World Bank2014-09-092014-09-092014-06-13https://hdl.handle.net/10986/20010The Dominican Republic - Central America - United States Free Trade Agreement (CAFTA-DR) has been fundamental in creating a stable framework for Costa Rica's trade with the United States. For Costa Rica, CAFTA-DR is more than a trade agreement. Besides eliminating tariffs and reducing non-tariff barriers between member countries, CAFTA-DR also introduced major changes to the legal framework of member countries, reducing barriers to services, promoting transparency, and ensuring a secure and predictable environment for investors. This report analyses how CAFTA-DR has impacted the Costa Rican economy in the five years after ratification, both on a macro level and in key specific sectors. The report shows that CAFTA-DR is yielding benefits to the Costa Rican economy, but it is too early to provide a complete account just after five years. The agreement has succeeded to further trade integration between Costa Rica, the US, and other CAFTA-DR countries. Exports to the US began increasing several years before the agreement, but CAFTA-DR accelerated the trend. Costa Rica continues attracting FDI above levels observed in other CAFTA-DR countries, with an increasing share from US investors and a focus on medical devices and business services. Online survey and interviews of high-tech firms in free trade zones found that CAFTA-DR was an important factor in the investment decisions. CAFTA-DR ignited an explosion of changes in the telecom and insurance sectors, bringing new regulatory frameworks, competition, product innovations, and price reductions. Consumers are reaping the benefits of improved telecom and insurance services. But some issues remain for those markets to mature. Finally, the concern regarding the potential negative impact on the Costa Rican Social Security Administration's finances due to the intellectual property rights measures have not been observed.en-USCC BY 3.0 IGOABSORPTIVE CAPACITYACCESS TO INSURANCEADVERSE EFFECTSAGRICULTURAL PRODUCTIONAGRICULTURAL PRODUCTSAGRICULTURAL SECTORAGRICULTURAL SUBSIDIESAGRICULTURAL TRADEAGRICULTUREAPPARELAPPAREL SECTORAUTHORITY IN CHARGEBENCHMARKBENEFICIARYBILATERAL APPROACHBILATERAL TRADEBROKERAGEBROKERAGE FIRMSBROKERSCENTRAL BANKCLEAN TECHNOLOGYCOMMERCIAL CODECOMMODITYCOMMON MARKETCOMMUNICATION TECHNOLOGYCOMPETITION POLICYCOMPETITIVE ENVIRONMENTCOMPETITIVENESSCONCESSIONSCONSUMER PRICE INDEXCONSUMER PRICE INDICESCONSUMER SURPLUSCONSUMERSCOUNTRY OF ORIGINCRITICAL INFRASTRUCTURECROSS-BORDER TRADECURRENCYCUSTOMSCUSTOMS UNIONDEBTDOMESTIC CONSUMPTIONDUMMY VARIABLEECONOMIC CRISISECONOMIC INTEGRATIONECONOMIC POLICIESECONOMIC STABILITYECONOMIES OF SCALEELIMINATION OF TARIFFSENVIRONMENTAL STANDARDSEUROPEAN UNIONEXCHANGE RATEEXCHANGE RATESEXPENDITURESEXPENSE RATIOSEXPORT GROWTHEXPORT PERFORMANCEEXPORT PRODUCTSEXPORT SHAREEXPORT STRUCTUREEXPORTSEXPOSUREFINANCESFINANCIAL CRISISFINANCIAL SERVICESFINANCIAL SYSTEMFIRM PERFORMANCEFOREIGN COMPANIESFOREIGN DIRECT INVESTMENTFOREIGN INVESTMENTFOREIGN INVESTORSFOREIGN TRADEFREE ACCESSFREE TRADEFREE TRADE AGREEMENTFREE TRADE AGREEMENTSFREE TRADE AREAFREE TRADE ZONEFREE TRADE ZONESGDPGDP PER CAPITAGLOBAL ECONOMYGRAVITY EQUATIONGRAVITY MODELGRAVITY MODELSGROSS DOMESTIC PRODUCTGROWTH RATESHUMAN CAPITALINCOMESINFORMATION SERVICESINSTRUMENTINSURANCEINSURANCE ACTIVITIESINSURANCE COMPANIESINSURANCE MARKETINSURANCE MARKETSINSURANCE PENETRATIONINSURANCE PREMIUMSINSURANCE PRODUCTSINSURANCESINSURERINSURERSINTEGRATION AGREEMENTSINTELLECTUAL PROPERTYINTELLECTUAL PROPERTY PROTECTIONINTELLECTUAL PROPERTY RIGHTSINTERMEDIATE GOODSINTERNATIONAL AGREEMENTSINTERNATIONAL BANKINTERNATIONAL FINANCIAL CRISISINTERNATIONAL MARKETSINTERNATIONAL TRADEINTERNATIONAL TREATIESINVESTMENT CLIMATEINVESTMENT DECISIONSINVESTMENT FLOWSJURISDICTIONSLEGAL FRAMEWORKLEGAL REGIMELEGAL REQUIREMENTSLEGAL SYSTEMLEVEL OF RISKLIBERALIZATIONLIBERALIZATIONSLIFE INSURANCELOCAL CURRENCYMANUFACTURING INDUSTRYMARKET ACCESSMARKET DATAMARKET SHAREMARKET SHARESMARKET SIZEMICROINSURANCEMONETARY FUNDMONOPOLIESMONOPOLYMONOPOLY PROVIDERMULTILATERAL AGREEMENTMULTINATIONAL COMPANIESNATIONAL TREATMENTNEW MARKETNEW PRODUCTSNON-TARIFF BARRIERSOPENNESSOUTPUTPATENT PROTECTIONPOLITICAL STABILITYPORTFOLIOPOSITIVE EFFECTSPOST OFFICEPREFERENTIAL TRADEPREFERENTIAL TREATMENTPRELIMINARY ASSESSMENTPRICE DEFLATORPRIVATE INVESTMENTSPROFIT MAXIMIZATIONPROPERTY RIGHTSQUANTITATIVE RESTRICTIONSREAL GDPREAL GROSS DOMESTIC PRODUCTREFERENDUMREGIONAL TRADEREGULATORREGULATORY AUTHORITYREGULATORY BODYREGULATORY FRAMEWORKREGULATORY FRAMEWORKSREINSURANCERULES OF ORIGINSHARE OF INVESTMENTSMALL BUSINESSSMALL BUSINESSESSUPERVISORY AUTHORITYTARIFF BARRIERSTAXTAX BENEFITSTAXATIONTELECOMMUNICATIONSTELEPHONE LINESTELEPHONE SERVICESTRADE BARRIERSTRADE FLOWSTRADE INTEGRATIONTRADE LIBERALIZATIONTRADE PARTNERSTRADE PATTERNSTRADE POLICYTRADE RELATIONSHIPSTRADINGTRANSPARENCYTREATIESTREATYUNIVERSAL ACCESSUNIVERSAL COVERAGEVOTERSWORLD DEVELOPMENT INDICATORSWORLD TRADEWORLD TRADE ORGANIZATIONWTO10.1596/20010