An Econometric Analysis of the Determinants of Chile’s Comparative Advantage in Non-Traditional Manufactured Goods

Abstract

In the seventies and eighties Chile undertook a remarkable process of export diversification away from copper, its traditional primary export item. New exports emerged, and in 1987 non-mining exports accounted for 46.2 per cent of total exports, from a low of 14.5 per cent in 1970 (Table 3.9). What accounts for such diversification? What have been the factors fostering Chile’s competitiveness and its pattern of international specialization? In this chapter I investigate the determinants of this rising competitiveness in manufacturing activities in Chile during the years of the monetarist experiment, and the evolution of these determinant factors over time. This is made with econometric evidence from cross-section estimates on 76 industrial groups (4 digit ISIC) for the years 1975-76 and 1984-85.