bank, BNDES. But it needs to be remembered that BNDES also has a very important role to play in local industrial development, through its local branches and programmes. In fact, BNDES has long promoted many new innovative SMEs through its loan programmes. It also increasingly promotes SME suppliers through the local content agreements that it attaches to its loans to larger companies. A new generation of community development banks are also helping to support sustainable new businesses in many communities. Funding comes from higher levels of government in order to support the poorest regions and localities that otherwise might not be able mobilize as much as they need locally in order to do a good job. It must also be remembered that Chile’s long-held status as the ‘role model’ for neoliberal policies is based on a myth. The Chilean government actually established a very impressive range of ‘interventionist’ local/regional state-led infrastructures and, moreover, generously financed these institutions through the very heterodox policy of retaining state ownership of the world’s most profitable copper facility, Codelco. Thus, both Fundación Chile and CORFO (Corporación de Fomento de la Producción de Chile) were able to patiently develop and finance important new industrial enterprises and enterprise clusters, and even entire agro-industrial sectors from scratch,
MILFORD BATEMAN is a freelance consultant on local economic development and, since 2005, Visiting Professor of Economics at Juraj Dobrila Pula University in Croatia. He is the author ‘Why Doesn’t Microfinance Work? The Destructive Rise of Local Neoliberalism’, published in 2010 by Zed Books.
Pictures (left to right): Worker at a small enterprise in Masaya, Nicaragua; Family company manufacturing ponchos, La Paz, Bolivia; Processing manioc at a rural cooperative in north-east Brazil.
the most famous examples being farmed salmon and soft fruits. Most recently, the Chilean government has established an innovation fund to support SMEs that is managed locally and is directly financed by its revenues from Codelco. Leftist governments in Bolivia and Venezuela have also developed innovative local industrial development policies, notably involving the establishment of cooperatives. The aim here has been to use oil and gas industry revenues to establish ‘local production for local consumption’ measures that directly serve poor communities for the very first time. Thanks to traditionally weak bureaucratic capacities and resistance from the entrenched private sector, many problems remain. But these new forms of local industrial development policy, allied to industrial democracy-building measures, have nevertheless demonstrated much potential to re-
spond to genuine need, while also promoting greater equality and social justice. Finally, even in traditionally centralized and neoliberal-oriented Colombia, local governments and provinces were allowed to experiment with novel forms of industrial policy. The city of Medellín, for example, has pioneered many new forms of engagement with and support for local industry and the community, helping to create many new industries and service sectors as its traditional textile industry declined. Crucially, the Municipality of Medellín was willing to take a leaf out of Chile’s book and retain ownership of Empresas Públicas de Medellín (EPM), the main utilities provider in the province of Antioquia, resulting in 30% of EPM’s profit being channelled into the Municipality’s budget. This largesse was creatively used to finance a wide variety of programmes that upgraded the region’s industrial and service base, as well as to (re)establish Medellín as one of Latin America’s most exciting tourist destinations. Latin America has embarked on a new voyage of discovery. New forms of industrial policy are (re)emerging, including at the local level, which are beginning to transform the industrial structure in a very positive direction. There are many optimistic portents to suggest that we might be seeing the start of a new, much more positive, ‘bottom-up’ development episode in Latin America’s economic history.
Photo: Scott Wallace / World Bank
post-neoliberalLatin America
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