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Networks and Public Policies in the Global South: The Chilean Case and the Future of the Developmental Network State

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Abstract

Recently, there has been considerable excitement about the economic potential of the “developmental network state”—decentralized government policies that successfully accelerated growth in several high- and medium-income countries. The question remains whether such a strategy could be successful in less-developed nations whose scientific and technological resources were relatively limited. This paper analyzes the trajectory of Chile, a Southern country which, despite adverse conditions, managed to produce something akin to an economic miracle during the last few decades. Our argument is that Chile’s success was based on the developmental network state strategy. Moreover, we highlight the centrality to understanding the Chilean experience of the concept of “network failures”—a common phenomenon that occurs when domestic production would be best served by network forms of organization but for a variety of reasons, these networks either fail to materialize or fail to take hold (Schrank and Whitford 2011). Over and over again, we see that the logic behind the actions of the Chilean state was to provide resources that reduced the likelihood of network failures. We examine three case studies of successful export sectors: salmon; wine; and fruit and vegetables. The paper outlines some of the challenges faced by the Chilean model and assesses its long-term viability.

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Notes

  1. See also Kim (2010), OECD (2011), and Weiss (2011). While these sources used different terminology, they are describing some of the same policy tools that are addressed in the literature on developmental network states.

  2. The term was originally coined by Williamson (1990) without the ideological connotation that it has since acquired.

  3. FC’s experience was replicated elsewhere in South America. For example, Mexico’s successful blueberry export program can be traced back to the efforts of one Mexican grower, together with specialists from the University of Chapingo, to develop locally viable varieties (Chollett 2009). In Argentina, several state institutions created detailed mappings of microclimates so as to help the local agro-exporters (McDermott 2007).

  4. Although the FC is formally a non-profit, private organization, several factors qualify it in practice as virtually a state agency. The government is usually instrumental in choosing the members of its board of directors and the president, and the government also owns an important share of FC’s capital (Agosin et al. 2009).

  5. As in the case of technology adoption, extensive support for entrepreneurship seems to have become entrenched in other parts of Latin America. For example, the Argentinean state of Mendoza has developed more than 75 different programs and policies specifically aimed at supporting local entrepreneurs (McDermott 2007).

  6. Again, there is substantial evidence to suggest that the emergence of publicly supported industrial clusters was not a Chilean peculiarity. In the Dominican Republic, exporters of organic bananas were required by the government to form industry associations, which in turn has helped Dominican firms to acquire necessary export certifications, maintain product quality, and increasing output (Raynolds 2008). The recent wine export boom registered in Mendoza, Argentina, is also attributable to programs jointly developed and managed by partnerships between the regional government and more than 50 nongovernmental organizations (McDermott 2007).

  7. In a now familiar pattern, Chilean export promotion programs were not singular in the South American context. In fact, PROCHILE itself had been modeled after Proexport, its successful Colombian counterpart (Kurtz and Brooks 2008). Extensive state-sponsored promotion efforts were also observed in Argentina (McDermott 2007), Brazil (Arbix and Martin 2009), Dominican Republic (Raynolds 2008), and Costa Rica (Schrank and Kurtz 2005).

  8. We chose to report shares in non-copper exports because, as we document in the concluding section, copper exports have been growing rapidly in recent years due to an increase in world prices. Depicting our sectors’ share of non-copper exports makes it possible to see that Chilean agroindustrial products would provide continued export strength even in the event of falling copper prices.

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Acknowledgments

This paper was supported by funding from the Ford Foundation, grant 1075-1307-1. Andrew Schrank, Kirsten Sehnbruch, Gay Seidman, and two anonymous reviewers made helpful criticisms of earlier drafts.

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Correspondence to Marian Negoita.

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Negoita, M., Block, F. Networks and Public Policies in the Global South: The Chilean Case and the Future of the Developmental Network State. St Comp Int Dev 47, 1–22 (2012). https://doi.org/10.1007/s12116-012-9097-4

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