Structural Transformation in Chile

Abstract:

The main finding of this analysis is that Chile’s pattern of specialization implies little opportunities for easy movements to new activities. Chile is specialized in an extremely sparse part of the product space and has a relatively unsophisticated export package. Past growth has been surprisingly strong given this pattern of specialization, as has been performance in the services sector, and it appears that there does remain some room to continue growing through quality upgrading in existing products. However, Chile has little room to increase its market share in existing products, and its current export package does not offer a path to future structural transformation and growth. Furthermore, this isn’t due to Chile’s status as a natural resource-based economy, as the country lags in these dimensions even when compared to countries like Canada, Australia, and New Zealand. Movements to new sectors are necessary, but will be difficult given this pattern of specialization. This suggests that there should be some scope for public investment in the study and coordination of new export activities to fuel long-term economic growth.

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