Kharas, HomiLeipziger, DannyMaloney, WilliamThillainathan, R.Hesse, Heiko2017-08-282017-08-282008https://hdl.handle.net/10986/28028Chile 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.en-USCC BY 3.0 IGOACTION PLANACTION PLANSAGGREGATE LEVELANNUAL GROWTHAVERAGE GROWTHAVERAGE PRODUCTIVITYAVERAGE PRODUCTIVITY LEVELSBARGAININGBENCHMARKINGBENCHMARKSBEST PRACTICEBEST PRACTICESBEST-PRACTICEBROADBANDBUDGET ALLOCATIONSBUSINESS CLIMATEBUSINESS CYCLEBUSINESS CYCLESBUSINESS INDICATORSBUSINESS LEADERSBUSINESS OPPORTUNITIESBUSINESS PLANBUSINESS SECTORBUSINESSESCAPITAL ACCUMULATIONCAPITAL EXPENDITURECAPITAL FLOWSCAPITAL FORMATIONCAPITAL INVESTMENTCAPITAL MARKETSCENTRAL BANKCOLLECTIVE BARGAININGCOMMODITYCOMPARATOR COUNTRIESCOMPETITIVENESSCOMPUTER TRAININGCOUNTRY CASECOUNTRY REGRESSIONSCOUNTRY RISKCOUNTRY SPECIFICDEREGULATIONDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPMENT AGENCYDEVELOPMENT GOALSDEVELOPMENT INDICATORSDEVELOPMENT OF KNOWLEDGEDEVELOPMENT POLICYDEVELOPMENT PRACTITIONERSDEVELOPMENT STRATEGYDIGITAL DIVIDEDISPLACEMENTDIVERSIFICATIONDRIVERSE-MAILEBUSINESSECONOMETRIC MODELINGECONOMIC BENEFITSECONOMIC CONDITIONSECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC PERFORMANCEECONOMIC POLICYECONOMICSEMPIRICAL WORKEMPLOYMENTEXPECTED VALUEEXPORT DIVERSIFICATIONEXPORT GROWTHEXPORTSEXTERNALITIESEXTERNALITYFACTOR ACCUMULATIONFEMALE EMPLOYMENTFEMALE LABORFEMALE LABOR FORCEFINANCIAL CRISISFINANCIAL MARKETSFINANCIAL SERVICESFISCAL POLICIESFISCAL POLICYFLEXIBLE LABOR MARKETSFOREIGN EXCHANGEFREE TRADEGDPGDP PER CAPITAGLOBAL COMPETITIVENESSGLOBAL CONDITIONSGLOBAL ECONOMYGLOBALIZATIONGOVERNMENT POLICIESGOVERNMENT SUBSIDYGROSS OUTPUTGROWTH PATHGROWTH PERFORMANCEGROWTH POLICIESGROWTH POTENTIALGROWTH RATEGROWTH RATESGROWTH REGRESSIONGROWTH STRATEGIESGROWTH STRATEGYGROWTH SUCCESSESHIGH GROWTHHUMAN CAPITALHUMAN RESOURCEHUMAN RESOURCE DEVELOPMENTICTIMPROVING PRODUCTIVITYINCOMEINCOME LEVELSINDUSTRIALIZED COUNTRIESINFORMATION INFRASTRUCTUREINNOVATIONINNOVATION POLICIESINNOVATIONSINSTITUTIONINTANGIBLE ASSETSINTERNATIONAL STANDARDSINTERNATIONAL TRADEINVESTMENT CLIMATEJOB CREATIONKNOWLEDGE ECONOMYKNOWLEDGE WORKERSLABOR COSTSLABOR DEMANDLABOR FORCELABOR FORCE PARTICIPATIONLABOR MARKETLABOR PRODUCTIVITYLEGAL FRAMEWORKLEVELS OF OUTPUTLICENSESLIVING STANDARDSLOTTERYMACRO STABILITYMACROECONOMIC POLICIESMACROECONOMIC STABILIZATIONMANPOWERMANPOWER PLANNINGMANUFACTURINGMARGINAL PRODUCTSMARKET ECONOMYMARKET FAILURESMARKET SHAREMATHEMATICSMEDIUM ENTERPRISESNATURAL RESOURCESNETWORKSNEW TECHNOLOGIESNEXT GENERATIONORGANIZED LABOROUTSOURCINGPACE OF INNOVATIONPCSPER CAPITA GROWTHPER CAPITA INCOMEPHYSICAL DISTANCEPOLICY CHANGEPOLICY CHANGESPOLICY INTERVENTIONSPOLICY MAKERSPOLITICAL ECONOMYPOLITICAL PROCESSPOVERTY REDUCTIONPRIVATE INVESTMENTPRIVATE PARTNERSHIPSPRIVATE SECTORPRIVATE SECTOR DEVELOPMENTPRIVATE SECTORSPROCUREMENTPRODUCTION FUNCTIONPRODUCTIVITYPRODUCTIVITY GROWTHPROPERTY RIGHTSPUBLIC INFRASTRUCTUREPUBLIC INVESTMENTPUBLIC POLICIESPUBLIC POLICYPUBLIC PROGRAMSPUBLIC SECTORQUERIESR&DRAPID GROWTHRATE OF RETURNRAW DATAREAL INTEREST RATESREFORM PROGRAMRELATIVE CONTRIBUTIONRELIABILITYRENTSRESEARCH WORKERSRESOURCE ALLOCATIONRESULTRESULTSRETAIL TRADERISK PREMIUMSECURE PROPERTY RIGHTSSIGNIFICANT IMPACTSKILLED LABORSKILLED WORKERSSOCIAL ISSUESSOCIAL SERVICESSTATE OF KNOWLEDGETARGETSTECHNICAL EFFICIENCYTECHNICAL PROGRESSTECHNOLOGICAL CHANGETECHNOLOGICAL PROGRESSTELEPHONETFPTOTAL FACTOR PRODUCTIVITYTOTAL FACTOR PRODUCTIVITY GROWTHTRADE UNIONSTRAINING REQUIREMENTSTRANSACTIONTRANSACTION COSTSUSESVALUATIONVALUE CHAINWAGESWORK FORCEWORKER PRODUCTIVITYWorking PaperWorld Bank10.1596/28028