Chile has a dynamic market-oriented economy characterized by a high level of foreign trade. During the early 1990s, Chile's reputation as a role model for economic reform was strengthened when the democratic government of Patricio Aylwin - which took over from the military in 1990 - deepened the economic reform initiated by the military government. Growth in real GDP averaged 8% during the period 1991-1997, but fell to half that level in 1998 because of tight monetary policies implemented to keep the current account deficit in check and because of lower export earnings - the latter a product of the global financial crisis. Chile's economy has since recovered and has seen growth rates of 5-7% over the past several years. In 2006, Chile became the country with the highest nominal GDP per capita in Latin America.^[1] Even though the exceptional Chilean economic results, when measured exclusively by the GNP indicators (a gauge that does not adequately depict the social depth of economic wellbeing) the Chilean economy income distribution has been extremely poor. Chile ranks 80th among the coutries on the list of income distribution, being the fourth worst in Latin America (only above Brazil, Paraguay and Colombia) and ranking, on that important indicator, behind much poorer African coutries such as Zambia, Nigeria and Malawi. Chilean notes currently in circulation: 1,000; 2,000; 5,000; 10,000; 20,000 pesos The peso is the currency of Chile. ... WTO redirects here. ... APEC redirects here. ... The South American Community of Nations (CSN) (Spanish: , Portuguese: , Dutch: ) will be a continent-wide free trade zone that will unite two existing free-trade organizations—Mercosur and the Andean Community—eliminating tariffs for non-sensitive products by 2014 and sensitive products by 2019. ... Motto (Spanish) (Portuguese) (Guaraní) Our North is the South  â€¢  â€¢ Pro Tempore Secretariat Montevideo, Uruguay Largest city São Paulo, Brazil Official languages 3 Portuguese Spanish Guaraní Membership 5 Argentina Brazil Paraguay Uruguay Venezuela Leaders  -  Carlos Álvarez Establishment  -  Declaration of Foz do Iguaçu 30 December 1985   -  Treaty of Asunción...  â€¢  â€¢ Seat of Secretariat Lima, Peru Official language Spanish Type Trade bloc Membership 10 South American states 2 Central/North American observer states Leaders  -  Secretary General Freddy Ehlers Establishment  -  as the Andean Pact 1969   -  as the CAN 1996  Website http://www. ... GDP is an acronym which can stand for more than one thing: (in economics) an abbreviation for Gross Domestic Product. ... PPP of GDP for the countries of the world (2003). ... There are three lists of countries of the world sorted by their gross domestic product (GDP) (the value of all final goods and services produced within a nation in a given year). ... It has been suggested that this article be split into multiple articles accessible from a disambiguation page. ... Map of countries showing percentage of population who have an income below the national poverty line The poverty line is the level of income below which one cannot afford to purchase all the resources one requires to live. ... The Gini coefficient is a measure of inequality developed by the Italian statistician Corrado Gini and published in his 1912 paper Variabilità e mutabilità. It is usually used to measure income inequality, but can be used to measure any form of uneven distribution. ... CIA figures for world unemployment rates, 2006 Unemployment is the state in which a person is without work, available to work, and is currently seeking work. ... For other uses of terms redirecting here, see US (disambiguation), USA (disambiguation), and United States (disambiguation) Motto In God We Trust(since 1956) (From Many, One; Latin, traditional) Anthem The Star-Spangled Banner Capital Washington, D.C. Largest city New York City National language English (de facto)1 Demonym American... For other uses of terms redirecting here, see US (disambiguation), USA (disambiguation), and United States (disambiguation) Motto In God We Trust(since 1956) (From Many, One; Latin, traditional) Anthem The Star-Spangled Banner Capital Washington, D.C. Largest city New York City National language English (de facto)1 Demonym American... USD redirects here. ... To meet Wikipedias quality standards, this article may require cleanup. ... The term current account usually refers to the current account of the balance of payments (BOP) and contains the import and export items of goods and services. ... A regions gross domestic product, or GDP, is one of several measures of the size of its economy. ... This graphic shows the distribution of gross annual household income. ...

The Global Competitiveness Report for 2007-2008 ranks Chile as being the 26th most competitive country.^[2] The Ease of doing business index created by the World Bank lists Chile as 33rd in the world that encompasses better, usually simpler, regulations for businesses and stronger protections of property rights.^[3] The OECD agreed to invite Chile to be among four countries to open discussions in becoming an official member. ^[4]. World map of the 2006-2007 Global Competitiveness Index. ... World map of the Ease of Doing Business Index. ... The World Bank logo The World Bank (the Bank) is a part of the World Bank Group (WBG), is a bank that makes loans to developing countries for development programs with the stated goal of reducing poverty. ... The Organization for Economic Co-operation and Development (OECD) is an international organization of those developed countries that accept the principles of representative democracy and a free market economy. ...

Macro-economic trend

Chile (blue) and average South America (orange) GDP per Capita (1945-2003).

After a decade of highly impressive growth rates, Chile experienced a moderate recession in 1999 brought on by the global economic slowdown and exacerbated by a severe drought reducing crop yields and causing hydroelectric shortfalls and rationing. Chile experienced negative economic growth for the first time in more than 15 years. Despite the effects of the recession, Chile maintained its reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. After averaging real GDP growth rates of around 7% in the 1990s, the economy grew 3.4% in 1998 and contracted 1.1% in 1999. By the end of 1999, exports and economic activity had begun to recover. The economy has recovered in 2000, with Asian markets rebounding and copper prices edging up. GDP growth for 2001 is expected in the 5%-6% range. The inauguration of Ricardo Lagos in March 2000, succeeding Eduardo Frei, kept the presidency in the hands of the center-left Concertacion coalition that has held office since the return of civilian rule in 1990. South America South America is a continent crossed by the equator, with most of its area in the Southern Hemisphere. ... GDP is an acronym which can stand for more than one thing: (in economics) an abbreviation for Gross Domestic Product. ... In macroeconomics, a recession is a decline in a countrys real gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year. ... Fields outside Benambra, Victoria, Australia suffering from drought conditions A drought is an extended period of months or years when a region notes a deficiency in its water supply. ... Hydroelectricity is electricity produced by hydropower. ... For other uses, see Copper (disambiguation). ... Ricardo Froilán Lagos Escobar (born March 2, 1938) is a lawyer, economist and social democrat politician, who served as president of Chile from 2000 to 2006 . ... Eduardo Frei Ruiz-Tagle (born June 24, 1942) was President of Chile from 1994 to 2000. ...

The government's limited role in the economy, Chile's openness to international trade and investment, and the high domestic savings and investment rates that propelled Chile's economy to average growth rates of 8% during the decade before the recession are still in place. The 1973-90 military government sold many state-owned companies, and the three democratic governments since 1990 have continued privatization at a slower pace. Policy measures such as the privatization of the national pension system encourage domestic investment, contributing to an estimated total domestic savings rate of approximately 22% of GDP in 2000.^{[verification needed]} This article does not adequately cite its references or sources. ...

Unemployment peaked well above Chile's traditional 4%-6% range during the recession and is stubbornly remaining in the 8%-10% range well into the economic recovery. Despite recent labour troubles, wages have on average risen faster than inflation over the last several years as a result of higher productivity, boosting national living standards. The share of Chileans with incomes below the poverty line — roughly $90/month for a family of four — fell from 46% of the population in 1987 to 14% in 2006. Critics, however, argue that this poverty line is unrealistically low, and point to previous studies by the National Census Institute which consider as much as 29% of population to be affected by poverty.^[5] Map of countries showing percentage of population who have an income below the national poverty line The poverty line is the level of income below which one cannot afford to purchase all the resources one requires to live. ...

Maintaining a moderate inflation level is a foremost Central Bank objective. In 1996, December-to-December inflation stood at 8.2%, falling to 6.1% in 1997 and to 4.7% in 1998. The rate fell to only 2.3% during the 1999 recession. Most wage settlements and spending decisions are indexed, reducing inflation volatility (See Unidad de Fomento). The rate for 2000 was 4.75%. The establishment of a compulsory private sector pension system in 1981 was an important step toward increasing domestic savings and the pool of investment capital.^{[verification needed]} Under this system, most regular workers pay 10% of their salaries into privately managed funds. This large capital pool has been supplemented by substantial foreign investment.^{[verification needed]} The Unidad de Fomento (UF) is a Unit of account that is used in Chile. ...

Chile GDP growth since 1961.

Total public and private investment in the Chilean economy has remained high despite current economic difficulties. The government recognizes the necessity of private investment to boost worker productivity. The government also is encouraging diversification, including such non-traditional exports as fruit, wine, and fish to reduce the relative importance of basic traditional exports such as copper, timber, and other natural resources. Image File history File links Download high-resolution version (1330x926, 98 KB) Note: 2006 and 2007 data are projections and not final data. ... Image File history File links Download high-resolution version (1330x926, 98 KB) Note: 2006 and 2007 data are projections and not final data. ...

Chile's welcoming attitude toward foreign direct investment is codified in the country's Foreign Investment Law, which gives foreign investors the same treatment as Chileans. Registration is simple and transparent, and foreign investors are guaranteed access to the official foreign exchange market to repatriate their profits and capital. The Central Bank decided in May 1999 on the removal of the 1-year residency requirement on foreign capital entering Chile under Central Bank regulations, generally for portfolio investments. A modest capital control mechanism known as the "Encaje," which requires international investors to place a percentage of portfolio investment in non-interest-bearing accounts for up to 2 years, has been effectively suspended through reduction to zero of the applicable percentage; the mechanism could be resurrected depending on economic circumstances. This article is about economics. ...

Total foreign direct investment flows in 2000 contracted to $3.6 billion (3.6 G$), down from $9.2 billion in 1999, and $4.6 billion in 1998. The 2000 figure is about 13% of GDP. In 2000, Chile experienced an outflow of $1.4 billion, largely the result of diminished inward foreign investment and--for a second year running--elevated levels of Chilean direct investment abroad ($4.8 billion). One thousand million (1,000,000,000) is the natural number following 999,999,999 and preceding 1,000,000,001. ...

Foreign Trade

Chile's economy is highly dependent on international trade. In 2006, exports increased to $59.0 billion from $40.5 billion in 2005, and imports increased to $36.7 billion from $30.2 billion the previous year. Exports accounted for about 42% of GDP. Chile has traditionally been dependent upon copper exports; the state-owned firm CODELCO is the world's largest copper-producing company. Foreign private investment has developed many new mines, and the private sector now produces more copper than CODELCO. Copper output continued to increase in 2000. Non-traditional exports have grown faster than those of copper and other minerals. In 1975, non-mineral exports made up just over 30% of total exports, whereas now they account for about 60%. The most important non-mineral exports are forestry and wood products, fresh fruit and processed food, fishmeal and seafood, and other manufactured products. CODELCO (full name in Spanish: Corporación Nacional del Cobre de Chile; in English: Chilean National Copper Corporation) is a state-owned company in Chile and the worlds largest copper producer with estimated 200 years of copper reserves. ... CODELCO (full name in Spanish: Corporación Nacional del Cobre de Chile; in English: Chilean National Copper Corporation) is a state-owned company in Chile and the worlds largest copper producer with estimated 200 years of copper reserves. ... Spaghetti with seafood (Spaghetti allo scoglio). ...

Chile's export markets are fairly balanced among Europe, Asia, South America, and North America. The U.S., the largest-single market, takes in 17% of Chile's exports. Latin America has been the fastest-growing export market in recent years. The government actively seeks to promote Chile's exports globally, and since 2004 has had the US-Chile Free Trade Agreement in place. Since 1991, Chile has signed several bilateral free trade agreements, including Canada, Mexico, South Korea, USA, the People's Republic of China, the CACM nations (Costa Rica, El Salvador, Honduras, Guatemala, Nicaragua), the EFTA and the European Union and has recently entered into the Trans-Pacific Strategic Economic Partnership which is a multilateral free trade agreement with New Zealand, Singapore and Brunei. Chile has also recently signed a free trade agreement with Japan. This means that Chile has free-trade access to over half of the world's GDP. Chile intends to negotiate further agreements with countries such as India. Also, Chile is member (in different degrees) of many international economical instances, like APEC, WTO, Mercosur. Such diversity of relations prevents the Chilean economy from being exclusively dependent of any major partner and thus provides stability. For other uses, see Europe (disambiguation). ... For other uses, see Asia (disambiguation). ... South America South America is a continent crossed by the equator, with most of its area in the Southern Hemisphere. ... North American redirects here. ... For other uses of terms redirecting here, see US (disambiguation), USA (disambiguation), and United States (disambiguation) Motto In God We Trust(since 1956) (From Many, One; Latin, traditional) Anthem The Star-Spangled Banner Capital Washington, D.C. Largest city New York City National language English (de facto)1 Demonym American... The US-Chile Free Trade Agreement was signed on June 6, 2003, ratified by the U.S. House of Representatives on July 24, 2003 by a vote of 270-156, and ratified by the U.S. Senate on July 31, 2003 by a vote of 65-32. ... The Central American Common Market (abbreviated CACM - in Spanish: Mercado Común Centroamericano, abbreviated MCCA) is an economic trade organization between five nations of Central America. ... The European Free Trade Association (EFTA) was established on May 3, 1960 as an alternative for European states that were not allowed or did not wish to join the European Community (now the European Union). ... The Trans-Pacific Strategic Economic Partnership (SEP), also known as the P4 agreement, is a multilateral free trade agreement between the countries of Brunei, Chile, New Zealand and Singapore which was signed on 3 June 2005 and came into force on 1 January 2006. ... APEC may refer to: Asia-Pacific Economic Cooperation Action Programme on the Elimination of Child Labour Advanced Placement European Civilization Atlantic Provinces Economic Council This article consisting of a 4-letter acronym or initialism is a disambiguation page — a list of pages that otherwise might share the same title. ... WTO redirects here. ... Motto (Spanish) (Portuguese) (Guaraní) Our North is the South  â€¢  â€¢ Pro Tempore Secretariat Montevideo, Uruguay Largest city São Paulo, Brazil Official languages 3 Portuguese Spanish Guaraní Membership 5 Argentina Brazil Paraguay Uruguay Venezuela Leaders  -  Carlos Álvarez Establishment  -  Declaration of Foz do Iguaçu 30 December 1985   -  Treaty of Asunción...

After growing for several years, imports were down in 1998 and 1999, reflecting reduced consumer demand and deferred investment. Imports have rebounded in 2000 and are up 19% over 1999; capital goods make up about 22% of total imports. The United States is Chile's largest-single supplier, supplying 18.5% of the country's imports in 2000, down from 21% in 1999. Chile unilaterally is lowering its across-the-board import tariff--for all countries with which it does not have a trade agreement--by a percentage point each year until it reaches 6% in 2003. Higher effective tariffs are charged only on imports of wheat, wheat flour, vegetable oils, and sugar as a result of a system of import price bands.

Finance

Chile's financial sector has grown faster than other areas of the economy over the last few years; a banking law reform approved in 1997 broadened the scope of permissible foreign activity for Chilean banks. Domestically, Chileans have enjoyed the recent introduction of new financial tools such as home equity loans, currency futures and options, factoring, leasing, and debit cards.

The introduction of these new products has been accompanied by increased use of traditional instruments such as loans and credit cards. Chile's private pension system, with assets worth roughly $36 billion at the end of September 2000, has provided an important source of investment capital for the stock market.^{[verification needed]} Chile has maintained one of the best credit ratings in Latin America despite the 1999 economic slump.^[6][7] In recent years, many Chilean companies have sought to raise capital abroad due to the relatively lower interest rates outside of Chile. There are three main ways Chilean firms raise funds abroad: bank loans, issuance of bonds, and the selling of stock on U.S. markets through American Depository Receipts (ADRs). Nearly all of the funds raised go to finance investment. The government is rapidly paying down its foreign debt. The combined public and private foreign debt was roughly 50% of GDP at the end of 2000, low by Latin American standards. An American depository receipt (ADR) is how the stock of most foreign companies trades in United States stock markets. ...

Income distribution

The percent of total income earned by the richest 20% of the Chilean population is 61.0% of GDP, while the percent of total income earned by the poorest 20% of the Chilean population is 3.3% of GDP. ^[8] GDP is an acronym which can stand for more than one thing: (in economics) an abbreviation for Gross Domestic Product. ... GDP is an acronym which can stand for more than one thing: (in economics) an abbreviation for Gross Domestic Product. ...

Chile's Gini Coefficient in 2003 (53.8) has slightly changed in comparison with the value in 1995 (56.4). In 2005 the 10% poorest among the Chileans received 1.2% of GNP (2000 = 1.4%), while the 10% richest received 47% of GNP (2000 = 46%) ^[1]. Graphical representation of the Gini coefficient The Gini coefficient is a measure of inequality of income distribution or inequality of wealth distribution. ... Measures of national income and output are used in economics to estimate the value of goods and services produced in an economy. ... Measures of national income and output are used in economics to estimate the value of goods and services produced in an economy. ...

GDP by sector

Gross domestic product by sector of the economy for the year 2007.

Note: Does not include VAT taxes and import duties (ID). Includes imputaciones bancarias (IB). Total GDP = GDP - IB + VAT + ID. Source: Central Bank of Chile. A decidous beech forest in Slovenia. ... For the computer security term, see Phishing. ... This article is about mineral extractions. ... For other uses, see Copper (disambiguation). ... Manufacturing (from Latin manu factura, making by hand) is the use of tools and labor to make things for use or sale. ... The word drink is primarily a verb, meaning to ingest liquids. ... Shredded tobacco leaf for pipe smoking Tobacco can also be pressed into plugs and sliced into flakes Tobacco is an agricultural product processed from the fresh leaves of plants in the genus Nicotiana. ... For other uses, see Textile (disambiguation). ... A baby wearing many items of winter clothing: headband, cap, fur-lined coat, shawl and sweater. ... For other uses, see Wood (disambiguation). ... For the UK band, see Furniture (band). ... For other uses, see Paper (disambiguation). ... For other uses, see Print. ... A chemical substance is any material substance used in or obtained by a process in chemistry: A chemical compound is a substance consisting of two or more chemical elements that are chemically combined in fixed proportions. ... Synthetic motor oil For other uses, see Oil (disambiguation). ... This does not cite any references or sources. ... For other uses, see Plastic (disambiguation). ... A machine is any mechanical or electrical device that transmits or modifies energy to perform or assist in the performance of tasks. ... This page discusses common devices known as tools, for other meanings see Tool (disambiguation) Modern hammer A tool is, among other things, a device that provides a mechanical or mental advantage in accomplishing a task. ... Electricity (from New Latin Ä“lectricus, amberlike) is a general term for a variety of phenomena resulting from the presence and flow of electric charge. ... For other uses, see Gas (disambiguation). ... Impact from a water drop causes an upward rebound jet surrounded by circular capillary waves. ... For other uses, see Construction (disambiguation). ... Drawing of a self-service store. ... A typical restaurant in uptown Manhattan A restaurant is an establishment that serves prepared food and beverages to be consumed on the premises. ... A hotel is an establishment that provides lodging, usually on a short-term basis. ... For the movement of people or objects, see transport. ... The term communications is used in a number of disciplines: Communications, also known as communication studies is the academic discipline which studies communication, generally seen as a mixture between media studies and linguistics. ... Financial services is a term used to refer to the services provided by the finance industry. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ... Public Administration can be broadly described as the development, implementation and study of government policy. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Gold standard Fiscal policy Spending   Deficit   Debt Policy-mix Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Regulation Banking Fractional-reserve Full-reserve   Free banking Islamic... An import duty is a tariff paid at a border or port of entry to the relevant government to allow a good to pass into that governments territory. ...

See also

• Chile
• Miracle of Chile
• Economy of South America
• Economic history of Chile
• Agriculture in Chile
• Fishing in Chile

The Miracle of Chile is a phrase coined by Milton Friedman in 1982 to describe the liberal, monetarist economic reforms implemented in Chile under the government of President Augusto Pinochet. ... The economy of South America comprises about 500 million people living in 14 states and territories. ... // In colonial times, the segmentation of Chile into latifundios left only small parcels for native American and mestizo villagers to cultivate. ...

References

Bibliography

• COLLIER, Simon and Sater, William F. A History of Chile, 1808-2002, New York and London, Cambridge University Press, 2004.
• CONSTABLE, Pamela and Valenzuela, Arturo. A Nation of Enemies: Chile Under Pinochet. New York, W. W. Norton & Company, 1993.
• PALEY, Julia. Marketing Democracy: Power and Social Movements in Post-Dictatorship Chile. University of California Press, 2001
• SCHAEFER, Standard. Chile's Failed Economic Laboratory: an Interview with Michael Hudson. CounterPunch, October 20, 2003
• WINN, Peter (editor).Victims of the Chilean Miracle: Workers and Neoliberalism in the Pinochet Era, 1973-2002. Durham, NC: Duke University Press, 2004.

External links

• Invest in Chile
• Is Chile a Neoliberal Success? by economist Jim Cypher in Dollars & Sense magazine

v • d • e Economy of South America
Sovereign states	Argentina · Bolivia · Brazil · Chile · Colombia · Ecuador · Guyana · Panama* · Paraguay · Peru · Suriname · Trinidad and Tobago* · Uruguay · Venezuela Dollars & Sense is a magazine dedicated to providing left-wing perspectives on economics. ... The economy of South America comprises about 500 million people living in 14 states and territories. ... This is an alphabetical list of the sovereign states of the world, including both de jure and de facto independent states. ...
Dependencies	Aruba* (Netherlands) · Falkland Islands (UK) · French Guiana (France) · Netherlands Antilles* (Netherlands) · South Georgia and the South Sandwich Islands (UK) Image File history File links South_America. ... World map of dependent territories. ...
* Territories also in or commonly reckoned elsewhere in the Americas (North America).