The Economy of Chile

Chile has a market-oriented economy characterized by a high level of foreign trade. Between the 1930s and the early 1970s, the Chilean economy was one of the most state oriented economies in Latin America. In 1970 Chile exported US$33 million in agricultural, forestry, and fishing products; by 1991 the total had jumped to US$1.2 billion. Much of the increased agricultural production in the country was the result of rapidly improving yields and higher productivity, spurred by an export-oriented policy. In early 1994, Chile had the strongest economic structure in Latin America and, in large part because of the military government's reforms.

Between 2000 and 2007 growth ranged between 2%-6%. Throughout these years, Chile maintained a low rate of inflation 6.5% with an estimated GDP of $234.4 billion growth coming from high copper prices, solid export earnings, and growing domestic consumption. The country’s labor force is around 6.97 million. Unemployment has exhibited a downward trend over the past two years, dropping to 6.7% at the end of 2007. Its currency is Chilean peso (CLP) and has an exchange rate which is around 526.25 per dollar.

In 2006, President Bachelet established an Economic and Social Stabilization Fund to hold excess copper revenues so that social spending can be maintained during periods of copper shortfalls. This fund surpassed $20 billion by the end of 2007. Chile continues to attract foreign direct investment, but most foreign investment goes into gas, water, electricity and mining. Chile deepened its longstanding commitment to trade liberalization with the signing of a free trade agreement with the US, which took effect on 1 January 2004.