Chile, South America
Business
Economic Overview:
Chile has a market-oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Exports account for 40% of GDP, with commodities making up some three-quarters of total exports. Copper alone provides one-third of government revenue. During the early 1990s, Chile's reputation as a role model for economic reform was strengthened when the democratic government of Patricio AYLWIN - which took over from the military in 1990 - deepened the economic reform initiated by the military government. Growth in real GDP averaged 8% during 1991-97, but fell to half that level in 1998 because of tight monetary policies implemented to keep the current account deficit in check and because of lower export earnings - the latter a product of the global financial crisis. A severe drought exacerbated the situation in 1999, reducing crop yields and causing hydroelectric shortfalls and electricity rationing, and Chile experienced negative economic growth for the first time in more than 15 years. In the years since then, growth has averaged 4% per year. 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. Chile claims to have more bilateral or regional trade agreements than any other country. It has 57 such agreements (not all of them full free trade agreements), including with the European Union, Mercosur, China, India, South Korea, and Mexico. Over the past five years, foreign direct investment inflows have quadrupled to some $17 billion in 2008. The Chilean government conducts a rule-based countercyclical fiscal policy, accumulating surpluses in sovereign wealth funds during periods of high copper prices and economic growth, and allowing deficit spending only during periods of low copper prices and growth. As of September 2008, those sovereign wealth funds - kept mostly outside the country and separate from Central Bank reserves - amounted to more than $20 billion.
— CIA World Factbook
Latin America poised for quick exit from crisis: IDB
VINA DEL MAR, Chile (AFP)
Latin America and the Caribbean are well placed to emerge from the storm buffeting much of the global economy, multilateral lenders said here Friday while meeting with regional ministers.
The finance ministers gathered at Vina del Mar in Chile agreed to seek "a more active role from multilateral lending institutions" for the crisis but also for after the crisis, said Chilean Minister Andres Velasco. Velasco cited a World Bank report that estimated a financing shortfall of 350 to 635 billion dollars per year for emerging countries, of which Latin America accounted for 115 to 180 billion.
The Inter-American Development Bank (IDB) meanwhile said it would increase its capital base by 6 billion dollars to help Latin America and the Caribbean tackle the global financial crisis. The funds came from Canada's offer to increase to 4 billion dollars its contribution to the regional lender, the bank said in a statement. Two more billion dollars would come from a change in an internal norm at the bank that had limited the amount of the loans depending on contributing countries.
Another priority identified by the ministers meeting in Chile was better integrating the continent, its infrastructure and its transportation, Velasco said. >>> Go to Full Story >>>
A Blow to Free Competition in the Chilean Pharmaceutical Industry
From Universia Knowledge@ Wharton
The pharmaceutical sector in Chile has played a major role in a questionable chapter of the country’s history ever since March, when the Court of Free Competition (TDLC) accused the Ahumada, Cruz Verde and Salcobrand pharmacy chains – which together have 92% share of the market – of colluding to raise the prices of 222 critical medications between December 2007 and April 2009.
Beyond the impact on the companies involved, there is another issue: Chilean consumers are now wondering why the principle of free competition has failed in a market that was supposedly regulated.... >>>>Go to Full Story >>>