Mr. Chairman, honourable members, thank you for the invitation to join the Standing Committee on Finance of the House of Commons for this study session dedicated today to tax havens and fiscal paradis.
Today I have the opportunity to showcase for you how a small country has developed a strategic path that gives us today the credentials to promote our candidacy to the OECD membership, full of confidence in a solid ethical and transparent financial system that has allowed Costa Rica to achieve billions in foreign development investment.
In the last ten years, the country has achieved consistent growth in foreign direct investment, which has become a significant complement to domestic savings. Total FDI inflows have grown an average of 10% every year since 2000, currently representing 5% of the GDP.
Moreover, the country has had success in attracting foreign companies in innovative industries such as services, advanced manufacturing, and medical devices. As a result, foreign investment contributes greatly to Costa Rica’s development in terms of export diversification, creation of more and better jobs, and accumulation of business capabilities.
Over the last 30 years, Costa Rica has accomplished consistent growth in its exports and in its diversification of its export products and destinations. Exports have grown at an average annual rate of 8% since 2001. We have free trade agreements with nearly all of our relevant commercial partners, including Canada.
Currently Costa Rica exports more than 4,000 products to 153 destinations. Due to the country’s commitment to social inclusion, Costa Rica is considered to be a country with one of the best human development performances. Our universal health care and education systems are definitely the pillars of our national stability. Education has been mandatory for 100 years, and we invest 8% of our GDP in this area. At the same time, we invest almost 11% of our GDP in health care, making the system universal.
The country has a strong and world-renowned tradition and commitment to democracy and human rights. Costa Rica has been one of the most stable democracies in the developing world, with no breakdowns since 1949, when it abolished its army. This has enabled resources to be delivered to and invested in education, health care, infrastructure, roads, and telecommunications, strengthening our democracy and fundamental freedoms. As well, Costa Rica has a strong commitment to environmental protection and a decisive commitment towards strengthening innovation and putting in place green growth strategies.
Thanks to its natural richness and environmental stewardship, the country is one of the top destinations in the world, especially for ecotourism. Annually we receive more than 120,000 Canadian tourists, and due to the high quality of life, more than 13,000 Canadians have decided to move to Costa Rica.
Our development is sustainable and inclusive. During the great financial crisis in 2008, we had a short recession and a strong recovery. Why have we done so well? We have a financial system based on prudential and efficient regulation. Even before the financial crisis started, we decided to set our financial regulatory standards above international minimums.
As a result, we have a solid institutional infrastructure that supervises and oversees the financial system. During the financial crisis, no banks failed or had to be rescued, and our financial system continued to provide credit to households and businesses. Additionally, we deployed a large fiscal stimulus package to stimulate the economy.
As we can observe in the graph, the GDP shrank in 2008 but had a strong recovery. Now it is expected to grow 4% over the next two years.