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Chile occupies a relatively high position in the annual rankings on economic competitiveness issued by international think tanks. But when the country's performance in these indexes is broken down into its constituent parts, Chile shows a stunning dichotomy.
In terms of macroeconomic variables and market freedom, Chile ranks among the top 10 countries in the world. But judged against several business productivity variables, it ranks closer to the bottom 10."Now that the country has a solid macroeconomic floor, the challenges of technological innovation, training, management capability and financial sector efficiency become more apparent," Chilean Economy Minister Alvaro García said in a recent presentation at the IDB. According to García, his country's private sector does not invest enough in technological innovation and training. "The state must help to finance these activities," he said, "but always together with the private sector, so there is a commitment from them. It is the private sector that should decide what has to be done in these areas and who has to do it." He further called for strengthening and continually updating the country's regulatory framework and institutions to ensure smoothly functioning markets. He cited the example of the highly competitive Chilean telecommunications industry. Telecommunications companies have approached the government several times over the past few years asking not for less regulation, which would have been the case in years past, but rather for more rules to improve transparency in a cut-throat, free-for-all market. García stated that meeting this microeconomic challenge through a more active collaboration between public and private sectors must be accompanied by continued insistence on macroeconomic soundness.
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