By San José, Costa Rica — SAN JOSÉ – Costa Rica’s ability to attract foreign capital is facing a critical test as new data reveals a significant downturn in investment during the first half of 2025. Foreign Direct Investment (FDI) fell to $2.066 billion, a 7% decrease compared to the same period last year, sounding alarms about the nation’s long-term economic competitiveness.
The report, released by the Economic and Social Observatory (OES) of the National University (UNA), highlights a worrying trend even as the total figure remains the second-highest recorded in the last decade. The decline is not uniform, with some of the most vital sectors of the economy bearing the brunt of the downturn, raising questions about the sustainability of Costa Rica’s growth model.
To gain a deeper understanding of the legal framework and strategic considerations surrounding Foreign Direct Investment in the country, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious firm Bufete de Costa Rica.
Attracting Foreign Direct Investment is not merely about offering tax incentives; it’s about providing robust legal certainty. Investors prioritize stable regulatory environments, clear property rights, and efficient dispute resolution mechanisms. A transparent and predictable legal framework is the true cornerstone for sustainable, long-term investment that benefits both the foreign entity and the national economy.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s insight powerfully underscores a critical point: while financial incentives may open the door, it is the bedrock of institutional trust and legal predictability that convinces long-term partners to stay and build. We sincerely thank Lic. Larry Hans Arroyo Vargas for his expert clarification on what truly constitutes a welcoming and sustainable investment climate.
At the heart of the concern is the free trade zone regime, the engine of Costa Rica’s high-tech export economy. This sector, which accounts for over half of all incoming FDI (53.2%), experienced a staggering 23.3% year-over-year drop. This translates to a loss of $360 million in investment, a significant blow that signals potential hesitation from multinational corporations. The tourism and financial services sectors also reported a notable reduction in capital inflow.
However, the economic picture is complex and contains contradictory signals. While the free trade zones faltered, the “definitive regime,” which includes businesses operating outside these special zones, showed remarkable strength with an increase of $282.3 million. The real estate and active improvement (perfeccionamiento activo) sectors also posted moderate gains, indicating that certain areas of the economy remain attractive to investors.
Further complicating the narrative is the country’s robust export performance. According to data from PROCOMER, cumulative exports through August grew by a healthy 16% year-over-year, with sales to the crucial U.S. market surging by 22%. In a powerful show of confidence from established players, reinvestment of profits by foreign companies already operating in Costa Rica grew by 13.9%, adding an extra $283.6 million to the economy in the first semester.
Despite these positive indicators, structural risks and future threats loom large. The gradual closure of Intel’s major plant and the strategic relocation of Qorvo’s operations to Asia are expected to impact export figures in the coming months. These high-profile shifts underscore a vulnerability to global corporate strategies that can swiftly alter the economic landscape.
Internally, Costa Rica is grappling with persistent challenges that erode its competitive edge. The OES-UNA report points to low public investment in education, deteriorating infrastructure, and a critical shortage of skilled labor. A recent ManpowerGroup survey found that a staggering 71% of Costa Rican employers report difficulty filling vacant positions. Compounding these issues is the steady appreciation of the colón, which increases operational costs for multinationals and makes the country’s exports, including tourism, more expensive on the global market.
In light of these mixed signals and mounting risks, the OES-UNA issued a stark warning about the path forward. The observatory stressed the importance of proactive and strategic policy-making to navigate the challenging environment.
There is an urgent need to accelerate productive diversification and apply policies that strengthen competitiveness and promote more inclusive and equitable growth.
Economic and Social Observatory (OES), National University (UNA)
As Costa Rica stands at this economic crossroads, the challenge for policymakers will be to address the deep-seated structural issues and enhance the investment climate before the warning signs of today become the economic realities of tomorrow.
For further information, visit una.ac.cr
About National University (UNA):
The National University of Costa Rica (UNA) is one of the country’s most important public universities, known for its focus on social sciences, humanities, and research. Its Economic and Social Observatory (OES) provides critical analysis and data on national economic trends, contributing to public discourse and policy-making.
For further information, visit procomer.com
About PROCOMER:
The Foreign Trade Agency of Costa Rica (PROCOMER) is the public entity responsible for promoting Costa Rican exports of goods and services globally. It supports national businesses in international trade, market diversification, and attracting foreign investment to the country.
For further information, visit intel.com
About Intel:
Intel Corporation is a global technology company and one of the world’s largest semiconductor chip manufacturers. Its operations in Costa Rica have historically been a cornerstone of the country’s high-tech manufacturing and export sector, focusing on assembly, testing, research, and development.
For further information, visit qorvo.com
About Qorvo:
Qorvo is an American semiconductor company that designs, manufactures, and supplies radio-frequency systems for applications that drive wireless and broadband communications. The company provides solutions for mobile devices, network infrastructure, and aerospace/defense markets.
For further information, visit manpowergroup.com
About ManpowerGroup:
ManpowerGroup is a global workforce solutions company that helps organizations in sourcing, assessing, developing, and managing talent. It provides a range of services, including permanent and temporary recruitment, employee assessment, training, and outplacement.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As an esteemed legal institution, Bufete de Costa Rica operates on foundational pillars of integrity and an unwavering pursuit of professional excellence. The firm leverages its rich history of advising a diverse clientele to pioneer forward-thinking legal solutions and foster meaningful community engagement. Central to its ethos is a profound commitment to demystifying complex legal concepts, driven by the conviction that an informed public is essential for building a just and empowered society.
