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The Formation of Network and Public Intervention: Theory and Evidence from the Chilean Experience



The first part of the paper deals with the theoretical foundations of new industrial policy tools aimed at promoting a process of interacting learning among firms. I discuss the issue at three different levels: first, I define the theoretical boundaries of my research interest within the considerable economic literature dealing with industrial networks; secondly, I concentrate on some endogenous growth and development models, in order to analytically define the existing relationship between firm interactions, knowledge flows, and productivity. Then, I discuss the relationship between knowledge diffusion and productivity, with particular emphasis on the fundamental concept of network multiplier. Finally, I carry out a microeconomic analysis of the motivations that bring firms to interact with each other, and look for a role for public institutions in promoting such interaction. I discuss in which cases public intervention promoting the formation of a knowledge-sharing network is justified by the existence of a sort of “market failure”, and identify which variables are involved. In the second part of the paper I analyze the most important Chilean networking program, the PROFO program. The availability of relational data on a significant number of firm networks allows me to investigate in detail the relationship between network structure, public intervention and firm competitiveness. The econometric analysis confirms a strong correlation between PROFO firms’ innovativeness and industrial cooperation, proving the existence of an interactive learning process among participant firms. I used sociometric data to refine my analysis of the impact of the program on the network multiplier: not only do participant firms also achieve better performance in terms of productivity, but this performance is quite strongly correlated with firm centrality and network density, which are the two variables best representing the structure and function of the network multiplier and that, as I previously mentioned, are strongly affected by PROFO.

Suggested Citation

  • Alessandro Maffioli, 2005. "The Formation of Network and Public Intervention: Theory and Evidence from the Chilean Experience," ISLA Working Papers 23, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy, revised May 2005.
  • Handle: RePEc:slp:islawp:islawp23

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    Cited by:

    1. repec:idb:idbbks:6668 is not listed on IDEAS
    2. Bronwyn Hall & Alessandro Maffioli, 2008. "Evaluating the impact of technology development funds in emerging economies: evidence from Latin America," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(2), pages 172-198.
    3. Giuliani, Elisa & Pietrobelli, Carlo, 2014. "Social Network Analysis Methodologies for the Evaluation of Cluster Development Programs," Papers in Innovation Studies 2014/11, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
    4. Juan S. Blyde & Christian Volpe Martincus & Danielken Molina, 2014. "Fábricas sincronizadas: América Latina y el Caribe en la era de las Cadenas Globales de Valor," IDB Publications (Books), Inter-American Development Bank, number 86755 edited by Juan S. Blyde, February.
    5. Pietrobelli, Carlo, 2019. "Modern industrial policy in Latin America: Lessons from cluster development policies," MERIT Working Papers 2019-031, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

    More about this item


    learning; productivity; public intervention;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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