Offshoring and employment in the developing worlds: The case of Costa Rica
This paper evaluates the impact of offshoring activities, particularly in the manufacturing sector, in the creation of quality employment through a detailed analysis of the Costa Rican experience. This country constitutes a particular interesting case study. The country began participating in the global apparel commodity chain in the early 1980s, when the Reagan administration introduced the Caribbean Basin Initiative. During the 1990s, Costa Rica adopted a selective policy of promoting high tech foreign direct investment, and succeeded in attracting Intel and other large multinational corporations. Through a detailed analysis of the direct and indirect effects of offshoring on the quantity and quality of employment, we make two central arguments. First of all, foreign investment in offshoring activities in Costa Rica has contributed to the expansion of skilled, well paid jobs, particularly since the arrival of Intel and other high tech companies. Secondly, offshoring activities have created some spillovers into other areas of the economy. Nevertheless, offshoring activities have remained relatively marginal in the overall economy, even in the manufacturing sector. Offshoring activities are characterized by higher productivity, but create just a small number of direct and indirect jobs. Building new linkages between offshoring production and the rest of the economy and expanding the technological capabilities of small and medium firms have become an urgent but difficult challenge for the Costa Rican economy.
employment creation / outsourcing / manufacturing / Costa Rica
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