Firm Creation, Firm Evolution and Clusters in Chile’s Dynamic Wine Sector: Evidence from the Colchagua and Casablanca Regions

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A political factor is the move towards ‘pragmatic neo-liberalism’ in 1984. As Gwynne
(2006) points out, the government had kept an influence previously on the Chilean
economy by keeping the peso fixed against the dollar, so true neoliberal policies did not
actually start until 1984. This meant that from this time onwards the true advantages of
neo-liberalism could be felt. Firm presence in Colchagua and Casablanca increased as
actors recognised their freedom to tap into global sources of wealth.

Another political factor causing the increase of firms was the transition to democracy that
Chile underwent at the end of the 1990’s. This tradition to democracy meant that global
consumers who had previously boycotted Chilean products, due to human rights issues
arising from the military regime, were willing to buy Chilean products again. Although,
the percentage of consumers who boycotted Chilean products is not known, it is
definitely known that human rights abuses by the regime were denounced on a global
scale. This meant that sales increased, encouraging creation of new firms to meet this
demand.

Consumers had a further influence on the creation of firms in Chile, owing to the fact that
in this period there was a switch in consumer trends, leaning towards the consumption of
red wines (Arnold et al, 2002). Chile is traditionally known for its red wine varieties, with
76% of Colchagua grapes being red wines (Olavarria et al, 2006). Owing to this increased
global demand of red varieties, firms were set up to take advantage of this in a country
known for its ability to produce good red wines. Consumers also changed their
consumption patterns in that they were more willing to purchase wines that did not

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