Diversification is key to weathering global shocks: Costa Rica’s foreign trade minister

Key Concepts

• Energy Security: The strategy of reducing dependence on volatile fossil fuel imports by leveraging renewable energy.
• Advanced Manufacturing: The shift from traditional agriculture to high-value sectors like MedTech and semiconductors.
• Economic Diversification: The strategy of expanding trade partners and markets to mitigate risks from global supply chain disruptions.
• CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership): A major free-trade agreement that Costa Rica is in the process of joining.
• FITP (Future of Investment and Trade Partnership): A coalition of like-minded nations committed to upholding a rules-based, free, and open trading system.
• Resilience: The ability of a small, open economy to withstand global shocks (inflation, energy crises, pandemics) through strategic integration and diversification.

1. Navigating Global Energy Volatility

Minister Manuel Tovar Rivera explains that while Costa Rica is not immune to global economic shocks, it has built structural defenses:

• Energy Independence: 98% of Costa Rica’s electricity is generated from renewable sources (water, wind, geothermal, and solar). This insulates the domestic power grid from global oil price spikes.
• Fuel Security: While the transport sector still relies on imported fuel, the country has secured annual supply contracts that cover insurance, freight, and commercial margins, preventing immediate shortages.
• Macroeconomic Outlook: Despite these defenses, the Minister acknowledges that global inflation and reduced demand from trading partners will impact growth. Projections from the OECD and IMF suggest a growth slowdown to between 1.5% and 2.5% for the year.

2. The "Green" Competitive Advantage

Costa Rica leverages its renewable energy profile as a core component of its foreign direct investment (FDI) strategy:

• Industry Attraction: Global companies are increasingly seeking to reduce their carbon footprints. By plugging into Costa Rica’s clean energy grid, multinational corporations can meet sustainability goals.
• Sector Shift: The economy has successfully transitioned from agriculture to high-value manufacturing. Medical devices now account for nearly 50% of the country’s goods exports.
• Semiconductor Expansion: Costa Rica is actively expanding its footprint in the semiconductor industry, positioning itself as a strategic partner for global tech firms looking for sustainable manufacturing hubs.

3. Strategic Trade Integration

Costa Rica is aggressively pursuing trade diversification to protect its status as a small, open economy:

• Asia-Pacific Growth: In 2025, the Asia-Pacific region became the fastest-growing market for Costa Rican exports, with a 48% increase in trade share compared to the previous year.
• Diversified Export Offer: Beyond traditional commodities (pineapple, coffee, bananas), the country now exports knowledge-intensive services, including cybersecurity, software, and specialized technical services.
• Multilateralism: The Minister emphasizes the importance of the CPTPP and the FITP as essential frameworks for small nations to maintain a rules-based trading system amidst the erosion of global multilateralism.

4. Key Arguments and Perspectives

• "Diversification is Resilience": The Minister argues that because trade disruptions can come in "many colors and flavors" (e.g., COVID-19, energy crises, trade wars), relying on a single market or region is a strategic risk.
• The "Lemonade" Philosophy: Acknowledging that the global environment is volatile, the Minister asserts that nations must adapt to the "new world" by forming new coalitions and integration schemes rather than expecting a return to "business as usual."
• Responsible Global Citizenship: The Minister frames Costa Rica’s sustainability path not just as an environmental choice, but as a "recipe for success" that attracts high-quality, responsible global partners.

5. Synthesis and Conclusion

Costa Rica’s strategy for navigating a volatile global landscape rests on three pillars: renewable energy independence, high-value industrial specialization, and aggressive market diversification. By positioning itself as a sustainable, reliable partner for advanced manufacturing (MedTech and semiconductors), the country has successfully insulated itself from some of the worst effects of the global energy crisis. The Minister concludes that for small, open economies, the only path to long-term stability is to move away from over-reliance on single markets and to actively participate in regional and global trade blocs like the CPTPP to ensure a rules-based economic future.