Relative importance of the intangible benefits of Foreign Direct Investment (FDI) in Free Trade Zones in Costa Rica

Alonso Alfaro-Ureña (), Marco A. Badilla-Maroto (), Isabela Manelici () and José Pablo Vásquez-Carvajal ()
Additional contact information
Alonso Alfaro-Ureña: Economic Division, Central Bank of Costa Rica
Marco A. Badilla-Maroto: University of California, Berkeley
Isabela Manelici: London School of Economics
José Pablo Vásquez-Carvajal: London School of Economics

No 2108, Documentos de Trabajo from Banco Central de Costa Rica

Abstract: This paper quantifies intangible benefits that arise from the interaction of multinational companies in the Free Trade Zone regime with their workers and with companies of Costa Rican capital (domestic). We compare those benefits to the corresponding benefits of multinationals that operate outside this regime. Specifically, we calculate the increase in productivity that domestic firms experience for supplying multinationals, and the additional salary (or wage premium) experienced by multinational workers compared to what they would receive by working in domestic companies. We find that those new suppliers of multinationals in the Free Trade Zone experience a 12% increase in their productivity from the first year after the start of the supply relationship, while those that supplied multinationals outside of this regime only received a 5% productivity increase. Likewise, the wage premium of the multinational company outside the Free Trade Zone is 6.2%, while the wage premium of multinationals in the Free Trade Zone is 14.3%. *** Resumen: En este trabajo se cuantifican beneficios intangibles derivados de la interacción entre empresas multinacionales en régimen de Zona Franca con sus trabajadores y con empresas de capital costarricense. Esta medición se realiza comparativamente con respecto a los respectivos beneficios de multinacionales que operan fuera de este régimen. Específicamente, se calcula el aumento en productividad que reciben las firmas domésticas por suministrar a multinacionales, y el salario adicional (o prima salarial) que experimentan los trabajadores de multinacionales en comparación con el que recibirían laborando en empresas domésticas. Se encuentra que aquellos nuevos proveedores de multinacionales en Zona Franca perciben un incremento en su productividad de 12% desde el primer año posterior al inicio de la relación de proveeduría, mientras que aquellos que suministraron a multinacionales fuera de este régimen solo un 5%. Así mismo, la prima salarial de la empresa multinacional fuera de Zona Franca es de un 6.2%, mientras que la prima salarial en Zona Franca es de un 14.3%.

Keywords: Multinationals; Free Trade Zones; Productivity; Employment; Multinacionales; Zonas Francas; Productividad; Empleo; Costa Rica (search for similar items in EconPapers)
JEL-codes: F14 F16 F23 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2021-12
References: Add references at CitEc
Citations:

Published

Downloads: (external link)
https://repositorioinvestigaciones.bccr.fi.cr/item ... 21-9487-63c39b90ddca (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:apk:doctra:2108

Access Statistics for this paper

More papers in Documentos de Trabajo from Banco Central de Costa Rica Contact information at EDIRC.
Bibliographic data for series maintained by Departamento de Investigación Económica ().