Lessons Learned from Chilean Model of Innovation and Development

Lessons Learned from Chilean Model of Innovation and Development

Juan Rock T. (Universidad de Talca, Chile) and Gordana Pesakovic (King University, USA)
Copyright: © 2015 |Pages: 15
DOI: 10.4018/978-1-4666-8468-3.ch073
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Abstract

In this chapter, the focus is on the Chilean economy and its development based on the innovation strategies and policies applied in the country in the last 40 years. The country's performance is compared with others countries in the region and the developed economies. The main lesson learned from the Chilean experience for the small developing countries are that a small economy can use to its benefit, competitive advantages achieved by other countries. In order to do this a country needs an open foreign policy and transparent, safe and fair business policies.
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Chilean Economic Background

Since the Great Depression the early 1930s, Chilean economic policies have adopted a development strategy named import-substitution industrialization (ISI). ISI is based on restricting imports of manufactured products and state-financed domestic industries. The main goal of this strategy was originally to reach higher economic growth while reducing significant reliance on Copper exports (represented 75% of the total export value). In 1973, a very deep institutional and economic crisis ended the ISI strategy. An economic reform began when a team of economists initiated structural reforms that eliminated government interventions, liberalized markets, privatized and deregulated industries, altered the structure of the public sector, liberalized the capital market and the capital account, and opened the economy to foreign trade (Montecinos, 1995).

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