Productive investment in Chile’s economic development: trend and challenges

15 April 2019 | Publication

Productive investment in Chile’s economic development: trend and challenges

- Author: Ffrench-Davis, Ricardo; Díaz Pérez, Alvaro
- Physical description: páginas. 25-4
- UN symbol (Signature): LC/PUB.2019/6-P
- Date: 15 April 2019

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Abstract

This article reviews the trend of investment in Chile and its relationship with economic growth since the 1973 coup d’état; and it documents how investment remains the main growth driver. Notwithstanding that fact, innovation helps to mitigate diminishing returns from natural resources, while technology-intensive investment, such as broadband infrastructure, helps to diversify the production matrix. The article shows how a persistent increase in the investment ratio in 1990–1998 supported GDP growth of 7.1% per year; but since 1999 investment has wavered, and average growth dropped to below 4%. The article examines the macroeconomic environment and its real instability since 1999, along with investment in infrastructure, the quality of natural resources and environmental services; and it identifies challenges for boosting both investment and innovation, diversifying the production matrix and its agents, and moving towards inclusive growth.