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State of Chile : in the eyes of the world. MacroEconomic , Political and Social Performance Up date August 2005 UTEM – DICOEX Project UTEM The State Technological University of Chile DICOEX The foreign Office of Chile /Chilean communities around the world.

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State of chile in the eyes of the world

State of Chile :in the eyes of the world

MacroEconomic , Political and Social Performance

Up date August 2005


UTEM The State Technological University of Chile

DICOEX The foreign Office of Chile /Chilean communities around the world

First approach contents
First Approach Contents

  • Presentation

  • Background and Geographic Position

  • Political System

  • MacroEconomic Performance

  • International Integration

  • Equality and Social Cohesion

  • Conclusion and Recommendation

State of chile in the eyes of the world

  • Background

    Sept 18 .1810 Independence .

    Bernardo O´Higgins Father of the Country

State of chile in the eyes of the world

Basic facts
Basic Facts

  • Population: 15.6 million

  • Population growth rate: 1.2%

  • Population density: 20.1 inhabitants / km2

  • Life expectancy: 76.7 years

  • Per capita income (nominal) 2005: US$ 5,741

  • Per capita income (at PPP*) 2005: US$10,981

  • Language: Spanish . Second language : English

Source: National Census 2002 (; Central Bank of Chile

( ); IMF ( )

*Purchasing power parity

State of chile in the eyes of the world

Political System

Republic of Chile is a

Democratic Regime

Divided into three independent

political powers

State of chile in the eyes of the world

Political System

The Chilean State is divided into three clearly differentiated and independent powers:

  • The Executive, headed by the country’s highest authority, the President of the Republic

  • The Judiciary, within which the highest court is the Supreme Court

  • The Legislature, comprising the House of Deputies and the Senate

Political system executive branch
Political SystemExecutive Branch

  • Chile has a presidential system of government in which Executive authority is held by the President, who acts as Head of State and Head of Government

  • The President holds office for six years ( since 2006 will be 4 years ) and cannot be re-elected for a second consecutive term .

  • There are 18 ministries

  • Chile’s current President is Ricardo Lagos, a member of the Concertación de Partidos por la Democracia, a center-left coalition

Political system legislative branch
Political SystemLegislative Branch

  • The Legislative Branch is represented by the National Congress, comprising the House of Deputies (120 members) and the Senate (49 members), with legislative and supervisory powers

Political system judicial branch
Political SystemJudicial Branch

  • The Judiciary is independent of the other powers of state. The highest court is the Supreme Court, with 21 members who, each three years, elect their President. In addition, there are Appeals Courts and Civil and Military Courts

  • A far-reaching reform of Chile’s system of justice was launched in 2000. This reform -the first structural modification of the system since the mid-19th century- aims to increase access to justice and to reduce trial times, as well as strengthening personal and civil liberties

Political system main characteristics
Political SystemMain Characteristics

  • Democratic institutions that function properly; total respect for civil and human rights

  • Firmly-rooted political stability, with strong institutions and a high level of transparency

  • An independent and efficient Judicial System

  • Modernization of the State underway through reforms that increase the efficiency of the public administration and ensure transparent government

State of chile in the eyes of the world

GDP by Sectors

Economic Strategic

GDP 1990 2004

GDP % Growth

Fiscal Surplus



External Debt


Economic Freedom


Sovereign Spread

Business Climate

Gdp by sector 2003

Electricity, gas & water

Personal services





Transport & telecommunications

Home ownership



Agriculture & forestry

Financial and



business services



Retail, restaurants

& hotels









GDP by Sector, 2003 (%)

Source: Central Bank of Chile ( )

In 2003, GDP totaled

US$71.4 billion, or

US$154.7 billion in PPP

Pillars of chile s economic strategy

Macroeconomic stability and a low country risk

Full operation of markets, accompanied by the regulation required to ensure their efficiency

Openness to trade and international investment

Wide range of social policies to promote equality and social cohesion

Pillars of Chile’s Economic Strategy

Gross domestic product gdp
Gross Domestic Product (GDP)

Source: Central Bank of Chile (thousands of 1996 pesos), 1996-2003,

Gdp average annual growth rate selected countries
GDP Average Annual Growth Rate (Selected Countries)

Source: International Monetary Fund, 1990 – 2004 (

Fiscal surplus deficit of gdp


Fiscal Surplus / Deficit (% of GDP)

Source: Central Bank of Chile , 1994 – 2003 ( )

Evolution of inflation in chile
Evolution of Inflation in Chile (%)

Source: Central Bank of Chile , 1994 – 2004 (,

Unemployment rate
Unemployment Rate (%)

Source: National Statistics Bureau, INE, 1996-2003 ( International Monetary Fund, 2004-2005 (

Competitiveness ranking
Competitiveness Ranking

Source: World Economic Forum, 2004 – 2005 (

Index of economic freedom
Index of Economic Freedom

Source: Heritage Foundation, 2005. Top 20 positions. (


Source: Transparency International, 2003 (

Business climate
Business Climate

Source: Economist Inteligence Unit, 2004-2008 (

State of chile in the eyes of the world



Free Trade Agreements

International integration

Trade Policy

  • Unilateral

  • Multilateral

  • Bilateral and Regional

    Foreign Investment

International integration unilateral trade policy
International IntegrationUnilateral Trade Policy

  • A flat-rate import tariff of 6%

  • Procedures for foreign trade that are simple, transparent and permanently being modernized

Chile’s Flat-Rate Import Duty

International integration multilateral trade policy
International IntegrationMultilateral Trade Policy

  • Chile participates actively in the multilateral trading system and was a founding member of GATT and the WTO

  • Multilateral trade agreements are integrated into Chilean legislation and have legal status

International integration bilateral and regional trade policy
International IntegrationBilateral and Regional Trade Policy

Agreements in force

  • ECAs with Mercosur and the Andean Community countries;

  • FTAs with Canada, Mexico, Central America, the European Union, South Korea, the United States and EFTA

    Agreements under negotiation

  • FTAA, New Zealand-Singapore (P3), India, and China

  • Preliminary study for a possible agreement with Japan

    Other fora: APEC, Observer status at the OECD

International integration bilateral and regional trade policy1
International IntegrationBilateral and Regional Trade Policy

  • The international insertion achieved through bilateral trade negotiations means that companies based in Chile have preferential access to a potential market of 1.2 billion consumers (80 times the country’s population), representing a GDP of US$ 22,149,200 million, equivalent to 270 times Chile’s annual output

  • In addition, 74% of Chile’s foreign trade (exports + imports) is covered by tariff reduction programs

  • Chile’s extensive network of trade agreements puts it in a privileged position to serve as a platform from which to access this large potential market

Chile s foreign trade 1991 2003 us million
Chile’s Foreign Trade1991-2003 (US$ million)

Source: Central Bank of Chile, 1991-2003 (

Exports of goods
Exports of Goods

Source: Central Bank of Chile, 2003 (

Exports of goods by market 2003
Exports of Goods by Market, 2003

Exports that are ever more diversified…

  6,024 companies (up from 200 in 1975) export 3,854 products (200 in 1975) to 165 countries (50 in 1975)

Foreign investment


Foreign Investment

More than 3,000 companies from 60 countries have invested over US$ 64 billion in Chile. Between 1996 and 2003, annual foreign investment averaged 7.3% of GDP

Nominal US$ billion

Includes DL600, Chapters XIV and XIX

Materialized foreign investment by country of origin
Materialized Foreign Investment by Country of Origin

Source: Foreign Investment Committee, 1974-2003, (

Foreign investment by sector
Foreign Investment by Sector

Source: Foreign Investment Committee, 1974-2003 (

State of chile in the eyes of the world

Chile, A Platform for New Markets

  • Chile’s Investment Platform Law (Law Nº 19.840) allows foreign investors to set up companies as a vehicle for investments in other countries, without being liable to Chilean taxation on returns from these investments

  • By mid-2004, around 40 multinational companies with a leading position in international markets had selected Chile as a location for call centers, technological support centers, back and front office operations, shared services centers, software development, and regional headquarters

State of chile in the eyes of the world

Equality and Social Cohesion


The main problem to

solve in CHILE : Decrease The

GINI INDEX from 0.57

( similar Africa) to 0.50 ( similar LatinAmerica)

State of chile in the eyes of the world

Social Concerns

  • Along with economic growth and modernization, Chile has also achieved important progress in building a country of greater fairness, solidarity, and equality of opportunity

  • This has been achieved through an extensive and efficient social protection network

  • Since 1990, improved access and greater efficiency in educational and healthcare programs have been key priorities for the government, along with programs to combat poverty

State of chile in the eyes of the world


Public expenditure on education increased from 2.4% of GDP in 1990 to 4.3% in 2002 and this has, among other advances, allowed Chile to:

  • double the number of young people receiving secondary education

  • triple the number of university students

  • start introducing a full school day in state schools as from 1997 (a process that the government aims to complete in 2006)

State of chile in the eyes of the world


  • Chile’s healthcare system combines an integrated public system with a private insurer/provider system created in 1981, and both the State and the private sector participate in providing insurance and healthcare services

  • Public health expenditure represented 2.9% of GDP in 2002, up from 1.9% in 1990

  • In 2004, a new universal health insurance plan -known as Plan Auge- was launched in a bid to ensure that all the country’s citizens have timely and effective access to medical care, independently of their financial situation, gender or age

State of chile in the eyes of the world


  • Free-choice pension and health insurance

  • Minimum wage established by law

  • Introduction in 2002 of an unemployment insurance scheme, providing basic coverage for five months

  • Reduction of the legal working week from 48 to 45 hours as from January 2005

State of chile in the eyes of the world

Chile Solidario

  • This program aims to lift the country’s 225,000 poorest families out of extreme poverty by 2005

  • It provides integral support to these families by creating a network of public services and programs that are tailored to their needs; it seeks to insert them in this national, regional and local network and to ensure that they access all the direct financial benefits to which they are entitled under the program

State of chile in the eyes of the world

ResultsBetter living standards (% of population)

State of chile in the eyes of the world

ResultsReduction of Poverty(% of population)

State of chile in the eyes of the world

Conclusion and RecommendationChile is 52 pts country risk , it means the better opportunity to make partners