Business in Chile Santiago. Foreign trade. Economy

Course summary (Doing business in Chile):

Chilean economy. Economic profile of the regions of Chile. Business in Santiago. Foreign direct investment.

Since 1990, Chile has implemented public policies to foster and consolidate serious and responsible macroeconomic management, greater economic openness and international integration, solid institutions and a fairer society in which all citizens can enjoy the benefits of economic development.

Economic growth has been accompanied by a sharp drop in public debt, the stabilization of the country’s external accounts and an increase in its international reserves. Chile has, in other words, given clear proof of its commitment to serious and responsible economic management.

These attractive advantages are further reinforced by the existence of an open economy that has meant greater competitiveness, growing international trade and rapid integration into world markets. In addition, Chile’s modern telecommunications systems, its well-capitalized and internationally competitive banking sector, its world-class public infrastructure, its high-quality services and the ready availability of skilled workers are key factors that cause a favorable impression among foreign investors.

The Chilean economy is widely renowned for its track record of sustained growth. Between 1990 and 2008, it expanded at an average annual rate of 5.8% and, according to the International Monetary Fund (IMF), was among the world's thirty most dynamic economy. The Central Bank of Chile estimates that, in 2008, GDP at current prices reached US$169.5 billion, up from US$31.5 billion in 1990. Between 1990 and 2008, per capita income measured in terms of purchasing power parity (PPP) trebled to US$14,688.

Annual average growth reached 7.2% between 1990 and 1998. This strong performance was temporarily interrupted in 1999 when activity contracted by 0.7%, following the Asian financial crisis and a sharp drop in the price of copper, Chile's main export. However, the contraction was short-lived and, in 2000, GDP expanded by 4.5%. Between 2001 and 2007, the economy expanded at an average annual rate of 4.3% before dropping to 3.2% in 2008.

In 2008, financial and business services comprised Chile's most important economic sector, accounting for 16.8% of GDP, followed by manufacturing (15.8%), personal services (10.8%), retail, restaurants and hotels (10.5%), transport and communications (10.1%), construction (7.5%) and mining (6.7%).

Free-market policies and export-led growth have shaped Chile into a highly competitive economy and this is regularly highlighted in rankings published by independent international organizations.

In the 2008-2009 Global Competitiveness index (GCI), released by the World Economic Forum (WEF) in October 2008, Chile took 28th position out of 134 economies, ranking ahead of countries that include Spain (29th), the Czech Republic (33rd), Mexico (60th) and Peru (83rd).

Chile's low level of public debt, its sound macroeconomic policies, the integrity of its institutions and the health of its financial system give it high foreign-currency sovereign ratings. According to the Risk Ranking, published by the Economist Intelligence Unit (EIU) in March 2009, Chile is one of the world's lowest-risk countries. The EIU's country-risk ratings, which cover 120 economies, take account of indicators of political, regulatory, tax, labor and macroeconomic stability and other measures of creditworthiness.

In Transparency International's 2008 Corruption perceptions index, released in September 2008, Chile obtained a score of 6.9 on a scale from 0 (highly corrupt) to 10 (highly clean). This gave Chile 23rd place in the index of 180 countries, tying with Uruguay as the best-ranked Latin American country.

Foreign direct investment in Chile (FDI)
Over the past quarter of a century, foreign direct investment (FDI) has played a decisive role in Chile’s economic growth and development. Incoming FDI has maintained an upward trend, helping to increase Chile’s competitiveness through not only resources and new markets but also technological development and specialized know-how. Chile has achieved widespread international recognition for its success in attracting FDI.

According to the 2008 World Investment report, published by the United Nations Conference on Trade and Development (UNCTAD), Chile holds third place among the ten most successful Latin American and Caribbean countries in attracting Foreign direct investment (FDI).

The study reported that, in 2007, Chile attracted FDI worth US$14,457 million, ranking immediately after the much larger Brazilian and Mexican economies, with US$34,585 million and US$24,686 million, respectively. Chile was followed by the Cayman Islands (US$11,743 million), Colombia (US$9,028 million) and Argentina (US$5,720 million).

According to the study, Latin America received total FDI of US$126,266 million in 2007, representing an increase of 36% on the previous year. UNCTAD also anticipated a further increase in 2008, principally in South America, due to the impact of high commodity prices and the region's solid growth on the earnings of multinational companies.

International Economic Relations. Chile is member of: Asia-Pacific Economic Cooperation (APEC), Union of South American Nations (UNASUR), Latin American Integration Association (ALADI), Latin American and Caribbean economic System (SELA), TPP Trans-Pacific Strategic Economic Partnership Agreement, Economic Commission for Latin America (ECLAC), Inter-American Development Bank (IDB), Pacific Economic Cooperation Council (PECC), Forum for East Asia-Latin America Cooperation (FEALAC), Summit of South American Arab Countries (ASPA), Organization of American States (OEA). MERCOSUR (Associate), Andean Community (CAN) (Partner Country)

Chile has bilateral Free Trade Agreements FTAFTA's of Chile: China, India, United States, European Union, Panama, Canada, Mexico, South Korea, Central America, EFTA, Australia, Peru. Andean Community - Chile.

- Economic Partnership Agreements (EPAs): European Union (EU), Japan and P4 (New Zealand, Singapore, Brunei Darussalam).
- Economic Complementation Agreement (ACE): Bolivia, Colombia, Ecuador, MERCOSUR and Venezuela.
- Partial Scope Agreements: Cuba.

Chile has borders with Peru (160 kms, Concordia Line), Argentina and Bolivia. Chile has an estimated population of 17,094,275 inhabitants by 2010.

Source: Foreign Investment Committee - Santiago - Chile

Business, Chile, Santiago, foreign trade, Economy, Chilean economy, Economic, profile, regions of Chile, foreign, Direct, Investment,