The Golden Period for Growth in Chile: Explanations and Forecasts
AbstractEconomic growth in Chile since the mid 1980s has been remarkable for its high level and persistence. This paper attempts to shed light on the factors behind it and analyze the extent to which they can be sustained in the future. The first part of the paper presents some stylized facts. Taken together, they suggest that the jump in growth was driven by policies and macroeconomic conditions that affected the economy’s overall productivity. The second part of the paper considers the recent empirical growth literature to examine the extent to which a cross-country approach can explain Chile’s growth. We formulate and estimate – using techniques suited for dynamic models of panel data— a basic model containing the most popular variables in the literature. Our basic model allows us to explain about 45% of the change in the growth rate between 1970-85 and 1986-1998, which was 4.74%. When we expand the basic model to include the quality of the political system and governance, the comprehensiveness and compl ementarity of policy reforms, and the availability of public services and infrastructure, we can explain 73% of the growth improvement. The last part of the paper starts the evaluation of possible new growth sources for Chile by, first, projecting the country’s growth rate for the next decade under various assumptions and, second, proposing some areas with potentially large returns.
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Bibliographic InfoPaper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 146.
Date of creation: Feb 2002
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Other versions of this item:
- Francisco Gallego & Norman Loayza, 2002. "The Golden Period for Growth in Chile. Explanations and Forecasts," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.), Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 13, pages 417-464 Central Bank of Chile.
- Francisco Gallego Y. & Norman Loayza O., 2002. "The Golden Period For Growth In Chile: Explanations And Forecasts," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 5(1), pages 37-67.
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- J. Rodrigo Fuentes, 2011. "Una Mirada Desagregada del Deterioro de la Productividad en Chile: Â¿Existe un Cambio Estructural?," Documentos de Trabajo 401, Instituto de Economia. Pontificia Universidad Católica de Chile..
- Ashvin Ahuja & Thammarak Moenjak, 2002. "Economic Arrangements and Long-Term Growth in Thailand," Working Papers 2002-05, Economic Research Department, Bank of Thailand.
- Rita Almeida & Ana M. Fernandes, 2013.
"Explaining local manufacturing growth in Chile: the advantages of sectoral diversity,"
Taylor and Francis Journals, vol. 45(16), pages 2201-2213, June.
- Almeida, Rita & Fernandes, Ana M., 2011. "Explaining local manufacturing growth in Chile : the advantages of sectoral diversity," Policy Research Working Paper Series 5891, The World Bank.
- Klaus Schmidt-Hebbel, 2012. "The Political Economy of Distribution and Growth in Chile," Documentos de Trabajo 417, Instituto de Economia. Pontificia Universidad Católica de Chile..
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