Integrating the national industrial system: the new challenge for Chile

Authors: Parrilli, M.

Journal: Review of International Political Economy

Volume: 11

Issue: 5

Pages: 905-925

Publisher: Taylor and Francis

ISSN: 1466-4526

DOI: 10.1080/0969229042000313073

This paper analyses the policy-making approach taken in Chile in the past three decades as a move away from unsatisfactory import substitution industrialisation (ISI), and as an affirmative response to the rule of free trade and globalisation. After many years of successful economic growth, Chile seems to be at a turning point. Indeed, the country’s position in the new globalised market – like that of other small countries – appears weak compared to stronger competitors, such as China and other East Asian countries. This is rooted in the neoliberal policies that have been pursued for many years (although in a less orthodox way in the last decade) and that have had a significant impact on the economic structure of the country. The main effect of these policies has been a split between a small sector driven by modern, technologically advanced, large firms, and a larger sector of traditional, labour-intensive, micro and small enterprises. The divergence between the two sectors in terms of their economic characteristics and their relative performance prevents them from establishing any kind of linkages. Therefore, the capacity of the system to respond to international competition shrinks. The implicit practical adjustments in policy-making implemented by the main national development organisation(s) are not enough to surmount the present difficulties. A different kind of answer is needed, namely, industrial development strategies that are voluntarily and collectively organised, and that aim to reconnect the national production system, overcoming tendencies to fragmentation and making the country more competitive internationally.

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