Loan of $27 million will help diversify exports, create jobs and stimulate foreign direct investment in the sector
The Inter-American Development Bank has approved a $27 million loan to contribute to the development of the global export services sector in Chile. The funds are designed to help improve human resources skills and generate jobs, exports and foreign direct investment in this sector, one of the most dynamic in world trade.
The project will contribute to increase exports of non-traditional global services, which today account for 5.5 percent of all exports in Chile and include computer, financial, insurance, legal, engineering, telecoms, technological, cultural, creative and knowledge-based services, among others.
The program will finance activities aimed at international marketing; trade promotion; business skills designed to boost exports; pre- and post-investment services; training and certification of human resources in skills required by the private sector, and an electronic platform with information on regulations and procedures for export services, business intelligence and access to data bases, among other things.
Overall, the program seeks to improve the quality and relevance of the skills of workers and thus generate new jobs with high added value in the sector. By using innovative mechanisms for mapping demand and ensuring quality, it is expected that the trainings will meet the specific needs of companies and the service sector, taking into account international best practices that have formed successful public-private partnerships.
As a whole, Chile's production model is not highly diversified, with 61 percent of all exports coming from copper and its derivatives. “Export services represent a major opportunity and alternative for Chile to diversify and add value to its exports, and to increase productivity,” said Mikael Larsson, the IDB project team leader and specialist of the Trade and Integration Sector. “The country has major competitive advantages such as a good infrastructure base, trade openness and the economic and political stability required to attract investment and drive the sector,” he added.
The program features an innovative governance mechanism with private-sector participation, which will provide a strategic vision and address demands from companies that will help access international markets.
Annual compound growth in global export services in Latin America and the Caribbean over the past 10 years was 14 percent, one of the highest rates in the world, second only to India, the world leader in such services. Besides having proven it is less vulnerable to the ups and downs of the global economy, the sector has low levels of pollution, encourages technology transfer, makes intensive use of human capital and boasts high potential for creating skilled jobs.
The loan resources come from the IDB’s ordinary capital, with an interest rate pegged to LIBOR and a reimbursement period of 16 years. The executing agency is the Chilean Finance Ministry.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.