investment Executives, met regularly with
established investors, taking note of their needs, and channeling their issues to the
new coordinator in charge of aftercare services. This position was also responsible
for policy advocacy, lobbying the government for the continuous improvement of
the operating environment, helping to ensure investor satisfaction, collaboration
with other investors, and reinvestments.

INVESTING IN DEVELOPMENT INTEL COSTA RICA

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