Current Account To Gdp Tourism Essay

The Current history balance as a per centum of GDP provides an indicant on the degree of international fight of a state. The Consejo Monetario Centroamericano studies Current Account to GDP in Costa Rica. A Current Account shortage of 5.35 per centum of the state ‘s Gross Domestic Product was recorded in 2011. From 1977 until 2011, Costa Rica Current Account to GDP averaged -5.5 per centum.

When a state records a strong current history excess it means that has an economic system with high nest eggs evaluations but weak domestic demand, and is to a great extent dependent on exports grosss. In our instance of Costa Rica entering a current history shortage it means that the state have strong imports, a low economy rates and high personal ingestion rates as a per centum of disposable incomes.

Current History

Exports minus imports of goods and services give us the amount of Current Account, or are the amount of the balance of trade, net factor income, as involvement and dividends and net transportation payments like foreign assistance. The Central Bank of Costa Rica reports Current Account in Costa Rica. Costa Rica reported Current Account shortage of 624.14 USD Million in the 3rd one-fourth of 2012. From 1999 until 2012, Costa Rica Current Account norm was -301.92 USD Million making a high of 80.98 USD Million in February of 2009 and a low record of -924.07 USD Million in May of 2008.

Investing Sectors

Costa Rica provides investors with a first environment for concern and competitory revenue enhancement inducement governments, and high-value fabrication, so that is why many of the universe ‘s prima companies are continuously puting in Costa Rica.

Costa Rica work force is known as bilingual and exceptionally talented. The state ‘s has an first-class strategic location and first-class concern clime, followed by solid substructure, good quality of life, a diverse and strong amalgamate service sector. Costa Rica can vouch good stableness, quality of operations, and positive growing potency. The investing sectors in Costa Rica have shown a sustained growing. Costa Rica is one of theA best finishs for high engineering sectors, so companies that belong in those sectors and are looking forA efficiency, can truly profit from Costa Rica ‘s advantages. Another thing that Costa Rica is known for is that is has the most suited locations for outsourcing and offshoring services in Central America.

Incentives for Investing in Costa Rica

The Costa Rican authorities implemented “ The Free Zone System ” as an investing scheme in order to advance Costa Rica ‘s export. This system represents set of benefits and inducements approved to companies doing new investings in Costa Rica. The biggest benefit for companies under the Free Trade Zone Regime is that they can obtain up to 100 % corporate income revenue enhancement freedom for a determined period and among other benefits under this government is that companies do non pay any import responsibilities or export revenue enhancements.

Exports and Imports

Both imports and exports in Costa Rica are reported by the SECMCA. Costa Rica ‘s mainly exports electronic goods, bananas, Ananas comosuss, java and medical equipment which represent 17 per centum of the state ‘s entire exports. Costa Rica ‘s chief export spouse is the United States, which represents 37 per centum of the state ‘s entire exports. Others merchandising spouses in these countries are the Netherlands, Panama and Hong Kong.

Costa Rica reported reduced exports of 828.50 USD Million in December of 2012 from 971.70 USD Million in November of 2012. Costa Rica Exports averaged 584.53 USD Million from 1995 until 2012, making a high of 1120.10 USD Million in March of 2012 and a record depression of 235.50 USD Million in December of 1995.

Fuel, electronics, pharmaceuticals and capital equipment are Costa Rica ‘s chief imports. The United States is Costa Rica ‘s chief import spouse stand foring 45 per centum of entire imports. Other import spouses of Costa Rica are Mexico, Japan, China, and Colombia.

A lessening was reported in Costa Rica ‘s imports to 1460.30 USD Million in December of 2012 from 1547.10 USD Million in November of 2012. Costa Rica Imports averaged 815.75 USD Million from 1996 until 2012, making high of 1615.50 USD Million in October of 2012 and a record depression of 320.70 USD Million in March of 1996.

Balance of Trade

Because of Costa Rica ‘s deficiency of mineral resources, this state is dependent on imports of fuels, which resulted in the state ‘s balance to be negative in the recent old ages. Costa Rica is a net exporter of nutrient and electronics. The United States is Costa Rica ‘s chief trading spouse because 45 per centum of the imports and 37 per centum of the exports in Costa Rica are from the United States. Other merchandising spouses of Costa Rica are the European Union, Panama, Guatemala and Mexico. Balance of Trade in Costa Rica decreased to -631.80 USD Million in December of 2012 from -575.40 USD Million in November of 2012. From 1995 until 2012, Costa Rica Balance of Trade norm was -204.83 USD Million making a 139.60 USD Million in April of 1999 and a depression of -696.10 USD Million in October of 2012.

Capital Flows

Capital and Financial Account Balance of the Balance of Payments in Costa Rica are measured by utilizing the international capital flows. Capital Flows in Costa Rica is reported by the Central Bank of Costa Rica. Costa Rica ‘s capital flows increased to 1163.81 USD Million in the 3rd one-fourth of 2012 from 198.49 USD Million in the 2nd one-fourth of 2012. Historically, Costa Rica Capital Flows averaged 370.27 USD Million from 1999 until 2012, making a high of 1163.81 USD Million in August of 2012 and a low record of -230.34 USD Million in May of 2009.

Part III: Other Economic Measurements and Idexes

Exchange rate

Costa Rica ‘s currency is the Colon ( XE, 2013 ) . The most The currency is comparatively stable since 2007 after the Central Bank of Costa Rica changed their attack to put the exchange rate in 2006 ( Quiros, 2012 ) . Since so the Bank set upper and lower boundaries and did non interfere but instead allow supply and demand within the market specify the exchange rate ( Quiros, 2012 ) . This led to the result that the state ‘s general population does non necessitate to be worried about their exchange rate and monetary value instability any longer, but besides that exporters with the United States have to acquire worried about a high Colon ( Quiros, 2012 ) .

Unemployment

The unemployment rate of the state decreased within 2012 ( Tradingeconomics, 2013 ) . In the 3rd one-fourth it was 10 % ( See Appendix X ) . Even though the unemployment degrees decreased over the last twosome of old ages the poorness degree increased to 21.3 % ( Williams, 2010 ) . This is because of the fact that the state managed successfully to increase the figure of occupations but the mean monthly wage is merely about 268,592 colones which equals $ 540 ( Williams, 2010 ) . The authorities recognized this job and knows that in order to cut down poorness they have to better the state of affairs and back up the societal sector and better the substructure ( The World Bank, 2011 ) . Another ground why the employment rate is still quiet high is the fact that the labour engagement of adult females is really low ( Appendix X ) .

Inflation

As mentioned in the paragraph about the exchange rate the Central Bank changed the exchange rate policy which besides has an influence on the rising prices. It is supposed to maintain the rising prices lower ( Auswartiges Amt, 2013 ) . The rising prices rate was around 4.26 % in 2011 and remained comparatively stable thoughout the twelvemonth ( Arias, 2012 ) . This figure is below the Cardinal American norm ( Auswartiges Amt, 2013 ) . The goods and services with the highest addition in 2012 were intoxicant, ciragettes, rent, instruction, conveyance and wellness ( Arias, 2012 ) .

Employment cost index

Labor productiveness

In general one of the chief jobs in Latin America in order to better the labour productiveness is still a low degree of instruction ( Duryea and Pages, 2002 ) . Even though employees in Costa Rica are extremely paid over the norm in Latin America there is still room for betterment in order to increase the productiveness ( See Appendix X ) . The schools and universities need to be aligned more efficient and in order to pull good educated pupils the pay degrees have to be increased ( Monge-Gonzalez, et al. , 2011 ) .

Global fight index

This is the index released by “ The World Economic Forum ” each twelvemonth for every state in the universe. There are variables that are evaluated, but the most of import 1s are Health, Education, Innovation and Use of Technology.

Costa Rica is positioned at 61 out of 142 states as of twelvemonth 2011-12. Before this it was positioned at 56 out of 139 states in the twelvemonth 2010-11 and 55 out of 133 states in the twelvemonth 2009-10. As we can see the Costa Rica GCI rank has been worsening over the old ages, and there are many factors impacting this. The factors impacting are slow development in its overall substructure, it ranks as 95/144 states. Variables that add to the hapless substructure are Quality of roads which ranks as 131/144 states, Quality of port substructure which is even worse than the roads and is ranked 140/144 states. The last factor that affects is the Quality of Railroad substructure which is graded 106/144 states. The other factors that are impacting its rank are foremost the inefficient authorities bureaucratism and back their unequal supply of substructure. See exhibit X for a graph that describes the jobs faced by the people.

Still Costa Rica is able to keep a comparatively good GCI ranking, because of its strong instruction system which is ranked 21 out of 144 states. In the twelvemonth 2012-13 state has able to derive place in its ranking from 61 to 57 merely because of its instruction system, strong degree of technological acceptance, solid concern edification and invention. But there is still to make a batch in the field of substructure to derive higher ranking in the old ages to come.

Human Development Index

The Human Development Index is released in “ The Human Development Report ” each twelvemonth. This index is used to mensurate a state ‘s development in footings of its people development. The variables that are taken into consideration are – Income, Health and Education. At present Costa Rica HDI is 0.744, ranking 69 out of 187 states in the universe. To demo how Costa Rica differs from other states in the universe in footings of HDI, we have two charts illustrated in exhibits X and X.

In exhibit X we can see instruction and income scope between 0.5 to 0.75, and wellness scopes between 0.75 to 1, which gets the HDI for Costa Rica to 0.744. The following chart shows the growing of HDI since 1980- nowadays, in comparing with Latin America and other parts of the universe: .

As we can clearly see from the exhibit X the Costa Rica HDI has ever been above the mean HDI, and it is merely because the state ever had a strong accent on its Education and Health system.

Index of Economic Freedom

Costa Rica had a mark of 68 in the footings of economic freedom, and ranked 44th in the twelvemonth 2012. Exhibit Ten illustrates where Costa Rica falls in comparing with other states. As we can see from the above chart that Costa Rica falls under reasonably free zone, and is above the regional and universe norm. Economic freedom index has four pillars which consist of 10 freedoms that add up to the overall economic freedom. The four pillars consist of first the Rule of Law which gives Costa Rica a ranking of 49th in Property Rights and 42nd in Freedom from Corruption. The following pillar is looks at Limited Government. In respects to Fiscal Freedom, they are graded sixtieth every bit good as 16th in Government Spending. The 3rd pillar expressions at Regulatory Efficiency. In this pillar Business Freedom is ranked 124th, Labor Freedom 84th and Monetary Freedom 118th. The 4th and concluding pillar is in respects to the Open Markets. Costa Rica ‘s Trade Freedom is ranked 42nd, their Investing Freedom 36th and Financial Freedom 72nd.

These variables are taken into consideration to measure the economic freedom. It includes everything from how the authorities maps, corruptness rate, investings made in that peculiar twelvemonth, fiscal state of affairs of the state and so on.