Economy of Chile

General

Chile is regarded today as the most stable country economically in Latin America. With a disastrous economic past having known many dictatorships, the country has nowadays become the “model” of the area, the only one which succeeded, for example, to reduce the poverty by half for the fifteen last years, (it is besides for that it is called the " jaguar" from South America). During twenty-four last years, the average annual growth of Chilean GDP was of 5,2%, and even of 8,3% between 1990 and 1997. The Chilean economic model is that of the neoliberalism, system set up by the general Pinochet (during the dictatorship) with the assistance of the Chicago Boys. With this new model, the country knew many reforms like the privatization of the government enterprises (Cuivre, Aviation, education…). Nowadays, Chile has a market open to the whole world. Its economy is characterized by the export and the importation of raw materials. During the year 2005, the full number of exports exceeded them: 39536 million American dollars. Exports increased half this year. These main customers are by order of importance the European Union, the the United States, the South Korea, the P4 agreement and the China. Chile is member of the APEC (treated countries of the Pacific) and associated member of the Mercosur (treated free trade between the countries of the southern continent American).

The imports reached the figure of: 30300 million American dollars in 2005. Its GDP increased the same year by 6,3% newcomer with: 115300 million American dollars is: 11900 dollars per capita in 2004. In 2006, the GDP of the country arrived at: 145399 million dollars is more than 13.000 dollars per capita. Chile thus has the GDP per capita the higher second of the countries of Latin America just behind the Argentine. .

Agriculture and the breeding are the main activities of the areas of the center and south of the country. The export of fruit and vegetables reaches historical levels because the market opens at the markets European and Asian since the years 1990. Chile knows also an exponential growth in the field of fishing. Thus, the country became the first exporter of Saumon by exceeding the levels of the Norway in 2006.

Chilean industry is especially local, with a notable exception of the production of the fish meal. The latter concentrates in the metropolitan region, Valparaiso and Concepción. For these twenty last years, the government has tried to instigate agribusiness industry. Thus about the year 2010, Chile will be one of the countries challenger in this field. In addition, the country, became a kind of platform for the foreign companies in Latin America. Thus of many companies set up their head office at Santiago or in its area. The country has an important presence of companies coming from the field of the service.

It continues to exist in Chile an social inequality in spite of its economic dynamism. The country continues to have more the low level of active women of Latin America (only 40% of the women have a work). Moreover, one notes a great difference in wages between the man and the woman (about a third for same employment and the same qualification).

Initially, unemployment rates did not decrease at the speed which one hoped for before the return to the democracy (8,7% in September 2005), which became one of the big challenges of the government. Then, in spite of projections in the matter, Chile always has a deplorable distribution of income and it is placed at the 16th rank of the bad distribution of the richness in the world. These two subjects belong to the discussions between the presidential candidates for the next elections of December 2005.

The economic good health of Chile is once again recognized in a study of the Cooperation organization and development economic (OECD) published the November 4th 2005. It appears thus that the economic dynamism allowed a fast rise in the standard of living with a GDP per capita last of 2340 dollars in 1990 more than 5000 dollars (4230 euros) in 2004 same if the income per capita corrected of the purchasing power parity represents currently less than 40% of the average in zone OECD and less than 30% of that of the United States.

The budget policy is guided by the rule of the structural surplus which requires a surplus of 1% of the GDP. Thus, public finances of Chile presented a positive balance of 2,2% of the GDP in 2004, and about 3% in 2005. However, in spite of these good performances, an important part of the Chilean population continues to live under the poverty line. On the subject of the economy néolibérale, Chile is famous for its economic power, which brought to decrease the incidence of poverty while passing from 50% in 1987 with 18,8% in 2003 (the country was the first Latin-American country to achieve and exceed the forecasts of 2000 on the reduction of poverty). However, semi-officially, even if the economic growth is good and evolves/moves atrather high rates, it is noted especially that are the easiest classes which benefit from the benefits of the economy néolibérale.

The Agriculture is a big factor with the Chile. This country produces fruits (tropical and not-tropical), Légume S, Vin and Céréale S. The fishing, the Forest S and the Pétrole are also important. For the industrial life, the mine, the Paper, the Textile S, the electricity and chemicals are developed. Chile is one of the most uneven countries of the world.

Table showing the evolution of the Chilean GDP since 1990

The economy of Chile is characterized by its Exportation. The exporting structure is composed by 45% of industrial products, 45% of mining production and one 10% of agricultural produce. In the field of the agricultural produce and industrial products destaca the export of Cellulose, Methanol, chemicals and agroalimentary. Forest industry, of salmon and the wine (of famous world by acquiring much importance these two last decades. The mining products most important are the extraction of Cuivre, mineral on which the Chile depends in great proportion. Agriculture as for it exports fruits (Raisin, Abricot,…) and of the Corn.

It should be added that the Chilean industrial production produces all leave products (food, iron and steel, clothing…). Even if Chile reduced its dependence on the copper export while passing from 60% (during the Seventies), to 35% in 2004, the rate is always very high. Most of the Chilean growth is related with the high prices to the worldwide market of minerals. The country still did not arrive at an industrial elevated level of production with high added value. The Chile is the first country of Latin America with the Argentine where industrialization began (about the middle from the 19th century. Quickly this sector receives a great impulse during the period of between war by the policies of fomento industrial of the I.S.I (Industrialization por sustitution of the imports). The economy of Chile spent these last years an economy monoexportatrice of primary education products, has a semi-industrial country, fruit of the continuous economic growth at intervals of 7% during the Nineties, with a solid bases industrial and a strong parliamentary cohesion towards the economic policy. Since its accession with OECD at the end of 2004, while being second Latin-American country after the Mexico. Its accession as full member is planned for 2007.

Like importance in the Chilean economy, it is one of the countries pioneers as regards economic liberalization in Latin America and a gravitational country of the free Commerce (Chile signed various commercial treaty of free exchanges with countries and associations which account for 65% of the world population como NAFTA, European Union, EFTA, South Korea, China…). Chile became in a score of years one of the economies mondialisées and competitive in the world. Thus that to contribute to decrease the poverty passing of 50% in 1987 with 18,8% in 2003 (it was the first Latin-American country to achieve, and exceed its goal of 2000 about the reduction in poverty). Thus, Chile is of second American country latino in term of GDP per capita (US$12.800 per head in purchasing power parity). The GDP per registered capital is of $7,089 according to the Banco Exchange of Chile in 2005, which exceeds the Mexico and the Brésil and is close to that of the Argentine. Nowadays the social indicators are good as by exmple the highest life expectancy of Latin America, according to the INNATE it is 77,74 years (74,8 years for the men and 80,8 for the women), a rate of alphabetism of 95,8% in (2002). there mortalidad infantil (7,8/1000) has nivel los países más desarrollados.

In 2005 GDP believes of 6,3%. The industrial production believes of more than 7% and exports from almost 50%. The rate of opening is of 70%. The public accounts obtained a surplus from approximately 4%. The Chômage remains rather high: 8,1% and the Inflation remain low: 3,7%.Pour the year 2007 the GDP should grow of 7%. However, even with good indicators, the Chilean economy presents a serious defect: the inequality of distribution of the richnesses which generates a large social gap between rich person E. According to information of UNO in 2005, Chile is with the 113e place of the list of the countries by inequality of richness, being located at the 15th place on a world level, which reveals an important deficiency in the economy.

This inequality is allotted by the current liberal system (in contradiction with the socializing policy of decades 50,60 and 70), otros lo atribuyen with the dotación of factores naturales (which developed typical extractive economy that favorecía instituciones that propiciaban the desigualdad). Medication according to the ministry of Planning and Cooperation of Chile gives an index of 0,57 in 2003.

The inequality of the Distribution of the richnesses can explain the dynamism of the economy of Chile. The small proportion of woman to work (lowest of America) dificulta reducción LED desempleo. Existen asimismo large differentiated wage between men and women.

The recién electa president, Michele Bachelet ha prometido tratar éste problema idiot profundidad.

Even with only 16 million inhabitants, Chilean economy - with the nominal GDP is the more important fifth of Latin America.

Companies

Economic projection

It is provided that the country which currently reaches records in term of growth of annual GDP thanks to the high price of copper L (Without " power purchase parity") of 157 thousand million dollars (approximately USD 10.000 Per cápita).

Exports

The most exported products are the Cuivre, the products mining, fishing, the fruits, wood and paper. However, the country succeeded in diversifying its economy and today it also exports services (data processing, mining expertise, governmental administration). The Chilean companies are very present in Latin America, in particular in Peru and in Argentina (stores with rays, air lines, dairy products, supermarkets). In addition, the country receives a growing number of tourists attracted by the natural beauty of the country, which contains lunar deserts and glaciers antarctic, forests wet and one of the rare areas having a Mediterranean climate in the world.

Imports

The major imports, in addition to oil, are the industrial machines, the spare parts, the cars and of consumer goods.

Economic relations with the the United States

Since the return to the democratic regime the commercial relations with the United States seem to be excellent. Indeed, the treated free trade the United States Chile was signed the June 6th 2003, was ratified by the Chambre of the representatives the July 24th 2003 following a vote of 270 for, and 156 and was against ratified by the Sénat the July 31st 2003 following an other vote giving 65 for and 32 against. The president George W. Bush signed it to it United States-Chile Free Trade Agreement Implementation Act the September 3rd 2003. This treaty is set up by the two countries since 2004.

Raw materials

The principal export of the country is copper with 36% of the worldwide market. Chile is the world leader in this field. But, it exports also Argent and Or in less quantity. These raw materials are extracted in the desert from Atacama in north from the country. The extraction of copper continues to represent a big part in exports. Indeed, 30% of the exported products are copper (against 60% in 1970). The company Codelco Chile has one of the largest mines in the world (for copper) like Chuquicamata and El Teniente. The extraction of copper is the main resource of the areas of Taracapá, Antofagasta, and Atacama (three areas of the desert of Atacama).

In the area of Magellan (surroundings of Punta Arenas), the exploitation of the oil reservoirs constitutes a big part for domestic transport (30% of oil in Chile are national). However, in its exports, one should not forget stone exports lapis lazuli lazuli (2nd exporter) used for the manufacture of artisanal jewels as well as the export of guano (first) used him like Engrais.

Tourism

Since the Years 1990, tourism in Chile became one of the economic main resources, especially in the extreme zones of the country (deserted of Atacama to north, Patagonie, Ground of Fire in the south). During the year 2005, it increased by 13,6%, generating thus more: 1360 million American dollars (either 1,33% of the national GDP). According to the SERNATUR, two million people go to Chile per annum. This figure is still good if one compares it with those of Brazil or the Mexico. The majority of these visitors come from the continent, mainly of the Argentine. However, these last years, the number of visitors coming from Spain, of France, of Germany east in constant increase (these countries offer even sometimes direct flights towards Chile without stopover as Air France which can only make Paris CDG-Santiago Pudahuel of 14 hours 30) . Europeans represent: 400000 visitors in 2005.

The principal tourist places correspond to the places of natural beauty of the extreme zones. San Pedro de Atacama, in the north of the country is very visited by the foreigners to contemplate the architecture of INCA origin, the lagoons of Altiplano, the Valle of Luna voted by plebiscite for its strangeness and the geysers of Tatio. Close to Putre, in extreme north, to admire the Lake Chungará and the Parinacota volcano located in the National park Lauca at more than 4500 meters of altitudes is appreciated. In the southern zone, the principal tourist places are the archipelago of Chiloé, the Patagonie, the lagoon of San Rafael and its glaciers as well as the national park of Torres del Paine. To finish, mysterious the Easter Island located in the middle of the Pacific Ocean is probably the tourist place more appreciated by the Westerners, because it is very exotic compared to the continent.

In the national field, tourism concentrates during the summer period, mainly in the seaside resorts like Arica, Iquique, Antofagasta, Serena and Coquimbo for the northern zone. The area of Valparaiso receives the greatest number of tourists like Viña del Mar thanks to its proximity with Santiago. The latter is known to be the “tourist capital of Chile” thanks to the beauty of its beaches and its proximity of the capital. Each year, in February proceeds the festival of the song of Viña del Mar, musical event important in Latin America.

Energy

Chile is depending vigorously speaking. Indeed, it does not have great energy reserves. For example, on: 228000 barrels of petrol consumed per day, only: 4000 comes from the layers of the country. The oil price thus depends on the international business and the economic situation. In the same way, it quasi totality of natural gas is imported of Argentine.

The consumption of electricity exceeded them: 51573 GWh during the year 2005 of which 54% are produced by hydroelectric stations. In the country, there exist four electric systems: the inter-connected system of Norte Large, the central inter-connected system and systems of Aisén Magallanes. The hydroelectric potential is used still little. The country uses 20% of the capacities used (will of protection of the fauna and the flora of the area of Aisén). There does not exist for the moment of nuclear plant, however, in 2006 the debate opens on the technical feasibility of the use of this type of energy. The wind installation of S and the geothermic energy utilization are also considered by the country.

Transport and telecommunications

The geography characteristic of the country makes that the grid systems and telecommunications are of considerable importance.

The country adds up 364 landing strips like the airports of Chacalluta d' Arica, Diego Aracena d' Iquique, Cerro Moreno d' Antofagasta, Carriel On Concepción, El Tepual of Puerto Montt, President Ibañez de Punta Arenas, Mataveri in the Easter Island, and the international airport Comodoro Arturo Merino Benitez of Santiago (one of more modern of the continent where seat the national company LAN Airlines).

Chile has: 6585 kilometers of railways. These last formerly were important for the development of the country, but, nowadays, the railroads are used especially for the transport of freight towards the ports since the crisis of the Années 1970. Currently, the government wishes redévelopper the train by restoring the service with the passengers of EFE between Santiago and Puerto Montt. On the contrary, the subway develops considerably in Valparaiso with Biotrén and Santiago will have more than 100 kilometers of line of subway from here 2009 (it has in December 2006 87 kilometers of line). For the roads, the country enjoys a network of more than: 79000 kilometers of roads of which: 10000 are tarred. Since the Years 1990, more: 2500 kilometers of highways were built (Pan-American Highway between Arica and the island of Chiloé). The will carretera southern connects the area of Aisén to the remainder of the country and is almost complete. The customs stations most important are those of Chacalluta and Tambo Quemado which are used as borders with the Peru and the Bolivia. There exist forty customs stations with the Argentine, most important are those of Cristo Redentor between Los the Andes and Mendoza.

Some economic statistics

Annual growth rate in 2004: + 6,1%, in 2005: + 6,3%
Annual inflation rate in 2004: + 2,4%, in 2005: +3,7%
Unemployment rate in 2005: 8%
Indicating of human development (2005): 0,854 (37e row in the world)
Population under the poverty line: 16% (and less than 2% which lives with less than one dollar per day).

Technological indicators

Rate of possession (at December 31st 2006)

Fixed telephone: 22,5%
Mobile phone móviles (portable): 83,0%
Personal computer: 21,5%
Worn of Internet: 42,0%
Télévisieur: 53,8%
TV: 38,7% (on the total of the hearths having a television set)
Radios: 75,9% Automobile
: 19,6%
Scientific available: 544/1 million hab.
Gasto in I+D (% LED GDP): 0,7%

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