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Intel: A Case Study of Foreign Direct Investment in Central America

Author

Listed:
  • Felipe Larrain B.
  • Andres Rodriguez-Clare
Abstract
This paper studies the advent of Intel, manufacturer of microprocessors, to Costa Rica. We use indicators of both direct effects and selected macroeconomic effects as evidence, even though these indicators are in some cases more qualitative than quantitative. We also examine training externalities, as well as the “signaling” effect that Intel has had on other firms’ decision to enter the Costa Rican economy, thus making Intel itself into a factor of attraction. The gross income generated by Intel in terms of net exports, investment, wages and benefits, and local purchases is very important for the Costa Rican economy. Net exports and the economy as a whole have been growing at a significantly higher rate since 1997, the year Intel started operations in the country. Also, the share of natural resource-based exports in total exports has declined while the share of manufactures has risen significantly. This has implied a dramatic change in the composition of Costa Rica’s exports. Available evidence supports the view that Intel has generated positive externalities for the Costa Rican economy.

Suggested Citation

  • Felipe Larrain B. & Andres Rodriguez-Clare, 2000. "Intel: A Case Study of Foreign Direct Investment in Central America," CID Working Papers 58A, Center for International Development at Harvard University.
    • Handle: RePEc:cid:wpfacu:58a
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    File URL: https://www.hks.harvard.edu/sites/default/files/centers/cid/files/publications/faculty-working-papers/058.pdf
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    References listed on IDEAS

    as
    1. John H. Dunning, 1977. "Trade, Location of Economic Activity and the MNE: A Search for an Eclectic Approach," Palgrave Macmillan Books, in: Bertil Ohlin & Per-Ove Hesselborn & Per Magnus Wijkman (ed.), The International Allocation of Economic Activity, chapter 12, pages 395-418, Palgrave Macmillan.
    2. Haddad, Mona & Harrison, Ann, 1993. "Are there positive spillovers from direct foreign investment? : Evidence from panel data for Morocco," Journal of Development Economics, Elsevier, vol. 42(1), pages 51-74, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    foreign direct investment; linkages; growth; Central America;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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