This paper traces the evolution of Chile’s pro-productivity policies from 1958 to 2025 and analyses how shifts in political and institutional regimes shaped the country’s growth and economic performance in general. It applies the van Ark et al. (2023) framework, examining four policy domains—capital accumulation, structural transformation, markets and internationalisation—underpinned by macroeconomic and institutional fundamentals across three historical phases: the inward-oriented state-led model (1958–1973), the liberalisation and adjustment period under military rule (1973–1990), and the democratic consolidation phase (1990–2025). While Chile succeeded in correcting macroeconomic distortions and attracting investment, it struggled to sustain productivity growth after the early 2000s. The analysis reveals that first-generation reforms enabled strong catch-up growth, but later gains proved elusive in the absence of sufficient innovation capacity, institutional coordination, and dynamic efficiency. The paper also addresses challenges in measuring total factor productivity over time, highlighting the limitations of internationally harmonised datasets and the importance of adjusting metrics to reflect country-specific conditions.
Author: Rodrigo Krell Loy