Who is responsible for development in Chile´s natural resource-based regional economies? A neostructural analysis of regional RRI

Abstract

From the 1980s, Chile became synonymous with the neoliberal development model characterised by liberalised markets, privatisation and public sector rationalisation. This new reality was forged within the framework of dictatorship imposed in 1973 and which would endure until 1990. While initially the economy was dominated by the traditional mining sector, the 1980s would see the promotion of the non-traditional export sectors such as cellulose, fruit, wine and salmon. The economy diversified however it remains largely dependent on the copper sector. One of the major changes, however, was the rise in the number of regions contributing to national exports. In the context of Latin America, the Chilean ‘miracle’ was hailed as the success story of the Washington Consensus model and the advantages of liberalization. However, the connection between macroeconomic results and regional development remains a complex phenomenon. Chile remains a highly inequitable country not only in terms of income distribution but also in terms of the contributions and benefits experienced by the fifteen regions that constitute the national space. At the core of this complexity is the political economy of liberalisation and regulation, and the roles of public and private actors. The argument that is presented in this article is based not on the predominant neoliberal argument that prioritises and lauds the role of the private sector in the Chilean ‘miracle’. Instead, it emphasises the centrality of the public sector in orienting and supporting the private sector in its regional development initiatives, and effectively acting as a pillar for ensuring that regional development is generated in relation to these activities as opposed to being a consequence of them. It provides a critical appreciation of the ‘trickle down’ argument and highlights the role of public sector agencies in researching and financing initiatives and innovation that enable a degree of ‘spatial friction’ from these activities. Spatial friction is the means through which export-oriented activities not only generate revenue for private firms and employment, but also enable regional development in terms of socio-economic support systems, infrastructure and services. There is considerable evidence to suggest that spatial friction is generated through public sector RRI rather than ‘trickle down’. The cases that provide this evidence are natural-resource based sectors that have dominated the export profile since the 1980s: mining, forestry and aquaculture. The regions selected are those that concentrate these activities and are most dependent on them for development: the Region of Antofagasta for mining; the Region of Bío-bío for forestry; and the Region of Los Lagos for salmon aquaculture. Economic and social data for these regions and their development trajectories since 2000 are supported by qualitative data from interviews undertaken in the principal production centres of these regions during 2017. The aim of the interviews is to uncover perceptions of private and public sector roles and responsibilities in generating regional development. This includes understanding of planning priorities, investment decision-making and fiscal considerations. The analysis is neostructural in that it moves beyond a neoliberal reading of economic transformation, based on FDI, growth and export data that highlights private sector protagonism, to highlight the interactions and complementarities of public and private sectors in regional development. This development includes issues of strategic planning, spatial planning, and how priorities are generated and deficits are confronted. Neostructuralism does not seek to provide a more radical alternative to neoliberalism. It is, instead, a more nuanced interpretation of regional development that uncovers the persistence of considerable state involvement in development in spite of the neoliberal rhetoric of public sector ineptitude. Consequently, the Chilean natural resource export model and its regional development outcomes since 2000, is discussed as a product of state-led prioritisation, based on RRI, as much as a ‘miracle’ of laissez faire economics. This RRI is evident in the programmes of the National Research Council, the Under-Secretariat of Regional and Administrative Development, the Ministries of Public Works, Education, Housing and Urbanism, and Health, and also the Regional and Municipal governments themselves. These programmes are ‘responsible’ in that they seek to alleviate the challenges of poverty, inequality and the guarantee of minimum living standards. As such, they contrast significantly with the focus on employment as the sole priority of development, which constitutes the principal argument of private firms. The socio-ecological conflicts which are evident in all three sectors also reveal the limitations of this employment bias, and the critical importance of the state role in defining regional development objectives and the range of programmes and investments that are required to fill the gaps that clearly the private sector is either unable, or unwilling, to assume. In conclusion, it would appear that spatial friction is principally a state function and that RRI plays an important role in supporting this function.