Handbook on Small Nations in the Global Economy
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Handbook on Small Nations in the Global Economy

The Contribution of Multinational Enterprises to National Economic Success

Edited by Daniel Van Den Bulcke, Alain Verbeke and Wenlong Yuan

This unique, extensive Handbook illustrates that multinational enterprises can contribute substantially to the competitive advantage of small countries. It advances the notion that small nations increasingly need to rely on both home-grown and foreign multinational enterprises to achieve domestic economic success in industries characterized by international competition.
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Chapter 8: Chile as an Example of the Augmented Diamond

Robert Grosse


Robert Grosse The Chilean economy: clusters, competitiveness and the augmented diamond Chile is an emerging market characterized by 30 years of free market economic policies and a well-developed private sector that produces a wide range of goods and services. It has been the most open economy in Latin America (recently rivalled by Mexico), since the Pinochet government’s decision to adopt (University of) ‘Chicago style’ free market policies in 1976. Per capita income by 2005 had reached over US$6000, putting Chile at the top of the range of emerging markets worldwide. Even before the 1970s Chile had demonstrated a recurring preference for open market economic policy, probably because the country’s market is so small, and the most viable transportation has been via ocean routes, which easily include products from other countries as well as from within Chile. A comparison of some macro characteristics of Chile and other Latin American countries appears in Table 8.1. Note that Chile eclipses the other Latin American countries overall, falling just slightly behind Argentina in education and literacy. Chile leads by far in having the lowest level of perceived corruption in the region, and also leads in the Human Development Index (which takes into account life expectancy, literacy and income). Venezuela leads in GDP growth due to the huge oil price increases in 2006, though Chile’s growth rate outperforms all of the countries over the past two decades. The country extends along the Andes mountains in southern South America for more than 6000 km (3500...

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