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World Bank Document 69701 Chile: Regional Development Planning Public Disclosure Authorized Evolving Policy and its Application to Regions I and XV Main Document December 21, 2007 Poverty Reduction and Economic Management Unit Latin America and the Caribbean Public Disclosure Authorized Document of The World Bank Public Disclosure Authorized Public Disclosure Authorized i CURRENCY EQUIVALENTS Currency Unit = Chilean Pesos (CLP) US$1.0 = CLP $496.75 (December, 2007) GOVERNMENT FISCAL YEAR January 1 to December 31 WEIGHTS MEASURES Metric System Vice President: Pamela Cox Country Director: Pedro Alba Sector Director: Marcelo Giugale Sector Leader: James Parks Sector Manager: Nick Manning 1. Task Manager : Fernando Rojas ACKNOWLEDGEMENTS In order to address this research agenda, the Bank assembled a team of Chilean and international experts. The team, lead by Fernando Rojas, was composed of Mr. Geoffrey Shepherd, who was the main editor of this report. It was also composed of Thomas Courchene, Enrique Fanta, Roberto Panzardi, Emily Sinnott, Wolfgang Koehling, Fanny Weiner, Raul Labán, Helena Dúran, Paulina Soto, Azul del Villar and Chie Ingvoldstad and Patricia Mendez. Yoko Katakura, William Dillinger, Maria Emilia Freire, Remy Prud’Homme, Paul Bernd Spahn, Harald L. Fuhr and Ignacio Irarrázaval provided useful comments to earlier drafts as peer reviewers. The team as a whole spent two separate weeks in Chile for data collection, meeting with officials and experts, and internal discussion and deliberation. As part of the initial meeting, the team visited Region I and Region XV, where the team met with officials, experts, politicians and various civil society associations. Earlier drafts of this report were presented to and discussed with the Minister of Finance and his team, and the Sub Direccion de Desarrollo Regional. Marcelo Tokman and Jorge Rodríguez from the Office of the Minister of Finance, Ignacio Santelices (adviser, Ministry of Finance) and Claudia Serrano, Under-Secretary for Regional Development (SUBDERE) provided guidance on government demands as well as policy and institutional parameters. Further guidance was provided by Tamara Agnic Martínez and Marcela Ruiz-Tagle (advisers, Ministry of Finance) and María Angélica Ropert (Division Chief, Regional Development, SUBDERE). This report would not have been possible either without the support of Julio Ruiz (CORFO) and the regional and local governments of the Regions of Tarapacá and Arica- Parinacota. We would also like to thank the many individuals from the public and private sector in the two regions who have contributed to this effort. Annex B includes the list of interviews held during preparation missions. The team would like to take this opportunity to thank formally these officials as well as to thank the Chileans for their generous hospitality. The team was privileged to visit their country and learn about state policies with regard to Regional Development Policy and its implementation. ii ACRONYMS ARDP Regional Economic Development Agency (Agencia Regional de Desarrollo Productivo) ARI Draft Regional Investment Plan (Anteproyecto Regional de Inversión) CEPAL Economic Commission for Latin America and the Caribbean (ECLAC) (Comisión Económica para América Latina y el Caribe) CORE Regional Council (Consejo Regional) CORFO Economic Development Corporation (Corporación de Fomento de la Producción) DACG Division of Analysis and Management Control (División de Análisis y Control de Gestión) DAF Division of Administration and Finance (División de Administración y Finanzas) DIPRES Budget Directorate (Dirección de Presupuestos) DL Legislative Decree (Decreto Legislativo) DFL Decree Equivalent to a Law (Decreto con Fuerza de Ley ) EFTA European Free Trade Association FCM Common Municipal Fund (Fondo Común Municipal) FNDR National Fund for Regional Development (Fondo Nacional de Desarrollo Regional) GORE Regional Government (Gobierno Regional) GTI Integrated Territorial Management (Gestión Territorial Integrada) HDI Human Development Index IDB Inter-American Development Bank INDAP Institute for National Agricultural Development (Instituto de Desarrollo Agropecuario) HFB Horizontal Fiscal Balance IRAL Regional Investment for Local Assignment (Inversión Regional de Asignación Local) ISAR Sectoral Investment for Regional Assignment (Inversión Sectorial de Asignación Regional) SENCE National Training and Employment Service (Servicio Nacional de Capacitación y Empleo) SERNATUR National Tourism Service (Servicio Nacional de Turismo) SERCOTEC Technical Cooperation Service (Servicio de Cooperación Técnica) SEREMI Ministerial Regional Service (Secretario Regional Ministerial) SERVIU Housing and Urbanism Service (Servicio de Vivienda Urbana) SIGFE Financial Management System for the Central Government (Sistema de Información para la Gestión Financiera del Estado) SINIM National System for Municipal Indicators (Sistema Nacional de Indicadores Municipales) SNI National Investment System (Sistema Nacional de Inversiones) SUBDERE Under-secretariat for Regional and Administrative Development (Subsecretaría de Desarrollo Regional y Administrativo) PAT Regional Policy Grant PMG Management Enhancement Program (Programa de Mejoramiento de la Gestión) PROPIR Public Program for Regional Investment (Programa Público de Inversión en la Región) PTI Integrated Territories Program (Programa Territorial Integrado) UTM Monthly Tax Units 1 UTM = 29.379 Peso, Dec. 2003 (Unidad Tributaria Mensual) VFB Vertical Fiscal Balance ZE Extreme Zone (Zona Extrema) ZOFRI Free Trade Zone, Iquique (Zona Franca Iquique) ZOTAC Free Trade Zone, Tacna (Zona Franca de Tacna) iii TABLE OF CONTENTS EXECUTIVE SUMMARY ...........................................................................................................................I CHAPTER 1. INTRODUCTION............................................................................................................ 1 Objective of the Study. .......................................................................................................................... 1 Outline of the report.............................................................................................................................. 1 CHAPTER 2. THE NATIONAL CONTEXT: THE CHILE MODEL................................................ 1 Chile in Comparison............................................................................................................................. 1 The Political Environment .................................................................................................................... 2 Economic Policy ................................................................................................................................... 3 Social policy.......................................................................................................................................... 4 Border Security ..................................................................................................................................... 5 The National Context For Regional Policies ........................................................................................ 6 CHAPTER 3. A NATIONAL FRAMEWORK FOR REGIONAL POLICIES.................................. 7 What is The Regional Problem in Chile?.............................................................................................. 7 Equalization: Territorial Issue Or Citizen’s Issue?............................................................................ 10 Regional Development Policies And Regional Planning.................................................................... 12 Regional Development Institutions ..................................................................................................... 15 Considerations For A Regional Policy Framework............................................................................ 17 CHAPTER 4. SUB-NATIONAL GOVERNMENT AND REGIONAL POLICIES......................... 18 Municipal Government ....................................................................................................................... 19 Regional Government: Current Structure........................................................................................... 21 Regional Government: The Reform Process....................................................................................... 26 The Challenges for Regional Government..........................................................................................32 CHAPTER 5. PROSPECTS FOR ARICA-PARINACOTA AND TARAPACÁ.............................. 34 Chile’s Regions in Comparative Context............................................................................................ 34 The New Region Of Tarapacá............................................................................................................. 37 The New Region Of Arica-Parinacota ................................................................................................ 39 Proposed Strategy for the new Regions .............................................................................................. 42 Reforming The Incentives For The Zonas Extremas........................................................................... 48 Planning for Development in Regions i and XV ................................................................................. 53 CHAPTER 6. CONCLUSIONS: MAKING REGIONAL POLICY WORK IN CHILE................. 55 BIBLIOGRAPHY ..................................................................................................................................
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