Strategic Role, Challenges And Opportunities For Small And Medium Enterprises Facing DR-CAFTA: The Case Of Costa Rica

Abstract

The development of regional business treaties and the subsequent removal of trade barriers has created new paradigms and challenges for companies in Latin America, especially in fast-growing Central America. This paper examines the role, challenges, and opportunities for small and medium enterprises (SMEs) in Costa Rica relative to the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA, or CAFTA in the US). Opportunities and challenges facing SMEs and the potential impact of DR-CAFTA on industry performances in Costa Rica are discerned. Central American nations and Costa Rica in particular, are facing new challenges, threats and opportunities that arise from trade agreements. Such is the case with DR-CAFTA. These paradigms and competitive pressures will directly impact external trade and sustainable economic development. Opportunities are associated with new laws and regulations, incentives to reinforce and improve business practices especially with regard to human capital, as well as new scenarios for international cooperation, commercial agreements and the growing use of outsourcing. The implications of DR-CAFTA are far-reaching and directly impact the development of small and medium enterprises in Costa Rica.