In 1948, Costa Rica abolished its army. It redirected military spending into education and healthcare. 78 years later, it has a 97%+ literacy rate, 60,000 workers in medical device manufacturing, $11 billion in annual medtech exports, and 18 of the world's top 35 MedTech companies operating within its borders. The most consequential defence policy in Latin American history turned out to be an economic policy in disguise.
Data sourced from PROCOMER, CINDE, US International Trade Commission, Tico Times, Medical Technology Magazine, and Global Finance. All figures current as of June 2026.
Ask most people what Costa Rica exports and they will say coffee, bananas, or pineapples. They are thinking of a Costa Rica that stopped being accurate in 2017. That year, medical devices surpassed agricultural goods to become the country's largest export category — a crossing that, once made, has only accelerated. In 2024, the medical and precision devices sector accounted for 43% of total exports. In 2025, exports of medical devices soared to $11 billion — 48% of Costa Rica's total goods exports. Medical devices now represent a larger share of Costa Rica's exports than coffee, bananas, pineapples, and every other agricultural product combined — not by a small margin, but by a factor of roughly four to one.
The companies generating these numbers are not local startups. 18 of the world's top 35 MedTech companies operate in Costa Rica. Boston Scientific, Medtronic, Abbott, Edwards Lifesciences, Hologic, Baxter, Cardinal Health, Philips — the companies that make the catheters, stents, pacemakers, surgical robots, and diagnostic equipment used in hospitals across the developed world are manufacturing them, at least in part, in a country of five million people in Central America. The workforce these companies employ has grown 216% over the past decade to exceed 60,000 direct employees — and the sector expects to add approximately 5,000 jobs annually for the foreseeable future.
On December 1, 1948, President José Figueres Ferrer made one of the most unusual decisions in the history of any nation state. Costa Rica, having just emerged from a brief civil war, abolished its military. The decision was enshrined in the 1949 constitution: Article 12 prohibits the existence of a permanent army. The military budget — modest by any measure, but significant in a poor country — was redirected to education and healthcare.
The immediate practical consequences were modest. The longer-term consequences were transformational. Without a military budget competing for resources, Costa Rica could invest proportionally more in schools than any of its neighbours. Over the following decades, literacy rates climbed — reaching 97%+ today, among the highest in Latin America. Public university education expanded. Technical training programmes proliferated. The country built the human capital base that, eventually, no neighbouring country could match. When the global economy began rewarding technical precision, bilingual capability, and educational quality in the 1990s, Costa Rica had been building those assets for forty years.
The healthcare investment ran parallel. Costa Rica has a life expectancy of approximately 80 years — higher than the United States. A population that is healthy, educated, and politically stable is a workforce that multinational companies can rely on for precision manufacturing. The demographic and institutional foundations of the medtech boom were laid not by any industrial policy designed to attract Boston Scientific, but by a constitutional decision to abolish the army made 30 years before Boston Scientific was founded.
The army money went to schools. The schools produced engineers. The engineers attracted Intel. Intel attracted the medtech companies. The medtech companies built the $11 billion industry. The chain of causation runs from 1948 to 2026 without interruption.
The most important analytical question about Costa Rica's medtech success is not what it achieved — the numbers are clear — but why it happened here and not in the neighbouring countries that share its geography. Honduras has lower wages than Costa Rica. Nicaragua has lower wages. Guatemala has lower wages. If the primary driver of medtech investment were labour cost, these countries would be competing successfully for the same companies. They are not. The difference is everything except cost.
The labour cost advantage is real but secondary. Costa Rica's fully loaded wages for medical device production operators run $4.50–$6.50 per hour — representing a 25–30% saving compared to the United States, but significantly more expensive than China, Vietnam, or neighbouring Central American countries. The companies paying that premium are not doing so despite the cost — they are doing so because the total cost of manufacturing in Costa Rica, when adjusted for quality outcomes, regulatory compliance rates, workforce reliability, and supply chain resilience, is competitive with or superior to alternatives at lower headline wages.
The regulatory alignment is particularly critical for medical devices — a sector where FDA compliance is not optional and where manufacturing errors have patient safety consequences. A production facility in Costa Rica operates under a regulatory and IP framework that is substantially aligned with US standards, uses a workforce already trained in FDA-compliant quality systems, and ships to the United States in 1–3 days rather than 3–6 weeks. These advantages are not available in lower-wage alternatives and cannot be replicated simply by paying workers less money.
How a semiconductor factory in 1998 created the workforce for a medtech empire in 2025
Intel's 1997 decision to locate semiconductor wafer fabrication in Costa Rica is the single most important corporate investment decision in the country's post-agricultural history. At peak, the Belén facility employed 3,500 workers in cleanroom fabrication — workers who had to be trained from scratch in calibration, metrology, yield management, and quality systems at a level Costa Rica had never required before.
Intel's presence lasted longer than its manufacturing. When Intel restructured its Costa Rica operations in 2014, shifting from wafer fabrication to R&D and global services, the workforce it left behind was the most technically sophisticated manufacturing talent pool in Central America. These workers — the "Intel generation" — became the labour market into which the medtech companies subsequently hired.
The precision and complexity ceiling that Costa Rica can reach in medical device manufacturing is meaningfully higher than any other Central American country because of this workforce legacy. Class I and many Class II medical devices can be produced competitively across the region. The advanced cardiovascular, neuromodulation, orthopaedic, and electrophysiology devices that represent the highest value in the sector — the ones requiring micro-assembly, optical alignment, and advanced metrology — can only be produced in Costa Rica among Central American options. That capability advantage, built by Intel and maintained by decades of accumulated expertise, is the structural moat that no neighbouring country can close in the short term.
Entered through a Heredia facility in 2004 producing endoscopic devices. Now the single largest medtech exporter from Costa Rica. Operations span cardiovascular, endoscopy, urology, and neuromodulation — the full breadth of its global portfolio manufactured partially in Costa Rica for global distribution. Thousands of employees.
Operates significant manufacturing in Costa Rica across cardiac and vascular, diabetes, and neurological disorder devices. Costa Rica's operations are part of Medtronic's global supply chain for devices distributed to over 150 countries. A pacemaker or insulin pump component made in Costa Rica reaches patients globally.
Specialises in structural heart disease and haemodynamic monitoring. Costa Rica operations produce some of the highest-precision, highest-value devices in the portfolio. Heart valves and related cardiovascular devices require the most demanding manufacturing precision in the medtech sector — and Costa Rica's workforce can deliver it.
Abbott's Costa Rica presence spans its medical device division. Manufacturing facilities produce diagnostic equipment and therapeutic devices. Part of a broader Abbott strategy to leverage Costa Rica's regulatory compliance capabilities for FDA-market products that require the highest quality standards.
Hologic Surgical Products named among top exporters. Produces women's health devices, surgical instruments, and diagnostic imaging equipment. Costa Rica's stability and IP protection framework made it the preferred choice over lower-cost alternatives where technology transfer risk is higher.
Long-established presence producing hospital and renal care products. One of the early medtech anchors that demonstrated the viability of the Costa Rica model and attracted subsequent waves of investment. The positive experience of early investors prompted new market entrants — the feedback loop that built the cluster.
COVID-19 was the most consequential event in the history of Costa Rica's medtech sector — not because it damaged it, but because it proved why it existed. When global supply chains from China and Southeast Asia collapsed in 2020, medical device shortages occurred across the developed world. Hospitals ran short of catheters, ventilator components, and personal protective equipment manufactured on the other side of the planet. The transit time, the single-country concentration, and the fragility of the just-in-time supply chain model became impossible to ignore.
Costa Rica's medical device facilities kept operating. The geographic proximity to the United States — three-hour flights, one to three day freight transit — combined with the timezone alignment and the US-compatible regulatory environment meant that Costa Rican production could be ramped, redirected, and delivered at a speed that Asian production could not match. The pandemic accelerated decisions that companies had been considering for years. The nearshoring premium — higher wages than Asia in exchange for supply chain resilience, proximity, and regulatory alignment — became commercially justified in a way it had not been before COVID exposed the cost of supply chain fragility.
From 2020 to 2023, medical device exports from Costa Rica increased by $3.6 billion — more than the total export value of all previous years combined. The nearshoring thesis, validated by the pandemic, drove investment decisions that translated directly into export volumes. US companies that had been weighing Costa Rica against Malaysia or Vietnam made the choice for Costa Rica — not because of wage costs, but because of the risk-adjusted total cost calculation that puts a value on not having your supply chain collapse when something goes wrong on the other side of the world.
Costa Rica's medtech success is real and structural — but it carries concentration risk that the government is actively trying to address. The United States accounted for approximately 73% of inward FDI and represented 66.5% of medical device exports in 2023, down from 76% in 2014 but still a very high concentration. A significant deterioration in US-Costa Rica trade relations — tariff changes, regulatory divergence, or political disruption — would be felt immediately and severely in the medtech sector. The industry has explicitly lobbied for tariff exemptions, and sector leaders cite stable US trade relations as a top priority. Costa Rica's diversification into Europe, Japan, and China as export markets is intentional and necessary, but incomplete.
The workforce pipeline is the most important constraint on future growth. Costa Rica produces approximately 4,000 engineering graduates annually — impressive for a country of five million, but potentially insufficient as the sector continues to grow and as the complexity of required skills increases. The shift from disposable device assembly to high-precision neuromodulation and electrophysiology devices requires deeper technical training. The national learning institutions are responding, but the pipeline needs to expand faster than it currently is to prevent skill bottlenecks from limiting investment attraction.
Narcotrafficking and security concerns are a legitimate cloud on the otherwise positive picture. Costa Rica's historically low crime rates have been deteriorating as the country becomes a transit route for drug trafficking from South America. A dip in tourism in recent years cost 22,000 jobs in the hospitality sector. The political stability that has been Costa Rica's competitive advantage for 78 years is not at risk of collapse — but the security environment requires active management to avoid eroding the perception of stability that attracts premium manufacturing investment.
Long-horizon thinking on capital, technology, and the forces shaping the next decade of wealth creation. Written from first principles. Not consensus. Not noise.