Trade and growth in Chile

Abstract

This study analyses the relations between the noteworthy performance of Chilean exports over the last two decades and the high economic growth rate of the country since the mid-1980s. It concludes that the Chilean experience may be described as a case of “export-led growth” rather than one of “growth-led exports”. What were the causes of Chile’s export success? Trade liberalization acted as an important stimulus, but this success was also due to other policies, both horizontal and sectoral: the exchange-rate policy followed since 1982, the introduction of drawback arrangements and export subsidies for exports of relatively minor importance in the mid-1980s, the use of a debt conversion programme to stimulate new production activities for the export of specific goods after the debt crisis, the active participation of the State in providing market information, and the substantial subsidies provided for the forestry sector. The next stage in the development of Chilean exports will be more difficult, however, and will call for more complex policies than the previous stage. Among the issues that must be addressed by such policies are the solution of market flaws in key activities (training and education, technical and marketing know-how, and the provision of long-term resources for investments in new activities not previously undertaken).

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