International marketing strategies in industrial clusters: Insights from the Southern Hemisphere

This paper examines co-operative marketing strategies among clustered-based firms in the most important wine producing and exporting countries in the ‘new world’. The research examines the development of active inter-firm marketing co-operation undertaken by firms to achieve competitive positioning in international markets. The results of a survey of managers located in Argentina, Australia, Chile and New Zealand are presented. The empirical contribution comes from the unique comparative data from regional clusters in four countries which are seen internationally as innovative producers and marketers, all strongly export-oriented, but at different stages of economic development and positioning in the global marketplace. In addition, this study makes a significant contribution to agglomeration theory by confirming the importance of sharing marketing knowledge to build sustainable competitive advantage in international markets. The theoretical contribution builds understanding of international marketing strategies within the Southern Hemisphere group of emerging countries and offers new insights on international marketing practices for emerging firms from both the developed economies in the Pacific Ocean region and Latin American emerging economies.     

Response of Tax Credit Claims to Tax Enforcement: Evidence from a Quasi‐Experiment in Chile

Diesel in Chile receives different tax treatments depending on its use. If diesel is used in industrial activities, the diesel taxes paid can be fully used as a credit against VAT, but if it is used in freight or public transportation – basically trucks and buses – only a fraction of diesel taxes paid can be claimed as a tax credit for VAT payments. As a result of this different tax treatment, firms have incentives to use ‘tax‐exempted’ diesel in activities requiring ‘non‐tax‐exempted’ diesel. This tax wedge therefore generates an opportunity for tax evasion, especially for firms with multiple economic activities, one of them being transport. In this paper, we analyse the impact of a tax enforcement programme implemented by the Chilean Internal Revenue Service (IRS), where letters requiring information about diesel purchases and use and vehicle ownership were sent to around 200 firms in 2003. Using different empirical strategies to consider the non‐randomness of the selection of firms, the empirical results show consistently that firms receiving a letter decreased their diesel tax credits by around 10 per cent.     

One cost of the Chilean capital controls: Increased financial constraints for smaller traded firms

There is growing support for taxes on short-term capital inflows in emerging markets, such as the encaje adopted by Chile from 1991 to 1998. This paper assesses whether the Chilean capital controls increased financial constraints for different-sized, publicly-traded firms. It uses an Euler-equation framework and shows that during the encaje, smaller traded firms experienced significant financial constraints. These constraints decreased as firm size increased. Both before and after the encaje, however, smaller firms did not experience significant financial constraints, and there is no relationship between firm size and financial constraints. Although Chilean-style capital controls may yield some benefits, any such benefits should be weighed against this cost of increasing financial constraints for small and mid-sized firms.     

Canada-Chile Free Trade Agreement: An Analysis

ABSTRACT

The Canada-Chile Free Trade Agreement (FTA) came into effect in June 1997. This paper examines the rationale for free trade negotiations between Canada and Chile. Key trade and investment issues in the Canada-Chile FTA are also discussed. Although it is only a few years since the Canada-Chile FTA entered into force, the preliminary results indicate impressive growth in trade and investment between the two countries.

RESUMEN. El Acuerdo de Libre Comercio Canadá-Chile (ALC) entró en vigor en junio 1997. Este documento examina el razonamiento que respalda las negociaciones entre Canadá y Chile sobre el Acuerdo de libre comercio. También abraca los temas más importantes sobre el comercio e inversiones entre Canadá-Chile. A pesar del poco tiempo transcurrido desde que se implantó el acuerdo de ALC entre Canadá y Chile, los resultados preliminarios indican una impresionante tasa de crecimiento entre las inversiones realizadas entre ambos países.

RESUMO. O Acordo de Livre Comércio (ALC) Canadá-Chile entrou em vigor em junho de 1997. Este estudo investiga os fundamentos das livres negociaç[otilde]es comerciais entre o Canadá e o Chile. São abordados, também, o comércio principal e os investimentos realizados no ALC Canadá-Chile. Apesar de estar em vigor há poucos anos, os resultados preliminares deste acordo indicam um crescimento impressionante no comércio e nos investimentos entre os dois países.     

Minority Stockholders' Protection in a New Corporate Control Law: Market Implications in an Emerging Economy

This paper analyzes the effect of a new corporate governance law in the emerging capital market of Chile to determine if capital markets perceived the intended protection of minority stockholders against wealth expropriation as effective. The unique nature of the new law allowed for voluntary adoption during the initial three-year period, after which it became mandatory. We find no evidence of superior abnormal returns for those firms voluntarily adopting the new law versus those forced to accept the new law as it became mandatory. Trading volume also increased for those not adopting and declined for those that did voluntarily adopt. These results indicate that the capital markets did not perceive voluntary adoption of the new law as effective protection for minority shareholders. We also find a greater presence of institutional investors in the ownership structure of those firms not voluntarily adopting the new law, indicating their monitoring role by investing in firms with better corporate governance practices. Our results suggest that, in the Chilean case, the presence of strong institutional investors is as effective a corporate governance mechanism as is the new law.     

Exposure to foreign markets and plant-level innovation: evidence from Chile and Mexico

Unlike most studies that calculate productivity as a residual, this study uses detailed plant-level data to examine the relationship between exposure to foreign markets and specific innovations including product design, investment in new tools (such as computers), research and development, and innovation in products and processes. The results suggest that exposure to foreign markets is positively related to most types of technology. The effects seem to be stronger in recently liberalized Mexico, which may suggest that the innovation gains from liberalization are greatest in the early stages of liberalization.     

Protección social en Chile: Reformas para mejorar la equidad

A comienzos del decenio de los ochenta Chile fue pionero en América Latina en acometer reformas estructurales que privatizaron total o parcialmente los sistemas de pensiones y salud e inspiraron cambios similares en la mitad de la región y en otros países del mundo. Las reformas fueron implantadas sin diálogo social, redujeron la solidaridad y la equidad, y agudizaron lapobreza y la desigualdad. Los gobiernos democráticos han subsanado durante los últimos dieciocho años muchas fallas de diseño en las reformas originales de salud, pensiones y asistencia sociales. El autor analiza el progreso realizado, las inequidades sociales que persisten en cuanto a cobertura, género y financiamiento, y los retos pendientes.