Table 4.5. Policies in Chile, Mexico, and Trinidad and Tobago Policy Chile Mexico Trinidad and Tobago Gulf CC Public spending Education Good Improved coverage Good for male citizens. but still poor Less for the non-citizens. quality Infrastructure Good for copper and for Improved but still Good investment for the Good for oil and tradable nontraditional exports bottlenecks at export industry, which has service sectors (agriculture) nodes effective priority over the domestic residents Subsidies for exports No No Subsidized inputs No, except for Yes electricity to (large-scale) Tax Policy Favors investment over agriculture consumption, administration strong General taxation weak but improved some since 2002. Other policies Exchange rate Flexible Flexible Pegged to US $ Pegged to US $ Customs Free trade agreement Joined NAFTA; with US; state-of-the-art good for big firms; administration improved for small and medium enterprises, but still a delay Regulation Predictable and low cost Somewhat Predictable and good for to business, but still problematic on HC sector. Varies across protects workers and paper and presents countries for tradable customers opportunities for service sectors. Governance corruption and of the countries depends on cronyism in ruling personalities, which practice, but the have been friendly to practice is business in recent decades. improving and becoming more impersonal Mineral extraction sector Diversification Yes, copper remains top, No, failed to Yes, strong expansion into Yes, strong expansion into but other minerals develop gas, silver natural gas and liquefied downstream processing (nitrates) are catching and other metals natural gas up, growing from 25 faded out percent to 80 percent of the value of copper exports Financial support Pemex starved of Joint ventures, with good investment funding access to financing since reforms of 1980s, partial fix in 2007–08 Downstream use of No, except for oil Substantial development of Substantial development – mineral resources refining, oil used to gas-based industry (fertilizer, varies by country, generate electricity high-tech steel, plastics), according to extent of inefficiently and some further processing of natural resource going to subsidize these materials endowment wasteful uses IMF 2009; Velculescu and Rizavi 2005. Source:
Table 4.5. Policies in Chile, Mexico, and Trinidad and Tobago Policy Chile Mexico Trinidad and Tobago Gulf CC Public spending Education Good Improved coverage but still poor quality Good for male citizens. Less for the non-citizens. Infrastructure Good for copper and for nontraditional exports (agriculture) Improved but still bottlenecks at nodes Good investment for the export industry, which has effective priority over the domestic residents Good for oil and tradable service sectors Subsidies for exports No No Subsidized inputs Tax Policy Favors investment over consumption, administration strong No, except for electricity to (large-scale) agriculture General taxation weak but improved some since 2002. Yes Other policies Exchange rate Flexible Flexible Pegged to US $ Pegged to US $ Customs Free trade agreement with US; state-of-the-art administration Joined NAFTA; good for big firms; improved for small and medium enterprises, but still a delay Regulation Predictable and low cost to business, but still protects workers and customers Somewhat problematic on paper and presents opportunities for corruption and cronyism in practice, but the practice is improving and becoming more impersonal Predictable and good for HC sector. Varies across countries for tradable service sectors. Governance of the countries depends on ruling personalities, which have been friendly to business in recent decades. Mineral extraction sector Diversification Yes, copper remains top, but other minerals (nitrates) are catching up, growing from 25 percent to 80 percent of the value of copper exports No, failed to develop gas, silver and other metals faded out Yes, strong expansion into natural gas and liquefied natural gas Yes, strong expansion into downstream processing Financial support Pemex starved of investment funding since reforms of 1980s, partial fix in 2007–08 Joint ventures, with good access to financing Downstream use of mineral resources No, except for oil refining, oil used to generate electricity inefficiently and going to subsidize wasteful uses Substantial development of gas-based industry (fertilizer, high-tech steel, plastics), some further processing of these materials Substantial development – varies by country, according to extent of natural resource endowment Source: IMF 2009; Velculescu and Rizavi 2005.
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