Abstract

CORFO was one of the first national development banks in Latin America, and played a decisive role in Chile’s national development strategy. In recent decades, its relative scale has diminished significantly. Its financial support currently represents only 1% of Chile’s GDP and has switched from giving credit directly to becoming a second-tier institution whose main instruments are not loans but guarantees. Its support for strategic sectors has been decisive to incentivize innovative, value-added activities, such as the Start-Up programme or renewable energy projects. Nonetheless, its limited scale severely reduces its potential ability to transform Chile’s economy or deploy a countercyclical role in a crisis scenario. This study suggests that CORFO could take advantage of Chile’s mature capital market, by raising additional funds through bond issues.