NEW FDI POLICY IN CHILE: PARADIGM SHIFT OR CHANGE IN OBJECTIVE?

Abstract

During 2013-2016, an abrupt and dramatic change took place in Chile’s Foreign Direct Investment (FDI) policy. The Foreign Investment Statute, also known as DL 600, was abolished and the Law 20,848 was enacted. The Foreign Investment Committee (FIC) was transformed into a new FDI agency, InvestChile. Besides, the first national Strategy for FDI Promotion and Development was established.

This radical policy change did not take place due to a predictable expiration of DL 600; nor a continuous decline of FDI inflows in Chile; nor the pursuit of liberalizing more FDI rules; nor the intention of collecting more taxes by repealing the invariable income taxation; nor the disuse of DL 600; nor following steps in the rational decision-making model. Then, why did the Michelle Bachelet's government bring a sudden end to the FDI policy, which had been successful during the last 40 years, and establish a new policy? How did the policy entrepreneurs achieve the policy change?

The result of the qualitative content analysis (coding, categorization and extraction of results) on the discourses of policy entrepreneurs, in accordance with Kingdon's Multiple Streams Framework (MSF), demonstrates that the OECD had a considerable influence on the Chile’s FDI policy change during 2013-2016. Embracing very actively OECD’s problematization and recommendations in the Problem Stream and the Policy Stream, the policy entrepreneurs achieved a change in objective in which the Chilean government has been transformed from a passive recipient to a proactive promoter. It is considered as an important advancement within the same paradigm of attracting more and better FDI and a deeper integration into the global economy.