Enablers and Bottlenecks to Upgrading Along the Medical Device Global Value Chain in Costa Rica

The medical device sector is a critical driver of Costa Rica's economic development, accounting for 37 percent of total exports as of 2022. This paper analyzes the main enablers and bottlenecks in upgrading along the medical device global value chain into higher value-added segments. The mixed-method approach we use includes documentary analysis, 15 interviews with key stakeholders, and descriptive statistics of different datasets. Results indicate five enablers for upgrading: (i) a strategic location and economic, political, and social stability, education, human talent, and a favorable investment climate allowed companies to establish in Costa Rica; (ii) a shift in the strategy of the investment attraction agency toward supply chain helped identify key suppliers; (iii) the development of specialized skills and talent needed by the industry helped manufacturing more complex devices; (iv) productive development programs helped linkages emerge between multinational enterprises of medical devices and domestic firms; and (v) the existence of specialized skills enabled companies to consider Costa Rica for research and product development processes. The sector also faces three main bottlenecks that hinder its ability to continue upgrading: (i) cultural barriers and informality that restrict backward linkages; (ii) persistent skills shortages, and more bilingual graduates in science, technology, engineering and mathematics are needed; and (iii) lack of incentives that limit the ability to deepen research and development.