Productive development policy for Chile: an alternative to stagnation

Abstract

Since 1998, Chile has been experiencing a significant slowdown in its economic growth. The Chilean economy’s recent poor performance is attributable to a halt in productive and export diversification around the beginning of the twenty-first century. State interventions have been horizontal, eschewing those to support specific industries. Intermediate interventions have focused on promoting activities (such as new exports and technologies) that form only a small part of the Chilean economy, leaving a wide margin for market forces to select companies and sectors. In terms of vertical policies, support for green hydrogen is proposed, as this is an emerging industry in which Chile has clear comparative advantages. The article also argues for exchange rate policies that mitigate sharp fluctuations in the real exchange rate and ensure a stable and competitive exchange rate for new exporters.