THE JUDGING PANEL, METHODOLOGY

CENTRAL AMERICAN COUNTRY OF THE FUTURE:

COSTA RICA

Costa Rica picked up a staggering 46 points – a full 17 points more than its nearest rival – to become fDi’s first Central American Country of the Future. It ranked top for: FDI deals; percentage of the population with a degree; universities; phone lines per thousand people; mobile phone ownership; internet access; housing; healthcare; schools; natural and cultural heritage; promotion strategy; and FDI attractions. It came second for GDP, transport, investment incentives and development projects; and was third for levels of FDI and FDI per capita.

Costa Rica’s stable economy has also largely avoided the crises that have affected many emerging markets since the 1980s. In 2004, the country attracted $596m in FDI, equivalent to 3.3% of GDP. Its investment promotion agency (IPA) CINDE helped 22 companies invest in areas such as back-office operations, shared services, engineering, design and call-centre operations. Other recent FDI deals include four medical device manufacturers, five electronics companies and other manufacturing projects.

Costa Rica’s growing popularity as a tourist destination is also helping to push up levels of foreign investment, with the tourist industry attracting $50m in FDI last year.

The high-tech sector – led by investment from Intel – is growing and contributed 1% to total GDP growth in 2004. Recent FDI in this area came from Boston Scientific, Baxter Financial Services and IBM.

Runner up:Panama

Panama ranked in the top three locations in 16 out of 26 categories: GDP; GDP growth; inward investment; FDI per capita; FDI deals; central office space; cost of employing middle management; cost of calls to the US; universities; transport; mobile phone ownership; housing; healthcare; promotion strategy; FDI attractions; and development projects. Panama offers cheap office rents and ranked top for its excellent transport links.

BEST ECONOMIC POTENTIAL:

Winner: Panama

Panama’s economy is growing at about 5% a year and last year reached a GDP of $13.7bn. The country received about $1bn in FDI in 2004, equivalent to $332 per person. The judges were also impressed by the success of the Colon Free Zone. Recent deals include significant investment by mobile phone carrier Movistar.

Runner up: Costa Rica

Costa Rica, the second largest economy in the competition after Guatemala, came a close second to Panama for its economic potential. The country has seen a marked transition from agriculture to services and manufacturing in the past two decades. Services now account for nearly 65% of GDP, with manufacturing accounting for 25% and agriculture just 10%. Last year, GDP reached $15.2bn, up 4.5%.

MOST COST EFFECTIVE:

Winner: Guatemala

Guatemala ranked ahead of all other countries in the competition for the availability of low-cost office and industrial space. Out-of-town office space can be rented for an average of just $36 per square metre a year, central office space costs an average of $66 per square metre per year, and industrial space an average of $27 per square metre per year. Wage costs remain at the low end of the spectrum for the region: manual workers get paid an average of $0.98 per hour excluding benefits, secretaries earn an average of $6048 per year and middle managers $16,635. Guatemala also had the lowest call costs to the US, with calls charged at just $0.10 per minute.

Runner up: El Salvador

El Salvador had the lowest cost of labour in the competition with manual workers earning just $0.65 per hour, while middle managers earn an average of $9000. Secretaries make an average of $4200 per year, more than their counterparts in Honduras but still cheaper than other locations in the competition.

Calls to the US cost $0.15 per minute. Industrial space can be rented at an average of $42 per square metre per year.

BEST HUMAN RESOURCES:

Winner: Costa Rica

Costa Rica’s population is the most highly educated in the competition with more than 14% holding a university degree. Four out of the six judges ranked the country’s 55 universities top, ahead of Panama and Nicaragua.

More than 25,000 graduates leave the country’s universities each year, a number that has been growing at just over 10% a year since 1993. There are more than 50 courses in business administration and more than 20 in engineering and architecture. International collaboration (with Harvard University Business School, for example) has kept institutions abreast of the latest international perspectives.

Research centres include a laboratory devoted to vision and image processing, material science, pharmacy, economics and engineering. There are a further 25 research centres at the University of Costa Rica alone, covering areas such as electrochemical and chemical energy, space research, and nuclear and molecular atomic sciences. Costa Rica’s Technological Institute is active in areas related to computer sciences, analysis and transference of modern technology in manufacturing, biotechnology and chemistry.

Runner up: Nicaragua

The country’s 44 universities (with some 95,000 students) and 113 technical institutes and colleges impressed the judges. Between them, university level institutions account for 6% of government expenditure, and 7% of Nicaraguans holds a university degree.

Leading institutions include INCAE, the Harvard-affiliated regional business school, which has campuses in both Nicaragua and Costa Rica, and offers one of the best MBA programmes in Latin America. Other top-level institutions include Universidad de Centro America, Ave Maria College of the Americas and Universidad Americana. The country has a US-accredited English language university and three bilingual university programmes.

BEST TRANSPORT SYSTEM:

Winner: Panama

Panama’s transport infrastructure includes a railway connecting ports on the Pacific with ports on the Atlantic coast. The Panama-Colon Highway, which connects Panama City with the coastal city of Colon in one hour, is being expanded.

Tocumen International Airport is increasingly used as a hub on long-haul passenger and cargo routes between the US, South America, Central America and the Caribbean. Panama also boasts 355km of railroads, 11,400km of highways, 800km of maritime routes and 17 ports.

Runner up: Costa Rica

Costa Rica has four international airports and more than 30 regional airports. More than 750 flights leave the country’s main airport, Juan Santamaría International, which serves flights to most major cities around the world. The country’s two major international ports are Caldera on the Pacific coast and Moin on the Caribbean coast.

BEST IT AND TELECOMS:

Winner: Costa Rica

With 316 telephone lines per 1000 people, Costa Rica reported the best telephone density of all countries in the competition. The country’s population is also well connected to the internet, with government figures showing that 28.75% had internet access in 2003. This is well ahead of other countries, which all reported internet access at below 10% of the population – with the exception of Belize (see below). In 2004, 37% of Costa Rica’s population owned a mobile phone.

Runner up: Panama/Belize

Panama has 119 lines per 1000 and high levels of mobile phone ownership. In 2003, 27.1% of the population owned a mobile phone. However, levels of internet access remain low in Panama.

In Belize, which has just 124 lines per 1000 people, 11.4% of the population has internet access and 37.7% owns a mobile phone.

Winner: Costa Rica

Costa Rica ranked as the judges’ strong favourite for the excellent quality of life offered to expatriates. It scored top marks for the quality of housing, healthcare, schools and heritage. The capital, San José, has the best quality of life in Latin America, according to the Economist Intelligence Unit’s Hardship Index 2004.

Housing is affordable and plentiful and, with the exception of downtown San José, rent for houses or apartments is generally less than half that in the US. Houses and apartments in the best areas rent for $1000 to $3500 per month. Upper-end houses and apartments come with large rooms, spectacular views, pools, landscaped gardens and even maid’s quarters because domestic help is cheap. House prices start at about $100,000 up to around $300,000. Luxury housing areas have been springing up along the Pacific shore and now include resort complexes such as the Four Seasons, the Playa Conchal, the Marriott Los Sueños and the Hacienda Pinilla.

Runner up: Honduras

Honduras ranked second for its strong schools, second equal with Panama for healthcare and third for housing. Local schools generally teach in Spanish, but larger cities offer bilingual schools that teach in English and French. As well as American and other international schools, Honduras has good specialist technical schools.

BEST FDI PROMOTION:

Winner: Costa Rica

Costa Rica won five out of six judges’ votes for the government’s overall investment promotion strategy. The country’s IPA, CINDE, has focused on manufacturing for re-export markets and on three very specific sectors: high-tech electronics, medical devices and services (including back-office and shared-services operations, call centres, and engineering and design centres). The agency maintains an office in New York.

Costa Rica also ranked top for its attractiveness to FDI, second for its incentive scheme and second for its development projects.

Runner up: Honduras

Honduras ranked in the top three for: investment incentives (third), FDI attractions (third) and development projects (first).

Guatemala scored fewer points than Honduras but won the judges’ vote for the best incentive programme.

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