CHILE: An Economic

Breakthrough
Country of study
By
ABARQUEZ
DIOKNO
 Republic of Chile
Capital: Santiago
Government: Republic
Currency: Chilean Peso
Population: 16, 601, 707 (July 2009 est)
Literacy Rate: 95.7% (2005 est)
Birth Rate: 14.64 births/1,000 population (2009 est.)
Death Rate: 5.84 deaths/1,000 population (July
2009 est.)
 Economy of Chile
• Strongest and stable economy of Latin
America
• One of the most prosperous
• Ranked 23rd in Forbes list of best countries for
business
• Market-oriented economy
• OECD member since Dec. 15 2009
  
The Economy under Allende: 1970-1973

• Unequal income distribution

• Solutions that yielded good short-term effects
but negative in the long run
• Nationalization of industries and expansionary
aggregate demand.
• 1971: wage increase, real GDP at 7.7 percent,
unemployment rate fell to 4 percent and real
wages increased by 23 percent
• By 1972, the GDP was declining and by 1973
fiscal deficit reached 30 percent due to
massive gov’t expenditure.
• Inflation reach a 600-percent annual rate
• Black markets developed and widespread
price controls and commodity rationing were
enforced
• Real wages fell 25 percent in 1972
 The Pinochet-era economic
reforms
• Liberalization of the economy to increase the
role of markets
• to return firms to private sector and
reconstructure the public sector
• stabilization of inflation and avoidance of a
balance of payments crisis.
• Tariff rate of 94 percent in 1973 to 10 percent
by 1979.
• privatized all but two dozen of Chile's 300
state-owned banks
• he had cut public spending almost in half and
public investment by nearly 14 percent.
• owered taxes, restricted union activities and
returned more than a third of the land seized
under Allende's land reform program (Jeter).
 Economic Breakthrough
• 1984: reform of the reforms
• Privatization of state enterprises, reducing
tariffs, tight fiscal and monetary policies
• Government participation
• Poverty rate dropped
• An average of 4-6 percent growth annually.
 Statistics
• GDP (Purchasing power parity): $244.3 billion
• GDP growth: -1.6% (2009)
• GDP Per Capita: $14,700 (2009)
• GDP by sector
– Agriculture: 4.8%
– Industry: 50.5%
– Services: 44.7%
• Inflation: 1.7%
• Population below poverty line: 13.7%
• Labor Force: 7.42 million
Labor Force by occupation
agriculture: 4.8%
industry: 50.5%
services: 44.7%
• Unemployment rate: 10%
 External
• Exports: $77.21 billion
• Main Export Partners: US, Japan, China,
Netherlands, South Korea, Italy, Brazil, France
• Imports: 41.8%
• Import Partners: US, Argentina, Brazil, China
• External Debt: $60.9 billion
 Public Finances
• Public Debt: 9% of GDP
• Investment: 20.5% of GDP
• Revenue: $31.31 billion
• Expenditure: $37.87 billion
GDP
GDP
GDP by Industrial Origin
Poverty
Poverty
Poverty
Poverty
 Chile Solidario
• System of protection for people and families in
extreme poverty
• Aims to help the poorest to support
themselves
• Benefits for them and education for their
children
• Access to better living conditions
• Training and grant to set up small businesses
 Chile Solidario
• 2006; 290000 families were incorporated into
the Chile Solidario Protection System
• Families in extreme poverty
• Adults (65 years old and above) that are living
alone and in conditions of poverty
• Homeless people
 Sources
• http://www.indexmundi.com/chile/gdp_real_
growth_rate.html
• http://www.hacer.org/chile
• http://www.economywatch.com/world_econo
my/chile/
• http://www.cia.gov
/library/publications/the-world-factbook/geos
/cl.html
• http://faculty.smu.edu/lmanzett/Chile%20%20
Market2%20Economy%20Washington%20Post
• http://www.economist.com/displayStory.cfm?
story_id=9645174
• http://www.scielo.cl/scielo.php?script=sci_ar
ttext&pid=S0717-68212001011400001&lng=e
s&nrm=iso&tlng=en
• Carlos Vergara, The Case of Chile