Abstract

This article examines the challenges of implementing Green Industrial Policy (GIP) in resource-dependent economies through a comparative analysis of lithium and green hydrogen sectors in Chile. Both sectors are presented as strategic opportunities to diversify the productive matrix, foster technological upgrading, and advance a sustainable development model. However, progress has been limited with such policies failing to build solid pathways towards transformative outcomes. Drawing on interviews with policymakers, industry actors and civil society representatives, along with document analysis, we trace how institutional traps shape policy trajectories from design to implementation. We show that in Chile, such traps have produced policies that are "industrial" only on paper and "green" mainly in discourse: lithium remains locked into extractive dynamics with weak value-adding linkages, while green hydrogen is still at a pilot stage, with uncertain demand, contested sustainability credentials, and heavy dependence on foreign investment. These findings reveal that institutional traps are not mere implementation failures but mechanisms that systematically tend to reproduce extractivist logics and new dependencies, even under ostensibly transformative policy frameworks. By tracing how these traps emerge and evolve, the article highlights the structural constraints facing GIPs in dependent economies and contributes to understanding why such policies often fail to escape path-dependent trajectories. More broadly, our analysis underscores the limits of the green transition as a transformative project in the global South, where institutional legacies and global power relations continue to constrain policy autonomy and development outcomes.