Chile: Horizontal linkages— Using taxation to foster horizontal linkages

Chile has avoided formal local content targets in its mining sector, instead utilizing taxes and royalties to fund a broad national innovation system. Key initiatives include Fundación Chile, which helped diversify exports into salmon and fruit, and the National Council on Innovation and Competitiveness (NCIC), which managed the Innovation for Competitiveness Fund (ICF). Additionally, the BHP Billiton World Class Suppliers program demonstrates a collaborative approach to supplier development, though it has faced challenges in scaling. While mining's share of exports fell from 89% in 1973 to 59% in 2012, the document notes that coordination failures and institutional weaknesses have sometimes hampered the impact of these policies.

• Chile differs from other mining jurisdictions by eschewing formal local content targets, opting instead to use tax and royalty revenues to fund broader economic goals, including R&D, skills development, and diversification.
• The country successfully reduced the mining sector's dominance in exports from 89% in 1973 to 59% by 2012, diversifying into industries such as wine, fruit production, and salmon farming.
• The 2006 mining royalty enabled the creation of the Innovation for Competitiveness Fund (ICF), which doubled funding for science, technology, and innovation from USD 350 million to USD 700 million between 2006 and 2010.
• The National Council on Innovation and Competitiveness (NCIC) faced implementation challenges because its recommendations were non-binding and it lacked a strong role in monitoring and evaluation.
• The BHP Billiton World Class Suppliers program, joined by Codelco in 2011, focuses on collaborative innovation in areas like water and energy; as of December 2012, it worked with 36 suppliers on 43 projects with combined sales of USD 400 million.
• The World Class Suppliers program has struggled to scale up and is unlikely to meet its goal of creating 250 world-class mining suppliers by 2020 due to resource requirements and a lack of qualified companies.

APA

Dolo, S., Odendaal, M., & Togo, G. (2018). Chile: Horizontal linkages— Using taxation to foster horizontal linkages. International Institute for Sustainable Development. https://www.iisd.org/sites/default/files/publications/case-study-chile-horizontal-linkages.pdf

Chicago

Dolo, Somine, Martin Odendaal, and Guire Togo. Chile: Horizontal linkages— Using taxation to foster horizontal linkages. International Institute for Sustainable Development, 2018. https://www.iisd.org/sites/default/files/publications/case-study-chile-horizontal-linkages.pdf.

Wikipedia

{{cite report |last1=Dolo |first1=Somine |last2=Odendaal |first2=Martin |last3=Togo |first3=Guire |title=Chile: Horizontal linkages— Using taxation to foster horizontal linkages |publisher=International Institute for Sustainable Development |date=2018 |url=https://www.iisd.org/sites/default/files/publications/case-study-chile-horizontal-linkages.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{dolo2018chile, author = {Dolo, Somine and Odendaal, Martin and Togo, Guire}, title = {{Chile: Horizontal linkages— Using taxation to foster horizontal linkages}}, institution = {International Institute for Sustainable Development}, year = {2018}, url = {https://www.iisd.org/sites/default/files/publications/case-study-chile-horizontal-linkages.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }