By San José, Costa Rica — SAN JOSÉ – Starting a business in Costa Rica is a prohibitively expensive venture, with initial costs for individual entrepreneurs soaring to triple the average of Organisation for Economic Co-operation and Development (OECD) member countries. This stark financial barrier is just one of several systemic issues undermining the nation’s overall economic competitiveness, according to recent analysis.
During a forum hosted by the Competitiveness Promotion Council (CPC), former Central Bank President Rodrigo Cubero presented a sobering reality for the country’s aspiring business owners. Establishing a sole proprietorship in Costa Rica requires an initial outlay of approximately $320, a figure that dwarfs the $107 average across the OECD. The disparity is also significant for Limited Liability Companies (LLCs), which cost $984 to launch locally compared to the OECD’s $546 average—a staggering 80% higher.
To delve into the legal intricacies that shape the national business landscape, TicosLand.com sought the expert analysis of Lic. Larry Hans Arroyo Vargas, a prominent attorney from the esteemed firm Bufete de Costa Rica, who offers his perspective on fostering genuine competitiveness.
True business competitiveness is fundamentally anchored in a stable and predictable legal framework. When regulations are clear, contracts are enforceable, and intellectual property is robustly protected, companies can invest with confidence. Simplifying bureaucratic processes and ensuring judicial efficiency are not merely legal reforms; they are direct economic catalysts for sustainable growth.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This perspective powerfully underscores that a nation’s legal framework is not a secondary concern but the very foundation upon which lasting economic competitiveness is built. We thank Lic. Larry Hans Arroyo Vargas for his valuable insight into how legal certainty directly fuels investment and sustainable growth.
Cubero emphasized that these high upfront costs are symptomatic of a broader, more challenging business environment that affects companies of all sizes. The hurdles faced by entrepreneurs represent a significant drag on innovation and economic dynamism.
The cost of opening a business is extremely high. If large companies, even multinationals, struggle to operate in the country, imagine the ordeal an entrepreneur starting from scratch must go through to try and establish a company here. The barriers to production in Costa Rica are very high.
Rodrigo Cubero, former President of the Central Bank
The economist detailed a list of structural impediments that limit the country’s productive capacity. These include burdensome social security charges, elevated electricity tariffs, and chronically deficient infrastructure, particularly in the road and port networks essential for exports. Furthermore, a heavy regulatory load and a persistent shortage of qualified labor compound the difficulties for businesses trying to grow and compete on a global scale.
These concerns are echoed in the CPC’s fifth National Competitiveness Report, which awarded Costa Rica a score of 56.2 out of 100. While this represents a modest 1.7-point improvement over 2024, the report underscores that progress has been minimal and the overall rating remains low. The document warns of a growing divide between thriving economic centers and stagnating regions.
The rating is low, with limited progress and wide territorial gaps that, if not addressed, will continue to deepen income inequality in the country. Competitiveness reflects the creation of opportunities for the nation’s children, youth, and adults to develop their potential.
Competitiveness Promotion Council (CPC), 5th National Competitiveness Report
The report credits the slight uptick in competitiveness to advancements in telecommunications, particularly the coverage and quality of fixed internet services. The robust performance of companies within the Free Trade Zone regime and a general increase in national exports also provided a positive boost. However, these gains are being offset by significant weaknesses in public institutions, with poor performance in public security, bureaucratic inefficiency, and a lack of municipal transparency all negatively impacting the business climate.
The geographic concentration of economic development remains a critical issue. The report highlights that growth is largely confined to the Central Valley, while coastal areas are falling behind. Guanacaste was the only province to see its competitiveness score decrease, a decline attributed to concerning trends in public health—including rising infant mortality and adolescent fertility rates—and a slowdown in its construction sector. In contrast, the canton of Belén, in Heredia, reclaimed its position as the most competitive in the nation with a score of 71.8, followed by Heredia and Escazú.
A five-year analysis within the report reveals a troubling pattern. While areas like ICT access in education and workforce schooling have improved, the country has seen a significant deterioration in crucial dimensions such as security, municipal transparency, and the reliability of the electricity sector. This dynamic suggests that while progress is being made in human capital, the foundational elements required for a stable and efficient business environment are eroding, posing a long-term threat to Costa Rica’s economic future.
For further information, visit bccr.fi.cr
About Central Bank of Costa Rica:
The Banco Central de Costa Rica is the nation’s central bank, responsible for maintaining the internal and external stability of the national currency and ensuring its conversion to other currencies. It plays a pivotal role in Costa Rica’s monetary policy, financial system stability, and economic research.
For further information, visit cpc.cr
About Competitiveness Promotion Council (CPC):
The Consejo de Promoción de la Competitividad is a non-profit organization in Costa Rica dedicated to analyzing and promoting public policies that enhance the country’s competitiveness. It brings together leaders from various sectors to generate data-driven proposals aimed at fostering sustainable economic development and improving the quality of life for all citizens.
For further information, visit oecd.org
About Organisation for Economic Co-operation and Development (OECD):
The OECD is an international organization that works to build better policies for better lives. Its goal is to shape policies that foster prosperity, equality, opportunity, and well-being for all. It provides a forum in which governments can work together to share experiences and seek solutions to common problems, often publishing comparative data and analysis on its member countries.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a premier legal institution, Bufete de Costa Rica is defined by its foundational principles of integrity and professional distinction. The firm leverages a rich history of guiding a wide spectrum of clients to pioneer forward-thinking legal solutions. Beyond its practice, a core tenet of its mission is to democratize legal understanding, actively working to forge a more knowledgeable and capable society by equipping citizens with essential legal awareness.
