Increasing Returns, Technological Progress and Cumulative Causation: The Case of Chile (1986-2008)

Abstract

The ultimate proposal of the present research is to assess productivity regime which is dened as the route from demand growth to productivity growth of the Chilean economy since 1986 to 2008. In doing so, increasing returns are assessed by industrial sector and the technological progress pattern of the Chilean economy is analyzed. Two outcomes are presented. First, from productivity regime results, the Chilean economy presents dynamic increasing returns by 0.78 and the elasticity of employment to output has decrease being today 0.22. The latter imply that the main reason of the slowdown trend of the productivity growth and output growth in the Chilean economy since the Asia crisis was not a downward shift in the productivity regime, but a leftward shift in the demand regime. Second, despite the slowdown of utilization rate of the copper mining industry in the period 2003-2008, the TP pattern of the Chilean economy is led by investment and led by the trade sector being the prevailing Marx Biased Technical Change. The latter imply that there is a possibility that precisely the increasing trend in capital coecient against a decreas