Washington, DC (Washington Insider Magazine)— Traditionally, Americans have viewed China as a business destination and Latin America as a vacation destination. Recently, however, the view has changed as the United States increasingly sees its southern neighbors as a source of immigration problems. This view has contributed to the current situation in which the U.S. economy is overly dependent on China for key goods while trade with other countries in the hemisphere lags, leading to a decline in American influence in the region.
However, there is an alternative path forward that I have observed firsthand with the support of the United States. Costa Rica is playing a central role in the massive effort to reduce dependence on microchips from China. These tiny components power a variety of technologies, from smartphones to fighter jets, and China dominates their packaging and testing, raising concerns about supply chain security. Currently, over 40 per cent of the French fries used by the U.S. Department are sourced from China. Department of Defense comes from Chinese suppliers, while more than 90 per cent of advanced chips are manufactured in Taiwan, a region disputed by China.
Costa Rica: Hub for Microchip Industry
Costa Rica now aims to position itself as a key hub for microchip packaging and testing outside Asia. This ambition traces back to the 1990s when Intel established a factory near San José, the capital. This initial investment contributes to the growth of a technology-oriented workforce and the expansion of related industries. Today, Costa Rica’s leading export category is no longer agricultural products like coffee or bananas but rather high-tech items such as medical devices.
Strategic Initiatives for Growth
Recently in a hotel lounge near San José, President Rodrigo Chaves unveiled a series of initiatives to bolster Costa Rica’s role in the microchip industry. These include tax incentives, regulatory reforms, and a commitment to renewable energy sources, all designed to attract further investment and propel industry expansion. Notably, key figures such as Gina Raimondo, the U.S. Secretary of Commerce, and top executives from Intel, have expressed support for Costa Rica’s endeavors.
Implications for U.S.-Latin America Relations
According to Eltiempo, the US is making changes to its supply chain strategy, which could have wider implications for its relationship with Latin America. At a time when the US is becoming more isolationist and skeptical of free trade, it is looking to improve its supply chain resilience and strengthen diplomatic ties in the region by investing in allies such as Costa Rica and Panama. This approach is in line with the goals of the Americas Act, which is a bipartisan initiative aimed at renewing relations with neighboring countries and strengthening trade agreements.
Countering Chinese Influence
The rise of China as a dominant player in Latin America underscores the urgency of this shift. Chinese investments, notably through initiatives like the Belt and Road Initiative, have cemented its influence in the region, posing challenges to U.S. interests. However, by actively engaging with its neighbors and investing in mutually beneficial partnerships, the United States can reclaim its position in the hemisphere.
Navigating Challenges and Building Future Success
Costa Rica’s decision to exclude Chinese tech giant Huawei from its 5G network rollout exemplifies the country’s strategic alignment with Western values and interests. President Chaves emphasized the importance of making difficult decisions to shape the future in line with shared values and goals.
Conclusively, the aspirations of Costa Rica to establish itself as Latin America’s Silicon Valley symbolize a significant paradigm shift in the economic and diplomatic dynamics of the region. Through the embracement of innovation and the cultivation of strategic partnerships, nations such as Costa Rica, Panama, and the Dominican Republic possess the capacity to not only strengthen their respective economies but also contribute to regional stability and prosperity. As the United States endeavors to navigate the complexities of the contemporary geopolitical landscape, fostering collaboration with neighboring countries emerges as a pivotal strategy towards achieving mutual success and ensuring long-term security in the years ahead.
