30 Sep Graciela Moguillansky, economist: “The growth of the Chilean economy requires more complex mining”
To diversify or not to diversify the country’s productive matrix? This old debate has once again gained space in some media, which question the Chilean model, after the presentation of the study “Export Diversification: Is Chile different from Australia and New Zealand?”, Developed by Hermann González, Felipe Larraín, and Oscar Perelló in August and published by CLAPES UC, which concluded that Chile did not need to diversify the matrix to achieve development, taking Australia and New Zealand as a reference, belonging to the group of developed countries and with even more concentrated exports.
“But as César Hidalgo (Chilean scientist and creator of the concept “economic complexity”) points out, we should not confuse economic complexity with export diversification”, explains the economist and specialist in productive development and innovation, Graciela Moguillansky. “While the first refers to the density of knowledge incorporated in products and services and the matrix of local suppliers, as well as in the research, development and innovation networks linked to companies, which increases their value and sophistication, making more exclusive the productive and export matrix, the second simply defines a more varied basket”.
The economist explains that from this it can be understood why economies like Australia and New Zealand present higher levels of exports concerning their population, “despite having similar export diversification than Chile. Its per capita exports are three times higher in the case of Australia and two times higher in New Zealand, being also much better positioned to the global innovation index.”
In Moguillansky’s opinion, “although copper mining in Chile has not been able to insert itself in the last decades in the value chains that have supported the industry, everything indicates that the export of concentrates will no longer continue to be the engine of the economy, having to face a greater complexity”. In this sense, the expert highlights that one option to achieve this is to advance, contrary to what is happening today, in the refined copper export capacity, which “is also an enabling factor for the circular economy and recycling”.
Another factor that must be analyzed is the drop in productivity in the 2000s, and the need to reverse this situation. In the words of the economist, “this necessarily leads to an increase in the speed of change in the way of production, introducing the technology of the 4.0 Industry in a large part of the processes, in a context of much greater environmental and social requirements. And here it is worth asking what role the national industry will play in this transformation”.
Moguillansky recalls that there have been other proposals to make the production and export matrix more complex, such as the project to generate world-class suppliers from the state-owned Codelco and BHP, which was expanded during the second government of Michelle Bachelet with the Alta Ley Program, which continues with a redefined roadmap, under the government of Sebastián Piñera. “All in all, about 12 years have passed and it is pertinent to ask how much progress has been made. On this, a recent study by Expande (Patricio Meller and Joaquín Gana (2015) “Chilean copper as a platform for technological innovation” CIEPLAN / UTalca) shows that only 30% of mining ventures focus the development of their solutions on trends technologies that the industry currently requires”.
“The problem is not that the way forward is unknown, the public-private alliance embodied in Valor Minero and Alta Ley programs are examples of this”, says the economist. “However, the development of the new is slowed down: in the public sector due to lack of political will and enormous fear of risk; among transnationals, for having the innovation center in the country of origin; in the national private sector due to demands for high profitability and low risk, all of which ultimately is expressed in a lack of leadership in the face of initiatives and a lack of appropriate financing”.
“The growth of the Chilean economy requires more complex mining. Without a clear long-term vision, and a path driven by a proactive state, this vicious circle will hardly be broken”, Moguillansky concludes.