New Industrial Policy of South American Countries and Industrial Cooperation with Korea

4 Pages Posted: 24 Jun 2016

See all articles by Ki-Su Kwon

Ki-Su Kwon

Korea Institute for International Economic Policy

Jin-O Kim

Korea Institute for International Economic Policy

Misook Park

Korea Institute for International Economic Policy

Siun Yi

Korea Institute for International Economic Policy

Date Written: May 10, 2016

Abstract

The three Latin American countries, Chile, Colombia and Peru, were in need of active industrial policies by the 2000s. First and foremost, they needed to diversify their export and industrial structure. Since the year 2000, dependence on the primary commodity exports of these South American countries has increased, due to China’s primary commodity boom (rose from 67% in year 2000 to 76% in 2013). In particular, Colombia’s export dependency on primary resources has jumped from 66% to 82% during the same period. This high dependency on primary goods can lead to high volatility in economic growth. During the period from 1996 to 2014, Chile, Peru, and Colombia’s volatility of economic growth exceeded the Latin American average. Second, these three countries had to promote their productivity. According to the IMF and other researches, the high rate of economic growth in the 2000s was achieved thanks to a high input of labor and accumulation of capital, rather than driven by TFP growth. In this sense, the low productivity of the three countries could be explained by the lack of innovation. Third, they needed to strengthen national competitiveness. These three countries all ranked on a mid-to-high level among South American countries, according to the World Economic Forum. However, their rankings have dropped or remained stagnant since 2010. In order to make the transition to an ‘innovation-driven’ economy from their current ‘efficiency-driven’ economy, they must expand R&D expenditure, and improve educational levels.

Keywords: South America, Latin America, Industrial policy, Chile, Colombia, Peru

Suggested Citation

Kwon, Ki-Su and Kim, Jin-O and Park, Misook and Yi, Siun, New Industrial Policy of South American Countries and Industrial Cooperation with Korea (May 10, 2016). KIEP Research Paper World Economy Update- No.16-11. Available at SSRN: https://ssrn.com/abstract=2799997 or http://dx.doi.org/10.2139/ssrn.2799997

Ki-Su Kwon (Contact Author)

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

Jin-O Kim

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

Misook Park

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

Siun Yi

Korea Institute for International Economic Policy ( email )

Seoul 137-602

Register to save articles to
your library

Register

Paper statistics

Downloads
31
Abstract Views
268
PlumX Metrics