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