This volume presents 11 papers written by renowned, national and international scholars that add substantially to the body of empirical research and policy lessons on how to raise economic growth and prosperity in Chile. This book presents a large body of new empirical evidence on the effects of the low quality of education on growth, productivity, the adoption and innovation of new technologies and it also suggests policies to enhance quality and equity at all levels of the educational system. New findings about the effects of the successive energy price hikes on growth and productivity are the foundation to discuss policies reducing the price of energy to boost growth. Other research discusses the dynamics of productivity in Chile, the performance of economic sectors in accounting for such dynamics, the effects of labor market policies in slowing the reallocation process towards high-productivity activities, reforms to financial markets and failures of the policymaking process and institutions and reforms to improve them. All papers recommend policies that would eventually lead the country to a virtuous cycle featuring high growth and better income distribution. This volume also includes a discussion of the MIT economist Daron Acemoglu about why Latin America is poor today, in light of the findings of his best selling book Why Nations Fail (co-written with James Robinson) in order to address Chile’s long-term challenges to achieve economic development. In the final chapter of the book Acemoglu, along with the MIT economist Ricardo Caballero, Vittorio Corbo, Patricio Meller and Jorge Marshall discuss the challenges that Chile is facing to boost growth and to reduce inequality.
- Cover
- Title page
- Copyright page
- Content
- Growth Opportunities for Chile: An Overview Vittorio Corbo, Ricardo Gonzalez
- 1. Introduction
- 2. Where are the opportunities to increase Chile’s growth today?
- 3. Overview of the volume
- 3.1. Why is Latin America poor?
- 3.2. Economic and productivity growth
- 3.3. Microeconomic reforms and competition in the electricity market
- 3.4. Misallocation in the labor market and aggregate productivity
- 3.5. Financial markets and economic growth
- 3.6. Education and productivity
- 3.7. Productivity and technological adoption
- 3.8. Political economy of distribution and growth
- 3.9. An institutional arrangement for enhancing productivity growth
- 3.10. Panel discussion
- Why is Latin America Poor? Daron Acemoglu
- Productivity and Economic Growth in Chile Vittorio Corbo, Ricardo Gonzalez
- 1. Introduction
- 2. What do we know?
- 3. The growth accounting framework
- 4. Sources of economic growth for Chile
- 4.1. Sources of gdp growth
- 4.2. Sources of average labor productivity growth
- 4.3. Alternative estimations and robustness checks
- 5. Productivity analyses at the sector level
- 5.1. Data description
- 5.2. Labor productivity and structural change
- 5.3. Growth accounting at the sector-level
- 6. Shocks to energy prices and productivity growth
- 6.1. What is the connection between energy shocks and productivity?
- 6.2. Growth accounting including the effect of energy price shocks
- 7. Opportunities to increase growth in the short-term
- 8. Concluding remarks
- References
- Appendix A: Measuring capital and labor services
- A.1. Measuring capital services
- A.1.1. ICT capital
- A.1.2. Non-ICT capital
- A.1.3. Calculating capital services
- A.2. Measuring labor services
- Appendix B: Construction of Capital Stocks
- Appendix C: ICT Goods Classification
- Appendix D: The effect of energy price shocks on productivity growth
- Microeconomic Policies and Productivity: An Exploration into Chile’s Electricity Sector Alexander Galetovic, Cristian Hernandez, Cristian Muñoz, Luz Maria Neira
- 1. Chile’s protracted productivity slowdown
- 2. Microeconomic policies, gdp accounting and productivity
- 2.1. Supply and demand meet gdp accounting
- 2.2. Microeconomic policies and gdp
- 2.3. Policies and productivity
- 3. Preliminaries: modeling Chile’s electricity market
- 3.1. Chile’s cis
- 3.2. A brief introduction into the Emma model
- 3.3. Electricity and the environment
- 4. Policies, efficiency and productivity in Chile’s cis
- 4.1. Endowments and the scope of an efficient energy policy
- 4.2. Baseline
- 4.3. Estimating the cost of not having Argentine natural gas
- 4.4. Red tape and policy uncertainty
- 4.5. Environmental policies
- 4.6. Competition policies and water rights divestment
- 4.7. The value of good microeconomic policies
- 5. Conclusions
- References
- Productivity, Misallocation and the Labor Market Alejandro Micco Andrea Repetto
- 1. Introduction
- 2. The Chilean labor market and its regulatory framework
- 2.1. Chile’s labor market
- 2.2. The regulatory framework
- 3. Data and methodology
- 4. The evolution of dispersion
- 4.1. Productivity-enhancing reallocation
- 5. Understanding the rise in dispersion
- 5.1. Interest rate hikes
- 5.2. Real exchange volatility
- 5.3. Energy prices
- 5.4. Accounting for the rise in dispersion
- 6. The aggregate implications of misallocation
- 7. Concluding remarks
- References
- Appendix A: Robustness exercises
- Finance, Productivity and Growth: Does it work for Chile? Fernando Diaz, Fernando Lefort, Marco Morales
- 1. Introduction
- 2. Measuring the impact of financial development on Chilean tfp
- 2.1. Growth accounting
- 2.2. A state-space model for tfp
- 2.3. Estimation results
- 3. The functioning of the Chilean financial sector
- 3.1. Access to financial services
- 3.2. Monitoring and governance of firm’s activities in Chile
- 4. Stock market efficiency and informational content of stock prices
- 4.1. The myy price synchronicity measures
- 4.2. The effect of the capital market reform on the informativeness of stock prices
- 5. Some conclusions and policy implications
- References
- Education and Productivity: Some New Evidence and Implications for Chile Harald Beyer, Francisco Gallego
- 1. Introduction
- 2. Human capital and economic growth
- 2.1. The previous literature
- 2.2. New estimates: quality/quantity of human capital and distance to the frontier
- 3. Determinants of human capital quality
- 3.1. Some stylized facts
- 3.2. Human capital production: a conceptual framework
- 3.3. Human capital production: A conceptual diagnostics of the case of Chile
- 4. Policy suggestions
- 4.1. Institutional reforms
- 4.2. Policies aimed at early childhood development
- 4.3. Primary and secondary school markets
- 5. Conclusions
- References
- What impedes Chile’s catching up with the United States? J. Rodrigo Fuentes, Veronica Mies
- 1. Motivation
- 2. Some stylized facts
- 3. Conceptual framework
- 3.1. Accounting for differences in average labor productivity
- 3.2. Modeling tfp differences
- 4. Calibration of the parameters of the model
- 4.1. Parameter choice
- 4.2. Estimation of the parameter γ
- 5. Comparative statics using the model
- 6. Summary and policy implications
- References
- The Political Economy of Distribution and Growth in Chile Klaus Schmidt-Hebbel
- 1. Introduction
- 2. Government size, income distribution, and growth: How does Chile fare in cross-country comparison?
- 3. Political economy of equity, government size, and growth in Chile
- 4. Dynamics of income distribution and growth
- 5. Leadership, policy-making process, and reforms shaping the dynamics of income distribution and growth in Chile
- 6. Political economy of key reforms to support growth and equity in Chile
- 7. Conclusions
- References
- Appendix A: A Framework for the Role of Leadership, the Policy-Making Process, Institutions and Policies in Shaping Growth and Equity
- A.1. Policy Hierarchy, Development, and Democracy
- A.2. Leadership, Policy-Making Process, Institutions, and Policies
- An Institution for Stimulating Productivity and Public Participation in Chile Ricardo Gonzalez
- 1. Introduction
- 2. The current process of policy formulation
- 3. The Australian Productivity Commission
- 3.1. Principles of the Productivity Commission
- 3.2. Has the Productivity Commission been successful?
- 3.3. The New Zealand version
- 4. Relevant elements of this approach
- 4.1. Does productivity growth contribute to social welfare?
- 4.2. Why is the Productivity Commission pro-participation?
- 5. Implementing a Productivity Commission in Chile
- 5.1. Benefits of adopting a Productivity Commission
- 5.2. Some criticisms of this approach
- 5.3. Comparing other proposals
- 6. Why is a Productivity Commission no panacea for Chile?
- 7. Final remarks
- References
- Appendix A: The origins of the Australian Productivity Commission
- Panel Discussion: The Way Forward
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