Data Appendix
The (annual) economic data used in this study were obtained from official government sources such as the Instituto Nacional de Estadísticas (various issues) and the Banco Central de Chile, Memoria Anual (various issues).12 Public and private investment data for Chile were obtained from the international Finance Corporation, Trends in Private Investment in Developing Countries: Statistics for 1970-2000 (Table C1, 2001) and ECLAC (2002). in the economic development literature proxies are often used for variables such as the labor force and/or the stocks of private domestic capital and FDI (see Aschauer, 1990; Cardoso, 1993; Lin, 1994; Nazmi and Ramirez, 1997; and Ram and Zhang, 2002). For example, population data is used instead of labor force data, or investment data (as a proportion of GDP) is substituted for capital stock data. However, the use of these proxies imposes unduly restrictive assumptions (e.g., such as a fixed capital-output ratio) or unrealistic assumptions (a constant labor force participation rate) that generate both wrongly specified relationships and significant measurement errors (see Alexander, 1994). in the case of Chile we are fortunate to have a sufficiently long (and official) time series (annual) data set for private investment, public investment, and FDI flows extending back to 1960. Using a perpetual inventory method, capital stock data was generated for the variables in question. Initial stocks of private (public) and foreign capital were estimated by aggregating over five years of gross investment (1956-1960), assuming an estimate of the rate of depreciation of 5 percent. To ensure the robustness of the results, other estimates of the rate of depreciation were used (10 percent), as well as different estimates of the initial capital stock (e.g., summing over 4 and 6 years), but the results were not altered significantly. Finally, Chile's National Institute of Statistics (INE) has also published official data on the labor force for the period under review.
12 Investment data was cross-checked with that found in the International Finance Corporation, Trends in Private Investment in Developing Countries: Statistics for 1970-2000 (2001) and no significant differences were discerned.