Chile at the Green Window of Opportunity: The Troubled Road to New Productive Capabilities

This article examines how Chile is navigating the global energy transition, with a focus on the resurgence of industrial policy. While developed countries have led this transformation–through policies such as the U.S. Inflation Reduction Act and the EU's Green Industrial Plan–peripheral economies are also strategically positioning themselves in the evolving global economy. Chile's comparative advantages in critical minerals and renewable energy place the country at the forefront of Latin American green growth initiatives. In contrast to long-held neoliberal policy beliefs, the last three governments have introduced strategies aimed at either developing strategic sectors for the energy transition, such as green hydrogen and lithium, or decarbonizing existing operations, such as copper, while simultaneously enhancing new productive capabilities. This contribution examines policy instruments across different segments (upstream, downstream, and offstream) of the green hydrogen and lithium value chains, with a particular focus on the development of new productive capabilities. By analyzing Chile's new industrial policy and its associated political-economic challenges, the article provides insights into how peripheral economies can leverage their resource endowments to engage in the reconfiguration of global value chains during the energy transition.