Costa Rica’s reputation as a prime destination for foreign investment is under threat, according to a new study from the University of Costa Rica (UCR). While the country still boasts a stable economy and tax-free zones, worsening social and environmental conditions are raising red flags for investors.
The UCR study highlights declining education, healthcare, public safety, and rising poverty as key risks to Costa Rica’s competitiveness. These factors are critical for foreign investors, who weigh social and environmental indicators alongside economic stability when choosing where to place their money. If these issues persist, the study warns, Costa Rica could see a drop in investor interest within five years.
Jhon Fonseca, a UCR researcher, pointed out that many companies currently in Costa Rica based their decisions on stronger public policies and social conditions from years past. New investors, however, will judge the country on its current state, making today’s challenges a pressing concern. Fonseca described a “productive ecosystem” of economic, social, and environmental factors that attract investment and create local jobs. Each region’s unique “productive DNA” drives its ability to compete, but Costa Rica’s ecosystem is showing cracks.
The private sector relies on skilled workers and healthy social and environmental conditions to grow. Yet, recent setbacks in education and workforce training have raised concerns. Andrea Centeno from CINDE, Costa Rica’s investment promotion agency, noted that companies are pushing for better alignment between the country’s workforce and the demands of sophisticated value chains. “We’re not losing ground yet, but we need to move faster to meet these expectations,” she said.
The stakes are high as Costa Rica competes with other nations offering similar economic incentives. Without action to address poverty, education, healthcare, and environmental decline, the country risks losing its edge. The UCR study serves as a wake-up call, urging policymakers to act swiftly to preserve Costa Rica’s position as a top destination for foreign direct investment.
