A comparative analysis of regional industrial policy between Chile and Italy RSAI, November Nicolás GarridoEnrico Zaninotto Universidad Católica del Norte Departamento de Economía – Núcleo Milenio en Ciencia Regional y Políticas Públicas Chile Università di Trento - CIFREM Italia

Motivation and Revision More or less Industrial Policy? D. Rodrik (2007) Constraints – Public sector has less information about the real constraints for diversification than privates – Industrial Policy is open to rent-seeking P. Evans (1995) Embedded Autonomy Weber (1968), Gerschenkron (1962) y Hirschman (1958) Motivation – How can we analyze Industrial Policies? Comparation? – To identify an institutional framework to compare territorial industrial policies

Comparing Institutions An institution is a set of rules or norms than regulate the behavior of society Comparative Institutional Analysis, as a fraemork to analyze the different structures of national economies – H. Simon (1978) – Mashiko Aoki (2000) – R. Boyer (2004) – Williamson (1993) y North (1990)

Framework for Institutional Analysis Resource Allocation and Employment Price and QuantitiesGet the marginal conditions right! Governance (the play of the game) Align governance structure with transactions Get the governance structure right Basic Institutional Environment Formal Rules of the Game (Property Right, Political System, Laws, courts, money, federal governments) Evolutionary process: Get the environment right Embeddedness, or Social or Cultural Foundation Informal Institutions, customs, traditions, social norms Spontaneous - Emergent

Framework for Institutional Analysis Resource Allocation and Employment Price and QuantitiesGet the marginal conditions right! Governance (the play of the game) Align governance structure with transactions Get the governance structure right Basic Institutional Environment Formal Rules of the Game (Property Right, Political System, Laws, courts, money, federal governments) Evolutionary process: Get the environment right Embeddedness, or Social or Cultural Foundation Informal Institutions, customs, traditions, social norms Spontaneous - Emergent

Two Industrial Policies Programs for Competitiveness Improvement (06/2006) Identification of competitiviness gaps or constraints in a cluster to design initiatives leaded by private firms through participatives and bottom-up techniques Goal: To contribute in the enhancement of the competitive capacities of the Chilean regions, making stronger the regional skills for designing and implementing territorial programs for improving the productivity of Small and Medium Firms in the clusters and to improve equity for backward sectors Territorial Agreements (1998) or Territorial Pacts Is an instrument available for all the economic agents of a territory to individualize and to make specific projects Goal: to execute programs for local development with high participation and sustainability – Subsidiarity Principle – Integrate capital incentivation with infraestructure interventions

Context of RDAs and PCIs Ministerial Comitee Strategic-Politic CORFO Technical Unit of Coordination Support Units in CORFO National Services Comitee Regional Development Agencies Local Governance of Clusters Benefited Firms National Level Regional Level Local Level

How the PCIs are proposed? 1.RDA, defines three strategic clusters within each region 2.Diagnostic of the problems of the cluster involving the participation of multiple agents – Participation of private firms – Three axes of work: regional dynamic, productive development of the firms and market access 3.To build a shared vision among all the agents about where the cluster should go 4.To develop an action plan with broad agreement

How the TAs are proposed? 1.The proposal for development of a territory presented by the involved subjects 2.The local state evaluates the coherence of the proposal 3.The concertazion table is called 4.Subscription to the pact, and the responsable subjects are presented 5.The Agreement is approved by the Local Government

Local Governance of PMCs Directory integrated by business local managers, business associations, public agencies All the stackeholders sign an Adhesion Act Local Manager Executives Directory

Local Governance of TAs In the concertazion table, private and public subjects agree on the pact according to their interests – The partnership is developed here – Difference between formal and informal agreements! The agreement is signed with a contract where every agent assume specific activities The responsable of the project has to follow the development of the project Each Region has two local structure available – Internal structure, of Politic and Burocratic support – External structure, selected by the TA, for technical support

Basic Simple facts on both programs PICs 45 PICs with three in each region Product specific PICs to the South Sectoral specific PICs to the North Territorial Agreements 210 TAs 120 not activated 74 have spent less than 30% 16 have spent more than 30% of the activities Good Results – Infraestructure investment – Change of Local Expectations

Preliminary Thoughts A Caveat: lack of information to make an efficiency comparation PICs top-down vs. TPs bottom-up The PICs design, seems to be better tailored for productive development TPs are more open to innovations Role of Leadership and Partnership in the governance

Cráter del Volcan Lascar 5300 mts. en Cordillera de los Andes Chilena

Regional Clusters (Chile)