by Paul Constance

When Intel Corporation announced that it had selected Costa Rica as the site of a new $300 million microprocessor plant last November, many observers thought the Central American country had pulled off an incredible marketing coup.

After all, Costa Rica was the smallest contender in a fierce competition for the plant that initially included the United States, Brazil, Mexico, Malaysia, Thailand, Chile, The Philippines, Ireland, Israel and Puerto Rico. At stake were some 3,500 jobs that would be generated by the 400,000 square foot plant and its suppliers, plus billions of dollars in future export revenues.

But although government and business leaders in San José did run an intensive campaign to attract Intel during 1996, the effort to clinch the largest foreign investment in the country's history actually began three decades ago. That is when Costa Rican government leaders began implementing policies to improve technical and scientific education--policies that have since become one of the country's hallmarks.

Speaking to reporters after the Intel announcement, Costa Rican President José María Figueres said "this [investment] amounts to an international recognition of our health system, our public education system... and our extraordinary communications services, of the efforts we have made in these areas over many decades and of the infrastructure we have managed to build."

Figueres' remarks were echoed by Intel executives themselves. "Intel chose Costa Rica in part because of its excellent educational system," Corporate Vice President Mike Splinter said during groundbreaking ceremonies for the plant near San José last April.

When the project was announced last year, Intel's vice president for manufacturing and technology, Frank Alvarez, specifically cited the high level of computer literacy and English-language ability among Costa Rica's high school and college graduates. He also praised Costa Rica's telecommunications infrastructure and its incentives for foreign investors as key factors in the final decision.

Alvarez said Intel was satisfied that Costa Rica would be able to supply educated workers for the four job categories that will be used at the plant. The most basic category, a technician, requires a high school diploma. Maintenance personnel need at least two years of post-high school technical training, and engineering and management positions require college-level engineering or science degrees.

The fruit of foresight.

According to Román Mayorga, IDB technology and education specialist, Costa Rica is a striking example of how even a small country with limited resources can become competitive in science and technology,

"Costa Rica defies the conventional view that small countries simply can't afford to develop science and technology sectors," he said. "The Intel project is the culmination of a deliberate policy process that began in the 1960s, when Costa Rica defined priorities and decided to invest heavily in its human resources, with a particular emphasis on technical education."

Mayorga said Costa Rica sought the IDB's assistance in developing science and technology on several occasions. In 1974, for example, two years after it created the National Council for Scientific and Technological Research (CONICIT), Costa Rica requested and received $3.3 million in IDB financing to expand the Costa Rican Technological Institute (ITCR), in Cartago. The ITCR now has one of Latin America's most advanced computer science and software engineering departments, a factor that contributed significantly to Intel's decision, according to Mayorga (see sidebar).

In 1978, the IDB lent Costa Rica $30 million to help finance a program to decentralize and expand its higher education system. The funds were used to build regional centers focused on agricultural and technical training and expand ITCR's central campus. That was also the year in which Costa Rica adopted its first science and technology program as part of a national five-year development plan.

In 1983, Costa Rica's Omar Dengo Foundation, with help from the government, the United Nations Development Programme, the U.S. Agency for International Development and the IDB, launched a program to promote computer literacy and reasoning skills in elementary schools. The result has been the installation of computers and computer science curricula in more than half of all primary schools and nearly all high schools.

"Thanks to these efforts, Costa Rica now has one of the highest levels of computer literacy in the region," said Mayorga.

Most recently, Costa Rica concluded a Science and Technology Program, partly financed by the IDB, that funded 239 post-graduate scholarships, 90 research and development projects and a variety of laboratory and computer equipment at 16 research facilities. Many beneficiaries of that scholarship program now teach in Costa Rican technical institutions, and several have gone on to start successful technology companies (see sidebar).

Lessons for others.

Given the considerable disagreement among policymakers over how small countries should promote science and technology development, it is worth asking if the Costa Rica experience holds lessons that can be applied elsewhere. According to Mayorga, Costa Rica offers a good example of a national science and technology strategy that focuses on a few priority areas and sets short-, medium- and long-term goals.

"Small countries sometimes make the mistake of trying to advance science in too many areas. They often end up producing mediocre scientists in areas that are irrelevant to the country's industries," Mayorga said. "Costa Rica decided early on to focus on information technology, environmental sciences and applied technology for the agricultural and forestry sectors.

"Today you can see the benefits of that approach. In addition to the Intel project, you have a number of local software companies in Costa Rica, and the country is recognized globally as a leader in environmental issues and ecotourism. You also have highly respected research centers--like the ITCR and the Tropical Agronomy Research and Teaching Center--that have a very productive relationship with local industry."

Costa Rica has also done a good job of balancing investments with long-term returns, such as basic education, with those that have short-term payoffs, such as technological extension services. "This approach is not very different from what some of the small and medium-sized countries in East Asia have done in the last 25 years," Mayorga added.

Moreover, Costa Rica shows that science and technology development in a small country need not come at the expense of social needs. "Starting with very low levels of science and technology spending--even less than half of a percent of GNP per year¯it is not impossible for an economy growing at several GNP percentage points per year to provide the necessary resources," concluded Mayorga.

As Costa Rica demonstrates, smart modest investments can yield spectacular long-term returns.

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The IDB and science and technology

The IDB has supported the development of science and technology in its member countries since the 1960s, although the nature of its efforts in this area has evolved considerably through the years.

From 1961 to 1987, Inter-American Development Bank funding for science and technology focused almost entirely on building up capacity in Latin America's universities and research institutions. Some 20,000 Latin American researchers were trained with IDB-funded scholarships during this period. In addition, at least 100 major science and technology institutions received IDB funds for infrastructure, equipment and other improvements.

From 1988 to 1996, the Bank focused its lending resources on consolidating the region's science and technology institutions and helping them to develop productivity-enhancing services for local industries. Technology development funds were set up in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico and Uruguay.

The cumulative effects of these measures, though hard to measure, are evident in dozens of advances throughout the region. In Argentina, IDB science funding contributed to the development of a biotherapeutic milk product for children suffering from diarrhea. In Brazil, the IDB helped fund genetically engineered varieties of soybeans and sugar that are now widely in use. In Chile, researchers developed computer software for managing open-pit mining operations. In Uruguay, the Bank supported the design and testing of an innovative device for preventing frost damage to crops.

IDB science and technology projects

Costa Rican Technological Institute

Araya started ArtInSoft in 1993 after receiving a doctoral degree in artificial intelligence at the University of Kansas on a Fullbright Scholarship. He launched the company with three ITCR graduate students and has continued to use his alma mater as a source of top-flight employees. Today, 40 of ArtInSoft's 45 employees are ITCR graduates or students.

ArtInSoft specializes in three fields: software "reengineering," where old software applications are adapted to run on new computers; industrial automation software, which helps manufacturers increase production efficiency; and designing Internet applications for the World Wide Web. Eighty percent of the company's customers are in Costa Rica, and 1997 sales are expected to reach $2 million.

Founded in 1975, ITCR's Computer science department now has more than 1,000 students and 60 full-time professors, including 12 PhDs. Luis Montoya, director of the Computer Research Center at ITCR, said researchers at the institute are encouraged to "sell" their research ideas to local private companies. "Basically, we sell what we produce," he said. "The financial aid for most of our research comes from the private sector."

That relationship with the private sector seems to have impressed Intel Corp. executives who visited ITCR last year, while evaluating Costa Rica as a site for the new plant. "They looked at our curriculum and asked questions about our research projects and what we were doing for private sector companies," Montoya recalled. "I think they liked what they heard."

After they selected Costa Rica, Intel executives asked two ITCR computer experts and two teachers from local vocational schools to visit the company's manufacturing facilities in Santa Clara, Calif., and Chandler, Ariz. Based on conversations with engineers and factory machine operators, the ITCR has designed a special two-year training program to supply workers for the new Intel plant. The program will train high school graduates in specific electronics, computer, industrial production and industrial maintenance skills required by Intel. "The microelectronics factory worker is very specialized," said Carlos Acuña, a professor of quality control and simulation at ITCR who visited the Intel plants. "There are going to be some radical changes in the way we train technicians as a result of the Intel project."

--reported by David Mangurian