Having launched a Digital Transformation Committee that will foster an ambitious agenda across several industries to “genuinely impact the real economy”, Corfo is supporting the challenge of transforming Chile into a leading player in disruptive technology, as well as playing an important role in achieving long-term national growth and strengthening ties with the United States.
By Jorge Isla
In early September, Eduardo Bitran, Vice President of the Corporación de Fomento de la Producción (Chilean Economic Development Agency), or Corfo, made one of his most important announcements since taking up his post at the beginning of the incumbent government. His declaration is both confirmation of the approach he has adopted during his time in the role, and a fundamental component of the legacy Corfo seeks to project over the medium and long term. Before an audience of a thousand business representatives at the Fifth Fundación País Digital Summit, Bitran gave the green light to the Comité de Transformación Digital (Digital Transformation Committee), or CTD. The objective of the CTD is to enhance the productivity, modernization and growth of industry, and the economy in general, by means of information, communication and digitalization technologies.
“There are two technological revolutions taking place in the world: the one related to digital or industrial internet, and the one regarding transformation of renewable energy and electromobility; both of which are significantly impacting a number of economies. In response, Chile must prepare itself to play a role in disruptive technology transformations and so it is essential to encourage systemic innovation that includes the participation of distinct actors from the educational, public services, business and academic sectors. If this is not achieved systematically, progress will be very difficult” emphasizes Bitran in relation to the primary objectives of the CTD. This Committee is the result of more than three years of work which began with a portfolio of initiatives linked to mining, agriculture, smart cities, astronomical information technology, advanced manufacturing, smart industries, construction and health.
The successful realization of this project helps to consolidate the important role sought by Corfo over this period, in relation to “generating a strategic outlook shared between academia and the public and private sector concerning large-scale technological revolutions taking place around the world, as well as the related opportunities to create social capital”, says Bitran. He also stresses the importance of this kind of perspective, calling its objective “highly valuable during times in which trust in institutions is low”.
The Vice President of Corfo highlights these guidelines at a time in which the Corporation is conducting an in-depth evaluation process in conjunction with the Organisation for Economic Co-operation and Development and the Inter-American Development Bank, which will submit its findings in January 2018. He explains that Corfo “will be able to deliver these results to the next government so they can also share and accelerate their investment procedures according to independent assessments”.
During his discussion with AmCham Chile, Bitran also reviews the ongoing debate on economic growth, State policy concerning natural resource strategies and the promotion of business developments focused on disruptive technologies, and what to expect in terms of joint support for entrepreneurship and innovation between institutions from both Chile and the United States.
– How would you like the next government to judge what Corfo has achieved during your administration?
– Whoever the next government is, I would say time is needed to analyse Corfo’s achievements, which have been created based on social capital and real-impact initiatives over this period. This will help to ensure continuity and to strengthen those aspects that are creating value; and here I am talking about genuine impacts on the real economy via the so-called ‘industry 4.0’, which is causing disruptions all over the world. We are creating a legacy at Corfo to leave any subsequent government which consists of a professional team, a series of projects and required resources with a focus on securing the digital transformation of the country, and ongoing links between the public and private sector. We are also making a valuable contribution to the country beyond the government sphere, based on the concept of long-term thinking.
– Now that growth has become a prominent topic on the national agenda, where should the emphasis be placed to ensure progress in this area?
– It is interesting that we are concerned about growth. Removing Corfo from the political discussion, we focus on this issue from the longer term perspective in line with what the Nobel Prize winner Paul Krugman said in his famous quote: “when we speak of growth, productivity is not everything, but, in the long run, it is almost everything”. So beyond the fluctuations of the price of copper, the key point is the ability to generate more value with the resources at your disposal, and that forms the basis of our work.
– In your opinion, what are the central aspects on which this discussion should focus in the long term?
– In the long term, total factor productivity also influences investment behavior, and as a country we have a problem in this regard. The Comisión Nacional de Productividad (National Productivity Commission) has recently compiled a study which concludes that during the 1990s the total factor productivity grew by 2.3%, while between 2000 and 2010 it fell sharply by 0.3%, and to 2015 it dropped by at least a further 0.2%. These findings indicate a productivity crisis that has lasted for 17 years, with no respite during any of the governments over this period! And in the current context of transformational disruptive technology, there is a risk that this productivity problem will deepen.
– How can this trend be reversed?
– We are leaving it rather late. The country must understand that the incorporation of these technologies into the economy needs a systemic focus across all areas, from human capital, regulations and infrastructure to the absorption capacity of small and medium-sized enterprises, all of which require consensus and a new style of politics. That is precisely what I have been trying to do at Corfo, breaking the silos within the public apparatus and working with a range of ministers and multiple private sector actors.
Strategic resource policy
– Regarding lithium, you have been emphatic about the mission of the State in relation to resources whose value is associated with the global technological revolution. With that in mind, what are the objectives?
– There will be about 40 million electric cars in the world by 2035; an extraordinary development that is generating a huge demand for minerals that can be found in Chilean soils, but that must be produced cleanly. In addition, the country is home to the best solar radiation on the planet. We therefore have the chance to transform the industrial mining economy in Chile with solar energy in order to satisfy the global demand for lithium, as well as for low-emission copper and, eventually, cobalt and rare earth metals found in tailings.
– You have also emphatically defended the interests of the State regarding the exploitation of lithium. How do you foresee this endeavor?
– In concrete terms. I believe that the agreement with Albemarle Corporation will increase the company’s production from 30,000 tons to over 100,000 tons of lithium carbonate over the next three years, in a global market of 200,000 tons. And this company agreed with Corfo to sell a percentage of its production locally without a subsidy on the export price, and we are calling for the private sector to make the most of this opportunity. The mere fact of having clean solar energy has attracted new and unexpected businesses to these shores, such as the Chinese vehicle leader (Baic Group, one the 15 largest automotive companies in the world and a significant player in the electric car sector) who approached us just a short time ago.
– Up to what point does the developmental role of the State play a part?
– It will be the private companies and not us who will decide what to do with the lithium, cobalt or low-emission copper that is mined or the solar power that is produced. From the State perspective, the role is merely to showcase the opportunities that exist in Chile.
Strengthening relations between Chile and the United States
– What is your assessment of the relationship with the United States in Corfo’s sphere of influence? And what kind of support mechanisms have arisen for entrepreneurs such as the case of the different versions of the Look North program implemented by AmCham Chile?
– We have played an important collaborative role with AmCham Chile. We began in the field of biotechnology, in which the Chilean professor Fernando Martínez, who is director of a center at the University of Arizona that works towards transitioning research findings to business-world applications, was responsible for devising a public-private strategy in this area. And so in this context, we frequently collaborate with AmCham Chile in work aimed at the entire national biotechnology industry and the distinct global centers and leaders in this field.
– The agreement between Chile and Massachusetts recently gave rise to Chile-Mass Tech Bridge, with alliances and co-financing of joint projects. How will this scheme be implemented?
– The Chile-Mass Tech Bridge was established as a non-profit corporation and inspired, in part, by biotechnology, since the first institution to have linked up with us in a significant manner was Massachusetts Life Sciences Center. This bridge allows us to contemplate the extensive scaling up of biotechnology businesses and, moreover, apply this field to the local Chilean reality. In addition, we want to form specific links with the three agencies working on digital, biotechnology and clean energy to promote collaboration between Chilean companies and those from Massachusetts on innovative programs that are relevant to our country.
– Will the Chile-Mass project open an office in Massachusetts?
–Absolutely. The corporation will have an office as of January 2018 and the executive president will be Yuly Fuentes, a Chilean biotechnologist who has lived and worked in the United States for 15 years. Yuly has wide ranging contacts across the government sector and the entire ecosystem as a whole, and she will lead the business matchmaking between both parties.
– To what extent have other agreements been formulated, such as the one between Chile and California?
– In regard to that agreement, we are trying to refocus the California relationship towards innovation. Other states are also reaching out to us having shown an interest in forming ties, so we will continue to assess our options. Indeed, the states play a very important role and the support provided by the Chilean Ambassador to the United States, Juan Gabriel Valdés, as well as that of the Cancillería (Ministry of Foreign Affairs) in general, have been critical. Moving forward, we hope to strengthen our relationship with the U.S. further on the issues of innovation and technology.
The progress of digital transformation
“In the last decade, the only export sector to have experienced double digit growth is technology services, which has grown from US$300 million in 2000 to US$3 billion in 2015”, states Eduardo Bitran, in reference to another one of the reasons behind the launch of the Digital Transformation Committee.
The strategy of this Committee is based on a “quadruple helix” approach, which as well as the entity itself includes the joint efforts of government, universities and businesses. One of the Committee’s most notable early initiatives is the Programa de Becas para Mil Programadores (Grants Initiative for a Thousand Programmers), which, following its first edition, will expand its reach to provide 3,000 places. “In view of the highly positive results so far, a partnership between Corfo, Sence, Sofafa and ACTI has refined the standards and now we are able to broaden our scope” adds Bitran. Another significant aspect has been the incorporation of the digital Building Information Modeling (BIM) tool, which improves management processes in the construction industry, by the Ministerio de Obras Públicas (Ministry of Public Works). The BIM has been applied in the design of a project portfolio whose overall amount constitutes 70% of its most recent annual budget.
In the field of health, the development of the interoperable digital prescription will follow the launch of a medical record that could be held for each individual patient regardless of where they receive medical treatment, the implementation of which is scheduled for late 2017.
“These are issues that impact significantly on the productivity and quality of public services”, concludes Bitran.