World Bank Economic Advisor Shahid Yusuf Speaks on Costa Rican Competitiveness

Shahid Yusuf was a keynote speaker at AS/COA’s first Latin American Cities conference in San José on the 30th July 2011

Amongst the notes of his speech …

What defines a dynamic economy? And how does Costa Rica compare? Yusuf says it has emerged as a leader in Latin America and can achieve major growth if it aims high. A 7 percent growth rate is not only feasible but it is central to this goal.

It is the rapidly growing countries that are going to be better prepared to take advantage of green technologies. How to achieve this? Through greater integration in the global economy.

How to achieve this growth?

Capital has been principal driver of growth, followed by total factor productivity and general purpose technology stimulates technological change.

Growth through inspiration for a middle income country:

• Forward-looking strategy.
• All successful countries started in manufacturing and moved to services. A blend is important.
• Build a competitive advantage through creating export with “big hit” items.
• Looking at countries such as Singapore and Finland there has been success by working with multinationals, but they have gone on to develop their own firms and businesses.
• All these countries meeting middle-income status have reached a level in which they can engage in research and development.

Education is crucial to growth. While reinforcement of educational values is crucial in the home, quality of teachers is central. “If you don’t get the best teachers to come and teach it’s not going to work.”

Also important are innovative cities, known as “sticky cities.” Research and innovation is an urban phenomenon. San José has to attract innovative residents by creating an ambiance of good IT infrastructure to attract smart residents.

What does all this mean in terms of Costa Rica’s outlook? Yusuf compares Costa Rica to Singapore in the 1980s (but with better infrastructure). Costa Rica is a fortunate economy. It’s a stable, middle economy on par with Malaysia. It has sound business environment.

But infrastructure needs to grow, particularly in comparison to a country like Malaysia. Costa Rica can count large multinationals as investors, but has a dearth of local firms. Costa Rica has good business services, but wooing foreign direct investment in correct sectors along with a focus on improving education will be crucial.

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Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.