Determining factors of the international competitiveness of Extra-Virgin Olive Oil (EVOO) from Spain and Chile

International competitiveness is "a measure of a country's advantage or disadvantage in selling its products in international markets" (OECD, 2014). The main objective of this research is to analyze the determinant factors of the international competitiveness of Spain (the world's leading exporter) and Chile (an emerging exporter) in the international market of extra-virgin olive oil (EVOO). The theoretical framework for the international competitiveness analysis is based on the well-known "Porter's diamond model," which includes: 1. "factor conditions," 2. "demand conditions," 3. "related and supporting industries," and 4. "strategy, structure, and rivalry," as well as aspects related to "government" and "opportunity." The methodology used to determine the level of international competitiveness in the EVOO industry in the countries under study is mixed. The results of the International Market Share (IMS), Revealed Comparative Advantage (RCA) and Trade Competitiveness (TC) indicators confirm Spain's leadership and Chile's emerging competitiveness in the EVOO market. However, both countries have stagnated in recent years. Possibly, Spain has reached a mature international competitiveness level, but Chile has not been able to boost EVOO production and exports. Subsequently, qualitative methods were applied to analyze the determinants of the levels of international competitiveness found in the previous step. Semi-structured interviews were conducted with key actors involved in the production and internationalization of EVOO, mainly producers, cooperatives, exporters' associations, public officials, scholars, and experts. The results of the analysis of Porter's diamond model outline some similarities and considerable differences that could have an impact on the international competitiveness of EVOO in Spain and Chile: 1. Regarding the "factor conditions," both countries have natural advantages that strongly favor olive production, the primary input for EVOO production. However, unlike Chile, Spain has achieved high availability and quality of production factors with acquired advantages, specifically, labor (in the field and technical level) and technology (machinery). This would seem to contribute not only to international competitiveness but also to resilience to the impact of climate change, for example, technological alternatives to the water crisis. 2. The national and international "demand conditions" for EVOO are very different in the analyzed countries. Spain has a millenary olive-growing tradition, which has managed to embed olive oil in the local gastronomic culture. The development of the local market has boosted the production and internationalization of Spanish olive oil. In contrast, Chile has not strengthened and expanded the local market, which is in line with the stagnation of olive oil exports. 3. The "related and supporting industries" seem to have developed alongside the EVOO industry in Spain. The fertilizer industry was the only concern raised by olive producers caused due to the Russia-Ukraine war. Although olive oil producers in Chile also expressed concerns about the world's supply of fertilizers, the packaging industry represents their biggest concern. In Chile, there are only two significant suppliers of glass containers, which prioritize other exporting sectors, such as wine. This concentration of a few packaging suppliers was a recurring concern among Chilean producers. 4. Regarding "firm strategy, structure, and rivalry," it can be seen that the Spanish olive sector is mainly concentrated in cooperatives and mergers of cooperatives, being the medium and large companies a minority. This market structure seems to have positively impacted the sector's international competitiveness, given the ability to generate economies of scale, for example, around the oil press (almazara, in Spanish). In contrast, most olive oil producers in Chile are medium and large companies, while a minority are small producers. The fragmented and dispersed structure of olive oil producers in Chile seems to favor only individual and specific results without generating volume or sufficient international exposure, negatively influencing the international market share. The factors related to "government" include one of the major differentiators between the Spanish and Chilean EVOO industry. Spain provides conditional and unconditional subsidies for olive production, those established by the Common Agricultural Policy (CAP) of the European Union, which are the most valued support by Spanish olive producers. On the other hand, Chile does not have specific subsidies to support the olive sector, which only benefits from horizontal public policies such as grant funds for the agricultural sector. Finally, the growing world demand for healthy foods and the rise in international prices of edible oils are part of the "opportunity" factor perceived by producers from Spain and Chile. Only the first is an opportunity that can be sustained over time and potentially exploited by both countries. The results of this study can be an essential input for the design of intervention policies in light of the current needs of the EVOO sector in Spain and Chile. In both cases, it is urgently required to promote efforts aimed at improving resilience to face the water crisis, as well as promote communication campaigns that expand knowledge and appraisal of the EVOO qualities in the national and international market.