Country Private Sector Diagnostic

Creating Markets in Chile: Country Private Sector Diagnostic

June 14, 2022

A Stronger Private Sector for a More Productive and Inclusive Society

Chile has long had a strong private sector that has enjoyed an accommodating and supportive policy environment. Vibrant private activity, domestic and foreign, has supported a development success story, with sustained growth and falling poverty. Chile was the first country in Latin America to reach high-income status, joining the Organisation for Economic Co-operation and Development (OECD) in 2010. Recent progress has been slower, however, and the role and responsibilities of the private sector are central issues in the debate over the future of Chile.

The private sector can be a stronger partner in building a more inclusive society, and a more productive, greener economy. For this to happen, this Country Private Sector Diagnostic (CPSD) argues that three cross-cutting avenues will be essential: enhancing productivity, supporting innovation, and upgrading skills. The CPSD also delves into three areas that illustrate the potential for the private sector to support a transition to a green, knowledge-based economy: green hydrogen development, climate-smart agriculture, and the digital economy.

Chile has the capacity to become a global leader in the nascent green hydrogen (GH) industry, relying on its abundant and low-cost renewable energy resources. However, to reach economies of scale in GH production, it needs to address financing hurdles, difficulties in gauging market size, significant technological issues, as well as competition from other GH producers. The adoption of Climate Smart Agriculture (CSA) practices could reduce GHG emissions and production costs, lead to more resilient crops and new export opportunities, and mitigate some of the risks to the country’s agricultural sector posed by climate change. Similarly, Chile is well-positioned to profit from a vibrant digital economy, having built a solid telecommunications infrastructure with high penetration rates and good quality services. Constraints, especially in digital infrastructure, skills, and entrepreneurship, need to be surmounted in order to reap the game-changing benefits of applying digital technologies in mining, electro-mobility and smart agriculture.


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