Social Capabilities and Catch-up Growth in Natural Resource Rich Developing Countries: A long-term perspective for the case of Chile

Sammanfattning: This research addresses the role of social capabilities over the growth trajectory of natural resource (NR) rich developing countries through a case study – an analytical narrative using data from various sources – of the Chilean experience since the early 1900s to the present. The paper adopts a novel framework, which identifies four distinct but interrelated dimensions of social capabilities: transformation, inclusion, and autonomy and accountability of the State. The empirical research reveals that Chile made great improvement in terms of social capabilities during the first half of the 20th century and up to the early 1970s but was unable to translate that into high growth rates. This is accounted on the determinant role that the lack of Sate autonomy has played over the economic performance and the evolution of the other dimensions. Then, under a dictatorial regime, Chile was able to exploit the capabilities stock by complementing them with a set of radical (neo-liberal) economic reforms, which led the country to an unprecedented high growth trajectory. However, the later prolonged slowdown is again accounted on the persisting lack of State autonomy and the role of the elites. These results hold relevant consequences for developing countries who should then focus their efforts on building an autonomous State, instead of broadly taking care of inequality. This is even more relevant for NR rich countries where an independent State is crucial to avoid rentier behaviors around NR and provide the conditions to transform and upgrade NR based industries.