Using the framework in Table 5.

1, explain which of the theories relate to Costa Rican trade policy during each of the fou

Periode
LATE 1800s–1960

1960–1982

1983–Early 1990s
Early 1990s–Present
framework in Table 5.1, explain which of the theories relate to Costa Rican trade policy during each of the four eras described in th

Costa Rica until

the early 1960s, specialized in either a single or a few commodities
(raw materials or agricultural products), which they
exported in exchange for other commodities and manufactured
goods. Costa Rican farmers specialized first in coffee
and later, after the development of refrigerated ships, in
bananas
as well. For most of the period, the country was well
served by this policy, primarily because commodity prices,
especially coffee prices, remained high.

• Two world wars disrupted the country’s ability to export

its commodities and import what it did not produce.
• Coffee and banana prices dropped relative to the prices
of manufactured products, particularly as new commodity
producers (especially in Africa) entered world
markets.
• Latin American countries with less open international
markets had insulated themselves more from adverse
international conditions

Costa Rica turned to policies

centered on the idea of import substitution.
Costa Rica joined with four
other countries—El Salvador, Guatemala, Honduras, and
Nicaragua—to form the Central American Common Market

To help ensure that only internationally competitive companies and industries were likely to s
government began removing import barriers.
Costa Rica formed CINDE (Coalición Costarricense
de Iniciativas de Desarrollo), a private organization funded by the government and by U.S. gra
purpose of CINDE was to aid in economic development, and one of its top priorities was attrac
direct investment.

To augment CINDE’s work, Costa Rica established an export processing zone (EPZ) that allowe
companies to import all inputs and equipment tax free, exempted them from paying Costa Ri
tax for eight years and taxed them at only 50 percent for the next four. By

1. Costa Rica could not remain cost-competitive in the type of products exported from the EP
other countries (mainly Mexico) were benefiting from even lower U.S. tariffs.
2. Costa Rica’s highly skilled and educated workforce was being underutilized by the types of i
attracted to the EPZ.
CINDE decided to work with the Costa Rican government to identify and attract investors wh
better with Costa Rican resources.
Costa Rica targeted industries ( a policy known as a strategic trade policy) for international co
(including medical instruments and appliances, electronics, and software) that promised high
growth potential and could pay higher wages and salaries than most of those that had already
in the EPZ.
The government also identified characteristics of developing countries that were attracting sig
amounts of the type of foreign investment it wanted: a highly educated and largely English-sp
workforce (especially the availability of engineers and technical operators), political and social
a relatively high level of economic freedom, and a quality of life that would appeal to the ma
technical personnel that foreign investors would bring in to work in the facilities. The conclusio
targeted industries, Costa Rica should be able to compete internationally.
ng each of the four eras described in the case.

Theory
Absolute Advantage
Di periode 1800s sampai awal 1960,
pemerintah Costa Rica sangat minimalis dalam
melakukan campur tangan atas dinamika
perdagangan internasional. Saat itu Costa Rica
secara alamiah terspesialisasi sebagai produsen
ekspor kopi dan pisang yang kuat

Di pertengahan 1960an dikarenakan beberapa Neomercantilism

faktor seperti dampak pasca perang dunia dan
jatuhnya harga komoditas kopi dan pisang Country Similarity
pemerintah Costa Rica mengubah strategi
perdagangan internasionalnya. Pemerintah
menerapkan kebijakan import subtitution,
sangat membatasi impor via pajak yang tinggi.
Pemerintah memberikan insentif untuk investor
lokal dan luar negeri untuk membuka produksi
dalam negeri dan konsumsi dalam negeri.
Harapannya
Setelah menerapkan import subtitution policy
kemudian pemerintah menyadari bahwa pasar
domestik terlalu kecil untuk menarik investor,
sehingga berdasarkan kesaamaan karakter
pasar kemudian bergabung dengan El Salvador,
Guatemala, Honduras, and Nikaragua untuk
membentuk Central American Common Market

Pemerintah Costa Rica mulai menyadari bahwa Neomercantilism

mereka harus memilih industri dan perusahaan
yang kompetitif secara internasional untuk Factor Proportions
dilindungi dan dikembangkan. Bantuan dari
America Serikat pun dimanfaatkan melalui
organisasi CINDE. Pemerintah juga mendirikan
Export Processing Zone (EPZ) yang mengijinkan
perusahaan pengekspor untuk melakukan
impor bahan baku dan peralatan bebas pajak.
Di era ini pemerintah Costa Rica juga mulai
menyadari bahwa mereka perlu mencocokan
jenis investor dengan resources yang dimiliki
Costa Rica seperti banyaknya tenaga kerja yang
highly skilled dan educated
Pemerintah sudah mulai memilah-milah industri Comparative Advantage
yang kompetitif dan sekaligus cocok dengan
resources yang dimiliki Costa Rica dan Diamond of national competitive advantage
menerapkan strategic trade policy. Industri Demand Conditions
yang dimaksud diantaranya adalah medical Factor Conditions
instruments and appliances, electronics, dan
software. Related and Supporting Industries
Sejumlah industri tersebut menuntut sejumlah Firm Strategy, Structure, and Rivalry
faktor seperti
(1) Angkatan kerja dengan pendidikan tinggi
dan bisa berbahasa Inggris untuk engineer dan
operator teknis
(2) Kestabilan sosial politik
(3) Kebebasan ekonomi yang relatif tinggi