Publication: Chilean Growth through East Asian Eyes
Date
2008
ISSN
Published
2008
Author(s)
Abstract
Chile could well have space to increase
its growth potential by 2 percentage points of Gross
Domestic Product (GDP) per year. To do this, it would need
to pay more attention to new sources of growth in natural
resources, manufacturing, and services. In an increasingly
globalized world, first-mover advantages have become more
numerous and larger. Chile risks losing out, as a few recent
high-profile cases suggest. Chile's total factor
productivity growth can be raised by driving within-firm
technological change closer to the global best-practice
frontier more rapidly, especially in manufacturing. This
would encourage the diversification of exports and boost
Chile's supply response to global demand changes. Chile
confronts obstacles in its processes of innovation, human
capital accumulation, and investment. To overcome them, deep
institutional changes are needed to develop a national
innovation system, stronger and more equitable educational
achievement, more flexible labor markets, and focused public
investments that crowd in private business. Such an
inclusive growth strategy is likely to yield better social
outcomes than a strategy that attempts to confront social
inequities head-on through more equitable access to public
services without paying adequate attention to the demand for
labor and generation of income. Chile could also try a new
policy towards innovation, but it would need to be bolder in
terms of the institutional design to maximize the chances of success.
Citation
“Kharas, Homi; Leipziger, Danny; Maloney, William; Thillainathan, R.; Hesse, Heiko. 2008. Chilean Growth through East Asian Eyes. Commission on Growth and Development Working Paper;No. 31. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/28028?show=full License: CC BY 3.0 IGO.”