Industrial Policy in Chile

Manuel Agosin, Nicolas Grau and Christian Larrain

No 4695, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: This paper studies three horizontal policy instruments and two vertical ones in Chilean industrial policy, particularly regarding small and medium enterprises (SMEs). The horizontal instruments are (1) a guarantee program for borrowing by SMEs (FOGAPE), (2) a small subsidy to new exports that was applied from 1985 through 2003, and (3) the innovation subsidies provided by the Corporación de Fomento de la Producción (CORFO). The vertical policy instruments are the activities of Fundación Chile (FCh), a semi-public entrepreneur cum venture capitalist, and a CORFO program to attract foreign direct investment in information technology. Although most programs are well designed, they are numerous and insufficiently funded; Chile could benefit from a prioritization of needs and consolidation of these programs. Moreover, the instruments for making strategic bets on new sectors are particularly weak. In particular, FCh needs to refocus its activities on high-risk projects with long payoffs, something it cannot do with its small endowment.

Keywords: Industrial policy; Small and medium enterprises; Chile (search for similar items in EconPapers)
JEL-codes: F43 L52 (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-ent and nep-lam
References: View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Industrial Policy in Chile (2010)
Working Paper: Industrial policy in Chile (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:idb:wpaper:4695

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