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Industrial Policy in Chile

Author

Listed:
  • Manuel Agosin
  • Nicolas Grau
  • Christian Larrain

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 Agosin & Nicolas Grau & Christian Larrain, 2010. "Industrial Policy in Chile," Research Department Publications 4695, Inter-American Development Bank, Research Department.
    • Handle: RePEc:idb:wpaper:4695
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    Cited by:

    1. 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.
    2. 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.
    3. Wilson Peres, 2011. "Industrial Policies in Latin America," WIDER Working Paper Series wp-2011-048, World Institute for Development Economic Research (UNU-WIDER).
    4. Gammage, Sarah. & Alburquerque, Tomás. & Durán, Gonzálo., 2014. "Poverty, inequality and employment in Chile," ILO Working Papers 994849553402676, International Labour Organization.
    5. Cornick, Jorge, 2013. "The Organization of Public-Private Cooperation for Productive Development Policies," IDB Publications (Working Papers) 4590, Inter-American Development Bank.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. Peres, Wilson, 2011. "Industrial Policies in Latin America," WIDER Working Paper Series 048, World Institute for Development Economic Research (UNU-WIDER).
    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. 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.
    13. 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).
    14. 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.
    15. Manuel R. Agosin, 2013. "Productive Development Policies in Latin America: Past and Present," Working Papers wp382, University of Chile, Department of Economics.
    16. 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).
    17. 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.

    More about this item

    Keywords

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    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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