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OECD Territorial Reviews: Antofagasta, Chile 2013

image of OECD Territorial Reviews: Antofagasta, Chile 2013

Chile has been very successful in turning its natural resource endowments into a generator of growth and modernisation. However, its mining regions, including Antofagasta, face the challenge of developing a critically important primary sector in a manner that contributes to both economic growth and broader measures of well-being. Antofagasta's long term sustainability goals include a more diversified economic base, supported by a city that is lived in for its high quality of life and the opportunities it offers. To achive this, it will need to make the most of its natural endowments, improve the city's physical attractiveness and ensure better urban policy outcomes. It will also require regional and local actors to act in a strategic and innovative manner. This study focuses on economic diversification, urbanism and governance in the city of Antofagasta. Consideration is given to: economic and socio-economic trends such as those associated with labour markets and skills, as well as quality of life factors; opportunities for specialisation, diversification and innovation within and beyond the mining cluster, including throught its port network; urban policy challenges especially in land use, waste management, environment and public transport; and to the role of public governance in helping the city realise its economic and quality of life objectives.

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Assessment and recommendations

Natural resource-intensive economies – often defined as economies in which natural resources account for more than 10% of gross domestic product (GDP) and 40% of exports – face some unique competitive advantages, a number of often debated disadvantages and some risks that do not typically confront regions where the primary sector is less prominent. They are a strong source of export revenue and are quite often somewhat sheltered from international competition, as competitiveness is based chiefly on having the relevant deposits. The widely cited disadvantages associated with such regions include exposure to volatile international commodity prices, potential limits on increased production, and potentially low entrepreneurial and innovative activity. These problems are linked to other risks, particularly so-called “Dutch disease” pressures, which can undermine the development of non-resources tradables, political economy concerns about the impact of resource dependence on institutions, and the potential generation of greater regional inequality. Taken together, these factors are believed by many to result in lower long-term growth.

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