Costa rica to work directly with Intel. CInDe dedicated one year
to helping these global suppliers learn about the country and
establish easily in Costa rica. since then, CInDe has continued to
work closely with established foreign investors and suppliers to
create stronger links, find new clients within the country, and
encourage new firms to locate in Costa rica. (See Box 4: Supplier
Development A Different Type of Investment Attraction.)
Local firms. not only were new supply outlets attracted by the
Intel investment, but also local firms upgraded their operations to
supply the world-class com-panies in the electronics cluster.
several Costa rican companies won contracts with foreign investors,
including Intel. Intel worked with local companies to help raise
their quality and cost competitiveness in order to meet global
standards, for example, in cardboard packaging. In this regard,
Intel both helped to increase the local content of its exports and
contributed toward a higher-performing supplier base. Intel
developed this local supplier network despite the fact that it was
able to import inputs without duty, tax or restriction under Costa
ricas free zone incentive regime.
Box 4 Supplier Development A Different Type of Investment
Attraction
Unlike large exporters such as Intel, suppliers of intermediate
goods choose their locations based on the size of the local market
for their products and services. this sets up a different dynamic
in attracting these investors into a growing cluster, as in Costa
rica, than for export-oriented manufacturers.
CInDes efforts in developing a supplier network have helped to
anchor investors in the electronics cluster and other growing
sectors. In developing suppliers, the agency was faced with a
typical chicken or egg challenge: investors liked to see suppliers
already in place before deciding to invest, but suppliers needed to
see a market of potential buyers before making the decision to
locate. For instance, CInDe discovered that manufacturers
(suppliers) of semiconductor equipment needed to have at least
three potential buyers to warrant setting up a local facility. In
addition, the industrys hyper-dynamic pace meant that plants were
continually refurbished and subject to relocation, so equipment
suppliers viewed any local market as in constant flux.
In tackling the challenge, CInDe learned to work through Costa
ricas existing investors to back link suppliers to them. this
bottom up approach required determining which suppliers were
already working with established investors in Costa rica and might
better serve these investors through local facilities. the agency
soon discovered commonalities between existing investors across
different sectors. For instance, both electronics and medical
devices companies contracted with some of the same suppliers for
clean rooms, plastics, cardboard packaging, metal mechanics, and
other services. After identifying the sector-specific
decision-makers within the supplier companies, the CInDe team
worked both sector angles of the same prospect. In this way, CInDe
was able to cultivate suppliers that sup-ported growth in both the
electronics and medical devices clusters in Costa rica.
