Development trajectories and new comparative advantages: Costa Rica and the Dominican Republic under Globalization

SummaryThis paper compares the experiences of Costa Rica and the Dominican Republic in creating new comparative advantages in manufacturing exports and its impact on economic development. It makes three main arguments. First, the apparel sector is currently unlikely to act as an engine of economic development. Second, high public spending in health and education and selective targeting of foreign investment have been fundamental in the creation of comparative advantages away from apparel into exports with higher technological content in Costa Rica. Third, the new export sectors still lack sufficient linkages to the rest of the economy and most of their value added goes into profits for the transnational corporations.