Development Model – Opinion Article

The debate raised by Deputy Boric and José Miguel Ahumada through proposals for a new development model is interesting. The diagnosis of its depletion has some basis, especially if the stagnation of productivity in the country is appreciated, reflected in a trend of lower economic growth in recent years. However, the diagnosis and its recommendations are not going in the right direction and do not look adequately to the future.

A starting point for Boric and Ahumada is that the country’s problems are associated with the productive matrix, which would inexorably lead us to diminishing returns. They propose a bank to stimulate development, a figure similar to the role of the Corfo Production Development Corporation and new scopes for the sovereign wealth fund, which currently plays a role of stabilizing income in the long term.

I think it is wrong to attribute the causality of the country’s development problems to the productive matrix. It is undeniable that the exploitation of natural resources entails a decrease in their stock as well as environmental externalities, however, leading countries in development and quality of life such as the Scandinavians and Australia and New Zealand, base their development on a productive matrix with a high presence of resources. natural and there are no signs that they will change. These countries have managed to effectively link their natural resource industries with the rest of society and the economy.

Natural resources are consumed to the extent that they are exploited but this view is incomplete and therefore, if assumed, leads to the adoption of wrong policies. One hundred years ago it was thought that copper in Chile would not last beyond 1960. Today, in 2021, we not only continue to exploit it, but there are reserves for many more years. What explains it? Mainly technical change, since advances in this area allow profitable access to resources of less and less law. And technology also advances making the exploitation of mineral resources less and less impactful on nature and on society.

This link between sustainable exploitation of natural resources and development has been the basis for the success of Scandinavia, Australia and New Zealand. These countries have managed to establish virtuous articulations where natural resource industries connect with academia and industry to trigger solutions that improve the performance of their extractive activities and reduce their socio-environmental impacts. In this way they have built competitive industries that export their services and have achieved quality of life levels of the best in the world.

Examples of the above are the Nokia company, which emerged from the forestry industry, suppliers of underground mining equipment in Sweden and Finland or mining software in Australia.

The problem for Chile, and many developing countries, is not that they exploit their natural resources but that they are not capable of structuring policies that achieve a virtuous productive articulation that allow them to take advantage of their competitive advantages in a better way.

It is important to make this distinction because the focus should not be on seeking to distance ourselves or even deny our productive reality, but the other way around: how from our competitive advantages we can promote greater socioeconomic development. The focus of Chile’s problems is not in its productive matrix but in other factors that impede the virtuous productive articulation around these industries and in reality of any other. We must seriously discuss why there is no connection between companies and academia, why the state does not operate as a true platform for the development of the country or why education does not take care of the reality and challenges of the country, among other issues.

Today’s world offers enormous challenges, such as the world leadership dispute between the United States and China or the advance of decarbonization, which is why this debate on Chile’s development model is of vital importance. And it is with more mining, more forestry and fishing industries that we will have more chances to play a relevant role in the world economy, since on this basis there will be more possibilities to apply intelligence that allows us to advance in development.

Juan Carlos Guajardo – Executive Director of Plusmining

Source: La Tercera

Translated with Google Translator