San José, Costa Rica, since 1956

U.S. Investment Corp Aids Investors Here

An institution that was once key in rebuilding war-torn Europe after World War II is providing political risk insurance and financing to U.S. investors in Costa Rica.

The Overseas Private Investment Corporation (OPIC) was born out of the government agency that helped allocate funds as part of the renowned Marshall Plan, an aid and investment package from the United States that helped rebuild Europe and plant the seed for the European Union.

The agency has since become a corporation that has shifted its focus from Europe to the developing world, and offers services in more than 150 countries.

The corporation’s communications director, Lawrence Spinelli, who was in Costa Rica last week to promote an upcoming investment forum in El Salvador (see sidebar), explains that the corporation’s ideology is founded on the notion that foreign aid isn’t enough to rebuild economies.

“If you want to rebuild an economy, foreign aid is not going to do it.You need to create jobs and get the private sector and businesses to invest. You know the old saying: give a guy a fish he can eat for today, teach a guy to fish, he can eat every day? It’s the same principal,” Spinelli said.

Foreign direct investment from the United States is now 250 times greater than government foreign aid to Latin America, according to the U.S. Embassy in Costa Rica. Foreign direct investment is defined as long-term investment by a foreign direct investor in an enterprise in a foreign economy. It includes a parent enterprise and a foreign affiliate in the foreign country,which together form a multinational corporation.

In Costa Rica, OPIC now supports a dozen investors who are pouring a total $140 million into this small country – about one-tenth of total foreign direct investment to Costa Rica last year. The corporation serves as a last-resort bank for foreign investors, in case they can’t find other financing. It also provides political risk insurance through U.S. brokers against acts of violence, civil war, the government’s nationalization of industries, if the government applies foreign currency controls and other political risks, Spinelli explained.

Spinelli sat down with The Tico Times at the U.S. Embassy last week to discuss how private investment is affecting emerging markets like Costa Rica. Excerpts:

TT: In the northwestern province of Guanacaste there’s a boom in private investment, yet Guanacaste is the province with the worst job prospects in the country, second only to the Caribbean port of Limón. Are you trying to focus the investment in a way that it is going to offer training and development and education for Costa Ricans?

LS: I can pile up studies and evaluations and reports on the history of foreign direct investment since 1945 that will demonstrate again and again and again that in every country there’s been investment there’s been economic growth through job creation.

There’s no other way to do it. If you’ve got a market-oriented economy, the only way you’re going to increase your job creation is by encouraging investment. Certainly domestic investment but also direct foreign investment… it’s the only way you’re going to lift up all the boats.

We follow World Bank guidelines and all of our projects must adhere to international labor standards.We have the Foreign Corrupt Practices Act that U.S. businesses have to follow. And finally we have transparency initiatives at OPIC that require businesses to be as transparent as possible in their operations.

What kinds of jobs are being created? In Guanacaste there are many construction jobs being created …

Construction, tourism, energy, but it’s not even as simple as that. If you want to have job creation and you don’t have adequate energy you’re not going to be able to do that, so we have investors building power plants and power facilities to make sure there’s an uninterrupted flow of energy.

One of the things we’re doing is working in the financial services industry to make sure financing is available. So construction workers here can buy a home, which is everybody’s dream. We’re making loans available through financial institutions we’re supporting, who can then turn around and lend that money to Costa Rican small businesses.

As more and more investment comes in, more investors have more institutional power. One of the issues now in Latin America is whether investors are threatening sovereignty.

I can’t answer your question but what I can tell you is this: OPIC has had a bilateral investment agreement for many years.We won’t support investment in a country without that kind of bilateral agreement. We’ve had one here for more than a decade and as a result of that we’ve seen more investors come here.

An Opportunity for Investors

OPIC’s “Access to Opportunity in Central America and the Caribbean” conference is scheduled for May 15-17 in San Salvador, El Salvador. It will give those interested in investment a chance to hear from leading investment experts, U.S. businesses currently investing in Central America and the Caribbean, financial institutions operating in the region, and U.S. government officials. Conference sessions will focus on investment opportunities in sectors such as infrastructure, energy, tourism, franchising, financial services and housing. The cost is $200 for local businesses and $400 for U.S. businesses. For more information see

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