UPDATE 1-Chile's Pinera unveils business-heavy cabinet

* Pinera names Felipe Larrain next finance minister

* Cabinet made up of businessmen, technocrats, academics

* Pinera appoints center-left rival as defense minister (Updates with cabinet announcement)

SANTIAGO, Feb 9 (Reuters) - Chilean President-elect Sebastian Pinera named a cabinet of business leaders and academics on Tuesday, with economist Felipe Larrain as finance minister tasked with luring investment through tax breaks and subsidies.

Pinera, a billionaire and prominent businessman himself, tapped leaders from Chile's prosperous retail sector as well as lawyers and economists to help steer one of Latin America's most stable economies.

During the election campaign, 51-year-old Larrain, a professor at Chile's prestigious Universidad Catolica, told Reuters he will seek to create a "virtuous circle," boosting growth to stimulate job creation and in turn demand, which stimulates growth.

Pinera has vowed to boost economic growth to 6 percent a year, create 1 million jobs and reform state companies like No.1 global copper producer Codelco to make them leaner and more efficient.

Pinera's critics say his plan relies too heavily on private investment and depends on an uninterrupted recovery from global financial crisis underpinning demand for main export and revenue earner copper, particularly in China.

Planned corporate tax breaks include an accelerated depreciation program as well as delays in tax payments for small and mid-sized companies. However few expect any major changes to policies that have made Chile one of the emerging world's most stable economies.

Chile's central bank has estimated that the economy shrank 1.9 percent in 2009, and forecasts an expansion of 4.5 percent to 5.5 percent in 2010 as the nation emerges from its first recession in a decade.

Pinera appointed his campaign chief, lawyer Rodrigo Hinzpeter, as interior minister, and Alfredo Moreno, a director of retailer Falabella, as foreign minister.

Pinera, who had promised a "unity cabinet," tapped as defense minister a former minister from the rival center-left coalition that he defeated in a January presidential run-off, ending 20 years of leftist rule.

Lawyer Jaime Ravinet had served as defense minister under a previous government of the leftist coalition.

Laurence Golborne, former chief executive of diversified retailer Cencosud, was chosen as mining minister and respected economist Cristian Larroulet was named Pinera's chief of staff. (Reporting by Simon Gardner, Rodrigo Martinez, Fabian Cambero, Alvaro Tapia and Bianca Frigiani; Editing by Eric Walsh)