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This paper studies the degree to which innovation by Costa Rican manufacturing firms creates or displaces employment, how different innovation strategies affect employment, and how these effects vary by firm size and type of employment demand characteristics (skills and gender). In particular the research focuses on the differential effects of product and process innovations on employment growth.Particular attention was paid to identifying innovation impacts on employment generation by SMEs (small and medium-sized enterprises). In doing so, we estimate a model proposed in Harrison, Jaumandreu, Mairesse, and Peters (2008) using an IV approach with data from the Innovation Surveys for Costa Rica for the period 2006–2007. The results show that both product and process innovation are positively related to employment growth. Evidence was found for important differences in impacts by firm size and labor skills. The strategy of in-house innovation is very important as a driver of employment generation. Imported innovation does not seem to have an impact on employment growth. The findings suggest that policies aimed at overcoming challenges faced by Costa Rican firms in becoming more innovative are also very important for generating new employment opportunities in the country. Download here

This paper addresses the relationships between innovation, research and development (R&D) and productivity in domestic ICT firms in Costa Rica.
Factors considered were the types of innovation outputs produced by domestic ICT firms, the relative importance of innovation inputs, the impacts of innovation on firm productivity, the protection of innovations, and impediments to innovation. While most firms engaged in all types of output and input innovations, they appear to be driven by retaining or increasing market share rather than increasing productivity. Half of firms do not formally protect the intellectual property created by their innovations, are not familiar with methods for protecting innovation or the availability of government grants for such purposes, and face barriers associated with the Costa Rican Patent Office. Other impediments include lack of knowledge about financial resources available and scarcity of human resources. There is also evidence of knowledge spillovers through worker mobility from multinationals operating in Costa Rica to domestic ICT firms.

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Author: Ricargo Monge-González, 2009

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We analyze five Productive Development Policies (PDPs) implemented in Costa Rica to assess whether these policies are justifiable based on the existence of market failures. We find that PDPs are not addressing market failures optimally. Moreover, this study shows that government failures rather than market failures are the main source of PDPs justification. Even in presence of market failures, the instruments applied in the policy design are not necessarily the more efficient (according to economic theory), but the more politically feasible options (lower-political cost). Besides, lack of policy evaluation and monitoring prevents the required adjustments and corrections of such policies, according to changing circumstances. The case studies indicate that addressing the arguments for policy intervention and incorporating the results of the evaluation into policy design and reform are necessary conditions for success. The improvement of key areas (like infrastructure, technology, business regulations, and market distortions) to enhance competitiveness and create the required conditions for productivity growth is a policy objective still on process, with positive outcomes but important limitations so far. An umbrella approach in the case of those PDPs that reinforce and create feedbacks between each other is necessary for productivity growth.

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