New Industrial Policy of South American Countries and Industrial Cooperation with Korea

The three Latin American countries, Chile, Colombia and Peru, were in need of active industrial policies by the 2000s. First and foremost, they needed to diversify their export and industrial structure. Since the year 2000, dependence on the primary commodity exports of these South American countries has increased, due to China's primary commodity boom (rose from 67% in year 2000 to 76% in 2013). In particular, Colombia's export dependency on primary resources has jumped from 66% to 82% during the same period. This high dependency on primary goods can lead to high volatility in economic growth. During the period from 1996 to 2014, Chile, Peru, and Colombia's volatility of economic growth exceeded the Latin American average. Second, these three countries had to promote their productivity. According to the IMF and other researches, the high rate of economic growth in the 2000s was achieved thanks to a high input of labor and accumulation of capital, rather than driven by TFP growth. In this sense, the low productivity of the three countries could be explained by the lack of innovation. Third, they needed to strengthen national competitiveness. These three countries all ranked on a mid-to-high level among South American countries, according to the World Economic Forum. However, their rankings have dropped or remained stagnant since 2010. In order to make the transition to an 'innovation-driven' economy from their current 'efficiency-driven' economy, they must expand R&D expenditure, and improve educational levels.