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Industrial Policy in Chile

Author

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  • Manuel R. Agosin
  • Christian Larraín
  • Nicolás Grau

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

  • Manuel R. Agosin & Christian Larraín & Nicolás Grau, 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. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    2. José Miguel Benavente & Alexander Galetovic & Ricardo Sanhueza, 2006. "Fogape: an economic analysis," Working Papers wp222, University of Chile, Department of Economics.
    3. Hausmann, Ricardo & Klinger, Bailey, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Working Paper Series rwp06-041, Harvard University, John F. Kennedy School of Government.
    4. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, vol. 72(2), pages 603-633, December.
    5. 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.
    6. Agosin, Manuel R., 1999. "Trade and growth in Chile," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. 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.
    2. Bateman, Milford, 2013. "The age of microfinance: Destroying Latin American economies from the bottom up," Working Papers 39, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    3. Arti Grover Goswami & Aaditya Mattoo & Sebastián Sáez, 2012. "Exporting Services : A Developing Country Perspective," World Bank Publications, The World Bank, number 2379, June.
    4. 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.
    5. Manuel R. Agosin, 2013. "Productive Development Policies in Latin America: Past and Present," Working Papers wp382, University of Chile, Department of Economics.

    More about this item

    Keywords

    Economic Development & Growth; Industrial Policy; Small and Medium-Sized Enterprises; Microbusinesses & Microfinance;

    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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