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The Macro Dimensions of Chile's Export Dilemma

Author

Listed:
  • Arroyo Francisco

    () (University of Chile)

  • Edmunds John C.

    () (Babson College)

Abstract

The success of Chile's economy in the past decades is relevant to the efforts of other emerging countries to achieve rapid economic growth. One of Chile's main accomplishments has been a steady increase in exports. The increase was in physical volume of exports, not in unit value. This increase was the result of a correct strategy of opening the economy, which permitted the more competitive Chilean businesses to access external markets. This strategy may be reaching a point of diminishing returns, so the dilemma that Chile now faces is relevant to other emerging countries as they try to grow their economies rapidly. To achieve significant further growth in the long run, Chile needs to move into new kinds of business opportunities, in categories and areas where it has not established a foothold. To break into these new areas, Chile has to develop new capabilities and new strategies. The old way of growing the economy is running into constraints.The data is about Chile's wood products export industry, which is the country's most successful in terms of adding value as measured by macro metrics. That export industry is not as well known as Chile's wine and fresh fruit export industries but has a more impressive record. The firms in Chile's wood export industry, despite being successful in increasing the dollar value of products exported, have not been able to make themselves competitive in stages of wood production beyond basic and repetitive processes. Other emerging countries are facing the same challenge.Chilean wood products exporting firms in Chile have been slow to respond to signals from the market. They have not been able to achieve high standards of quality or precision, and they have worked only with local raw materials. These firms have attempted to export manufactured products, but these attempts have failed. For those reasons many observers argue that the advantage in the market that these firms enjoy is due to superior endowments of natural resources rather than to corporate strategies.High raw material prices have not triggered a new chapter in this history. On the contrary, this comfortable situation has lulled the country into complacency. Other countries were in the same comfortable situation and now the financial crisis has intervened. Chile's present slow growth is discouraging but might prod the country to achieve greater sophistication in exporting goods and services.

Suggested Citation

  • Arroyo Francisco & Edmunds John C., 2010. "The Macro Dimensions of Chile's Export Dilemma," Global Economy Journal, De Gruyter, vol. 9(4), pages 1-19, January.
  • Handle: RePEc:bpj:glecon:v:9:y:2010:i:4:n:8
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    References listed on IDEAS

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    1. MD. Ramirez, 2000. "Public capital formation and labor productivity growth in Chile," Contemporary Economic Policy, Western Economic Association International, vol. 18(2), pages 159-169, April.
    2. Boriss Siliverstovs & Dierk Herzer, 2007. "Manufacturing exports, mining exports and growth: cointegration and causality analysis for Chile (1960-2001)," Applied Economics, Taylor & Francis Journals, vol. 39(2), pages 153-167.
    3. Zahler, Roberto, 1995. "Chile: growth with stability," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34027, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Hojman, David E, 2002. "The Political Economy of Chile's Fast Economic Growth: An Olsonian Interpretation," Public Choice, Springer, vol. 111(1-2), pages 155-178, March.
    5. Amin Gutierrez de Pineres, Sheila & Ferrantino, Michael, 1997. "Export diversification and structural dynamics in the growth process: The case of Chile," Journal of Development Economics, Elsevier, pages 375-391.
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    Cited by:

    1. José Ernesto Amorós & Rodrigo Basco & Gianni Romaní, 2016. "Determinants of early internationalization of new firms: the case of Chile," International Entrepreneurship and Management Journal, Springer, vol. 12(1), pages 283-307, March.

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