Innovation, Productivity, and Growth in Costa Rica

This technical note presents a detailed review of Costa Rica’s recent
innovation policy. It discusses how far Costa Rica is from having innovation
ecosystems (human networks that generate extraordinary creativity and
output on a sustainable basis), and shows that the low innovative capacity of
Costa Rican firms explains their low productivity, which in turn determines
the moderate level of economic growth in the country. Among the main
challenges that Costa Rica faces in moving toward an innovation-based
economy, according to the evidence presented herein, is the low level of
investment in research and development (R&D). Strengthening Costa Rican
innovation ecosystems, creating closer linkages between SMEs and large
companies including multinationals, in addition to increasing the domestic
value-added of SME exports, and reduction (or even better, elimination) of
the principal obstacles to the growth of companies, must be part of an
innovation policy agenda. Costa Rica’s economic success will depend on
how well it can design and implement policies and programs that lead
toward achievement of an innovation-driven economy in the near future.
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Published by Inter-American Development Bank in 2016

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