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The productivity challenge

Enhancing competition, entrepreneurship and innovation

Chile’s productivity has virtually stagnated over the past decade, thus impairing the convergence towards higher living standards. Key policy measures to boost productivity growth include: enhancing competition through legal and regulatory action; removing regulatory barriers to entrepreneurship; and strengthening innovation in firms. Specifically: • Ensure the National Economic Prosecutor receives sufficient resources. Deter cartel participation by linking the maximum fine to revenues on the market involved in the conspiracy. Make price fixing a criminal offence. • Revise the text of the Competition Act to clarify the Competition Tribunal’s jurisdiction to review mergers, the stages of merger analysis and the substantive standards applied. • Reduce entry barriers in retail and business services to discipline incumbent firms. • Continue reducing “red tape” for start-ups to strengthen competition and encourage entrepreneurial ideas. • Reform the bankruptcy law to encourage entrepreneurial risk taking in non-traditional sectors. • Maintain strong commitment to support technological and other forms of innovation and continue efforts to strengthen links between universities and firms. • Complement supply-side measures to foster broadband Internet access by demand-side measures. • Pursue the cluster initiative as a market-friendly, bottom-up approach to give innovation policy the necessary degree of selectivity, but strengthen the evaluation of relevant measures and establish sunset clauses for public support. • Establish by law the institutional structure for innovation policy to ensure continuity of the long-term innovation strategy.

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