Latin America Advisor

A Daily Publication of The Dialogue

Will Investment in a Space Agency Benefit Costa Rica?

A photo of a satellite orbiting Earth. Costa Rican lawmakers last month approved the creation of a new space agency for the Central American nation. // File Photo: NASA.

Costa Rica’s Legislative Assembly last month approved a bill to create a space agency to conduct research and explore technological innovations in the field. The measure prompted some criticism, with opponents citing existing financial constraints to providing sufficient basic services as well as other areas in need of investment, including infrastructure, health and education. What advantages will the creation of a space agency bring Costa Rica? Will investing in a space program now pay off in the long term, and in what ways? Is it the right time for the Costa Rican government, and others in the region, to be investing in science and technology, or should they be prioritizing other areas with more pressing, short-term needs instead?

Franklin Chang Díaz, former NASA astronaut and founder and CEO of Ad Astra Rocket Company in Costa Rica: "At the end of April, Costa Rica will unveil the most advanced space radar in the world, capable of tracking orbiting objects as small as three centimeters. The project will position our nation front and center in the space age, with unimaginable opportunity for the country in new industries of great value to our economy. The radar site, already a multi-million-dollar foreign investment, happened partly by chance and partly by the timely involvement of a team from the public and private sectors. It is also one of many potential ‘space tenants’ that Costa Rica could welcome, given the right conditions. We have done it before in electronics and again in medical devices. In each case, a bold national bet paid off. The Costa Rica Space Agency will become a direct way for the nation to participate in the $38 billion space market. The agency will have negotiating power and voice at the table of space-faring nations. The potential dividends from such an investment are immense in high-paying jobs, education, quality of life and business diversity. Some have criticized the new law as too expensive at a time of fiscal crisis. However, while the law allocates 0.4 percent of the noncommitted funds of the country’s nonfinancial institutions, the absolute claim on the country’s finances can and should be quite modest. Moreover, the costs of the AEC can be controlled, and responsibly managed, by the entity’s five-person unpaid governing board. Critics also point out that the PhD-level formal education required for the AEC’s executive director unfairly eliminates talent and limits the pool of otherwise qualified leaders. This is a valid concern that should be corrected with future legislation, but it is not sufficient to send the law back to the drawing board. Costa Rica, fortunately, has an ample supply of qualified leaders that meet these requirements. A crisis is a terrible thing to waste, and this one is no exception. It is our opportunity to reinvent ourselves. The AEC must move forward. It is our bet to bring economic dividends to our country and hope, opportunity and optimism to younger generations."

Aida Montiel Héctor, National Liberation Party member of Costa Rica’s Legislative Assembly: “The space agency (AEC) will incentivize the creation of areas of high-value-added work outside the Greater Metropolitan Area, not only in the most populous region but also in the development of areas such as Liberia, in Guanacaste province. Liberia has all the conditions to become a second development zone and the main technological hub in Costa Rica, as it is where the Daniel Oduber international airport and air cargo terminal, as well as first-rate universities such as the University of Costa Rica, the National University of Costa Rica and EARTH University, are located. It also has needed infrastructure (public services, a free trade zone known as Solarium, roads, tourist developments and hotels, among others). Undoubtedly, as the proposal contemplates, a space center in that area will promote research and development not only in Liberia, but throughout the country. The AEC will be subject to legal provisions of control and supervision under the Comptroller’s Office and other laws. Regarding its financing, for five years it will be equivalent to only 0.4 percent of the uncommitted surplus of the government’s financial institutions. This will be an initial contribution, as the agency will have to invest in plant and laboratory facilities as well as manage or contract professional services. It will also be financed through the sale of services and products of upstream and downstream space technology companies. Costa Rica does not have an entity that can make high-impact agreements with agencies from friendly countries, such as NASA, or the European, Japanese or Korean Space Agencies, with which it could have strategic alliances that benefit the country. The space agency could be an instrument for the promotion of scientific and technological aspirations for girls and boys. I am satisfied having put in my two cents into the construction of a dream that will become a reality for development and innovation in Costa Rica.”

María Inés Solís, Social Christian Unity Party member of Costa Rica’s Legislative Assembly: “The Costa Rican space agency will bring foreign investment to the country. Costa Rica has the potential, the professionals and the creative capacity to become an international center for scientific and technological innovation, which is tied to improving the creation of opportunities. We have competitive advantages in aspects such as geographic location and climate that we must take into account to maximize the project’s benefits. Activities related to space science have positive impacts worldwide in areas such as industrial manufacturing, the medical industry, the construction of satellite instruments and the reduction of production costs, among many other achievements that have resulted in an improvement in people’s quality of life. With the space agency, we will have the support of the scientific community, which will also generate fresh resources through the sale of services and thus bring economic growth and international positioning. It is precisely these innovative ideas that can bring the fresh capital that the country so badly needs, especially now with the health crisis’ negative impact on unemployment and productive activities. Regarding its financing, it is important to note that the state’s contribution toward the agency will be of a period of five years. The contribution will be 0.4 percent of the uncommitted surplus of nonfinancial institutions. The agency will also begin its work with a seed capital from its ally institution, CeNAT, and then it will have its own income and donations."

Juan Carlos Hidalgo, independent policy analyst: “The problem with the creation of a Costa Rican Space Agency is not that this is an inopportune moment for the government to bet on science and technology— although with the fragile fiscal situation that the country is going through, public opinion has been decidedly against the creation of a new state institution. Rather, the problem is that the financing mechanisms and legal exemptions that the AEC will enjoy violate the principles of good public administration and budgetary responsibility that the country committed to in joining the OECD. The Comptroller General’s Office warned of this in a report last year. For example, the bill establishes that the AEC will be financed in the first five years through an annual disbursement of 0.4 percent of the uncommitted surpluses of nonfinancial public institutions. Legal mandates of this sort explain why Costa Rica has the second-most inflexible public spending in Latin America after Brazil, according to the OECD. The bill also exempts the AEC from most budgetary controls. If the real intent is to promote investment in science and technology, Costa Rica would do better by concentrating its efforts on strengthening the National Innovation System. The main goal should be to increase significantly the meager amount currently allocated to research and development (0.43 percent of GDP) and to better target it in resolving the problems and challenges faced by the private sector.”

Juan José Muñoz, director of entrepreneurship and innovation lab OpenLab: “We must not lose sight of the long-term impact the pandemic may have on our education and competitiveness as an economy. While the current and post-pandemic global context does require creating short-term solutions, long-term vision should be our main goal. A Costa Rican space program, far beyond results directly linked to the space industry, will provide a guiding light—which has been lacking—for Costa Ricans to pursue technology and knowledge creation as personal and societal economic drivers. The Costa Rican work force has been recognized for being highly technically educated and skilled, but it has never been a very ‘entrepreneurial’ work force, and it is risk-averse. Universities offer only a handful of ‘entrepreneurial’ and ‘innovation’-based courses, and no majors around them. Students actively seek out corporate roles and post-grad degrees after graduation instead of seeking a more entrepreneurial, value-creation driven approach to their careers. A healthy match between education and entre(intra)preneurship would be very beneficial to the country’s competitiveness in a global market. Costa Rica has been poised to make a breakthrough as a global start-up and knowledge infrastructure hub. This has yet to happen due to a lack of ‘champions’ and ‘visible opportunities’ to act as guides and motivation for our professionals and students as well as for investment in highly valuable fields such as microchips, medical devices and software development. A space agency may just be the champion and visible opportunity we need for that breakthrough.”

Latin America Advisor logo.The Latin America Advisor features Q&A from leaders in politics, economics, and finance every business day. It is available to members of the Dialogue’s Corporate Program and others by subscription.


Related Links

Suggested Content