Developing Supply Chains for Foreign Investors in Costa Rica

Leveraging FDI for technological learning and suppliers development

Roberto CalvoDirector Costa Rica ProveeForeign Trade Corporation of Costa Rica

Agenda

• Country’s background

• Supply Chain Development

• Final remarks

Costa Rica at a glance

• Population: 4 million citizens.

• In the “center” of the Americas

• Oldest democracy in Latin America

• Universal Educational and Health System

Costa Rica at a glance

• Literacy Rate = 95%

• GDP per capita: US $ 3,920

• Life expectancy: 78.1 years

• 6% of world’s biodiversity

Costa Rica trade policies impactin last 15 years…

Costa Rica: Export Evolution

Costa Rica: Thinking locally, acting globally…

Suppliers key role…Opportunities

• The 10 biggest U.S. automotive manufacturers spent 48 cents out of every dollar in sales in 2002 to buy materials, compared with 43 cents in 1996. (Liker, HBR)

Businesses are increasingly relaying on suppliers costs, improve quality, and develop new processes and products (innovation) faster than their rivals’ vendors can .

To contribute to increased national value-added in the production of multinational firms installed in Costa Rica, and as a result, improve the competitiveness of small and medium-sized enterprises (SMEs).

Supply Chain Linkages“Costa Rica Provee”

Primary Goals

- Improve the STI and production capacity SMEs through first class business relationships. - Contribute to the development of value-added local production through linkages.

- Set up mutually beneficial relationships between local companies and institutions that foster competitiveness in the production sector.

Match – Makers!!

STEP 1: DEMAND STEP 2: LOCAL SME

Costa Rica Provee

Training and Assesment

TNC SME

Measure 1

Measure 2

Measure 3

ST

I com

plex

ity

Strategic Value for Electronic TNC(Indirect Materials)

HIGHLOW

Packaging,Pallets (transport accs)Consumables.

Metalmecanics, (Level 1)Plastics (Level 1)ChemistryVA. Services (Level 1)

Metalwork, (Level 2)Plastics (Level 2)Chemistry (L2)VA. Services (Level 2)

R+D + InnovationShared ServicesMetalwork, (Level 3)Plastics (Level 3)Chemistry (L3)

1996

2006

Suppliers STI Capacity Building Development• Improvement of the productive

processes (15%)

• Innovation, investigation and development with special materials or services (18%)

• New technologies (22%)

• Specialized Certifications (ISO 13485, ISO 9001:2000) (7%)

Final remarks.. for developing a program on your country

1. Sustainable linkages are not produced automatically as a direct consequence of FDI presence… it requires participation of Local Government, favorable policies, business conditions, and Business Community openness (TNC and SME).

Final remarks.. for developing a program on your country

2. For MNC: Local sourcing is not (only) Social Responsability, it’s a competitive issue

3. For SME: Think locally, act globally.

“Toyota helped us dramatically improve our production system. We started by making one component, and as we improved, [Toyota] rewarded us with orders for more components. Toyota is our best customer”.

Senior Executive, supplier to Ford, GM, Chrysler and Toyota, July 2001. (Choi, HBR)

Thank You

Enjoy Costa Rica