Final report : performance evaluation of the Costa Rica Export Fund

Performance evaluation covers the period 10/90-5/95. Implementation of the export fund has digressed substantially from the project design because of the undercapitalization of the fund, which is only $20.9 million rather than the minimum $70 million envisioned in the project design. Nonetheless, except for the constraints introduced by this shortage of resources, the Export Development Foundation (FUNDEX), the fund administrator, has strictly adhered to the terms and conditions of the export fund agreement. FUNDEX has also developed its capability to carry out the financial management of the fund by establishing sound systems and procedures to ensure accurate financial reporting and reliable internal control. The most difficult problem in project implementation is the tense working relationship between FUNDEX and the CINDE, the major recipient of grants provided under the fund (in 1994, for example, CINDE received 62% of the C 215 million in approved grant funds). This problem will not be solved unless the administrations of both FUNDEX and CINDE take further steps to develop mutual trust and goodwill. Other problems -- such as those related to program management and program monitoring methodologies and systems -- should not be difficult to solve from a technical viewpoint. On the basis of CINDE's experience, an annual increase in measurable exports of $5-$7 million for each $1 million in program expenditures on the overall mix of various types of export development programs should be a reasonable target for the export fund. Although many projects financed by FUNDEX have no measurable impact on exports, they nonetheless foster export development by providing useful services to the export sector. Some of these services help to strengthen the competitiveness of Costa Rican products, whereas others are helpful for identifying potential market opportunities or structuring market penetration strategies. The continued functioning of CINDE is a necessary condition for the viability of the export fund as originally designed, because CINDE is the only private organization specializing in export development that has a successful track record. Hence, the policy to maintain the value of the export fund's capital in real terms should be modified to ensure that a minimum amount of funding exists for providing CINDE's integrated and mutually reinforcing export development services. The fund itself should be extended another 4 years after the current PACD of 12/96. Finally, the Fundacion Costa-Rica-United States of America (CRUSA) project appears to be the best mechanism to assume the role of USAID vis-a-vis the Export Fund after USAID's departure from Costa Rica.