Chile is a South American country located south of Peru and west of Bolivia and Argentina. The South American country boasts of a fertile arable land (found in the central part of the country) that is suitable for agricultural activities. In fact, this is the main reason why the Spanish colonialists invaded and colonized the country in spite of the fact that they were unable to trace the precious metals (silver and gold) they were looking for.
We will write a custom Essay on Economy of Chile specifically for you
301 certified writers online
The main language spoken in Chile is Spanish as a result of the influence of the Spanish colonialists. Nonetheless, Chile attained independence from Spain in 1818 under the stewardship of Jose de San Martin and Bernardo O’Higgins (CIA Factbook 1).
According to World Bank Report, the economy of Chile is ranked among the best economies in the South American region. Chile leads other South American countries in terms of per capita income, human development index, economic freedom, globalization, competitiveness as well as low incidences of corruption. Nonetheless, according to Gini index, economic disparity is quite prevalent in the country (Eira1).
According to the 2009-2010 Global Competitive Report, Chile was ranked as the 30th most competitive nation in the world-surpassing Argentina (85th), Brazil (56th) and Mexico (60th). In addition, the country is ranked 43rd by the World Bank in terms of the ease of doing business index.
This index is computed by assessing the conduciveness of doing business in a country and includes several factors such as efficient and simpler business regulations that attract both domestic and foreign investments. It is worthy to note that Chile has been credited for introducing privatized national pension system that has promoted domestic investments. This has seen the aggregate domestic rate rise to about 21% of the country’s gross domestic product (Eiras 3).
There is no doubt that the robust economic growth (approximately 4% growth per annual) in Chile is largely attributed to sound economic policies that were introduced by the military regime. Chile is a market-oriented economy characterized by strong efficient financial institutions and high volume of foreign trade.
The sound economic policies adopted by Chile has enabled the Latin American country to achieve remarkable and sustained economic growth in all seasons. For example, the volume of exports from Chile (mainly commodities) accounts for more than 25% of the country’s GDP. For example, the copper industry accounts for approximately 30% of the total tax collected by the government (CIA Factbook 3).
In addition, the country has established good bilateral trade agreements with the EU as well as other countries such as South Korea, Mexico, China and India. According to some financial specialists, the country’s foreign direct investments rose by $15 billion in 2010. This is a clear indication that foreign investors are attracted by an enabling business environment in the country (Eiras 6)
Chile has also introduced several austere policies to reduce unemployment rates and poverty levels in the country. It is worthy to note that the unemployment rate was about 7% during the 1990s. It rose to about 8.5% in 1999 when economic slowdown set in.
Following the introduction of sound economic policies, unemployment rate eventually dropped to 6.8% in 2007. This was mainly attributed to increased levels of productivity in the economy which saw wages rising faster than inflation rate. As a result of this, the poverty levels dropped significantly.
Nonetheless, some critics argue that the Chilean government has not done enough to reduce income disparity. They also contend that the government has not addressed problems in the energy sector in order to produce sufficient power to meet the consumption requirements of the economy (Turner 8).
CIA Factbook. Chile, South America: The World Factbook. Nov 15, 2011. Web.
Eiras, I. Ana. Chile: Ten Steps for Abandoning Aid Dependency for Prosperity. Dec 4, 2009. Web.
Tuner, Mark. Facing a Severe Energy Crisis: Chile Economic Monitor. Feb 12, 2008. Web.