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Productive investment in Chile’s economic development: trend and challenges

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  • Díaz Pérez, Alvaro
  • Ffrench-Davis, Ricardo

Abstract

This article reviews the trend of investment in Chile and its relationship with economic growth since the 1973 coup d’état; and it documents how investment remains the main growth driver. Notwithstanding that fact, innovation helps to mitigate diminishing returns from natural resources, while technology-intensive investment, such as broadband infrastructure, helps to diversify the production matrix. The article shows how a persistent increase in the investment ratio in 1990–1998 supported GDP growth of 7.1% per year; but since 1999 investment has wavered, and average growth dropped to below 4%. The article examines the macroeconomic environment and its real instability since 1999, along with investment in infrastructure, the quality of natural resources and environmental services; and it identifies challenges for boosting both investment and innovation, diversifying the production matrix and its agents, and moving towards inclusive growth.

Suggested Citation

  • Díaz Pérez, Alvaro & Ffrench-Davis, Ricardo, 2019. "Productive investment in Chile’s economic development: trend and challenges," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    • Handle: RePEc:ecr:col070:44713
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    1. Michiko Iizuka & Jorge Katz, 2011. "Natural Resource Industries, ‘Tragedy of the Commons’ and the Case of Chilean Salmon Farming," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 3(2), pages 259-286, July.
    2. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    3. -, 2019. "CEPAL Review no. 127," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    4. Coremberg Ariel Alberto & Pérez García Francisco (ed.), 2010. "Fuentes del crecimiento y productividad en Europa y América Latina," Books, Fundacion BBVA / BBVA Foundation, edition 0, number 2011101, October.
    5. Guillermo A. Calvo & Alejandro Izquierdo & Ernesto Talvi, 2006. "Phoenix Miracles in Emerging Markets: Recovering without Credit from Systemic Financial Crises," Research Department Publications 4474, Inter-American Development Bank, Research Department.
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