Costa Rica, the oldest continuous democracy in Latin America, and greatly values the bilateral relationship with the United States – Costa Rica’s top security and trade partner, foreign investor, and source of tourists. In an April 2022, President Rodrigo Chaves, a former Finance Minister and World Bank official, was elected with 53 percent of the vote. Since the election, President Chaves has maintained high popularity in Costa Rica, with a September 2023 CID Gallup poll showing 61 percent of Costa Ricans rate his performance as good or better. The Costa Rican economy continues to grow as the Administration pursues new free trade agreements with regional and global allies, and by continuing the country’s strong track record of attracting high-tech investments from multinational companies. The country’s well-educated labor force, focus on English-language instruction, relatively low levels of corruption, geographic proximity to the United States, and attractive free trade zone incentives offer strong appeal to many exporters and investors. In recent decades, the Costa Rican government has focused on attracting investment from high-tech manufacturers in the semiconductor, electronics and medical device sectors. Costa Rica recorded a GDP growth of 7.6 percent in 2021 and 4.3 percent in 2022. The 2023 GDP growth looks to stay on track with 2022 with a projected 4.2 percent growth rate.
Current domestic issues include Costa Rica’s persistent fiscal deficit, stifling internal bureaucracy, the high cost of energy, the state of basic infrastructure, and the impact of inflationary issues throughout the globe. Over the next several years, plans are in place for major upgrades involving rail, ports, airports, highways, and water systems.
Costa Rica ratified the U.S.-Central American Free Trade Agreement (CAFTA-DR) in 2009. This free trade agreement eliminated most of the tariffs for non-agricultural imports and has made trade and investment in the region more attractive to U.S. companies. The remaining tariffs on virtually all U.S. agricultural products will be eliminated by 2023. CAFTA-DR member countries have further promised increased transparency in customs dealings, anti-corruption measures in government contracting and procurement, and strong legal protections for U.S. investors.
The United States and Costa Rica continue to enjoy a strong and mutually beneficial economic relationship, headlined by the United States’ support for Costa Rica’s successful effort to join the Organization for Economic Cooperation and Development (OECD) in 2021. In addition, the U.S. is Costa Rica’s largest trade and investment partner. Approximately 73 percent of Costa Rica’s Foreign Direct Investment in 2022 came from the United States ($2.2 billion), and Costa Rica is home to more than 250 U.S. companies who employ over 150,000 employees. In addition, almost 40 percent of all imports are of U.S. origin. There are no restrictions on capital flows in or out of Costa Rica nor on portfolio investments in publicly traded companies, but companies are subject to local taxes. While foreigners can own property with no title restrictions, and most of the land in Costa Rica has clear title, false or incomplete registries in the National Registry have prompted investor complaints.
Political Environment
Visit the State Department’s website for background on the country’s political and economic environment