Economy of Chile

Chile
World economic rank	42nd (nominal) 44th (PPP)
currency	Chilean Peso (CLP)
Trade organizations	WTO , APEC
Key figures
Gross domestic product (GDP)	$ 277.0 billion (nominal) (2017) $ 451.1 billion ( PPP ) (2017)
GDP per capita	$ 15,070 (nominal) (2017) $ 24,537 (PPP) (2017)
GDP by economic sector	Agriculture : 4.4% Industry : 31.4% Services : 64.3% (2017)
growth	▲ 1.4% (2017)
inflation rate	2.2% (2017)
Gini index	50.5 (2013)
Employed	8.881 million (2017)
Employed persons by economic sector	Agriculture : 9.2% (2013) Industry : 23.7% (2013) Services : 67.1% (2013)
Unemployment rate	7.0% (2017)
Foreign trade
export	64.51 billion (2017)
Export goods	Copper, agricultural goods, chemicals
Export partner	China : 28.6% USA : 14.1% Japan : 8.6% South Korea : 6.9% Brazil : 5.0% (2016)
import	59.92 billion (2017)
Import goods	Machines, electronics, automobiles, petroleum
Import partner	China : 24.3% USA : 14.7% Brazil : 9.3% Argentina : 4.4% France : 4.2% (2016)
Foreign trade balance	4.50 billion (2017)
public finances
Public debt	25.2% of GDP (2017)
Government revenue	$ 56.73 billion (2017)
Government spending	$ 64.89 billion (2017)
Budget balance	−3.1% of GDP (2017)

Chuquicamata , the largest open pit copper mine in the world

Copper, the most important export

In terms of per capita income in US dollars , Chile is the richest country in Latin America. In terms of per capita income in purchasing power parities , Chile ranks second in Latin America with around US $ 24,500 per capita; so it is about a third of the German . The economic system is oriented towards the market economy : Most areas have been liberalized and privatized, the state quota is 22%, less than half of the state quota in Germany and also significantly less than that of the USA .

Chile is the country with the highest exports in South America. Exports make up around a third of GDP , which roughly corresponds to the German export quota . The main exports are raw materials, primarily copper and agricultural products such as wine , wood and fishery products . The country has the largest known copper deposits in the world (approx. 40%) and is the world's largest copper exporter. In 2008, copper revenues contributed 25% of government revenue, 17.5% of GDP and 59% of exports. After Norway, Chile is now the second largest salmon producer in the world.

Chile is a member of APEC (Asia Pacific Economic Cooperation), an associate member of Mercosur and, since May 2010, a member of the OECD .

Macroeconomic data

When raw material prices collapsed in the wake of the Asian crisis and the Brazilian crisis in 1998, Chile also fell into recession . After the copper price increased by 275% from 1999 to the end of 2005 (from 0.74 US dollars to 2.02 US dollars per English pound of fine copper), the economy in Chile is growing stronger again. Real GDP growth amounted to 4.2% in 2006, in 2007: 5.1%. In the course of the international financial crisis from 2007 onwards , real GDP growth fell to 3.5% in 2008. The inflation rate was 7.1% in 2008 and the unemployment rate at the end of 2008 was 7.5%. The total public debt is 4% of GDP.

A comparison of four major macroeconomic indicators for South American countries. Status: 2017.

country	GDP ($) per inhabitant purchasing power parity	Economic growth (%)	Public debt% of GDP	Exports in billions of dollars
Argentina	20,876	2.86	54	72.6
Bolivia	7,547	4.20	51	9.1
Brazil	15,602	0.98	84	251.7
Chile	24,537	1.49	24	79.3
Ecuador	11,482	3.00	45	21.9
Colombia	14,485	1.77	49	47.8
Paraguay	9,826	0.77	26th	12.8
Peru	13,334	2.53	26th	51.9
Uruguay	22,371	2.66	66	16.2
Venezuela	12.114	−12.00	60	...
For comparison: Mexico	19.903	2.04	54	437.0
For comparison: Germany	50,425	2.22	64	1,742.9

Sectors

Agriculture generates 4% of GDP, industry 31% and the service sector 67%.

Agriculture

Not even usable for sheep breeding: Patagonia

Only about 7% of the land area is used for agriculture, of which only 3% is used for arable farming and the rest for mostly extensive pasture management and forestry plantations. Intensive agriculture is mainly practiced in the central valley. In northern Chile, agriculture in the desert area is often limited to oases. Livestock farming is mainly located in central Chile and the northern part of southern Chile. Around two thirds of the area used for arable farming is used for the staple foods wheat , maize and potatoes .

The country was still an agricultural exporter at the beginning of the 20th century, but from the 1960s onwards, due to the neglect of agriculture in the development model of import-substituting industrialization (ISI), food had to be imported on a large scale.

Extensive agricultural reforms were carried out under Frei and Allende , during which 40% of the cultivated area was redistributed and the previous owners were compensated. All large landowners from 80 "unit hectares" were expropriated (to take account of the quality of the soil, all land was converted to this equivalent unit). While Frei also pushed ahead with agricultural modernization by providing financial support to efficient large farms, Allende tightened expropriation and tried to redistribute all large estates in the country. Most of the haciendas were converted into cooperatives ( asentamientos ) and supported by the agricultural authority CORA. Monthly support paid by the CORA ( anticipio ), low state-set prices and at the same time a flourishing black market set false incentives, so that most of the asentamientos worked very uneconomically.

Pinochet gave back 29% of the expropriated land and stopped growing co-operatives, but most of the land that had been distributed was not returned. Part of the cooperative land was sold to the asentados as small parcelas of 5 to 20 hectares, which they often resold. That is why there is still a large sector of medium-sized farms (20-100 ha) in Chile. Under the dictatorship and further pursued by the Concertación governments, agriculture was modernized and today makes a significant contribution to exports and labor supply (20% of the workforce). Due to the release of prices and the opening to the world market, the production of staple foods continued to decline under Pinochet until it reached its lowest point in the entire 20th century in the 1982/83 crisis and has since increased sharply.

Since the 1970s, the agricultural sector has been undergoing radical structural change in three dimensions:

• Technology and the use of capital ensure that, despite the decline in the built-up area, the yield continues to grow.
• The world market orientation caused an export boom: under the dictatorship, agricultural exports increased twentyfold and since then have increased eightfold.
• Instead of staple foods, more and more fruit, wine and vegetables are being grown in the central valley, and more and more forestry is being practiced in the south.

Based on the forestry in Chile are giant planted forests from pine ( Pinus radiata , Monterey pine) and eucalyptus . In the 1970s and 1980s, 80,000 hectares were replanted annually (almost the size of Berlin).

Chile is the fourth largest fishing nation in the world and, alongside Norway, one of the largest producers of salmon .

Chile mainly exports wood products (wood, paper, cellulose), fishery products (fish meal, salmon), fruits (apples, grapes) and wine and can provide itself with the most important foods.

Mining

Chuquicamata

With 27% of global production, Chile is the largest copper producer and the largest copper exporter in the world, ahead of Indonesia and the USA . With 40% of the world's reserves, the country also has by far the largest deposits of the metal. Chile has the world's largest copper mines , Chuquicamata (above ground) and El Teniente (below ground). The production of the state group CODELCO accounts for almost a third of the total Chilean production.

Until the 1950s, US companies in particular owned the copper mines . The most important were Anaconda and Kennecott . For example, although the Chilean activities only claimed 16% of Anaconda's capital, 80% of the foreign profits were generated here. However, little was invested. As a result, Chile's world market share in the copper trade fell from 19% in the 1940s to 13% in 1966. Eduardo Frei Montalva negotiated with the companies in 1965 a 51% stake by the state ("Chileanization") and the option of a complete takeover. Since all investments were now borne by the government, but a large part of the profits continued to benefit the corporations, the Christian Democrats also demanded complete nationalization as early as 1969. In June 1971, the parliament under Allende's UP government unanimously decided on nationalization. The firms should be compensated, but with the deduction of the excessive (i.e., higher than the US yield level) profits of the past 25 years. The Supreme Audit Office calculated corporate debts of 400 million US dollars to the Chilean state.

Despite difficulties after the nationalization (shortage of spare parts, purchase boycott by the USA, lack of investments in recent years, 25% price drop on the world market by 1972), the military dictatorship maintained the nationalization of the CODELCO mines, but enabled the private exploitation of new locations. Since 1958, the Chilean military has received 10% of the profits from copper exports directly (i.e. without the possibility of parliamentary influence).

In addition to copper, iron ore is also mined on a much smaller scale in Chile . One of the largest gold mines in the world is currently being planned with the Pascua Lama project , for which entire glaciers are to be relocated.

Industry

After beginnings in the 19th century, in the course of import-substituting industrialization (ISI), the rise of a dynamic secondary sector began in Chile in the 1930s, which, with a share of almost 30% of GDP, reached the height of its importance in the 1960s. In 1939, the Corporación de Fomento de la Producción (CORFO) was founded as the planning authority . By 1970 the share of the state in all investments rose to 70%. Until the 1950s, domestic demand for short-lived consumer goods (food, shoes, textiles, wood products) was largely covered. Due to the small market (nine million inhabitants), the ISI soon reached its limits.

In 1970 Allende began to gradually transform industry towards a socialist one . In the face of massive opposition from the political opposition and entrepreneurs, and accepting a radical polarization of politics, he began nationalizing consumer goods industries. Banks were nationalized by the government buying up their stocks.

Pinochet's dictatorship began with a strict austerity policy , which, although it could not bring inflation below 300%, led to a 27% decline in industrial production. The reason was the opening of the markets (all tariffs immediately reduced to 10%) and thus an end to the industries previously supported by the ISI. Even regular devaluations could not stop deindustrialization. Only after the miracle of Chile - the boom phase from 1977 to 1980 - was the production level reached again under Allende. The fixing of the peso to the US dollar in 1979 (ratio 39: 1) - still to fight inflation - massively appreciated the currency in real terms (inflation rate was still around 20%) and a second wave of factory deaths began: industrial production fell 1982 alone by 21%. In terms of GDP, the weight of the secondary sector fell from 30% in 1974 to 19% in the 1980s. Industry only recovered substantially under the democratic governments and now accounts for 34% of GDP. However, the foundations were laid by a less ideological economic policy from 1985 under Finance Minister Hernán Büchi : The protective tariffs that were quickly introduced (up to 35%) were only gradually reduced and exports actively promoted (export promotion agencies).

In the course of the reprivatisation of the companies nationalized by Allende, corporations emerged which together controlled the banking market and controlled two thirds of the 250 largest private companies through equity investments. After massive state intervention in the course of the 1982/83 crisis (in which the state took on private speculative debts), the companies were privatized again in the early 1980s. In addition, in the second half of the 1980s, a number of state-owned companies that belonged to CORFO were privatized, opening the wave of privatizations in developing and emerging countries that continues to this day. In relation to the size of the country, about twice as much was privatized as in Great Britain under Margaret Thatcher . Often the companies were sold far below their value in the opaque privatizations - most of them were only slightly indebted and generated high profits.

Foreign trade

Chile's economy depends heavily on exports. In 2004 the export share was 34% of the gross national product, which roughly corresponds to the quota for Germany . Copper exports are particularly important for the Chilean economy . With the sharp rise in raw material prices, exports exploded from 20.4 (2003), 32.1 (2004) to 39.4 billion US dollars (2005). In 2005 goods were imported for around 33.1 billion US dollars. For 2006, exports were forecast to be worth $ 53.9 billion.

Products

Primarily raw materials and only little processed products, so-called primary goods-based products, are exported. In addition to copper, these are mainly wine and fruit, salmon and fish meal , wood, paper and cellulose and methanol . Until the mid-1970s, about three quarters of the export consisted of copper. Increasingly since the mid-1980s, non-traditional raw materials and raw material-related products can be successfully sold on the world market. The export of wine and salmon has increased roughly tenfold over the past 13 years, that of paper and cellulose has quadrupled, and that of fruit has more than doubled. Due to the recent extreme increase in the price of copper, their share of total exports has decreased somewhat in recent years, despite progressive absolute growth.

Share of the most important products in total exports in percent. Source: IHK Pfalz
	1991	1996	2000	2003	2004	2005	2006
Total value in billion US $	8.9	15.4	19.2	21.5	32	40	58.1
copper	40.5	39.1	37.9	36.1	44.8
fruit	11.0	8.2	9.3	8.3	6.3
Cellulose & paper	5.0	6.5	6.4	5.7	5.1
salmon	1.5	2.6	4.9	5.3	4.4
Wine	1.0	1.9	3.0	3.1	2.6
Methanol	0.9	0.6	1.7	2.0	1.6
Fish meal	5.2	3.9	1.2	1.7	1.1
Consumer goods	13.1	21.7	16.0	14.1	12.4
Capital goods	20.8	31.1	17.9	16.4	14.6

Mining

While until the 1870s Great Depression saltpeter almost made up the total export, dominated since copper. In the last years of the 1930s, Chile was able to diversify its exports significantly. However, the share of copper increased in favor of other raw materials. Industrial products, even with a low level of technology, are hardly exported to this day (2004). One of the largest gold mines in the world is currently being planned with the Pascua Lama project, so that exports should be further differentiated within the sector.

Share of saltpetre and copper in total exports in percent. Source: Handbook of the 3rd World: 299; Thorp (1998): 347 and others. Data is not always consistent.
	1900	1910	1920	1930	1940	1950	1960	1970	1980	1990	1991	1993	1996	2000	2003	2004
Saltpetre	65	67	54	43	19th	22nd
copper	14th	7th	12	37	57	52	87/67	86/79	59/46	55/46	40	43	39	38	36	45

The countries with the largest copper production (2002)
Source: Handelsblatt Die Welt in Figures (2005)

rank	country	Delivery rates  (in thousand t )	rank	country	Delivery rates  (in thousand t)
1	Chile	4,620	11	Zambia	336
2	Indonesia	1,167	12	Mexico	315
3	United States	1,140	13	Argentina	218
4th	Australia	876	14th	Papua New Guinea	211
5	Russian Federation	844	15th	South Africa	130
6th	Peru	843	16	Mongolia	120
7th	Canada	577	17th	Bulgaria	108
8th	Poland	572	18th	India	79
9	China	554	19th	Portugal	77
10	Kazakhstan	432	20th	Sweden	72

See also: Chuquicamata , CODELCO

Timber industry

Main article forestry in Chile

In addition to natural wood , the most important products in this area are wood pellets , paper , cellulose and, increasingly, furniture . While exports of these products only amounted to US $ 105 million in 1973 (in 1995 prices), it rose to US $ 1.8 billion by 1995. As early as the 1960s, the government began extensive reforestation. When all active role of the state in economic policy was to be canceled after the coup, the promotion of forestry was retained as the only major industrial policy project. From 1974 onwards, the state covered 75% of the cost of afforestation. Privately planted land was declared non-expropriations. Numerous regulations (such as the ban on cutting down young trees under the age of 18 and the export ban on raw wood) have been abolished in order to improve the investment climate. The Banco del Estado provided subsidized loans to the sector.

salmon

While Chile exported practically no salmon in 1986 , export revenues in 1998 were already 700 million US dollars. After Norway , Chile is now the second largest salmon producer in the world. The majority of the salmon farms on the coasts and in the lakes in the south of the country, which are often industrially operated, are operated by Norwegian or Japanese agricultural groups. The Fundación Chile began in the 1970s to spread current technology for salmon farming in Chile. In the early 1980s, the Salmones Antártica company started its first large salmon farm on Lake Llanquihue , which was followed by numerous imitators in the Región de los Lagos . The company was later sold to the Japanese group Nippon Suisan .

Wine

Main article: Viticulture in Chile

Vineyards in Puente Alto .

In the mid-1980s, Chile's wine export was also marginal. Although wine has been grown and pressed in the country since colonial times , the quality used to be not at world market level. In 1985 Chile exported wine for just 10 million US dollars. 13 years later it was already 550 million. The boom started in 1981, when the Spanish company Miguel Torres built a huge winery out of the ground in the central valley near Curicó . Numerous foreign investors followed, including Rothschild , Larose Trintaudon , Grand Manier , Robert Mondavi and the Christian brothers.

fruit

Like wine, fruit is mainly grown in the central valley. The cultivation is mainly done with irrigation. More than half of fruit exports are controlled by just four companies: Dole , Chiquita , UTC (with the Del Monte brand ), and Unifrutti.

Trading partner

Share of selected countries in Chile's exports (2002/04)
region	country	Exports	Imports
Europe		27%	17%
	EU	25%	16%
	thereof Germany	3%	4%
Asia		36%	19%
	China	11%	8th %
	Japan	11%	3%
Latin America		14%	38%
	Argentina		18%
	Brazil	4%	9%
	Mexico	5%	3%
NAFTA		22%	19%
	United States	15%	15%
rest of the world		2%	6%

The country's most important trading partner is the USA, but Chile has a much more diverse structure of trading partners than other South American countries. First of all, this is due to the fact that Chile, due to its geographical location, is an interface between South America, North America (the US west coast can be easily reached by ship), Oceania as well as eastern and southeastern Asia. A second reason for Chile's broad export structure is the global demand for Chilean copper. Third, Chilean agricultural products (especially fruit and wine) now have an excellent reputation worldwide.

Foreign trade policy

In 1947, Chile was one of only six emerging economies to be a founding member of GATT .

After an increasing isolation from the world market as part of the ISI and even more so under Allende, the Pinochet regime opened the country radically after 1973. Unilaterally , the tariffs were standardized and reduced from an average of 94% (57 different tariff classes with rates between 0% and 220% were possible) to three categories with a maximum of 60% tariff. With the enforcement of the Chicago Boys in 1975, a uniform tariff of 35% was announced, two years later of 10%. The multiple exchange rate with eight different rates under Allende was standardized in 1973, and non-tariff trade barriers such as import quotas and import bans were abolished.

Even after the end of the military dictatorship, the entire economic policy remained oriented towards the world market. Although Chile left the Andean Community (CAN) as a founding member in 1976 (but has been an associate member again since 2006) and is only an associate member of Mercosur , the government has in recent years free trade agreements with the EU (2002) and NAFTA (2003 ) as well as the East Asian states of Brunei , South Korea and Singapore . China followed in September 2005 . As of 2008, Chile has signed more free trade agreements than any other country with 19 treaties that include more than 55 countries. This makes the country the most open economy in the world in terms of goods markets.

history

→ Main article : Economic history of Chile

The economy of Chile was characterized by Spanish colonization from the 16th to the beginning of the 19th century . With the Spanish haciendas , the foundation stone was laid for the economically and politically dominant landed property in Chile and the mass of agricultural workers with almost no rights. The Spanish trade monopoly was eroded by smugglers in the 18th century , but it did not formally end until 1810 with the independence of Chile. The Chilean economy went through different cycles. In the 17th century cattle breeding was the most important branch of the economy, in the 18th century wheat was grown. From 1873 to 1914 the rise and decline of saltpetre production had a major impact on economic development. After that, copper became the dominant export good.

Due to the extensive collapse of world trade as a result of the global economic crisis and the subsequent Second World War , industrialization that replaced imports took place in the 1930s and 1940s . After the normalization of world trade, the strategy of import-substituting industrialization was pursued with varying intensity in the 1950s and 1960s and based on the recommendations of the structuralists .

From 1973 to 1982, Chile was the first country in the world to experience a radical turn in economic policy towards economic liberalism of the New Right (commonly referred to as neoliberalism ) v. a. through liberalization of foreign trade, privatization, deregulation and dismantling of the (rudimentary) welfare state. A gradual change of course took place in 1983–1990 with the turn to “pragmatic neoliberalism”. Since the democratization of speech in 1990, there has also been a correction of course in social policy.

Social policy

Poverty and inequality

The Población Nogales in Santiago

Chile is relatively prosperous in comparison to South America and in the 1990s it was the most successful country on the continent in terms of increasing the gross national product per inhabitant. Nevertheless, like almost all countries in the region, Chile remains a country with an extremely unequal distribution of wealth. In 1994 the poorest fifth of the population received 4.6% of the national income, the richest 56.1%, or 13 times as much. Chile is therefore not a special case: In Brazil the ratio was even 24, in Mexico 14 and in Venezuela 10. Even relatively unequal industrialized countries like the USA show a significantly more even distribution with a factor of 9, not to mention Germany with 6 or Japan with 4. East Asian emerging countries such as South Korea (6) or Thailand (8) distribute their national income much more equally.

Although prosperity rose significantly in the 1990s, the welfare state in Chile remains rudimentary even under the democratic governments.

Chile in the Human Development Index (HDI)

	1990	2000	2010	2014
Chile	0.699	0.752	0.814	0.832

1925 to 1973

With the boom in copper mining and the emergence of workers' parties and unions , Chile began building a social system as early as the 1920s and thus played a pioneering role in South America. With the introduction of the ISI , social policy was significantly expanded. Because broad sections of the population, including the middle class, were now integrated into social programs, one speaks of a universalistic social policy. The welfare state grew far beyond mere handouts to the very poor. This should not hide the fact that it continued to be exclusive, that is, that broad sections of the population were excluded. This is particularly true of the rural and informal urban economies . Under Eduardo Frei Montalva and Salvador Allende , the expansion of the welfare state accelerated dramatically. It is estimated that at the beginning of the 1970s 70% of the population had access to the state pension system and 90% had access to some form of health care system, very good values ​​for the state of development of the country at the time (according to Taylor (2001): 24). However, the highly complicated system of hundreds of programs also increasingly served as a channel for clientelism , i.e. the government's preference for its own supporters.

Share of social expenditure in GDP.

1925	1939	1935	1955	1965	1972	1981	1990	1997/8
2.1	2.7	5.2	15th	20th	25th	15th	13	15th

Source: Läger et al. (2001).

Under Pinochet

The junta drastically broke with the traditional model in 1973. While this mainly had quantitative effects in the period from 1973 to 1976 (all social programs were cut by 25% to 50%), the Chicago Boys with their seven modernizations between 1977 and 1981 brought about a fundamental, structural change in social policy, the has largely survived the transition to democracy. What was fundamental was a fundamentally changed view of the welfare state. Above all, this should not hinder the allocation of goods and resources via the market. To this end, the universalist welfare state should become selective, i.e. concentrate on the poorest. Everything that goes beyond that should correspond to market economy criteria - i.e. guarantee individual responsibility and competition. Those who celebrate Chilean social policy as a model speak of this basic pattern. The basis of the reforms was a plan drawn up at the Pontificia Universidad Católica de Chile in 1972 called El ladrillo ("The Brick").

Quantitative cuts 1974–1976

Instead of 59% (1970), the state spent only 32% of its funds on social issues in 1975. Compared to 1970, prior to Allende's reforms, government spending on health fell 33%, education 37%, housing 26% and insurance 39%.

Pension system

José Piñera was in charge of reforming the Chilean pension system . In 1981 a funded pension system was introduced. Employees have to pay 13% of their gross wages into a savings plan of a state-controlled, but privately-owned fund company ( Associación de Fondos de Pension , AFP). Their pensions will be paid out later. Self-employed people can voluntarily become members. The AFP system is supplemented by a state (very low) minimum pension and (purely) private provision. The change to the new system was voluntary for previous members, but the majority changed because of the lower mandatory contribution payments. People who are new to the labor market can no longer insure themselves through the old pay-as-you-go system . Today around 60% of the working population are insured in the AFP system, 10% in the old system and 30% are without insurance.

→ Main article : Pension insurance system (Chile)

Health system

In the health system - similar to Germany - a dual system was created with the state Fondo Nacional de Salud (FONASA) with a 7% contribution obligation and the private Institución privada de salud previsional (ISAPRE). Here, the ISAPRE (like the German private health insurance companies ) withdraws from the solidarity model FONASA both the financially strongest as well as the healthiest (and therefore cheapest) payers.

Education System

The school system was radically reformed in 1980 and switched to demand financing. Since then, schools have been paid for the number of students who regularly attend classes. Private companies can also set up schools, recruit students and, if successful, receive the same reimbursement as state schools. The aim was a competition between the schools for the pupils and thus an improving school system. The state schools were decentralized and made the responsibility of the municipalities. As a third pillar (in addition to the state and privately subsidized) a strong sector of private, fee-financed schools emerged.

Since the 1990s, privately subsidized schools have also been allowed to levy (additional) fees. The negative consequence is a strong polarization of schools. Those in poor neighborhoods and areas are usually much worse than those subject to charges. This can be seen in the annual comparative tests and rankings and in the central university access test ( PSU ), in which a large part of the lower class regularly fails. So the selective education system is an important factor in maintaining inequality in the country.

corruption

Corruption is much less of a problem in Chile than in the rest of Latin America. The reasons are the market economy structures, a functioning judicial system and the relatively well-functioning democratic institutions. The index of the non-governmental organization Transparency International ranks Chile third among American countries after Canada and the USA .

Chile in TI's Corruption Perception Index .

	1995	1997	1998	1999	2000	2002	2003	2004	2005	2017
Score	7.9	6.1	6.8	6.9	7.4	7.5	7.4	7.4	7.3	67 points
rank		23 (of 52)	20 (of 85)	19 (of 99)	18 (of 90)	17 (of 102)	20 (of 133)	20 (of 145)		26 (of 180)

Trade unions and employers' associations

Traditionally, both entrepreneurs and trade unions have a high weight in politics in Chile. On the employee side, the Central Unitaria de Trabajadores de Chile (CUT) is the main political actor, while the unions, unlike in Germany, are only organized at company level and are therefore very fragmented. On the employers' side, it is less the umbrella organization Confederación de la Producción y del Comercio (CPC) than the direct influence of large corporations and conglomerates that is decisive. These Grupos económicos were most important in the first half of the Pinochet regime (1973–1982), but still dominate large parts of the economy and have a great influence on politics.

Business associations

100 years of dominance of entrepreneurs

Since the middle of the 19th century, Chile's economy and thus also the entrepreneurs were concentrated on the agricultural sector (for the domestic market) and the mining sector ( saltpeter , from the 1930s copper for export). With industrialization as a result of the global economic crisis and the set in import-substituting industrialization (ISI), large landowners and industrialists became intertwined. Formally a democracy, this oligarchy de facto also determined the politics of the country, because the right to vote was so restricted that only a few thousand were allowed to vote. Thus, business-friendly governments ruled Chile for over a century. Although the ISI gave the country a leap into industrialization, development was limited by corporatism, rent-seeking and the small market of Chile (only 5 million inhabitants) as early as the mid-1950s. Despite a decade of stagnation, a comprehensive reform process only began when Eduardo Frei Montalva became president in 1964 . The development has been accompanied since 1935 by the powerful business association Confederación de la Producción y del Comercio (COPROCO, today CPC).

Frei and Allende

Because the business-friendly Jorge Alessandri was not allowed to run again and Salvador Allende had a chance of winning the election, the entrepreneurs supported the Christian Democrat Frei in 1964. However, this relied on revolución en libertad and accelerated the decade-long, gradual decline in entrepreneurial power through agricultural reforms and social legislation. Expecting nationalization, Allende's entrepreneurs began with an all-or-nothing opposition to the government. However, the cross-industry corporations ( Grupos económicos ) also fueled fear with the help of their media power and thus caused business strikes ( lockouts ) and the deliberate economic decline of the country in order to induce the military to a coup.

The liberal turnaround: entrepreneurs since 1973

The 1973 coup was supported by practically all entrepreneurs, and the entrepreneurship remained loyal to the regime to the end. In view of the close personal ties between the private sector and government, the reprivatisation of companies nationalized by Allende (1973–1976), anti-union policies and the last wave of privatization (1985–1990), this is not surprising either. Most important, however, is the macroeconomic economic policy: the neo-liberal monetarist policy of the Chicago Boys was unreservedly supported on the business side until the boom ( Miracle of Chile ) collapsed in 1982. But even in the crisis, at least the big conglomerates could count on Pinochet: The billions in speculative losses of the banks were socialized through nationalization. In their loyalty to the dictatorship, however, neither the crisis nor the massive human rights violations ( see History of Chile ) changed anything: In the run-up to the plebiscite in 1988, the entrepreneurs created a massive mood for a "Sí" and painted catastrophe scenarios in the event of a concertación government on the wall. Although the entrepreneurs still see their political representation in the UDI and RN (which is also led by the billionaire entrepreneur Piñera ), they also work extremely well with center-left governments in view of the economic continuity. Today the entrepreneurship of Chile sees itself as a contrast to the rest of Latin America: highly dynamic, world market-oriented, efficient, high-performing, successful, non-ideological - entrepreneurs in the spirit of Schumpeter.

Grupos económicos

With the hectic privatizations and laissez-faire tendencies in economic policy from 1973 to 1982, the economy experienced a strong concentration. The trend that had existed for decades to forge conglomerates and corporations ( Grupos económicos ), which were economically independent and politically influential (this was how the Grupos survived the left UP government without harm), intensified in these years. In 1978, five groups controlled more than half of the 250 most important private companies, often through bank holdings. The capital account liberalization promoted by the Chicago Boys allowed the banks to speculatively borrow abroad. Then when the peso devalued in 1982 and the debt soared, the government used billions (6 billion US dollars, about 30% of the GDP of 1983!) To bail out the companies. While millions of impoverished Chileans, some were Grupos bailed out with government funds. Although the power of large companies has decreased due to structural change and transition , they are still very influential today. Among the most important today are:

• Grupo Cruzat-Larrain
• Grupo BHC with the most important figure Javier Vial Castillo
• Grupo Matte
• Grupo Angelini
• Grupo Edwards (El Mercurio SAP), with the leading family member Agustín Edwards Eastman , who, among other things, control almost the entire press market: El Mercurio , Las Últimas Noticias and La Segunda alone account for around 70% of the press advertising market, including Edwards another 18 newspapers. Because of the power of opinion and the right-wing ideological orientation, the left urban guerrilla Frente Patriótico Manuel Rodríguez kidnapped the son Cristián Edwards in 1991 .
• Grupo Luksic
• Grupo Yarur Banna
• Grupo Parir Lolas

Unions

Formation of the first trade unions

In 1909 - before the workers' parties - the Federación Obrera de Chile (FOCh) was founded in Chile , a union of workers from the state railway company. It not only appeared as a collective bargaining party, but also aimed to transform Chile into a socialist way. After opening up to other industries in 1917, it temporarily gained 70,000 members. From the mid-1920s, the Ibáñez government pursued a repressive policy against politically active unions, but at the same time pushed for the establishment of politically moderate, "legal" unions. In 1924, for example, a labor and social law was passed that for the first time stipulated the right to strike and collective bargaining, made compulsory membership mandatory, but restricted trade union organization to the company level.

In 1936 the anarchist CGT ( Confederación General de Trabajo ) and the socialist CNS ( Confederación Nacional de Sindicatos ) became the Confederación de Trabajadores de Chile (CTCH), which became the most important workers' organization until it split in 1946. Soon, however, there was a preponderance of qualified employees over simple workers within the trade unions, which continues to this day. During the reign of the Popular Front ( Frente Popular , 1938–1945), the trade unions grew both in their number (doubling in 1938–1941) and in their importance as political actors.

CUT and Allende

In 1953 the Central Unitaria de Trabajadores de Chile (CUT) was founded as the umbrella organization of the Chilean trade unions. Initially determined by communist hegemony, the ideological heterogeneity soon became noticeable and the political goals became more moderate. In 1967 the CUT brought together 49 of the existing 79 unions and 60% of all union members. The steady increase in the importance of the unions since the 1950s accelerated further under Frei : During his tenure, the number of union members doubled and the CUT became an accepted point of contact for the government. Under Allende's socialist government , the trade unions assumed a dual role as worker representative and member of the government.

Under Pinochet

The military were aware of the importance of the trade unions: In addition to the long tradition and deep roots in society, the political orientation, the dominance of left ideologies, they were closely intertwined with the communists and socialists. So the putschists destroyed the headquarters of the CUT on September 11, 1973. Most unions were banned, officials persecuted and the right to strike abolished. After all, a year after the coup, around 50% of union officials were still in office, which points to the existence of moderate or Pinochet-loyal unions as well as a more moderate (compared to the political parties) attitude of the regime towards unions. At the height of power, in July 1979, the plano laboral was passed as one of the seven modernizations . In response to international pressure, Pinochet eased some repression measures. The regained right to strike was only valid for 60 days and if the functionality of the company was not restricted as a result. In addition, the minimum wage and the indexation of wages were suspended and the protection against dismissal was reduced. The continuing weakening of the trade unions experienced a turning point with the 1982/83 crisis: the number of members doubled by 1991 and trade unions played prominent roles both during the día de protesto and in the organization of the Concertación.

Since 1990

Despite union-friendly reforms and center-left governments, employee representatives have lost influence. Ideologically homeless, put under pressure by structural change and still only organized at company level and therefore fragmented (in 1998 there were almost 15,000 unions), the degree of organization fell from 22% (1991) to 16% (1995), especially in small and medium-sized companies ( 7% and 2%).

The politicized leadership of the CUT (representatives of the PPD and the communist party sit on the executive board) are generally considered to be close to the government and strive for consensus with the state and companies, while the grassroots unionists are concerned with asserting their economic interests in collective bargaining.

Web links

• Economic Outlook for Chile
• CIA World Factbook
• Country info Chile - General country and economic information Current and extensive analysis of the IHK Pfalz
• The Chilean success story by Carlos Alberto Montaner, article in firmas press , published on Thursday , January 6, 2005

literature

Introduction and overview

• Dieter Nohlen and Detlef Nolte: Chile . In: Dieter Nohlen and Franz Nuscheler: Handbook of the Third World . Volume 2: South America, Dietz, Bonn 1995, ISBN 3-8012-0202-X .
• Klaus Eßer: Economic specialization and development of a modern nation state in Chile . In: Peter Imbusch (Ed.): Chile today . Vervuert, Frankfurt am Main 2004, ISBN 3-89354-590-5 , pp. 565-601.
• Benedikter, Roland / Siepmann, Katja (2015): Chile in Transition - Prospects and Challenges for Latin America's Forerunner of Development, pp. 1–217, Springer, ISBN 978-3-319-17950-6 (English).

Political science analyzes

• Michel Duquette: The Chilean economic miracle revisited . In: The Journal of Socio-Economics . 1998, Volume 27, No. 3, ISSN  1053-5357 , pp. 299-321 (English), doi : 10.1016 / S1053-5357 (99) 80092-4
• Peter Thiery: Transformation in Chile - Institutional Change, Development and Democracy 1973–1996 . Vervuert, Frankfurt am Main 2000, ISBN 3-89354-252-3 .

Unions

• Alan Angell: Politics and the Labor Movement in Chile . Oxford University Press, London 1972, ISBN 0-19-214991-1 .
• Manuel Barrera et al. a .: Trade Unions and the State in Present Day Chile . United Nations Research Institute, Geneva 1986
• Hartmut Grewe (Ed.): State and trade unions in Latin America . Schöningh, Paderborn 1994, ISBN 3-506-79326-8 .
• Dieter Nohlen: Chile - The socialist experiment . Hoffmann and Campe, Hamburg 1973, ISBN 3-455-09073-7 .
• Detlef Nolte: Between rebellion and integration - trade unions in Chilean politics . Breitenbach, Saarbrücken 1986, ISBN 3-88156-326-1 .
• Jorge Rojas Hernández: The Chilean trade union movement 1973–1984 . Campus Verlag, Frankfurt am Main 1986, ISBN 3-593-33583-2 .
• Lynn Stephen: Women and Social Movements in Latin America . University of Texas Press, Austin 1997, ISBN 0-292-77715-9 (US), ISBN 1-899365-28-1 (UK).

Entrepreneur

• Peter Imbusch: Entrepreneurs and Politics in Chile . Vervuert, Frankfurt am Main 1995, ISBN 3-89354-066-0 .
• Peter Imbusch: Entrepreneurs and their associations as socio-political actors . In: Peter Imbusch (Ed.): Chile today. Politics, economy, culture . Vervuert, Frankfurt am Main 2004, ISBN 3-89354-590-5 .

Poverty and inequality

• Oscar Altimir: Income Distribution and Poverty Through Crisis and Adjustment . In: Albert Berry (Ed.): Poverty, Economic Reform, and Income Distribution in Latin America . Lynne Rienner, Boulder 1998, ISBN 1-55587-746-X , pp. 43-80.

Current economic situation

• CEPAL (2005): Chile . In: Estudio Económico de América Latina y el Caribe . 2004–2005, ISSN  0257-2176 , pp. 165–171 online version (PDF; 71 kB).
• Claudio Maggi and Dirk Messner: Chile - a model case? Challenges on the threshold of the 21st century . In: Peter Imbusch (Ed.): Chile today . Frankfurt am Main 2004, ISBN 3-89354-590-5 , pp. 501-524.

Foreign trade

• Ricardo Ffrench-Davis: The impact of exports on growth in Chile . In: CEPAL Review . Volume 76, 2002, ISSN  0252-0257 , pp. 135-150.
• Dierk Herzer: Export expansion, vertical export diversification and economic growth in Chile . Ibero-America Institute for Economic Research, Göttingen 2003, ISSN  1431-181X .

Social policy

• Dagmar Raczynski: Overcoming Poverty in Chile . In: Joseph Tulchin and M. Allison Garland (Eds.): Social Development in Latin America . Rienner, Boulder 2000, ISBN 1-55587-843-1 .
• Marcus Taylor: The Reformulation of Social Policy in Chile, 1973-2001. Questioning a Neoliberal Model . In: Global Social Policy . Volume 3, No. 1, 2003, ISSN  1468-0181 , pp. 21-44.
• Peter Thiery: Transformation in Chile: Institutional Change, Development and Democracy 1973–1996 . Vervuert, Frankfurt a. M. 2000, ISBN 3-89354-252-3 , pp. 234-269.
• Lothar Witte: The development of a model: 20 years of pension reform in Chile . In: Peter Imbusch (Ed.): Chile today. Politics, economy and culture . Vervuert, Frankfurt a. M. 2004, ISBN 3-89354-590-5 , pp. 417-432.
• Article on the pension system in: Economist , Nov 10th 2005

Agriculture

• Cristóbal Kay: The agricultural sector . In: Peter Imbusch (Ed.): Chile today . Frankfurt am Main 2004, ISBN 3-89354-590-5 , pp. 501-524.

Energy policy

• Woodhouse, Shayla / Meisen, Peter (2011): Renewable Energy Potential of Chile, Global Energy Network Institute (GENI), pp. 1–35, San Diego, available online at: http://www.geni.org/globalenergy/ research / renewable-energy-potential-of-chile / Chile% 202020% 20Report% 20II% 20PBM% 20final.pdf (as of October 21, 2016).

Individual evidence

1. ↑ Gross domestic product 2016 (PPP) (PDF; 14 kB) In: The World Bank: World Development Indicators database . World Bank. February 3, 2017. Retrieved February 5, 2018.
2. ↑ [1] Retrieved January 29, 2018
3. ↑ [2] Retrieved January 29, 2018
4. ↑ [3] Retrieved January 29, 2018
5. ↑ [4] Retrieved January 29, 2018
6. ↑ [5] Retrieved January 29, 2018
7. ↑ [6] Retrieved January 29, 2018
8. ↑ [7]
9. ↑ [8] Retrieved January 29, 2018
10. ↑ [9] Retrieved January 29, 2018
11. ↑ [10] Retrieved January 29, 2018
12. ↑ ^{a b} erwaertiges-amt.de
13. ↑ ^{a b} 3sat.de
14. ↑ World Economic Outlook Database April 2018. Retrieved July 9, 2018 (American English). 
15. ↑ German-Chilean foreign trade 2007 (German-Chilean Chamber of Commerce, April 17, 2008)  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.  
16. ↑ aduana.cl
17. ^ Anil Hira, Ideas and Economic Policy in Latin America, Praeger Publishers, 1998, ISBN 0-275-96269-5 , p. 14.
18. ^ Joseph Ramos: Poverty and Inequality in Latin America. In: Journal of Interamerican Studies and World Affairs Vol. 38, No. 2/3, Special Double Issue: Poverty and Inequality in Latin America (Summer - Autumn, 1996), pp. 141-157.
19. ↑ United Nations Development Program (UNDP): Human Development Report 2015 . Ed .: German Society for the United Nations eV Berliner Wissenschafts-Verlag, Berlin ( undp.org [PDF; 9.3 MB ; accessed on November 1, 2016]). Page 250.