Intel In Costa Rica hbr case study help in exactly the same way, training case studies became increasingly more well-liked in science training.
Life after Intel Image source: In all fairness, the decision was entirely out of the country's hands: Intel has been facing an ever more difficult global environment due to its failure to capitalize on the market for smartphone chipsets, one that is dominated by rivals such as Qualcomm, NVidia and Texas Instruments.
Its attempts at slimming down its operations is therefore more of a reflection of its own struggles rather than a judgement call on Costa Rica's attractiveness as a high-tech production center. Still, the announcement has raised real concerns over the future of Costa Rica's economic model, one that since the mid has focused primarily on high-tech exports and of which Intel was the centerpiece.
Can this model still work without it? Less dependent than it looks At first glance, Costa Rica's dependency on Intel is remarkable.
In comparison, Costa Rica's two traditional exports, bananas and coffee which dominated its trade in the pre-Intel era together accounted for barely 10 percent. Furthermore, microprocessors contributed just over half of the total of Costa Rica's high-tech exports, the rest of which were composed primarily of medical equipment 13 percent of total exports and other mostly IT-related electronic goods.
On paper at least, the end of microprocessor assembly will instantly rob the country of a fifth of its exports if not more. Yet to say this is a catastrophe is unfounded. First and foremost is the fact that Costa Rica's investment climate has not deteriorated at all because of Intel's decision, and 1, surplus engineers and technicians will be a prized asset for any company wishing to either set up or expand its presence in the country.
A large complaint over the past few years has been that backward linkages between Intel and the rest of the economy have been less than ideal.
This may have been a drawback, but it also means that the negative impact on other firms will be weaker once microchip production ceases. Furthermore, there is a tendency towards forgetting that services account for a large share of exports as well.
More important than just the trade side is the effect of Intel's closure on the external accounts as a whole. It is here where there is even less cause for concern. Even assuming that exports suffer a 20 percent-plus hit, this is partly offset by the high import requirements of microprocessor assembly which will fall too although admittedly at a smaller scale.
Another category that will see significant changes is the income account, which is dominated by the large volume of profit outflows from foreign companies operating in Costa Rica: With lower profits expected from Intel's much downsized operations, Costa Rica's structure income deficit could therefore improve somewhat over the next few years compared to what it would be if Intel had stayed.
Was Intel the main driver of GDP? It is hard to argue that Intel was not an important source of GDP growth, but whether its absence will be catastrophic is difficult to affirm. Data here is less reliable than for the external accounts given that there is no actual breakdown of industries on the manufacturing side, but until Costa Rica published a separate monthly economic activity index IMAE with and without the high-technology sector.
Duringit can be seen that growth in economic activity averaged 5 percent overall, but just 4. It is also worth noting that fluctuations in the non-high tech IMAE were less volatile: A crude extrapolation of the effect of high-tech can be made through the IMAE data that excludes the free-trade zones, which include much of the high-tech sector.
Between andoverall IMAE growth averaged 4. This suggests that without high-tech, growth would have been somewhere around 4. A loss of 0. As for jobs, the 1, workers to be laid off represent an important share of Costa Rica's high-skilled workforce but in terms of the overall economy, it will make only a small dent on the overall unemployment rate, even when combining this with the other 1, layoffs at Bank of America's IT servicing center which were announced almost concurrently to Intel's together this would add just 0.
There are still dozens of IT-related firms operating in Costa Rica including large multinationals, and it is possible that a large, suddenly available pool of high-skilled workers could attract further investment and expansion by some of these firms, thereby reabsorbing the workers back into the labour force.
The dark side of Intel's legacy We have it therefore that the country will not implode as a result of Intel's decision, although one should expect slightly slower growth while the economy rebalances and fills the void. However, it is perhaps time to revalue the full legacy of Costa Rica's push towards high-tech manufacturing.Intel decided to find their next assembly and testing plant in Latin America.
Four countries have made a short list: Brazil, Chile, Mexico and Costa Rica. Telford International Site Selection Analyst Intel, should be invited to the final site. Tourism in Costa Rica is one of the fastest growing economic sectors of the country The United States was one more time the main source of tourists to Costa Rica, with 1,, visitors in , up 8% from Arrivals from Europe grew by %.
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Its share in the imports of the member countries of the Organization for Economic Co-operation and Development (OECD); has gone up from % to % (% to % of the North American market); and in the market for manufactures from Costa Rica: Life after Intel.
Costa Rica's dependency on Intel is remarkable. According to data from the UN's International Trade Center (ITC), a whopping 21 percent of Costa Rica's exports in. That means pushing up productivity further, and in particular putting some 70m hectares (m acres) of degraded pasture to better use.
A similar joint effort in Costa Rica secured an Intel.