When I first got to Chile, it took about 5 minutes of leaving the airport to realize that this is not your typical developing Latin American country. It took about 1 day to learn just how far from a developing country Chile is, 5 weeks to get a good understanding of the history and politics that led to their current state and 7 weeks to form a point of view worth posting on a blog.
Chile has risen to what the World Bank would classify as a “middle-income economy.” This success is due largely to agricultural and other commodity exports including copper, silver, wine, salmon and lumber. However, the problem with pegging an economy on natural resources is that those resources one day run out or you reach a point where extraction of the resources causes more instability than economic benefit. Further, commodity markets don’t have the ability to absorb a nation’s full workforce which results in stagnant employment.
In recognizing that Chile’s current economic dependencies are not viable in the long- run, the Chilean government began promoting future focused industries like professional services, biotechnology and software. Key public-private partnerships have also been made through CORFO and the National Innovation Council for Competitiveness to promote entrepreneurship and innovation. Organizations like Ernst & Young and Endeavor also partner to do their part by providing support and increasing visibility of Chilean entrepreneurs on the global stage.
Earlier this week, I had the opportunity to speak with a bunch of local high-impact entrepreneurs at the Endeavor/EY Knowledge Sharing Conference where I presented on the topic of Turning Risk into Results. Here, we discussed the top 10 global risks as published annually by Ernst & Young as well as specific risks in Latin America using the World Bank’s 2012 Ease of Doing Business Study. We shared some really honest dialogue on topics including strategic tax, transfer pricing, managing your innovation investment, human capital planning, leveraging automation early in your company’s growth and managing capital risk. It’s clear that understanding risk is a competitive advantage – even in early stage companies where failure is often the result of the things could have been avoided with proper risk assessment, prioritization, action and ongoing transparency/communication.
I think it’s very possible that Chile could be home to the Silicon Valley of Latin America. If the government and private sector continue to create favorable conditions that promote commerce and limit corruption risk, more foreign investment will come to the edge of the world. Like with the rest of the world, it’s also critical that upstream investments be made in the quality of and access to education – particularly math and science as well as improving gender equity in the workplace. With this investment and a realistic outlook on managing key risks to enable the nation’s development strategy, the emerging enterprises of Chile today can become the next generation market leaders of the World tomorrow.