Small Business, Policy, and Exports: The Case of Chile Jorge L. Daly, Management Systems International February 7, 2008 www.BusinessGrowthInitiative.org
In This Presentation We Consider: • The political economy for trade-led development • Economic performance related to exports • SME export participation • Role of the b business siness en environment ironment to promote exports • Lessons for enterprise p development p February 7, 2008
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350
35
300
30
250
25
200
20
150
15
100
10
50
5
0
0 1985 GDP
1990
1995
2000
GDP per capita
Inflation %
Ind dex 1985 = 100
GDP and Inflation
2005 Inflation
Index values expressed in constant 2000 US Dollars Percentage Change of Consumer Prices February 7, 2008
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600
80 70 60 50 40 30 20 10 0
500 400 300 200 100 0 1985
1990 Exports
1995
2000
Trade / GD T DP
Exports Index, 198 85 = 100
Indicators of Success
2005
Trade / GDP
Index values expressed in constant 2000 USD February 7, 2008
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Comparison p of Selected Latin American Countries 1985 = 100
GDP
GDP per Capita Exports
Trade/GDP (1985)
Trade/GDP (2005)
Change 1985-2005
Chile
320
237
551
30
75
+ 150 %
Peru
164
115
320
39
44
+ 13 %
Argentina
168
131
340
18
44
+ 144 %
Colombia
193
134
354
26
42
+ 62 %
Mexico
165
122
566
25
61
+ 144 %
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Principal Products Exported in 2005 (Percent of total exports)
Wine (2.1 %) Paper and pulp (4.0%) Fish products (5.6 %) February 7, 2008
Copper (45 7 %) (45.7 Fruit (8 4%) (8.4%) Chemicals (6.9%)
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Chilean Exporting p g Firms Year 2000
Number by Size
Export Value by Size 96%
26% 36% 29%
Micro
0% Small
9% Medium
3% Large
Micro
Small
Medium
1% Large
Total SME participation: 3.9% of total export value February 7, 2008
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Measures to Promote Exports • • • • •
Elimination of all export bans Tax rebates Pro Chile Free trade zones F Free trade t d agreements t
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Real SME Contribution to Exports is Probably Much Higher Because • Indirect exports are not captured by official statistics • Maximum dollar value for SME annual sales is low February 7, 2008
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Elements El t off the th Business B i Environment to Consider • Macro economy • Regulatory framework
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Key Components of the Macro Economy That Facilitate Exporting • • • •
Exchange rate T incentives Tax i i Free trade agreements Infrastructure improvements
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National N ti l Regulatory R l t Framework • • •
Transparent Efficient Ad Adequately t l enforced f d
“Friendly to SMEs”
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Challenges Ch ll Remain R i for SMEs • • • •
Municipal over regulation Excessive vigilance Labor legislation Environmental regulation
Few firms join SME incentive programs 12
Key Issues 1. Macroeconomic policies successful for economic and export p g growth with low inflation. 2. Growing absolute value of exports by SMEs, 84% growth in value from 1997 to 2004, however . . . 3. Declining share of exports by SMEs, from 4.2% (1997) to 3.1% (2004). 4 Does a greater share of SME exports benefit Chile? 4. 5. Challenges for promoting SME participation.
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Questions and Discussion Q The USAID/EGAT Business Growth I iti ti project Initiative j t iis managed db by: Weidemann Associates, Inc. (prime) J.E. Austin Associates, Inc. Management Systems International
Visit the BGI Knowledge Portal www.BusinessGrowthInitiative.org February 7, 2008
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