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Industrial Policy in Chile

Author

Listed:
  • Agosin, Manuel R.
  • Larraín, Christian
  • Grau, Nicolás

Abstract

This paper studies three horizontal policy instruments and two vertical ones in Chilean industrial policy, particularly regarding small and medium enterprises (SMEs). The horizontal instruments are (1) a guarantee program for borrowing by SMEs (FOGAPE), (2) a small subsidy to new exports that was applied from 1985 through 2003, and (3) the innovation subsidies provided by the Corporación de Fomento de la Producción (CORFO). The vertical policy instruments are the activities of Fundación Chile (FCh), a semi-public entrepreneur cum venture capitalist, and a CORFO program to attract foreign direct investment in information technology. Although most programs are well designed, they are numerous and insufficiently funded; Chile could benefit from a prioritization of needs and consolidation of these programs. Moreover, the instruments for making strategic bets on new sectors are particularly weak. In particular, FCh needs to refocus its activities on high-risk projects with long payoffs, something it cannot do with its small endowment.

Suggested Citation

  • Agosin, Manuel R. & Larraín, Christian & Grau, Nicolás, 2010. "Industrial Policy in Chile," IDB Publications (Working Papers) 3954, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:3954
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    References listed on IDEAS

    as
    1. Agosin, Manuel R., 1999. "Trade and growth in Chile," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    2. Claudio Bravo-Ortega & Manuel Agosin Trumper, 2007. "The Emergence Of New Successful Export Activities In Latin America: The Case Of Chile," Working Papers wp236, University of Chile, Department of Economics.
    3. Ricardo Hausmann & Bailey Klinger, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Growth Lab Working Papers 5, Harvard's Growth Lab.
    4. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    5. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, vol. 72(2), pages 603-633, December.
    6. José Miguel Benavente & Alexander Galetovic & Ricardo Sanhueza, 2006. "Fogape: an economic analysis," Working Papers wp222, University of Chile, Department of Economics.
    7. Agosin, Manuel R., 2008. "Export diversification and growth in emerging economies," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
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    Citations

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    Cited by:

    1. Cornick, Jorge, 2013. "The Organization of Public-Private Cooperation for Productive Development Policies," IDB Publications (Working Papers) 4590, Inter-American Development Bank.
    2. Aaditya Mattoo & Arti Grover Goswami & Sebastián Sáez & Aaditya Mattoo, 2012. "Exporting Services : A Developing Country Perspective," World Bank Publications - Books, The World Bank Group, number 2379, April.
    3. Peres, Wilson, 2011. "Industrial Policies in Latin America," WIDER Working Paper Series 048, World Institute for Development Economic Research (UNU-WIDER).
    4. Wilson Peres, 2011. "Industrial Policies in Latin America," WIDER Working Paper Series wp-2011-048, World Institute for Development Economic Research (UNU-WIDER).
    5. Sergio G. Lazzarini, 2012. "Strategizing by the Government: Industrial Policy and Sustainable Competitive Advantage," Business and Economics Working Papers 148, Unidade de Negocios e Economia, Insper.
    6. Bravo-Ortega, Claudio & Egana-delSol, Pablo & Winkler-Sotomayor, Nicole, 2023. "Does the lack of resources matter in a dual economy: Decoding MSMEs productivity and growth," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 716-739.
    7. García, Raffi E. & López Rago, Ricardo A., 2025. "Financial subsidies, female employment, and plant performance — Evidence from a quasi-experiment," Journal of Financial Stability, Elsevier, vol. 76(C).
    8. Manuel R. Agosin, 2013. "Productive Development Policies in Latin America: Past and Present," Working Papers wp382, University of Chile, Department of Economics.
    9. Amir Lebdioui & Keun Lee & Carlo Pietrobelli, 2021. "Local-foreign technology interface, resource-based development, and industrial policy: how Chile and Malaysia are escaping the middle-income trap," The Journal of Technology Transfer, Springer, vol. 46(3), pages 660-685, June.
    10. Lazzarini, Sérgio G., 2012. "Strategizing by the Government: Industrial Policy and Sustainable Competitive Advantage," Insper Working Papers wpe_289, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    11. Bateman, Milford, 2013. "The age of microfinance: Destroying Latin American economies from the bottom up," Working Papers 39, Austrian Foundation for Development Research (ÖFSE).
    12. Dünhaupt, Petra & Gräf, Helena & Jiménez, Valeria & Jungmann, Benjamin, 2025. "Industrial policy space in emerging economies: The case of Chile's lithium industry and the energy and raw materials chapter in the EU-Chile free trade agreement," IPE Working Papers 251/2025, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    13. Devlin, Robert & Moguillansky, Graciela, 2012. "What's new in the new industrial policy in Latin America ?," Policy Research Working Paper Series 6191, The World Bank.
    14. Agosin, Manuel R., 2023. "Productive development policy for Chile: an alternative to stagnation," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    15. Agosin, Manuel & Retamal, Yerko, 2021. "A model of diversification and growth in open developing economies," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 455-470.
    16. Amir Lebdioui, 2019. "Chile's Export Diversification since 1960: A Free Market Miracle or Mirage?," Development and Change, International Institute of Social Studies, vol. 50(6), pages 1624-1663, November.
    17. Gammage, Sarah. & Alburquerque, Tomás. & Durán, Gonzálo., 2014. "Poverty, inequality and employment in Chile," ILO Working Papers 994849553402676, International Labour Organization.

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    More about this item

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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