1. Chile: An Overview
Mr. Carlos Mladinic
New Dehli, November 2007

2. Chile at a Glance (2006)
Population: 16.3 M
GDP: USD 145 B
GDP per capita: USD 8.9 K
Time zone
Income per capita (PPP): USD 12.9 K
alignment
FDI (net inflow): $6.7 billion
Annual inflation: 2.6%
Unemployment: 6%
Adult literacy rate: 96%
Corporate tax: 17%
Remitted Profits Tax: 35%
(corporate tax is credited towards Overnight
remitted profits) flights
to the U.S.
Tariffs
• General 6%
• Hardware 0%
• 95% of imports pay no tax
(FTAs)

3. Labor and Education
• Total Labor Force : 6.1 million More than 60 Universities
• Labor Force in Santiago: 2.8 million
48 Professional Institutes
• Education:
- Primary: 98.6% 109 Technical Centers
- Secondary: 90% 21 MBA Programs
- Professional: 31.4%
Education Average (years)
1992 2002
National 7.5 8.5
Labor Force 9.2 10.5
Source: Ministry of Education of Chile (www.mineduc.cl), National Institute of Statistics (www.ine.cl ),
2006

4. Chile, An Attractive Place to do Business
Chile is one of the most competitive countries in the world in
terms of its positive business environment.
• Business Environment Rankings (Economist Intelligence
Unit)
• Ease of Doing Business (World Bank)
• Best Latin American Cities to do Business (America
Economía)

5. The Best Places to Do Business
Ranking of the Best Places to Do Business in the Next Five Years (2006-2010)
(Out of 77 economies)
Denmark 1
Canada 3
United Kingdom 7
United States 8
Chile 22
Malaysia 25
Korea 26
Czech Republic 27
Poland 37
T hailand 40
South Africa 41
Mexico 42
Brazil 45
China 50
Russia 62
Pakistan 74
Developed countries Other emerging LATAM
Source: Economist Intelligence Unit (www.eiu.com)

6. Ease of Doing Business 2008
(Out of 178 economies)
Singapore
1
United States 3
Ireland 8
Finland 13
Thailand 15
Malaysia 24
France 31
Chile 33
Portugal 37
Spain 38
Mexico 44
Italy 53
Peru 58
Colombia 66
Poland 74
China 83
Uruguay 98
Paraguay 103
Argentina 109
Ecuador 128
Bolivia 140
Venezuela 172
Developed countries Other emerging LATAM
Source: World Bank (www.doingbusiness.org)

7. Best Latin American Cities to do Business
(Out of 42 cities)
Santiago (Chile) 1
Sao Paulo (Brazil) 4
Buenos Aires (Argentina) 5
Mexico City (Mexico) 10
Bogota (Colombia) 11
Lima (Peru) 14
Montevideo (Uruguay) 20
Quito (Ecuador) 39
Asuncion (Paraguay) 40
La Paz (Bolivia) 41
Caracas (Venezuela) 42
Source: America Economia (www.americaeconomia.com)

8. Success Factors
Chile’s dynamic business environment is the result of a policy-
driven strategy that has focused on:
• Building sound macroeconomic fundamentals through a
rules-based policy framework (characterized by a floating
exchange rate, inflation targeting and a structural fiscal
surplus rule)
• Advancing democracy, political freedom and civil liberties
• Actively encouraging international integration through free
trade agreements and FDI
• Implementing strong social policies to promote social
cohesion so all citizens benefit from economic growth

9. The Chilean Economy
Today, the Chilean economy is very well positioned to weather
global macro and market uncertainty thanks to its solid
fundamentals, characterized by:
• Record of strong growth
• High growth of industrial output
• Record investment rates
• Record employment levels
• Low inflation rate
• Large fiscal surplus
• An export oriented economy
• Favorable outlook for the price of copper
• Very low country risk

10. The Chilean Economy
• Record of strong growth
• High growth of industrial output
• Record investment rates
• Record employment levels
• Low inflation rate
• Large fiscal surplus
• An export oriented economy
• Favorable outlook for the price of copper
• Very low country risk

11. Chile: GDP Growth (1990-2006)
14 12,3
12 10,6
10
8,0
7,4
7,0
8 6,6
6,0
5,7 5,7 5,7
6 4,5
4,0 4,0
3,7 3,5
3,3
4 2,2
2
0
-0,8
-2
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007*

12. GDP Growth (1990-2006)
China 9,8
Ire land 6,5
India 6,1
Chile 5,5
Indone sia 4,6
Luxe mbourg 4,5
Colombia 3,3
M e xico 3,2
Australia 3,2
Spain 3,1
United State s 2,9
New Ze aland 2,7
Portugal 2,5
Unite d Kingdom 2,4
Brazil 2,3
Denmark 2,2
France 1,8
Japan 1,6
Russia 1,5
Italy 1,4
0 1 2 3 4 5 6 7 8 9 10
Developed countries Other emerging LATAM

13. The Chilean Economy
• Record of strong growth
• High growth of industrial output
• Record investment rates
• Record employment levels
• Low inflation rate
• Large fiscal surplus
• An export oriented economy
• Favorable outlook for the price of copper
• Very low country risk

14. Industrial Output
(August 2006-August 2007, 12-monthly var.)
8%
6,7%
6% 5,2% 5,2%
4,5% 4,6%
4,0% 4,0%
4% 3,0%
2,9%
2,4%
2% 1,6%
1,2%
0%
-2%
-2,6%
-4%
Ago-06
Ago-07
Nov-06
Ene-07
Jun-07
Abr-07
Oct-06
Dic-06
Jul-07
May-07
Sep-06
Feb-07
Mar-07

15. The Chilean Economy
• Record of strong growth
• High growth of industrial output
• Record investment rates
• Record employment levels
• Low inflation rate
• Large fiscal surplus
• An export oriented economy
• Favorable outlook for the price of copper
• Very low country risk

16. Investment at record levels (% of GDP)
25% 24, 7%
24, 3% 24, 2% 24, 2%
24, 1% 24, 1% 24, 3%
24% 23, 5%
23% 22, 6%
22% 21, 7%
20, 9%
21%
20, 3%
20, 0% 20, 0%
20%
19%
18%
17%
1trim-04
2trim-04
3trim-04
4trim-04
1trim-05
2trim-05
3trim-05
4trim-05
1trim-06
2trim-06
3trim-06
4trim-06
1trim-07
2trim-07

17. The Chilean Economy
• Record of strong growth
• High growth of industrial output
• Record investment rates
• Record employment levels
• Low inflation rate
• Large fiscal surplus
• An export oriented economy
• Favorable outlook for the price of copper
• Very low country risk

18. E
n
5,0
6,0
7,0
8,0
9,0
10,0
11,0
12,0
e-
04
M
ar
-0
M 4
ay
-0
4
Ju
l-
04
S
ep
-0
4
N
o
v-
04
E
n
e-
05
M
ar
-0
M 5
ay
-0
5
Ju
l-
05
S
Unemployment
ep
-0
5
N
o
v-
05
E
n
e-
06
M
ar
-0
M 6
ay
-0
6
Ju
l-
06
S
ep
-0
N 6
o
v-
06
E
Deseasoned Unemployment
n
e-
07
M
ar
-0
M 7
ay
-0
Unemployment (% of labor force)
7
Ju
l-
07
S
ep
-0
7

19. The Chilean Economy
• Record of strong growth
• High growth of industrial output
• Record investment rates
• Record employment levels
• Low inflation rate
• Large fiscal surplus
• An export oriented economy
• Favorable outlook for the price of copper
• Very low country risk

20. Low Inflation Rate
6%
5%
4%
3%
2%
1%
0%
Ene-03 Jul-03 Ene-04 Jul-04 Ene-05 Jul-05 Ene-06 Jul-06 Ene-07 Jul-07
-1%
-2%

21. The Chilean Economy
• Record of strong growth
• High growth of industrial output
• Record investment rates
• Record employment levels
• Low inflation rate
• Large fiscal surplus
• An export oriented economy
• Favorable outlook for the price of copper
• Very low country risk

22. Fiscal balance pre- & post rule (% GDP)
12% Política Fiscal
10%
7,7% 7,5%
8%
6% 4,8%
4,6%
4% 3,1%
2,4% 2,1% 2,2% 2,0% 2,1%
1,6% 1,4% 1,5%
2% 1,0% 1,0% 1,0% 1,0% 1,0%
0,4% 0,6% 0,7% 0,5%
0%
-0,7% -0,5% -0,4%
-2% -1,2%
-2,1%
-4%
2008 (p)
2007 (e)
1990
1991
1992
1994
1995
1996
1998
1999
2000
2002
2003
2004
2006
1993
1997
2001
2005
Efectivo Estructural
Source: Ministry of Finance

23. The Chilean Economy
• Record of strong growth
• High growth of industrial output
• Record investment rates
• Record employment levels
• Low inflation rate
• Large fiscal surplus
• An export oriented economy
• Favorable outlook for the price of copper
• Very low country risk

24. Chile’s Trade with the World 1990 - 2006
Chile is a “global trader” as it is reflected in this chart (with an ascending tendency)
90.634
70.000
65.000 69.192
60.000 E xports repres ent 62%
E xports repres ent 62%
of C hile’s total exchange
55.000 53.914
of C hile’s total exchange
with the world
50.000 58.995
with the world
45.000
38.291 39.252
Millones de US$
40.000
35.129 35.268
35.000 32.205
31.841 33.430
30.000 29.937 33.902
22.794 31.357
25.000 31.460
20.000 19.383
17.405
19.958
15.000 16.602 18.425 17.668 17.676 20.627
16.454 15.395 17.017 15.915
8.580 14.754
10.000 11.645
9.049 9.927 9.414
5.000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06
Source: General Directorate for International Economic Affairs

25. Chile’s Trade with the World
(Exports, 2006)
Others
Nafta 3%
Asia
22% 33%
South Asean
Others 5%
Korea China
10%
Europe LA 18% 26%
29% 13%
India
8%
Japan
33%
Source: General Directorate for International Economic Affairs

26. Chile’s Trade with the World
(Imports, 2006)
Others
Nafta 3%
Asia
22% 33%
South Asean
Others 5%
Korea China
10%
18% 26%
Europe LA
29% 13%
India
8%
Japan
33%
Source: General Directorate for International Economic Affairs

27. The Chilean Economy
• Record of strong growth
• High growth of industrial output
• Record investment rates
• Record employment levels and rising wages
• Low inflation rate
• Large fiscal surplus
• An export oriented economy
• Favorable outlook for the price of copper
• Very low country risk

28. 0
50
100
150
200
250
300
350
400
Jan/99
Jul/99
Jan/00
Jul/00
Jan/01
Jul/01
Jan/02
Jul/02
Jan/03
Jul/03
Jan/04
Jul/04
Jan/05
Jul/05
Jan/06
Jul/06
appreciating the exchange rate
Jan/07
Jul/07
Recent sustained copper price rise risks

29. A measure of the “real” copper price (deflated by
US PPI) reveals strength of recent appreciation
350
300
250
200
150
100
50
-
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Spot LME copper price deflated by the US PPI
Source: Cochilco & Central Bank of Chile

30. Exports by quantity: robust despite copper
price appreciation
170
160
150
140
130
120
110
100
90
80
1trim-04
2trim-04
3trim-04
4trim-04
2trim-05
4trim-05
2trim-06
4trim-06
1trim-07
2trim-07
1trim-05
1trim-06
3trim-06
3trim-05
Cobre No Cobre
Source: Central Bank of Chile

31. The Chilean Economy
• Record of strong growth
• High growth of industrial output
• Record investment rates
• Record employment levels and rising wages
• Low inflation rate
• Large fiscal surplus
• An export oriented economy
• Favorable outlook for the price of copper
• Very low country risk

32. Very Low Country Risk
Sovereign Spread: EMBI Global Spread
(Monthly averages, in basis points over USTBs)
249
243
232
250 226
203 200
189 192
176 176
200
164 167 161 165
168
160
152
138 140 144
129 134 129
150 121 121
108
90
82 80
80
100
50
0
Abr-07 May-07 Jun-07 Jul-07 Ago-07 Sep-07
Global Latin America Asia Europe Chile

33. A Further Competitive Edge
As well as these sound macroeconomic indicators, Chile has the
advantage of:
• A growing network of Free Trade Agreements
• High levels of transparency
• Strong institutions
• Competitiveness
• A Freedom Economy
• High levels of connectivity and Internet use
• Excellent quality of life

34. A Further Competitive Edge
• A growing network of Free Trade Agreements
• High levels of transparency
• Strong institutions
• Competitiveness
• A Freedom Economy
• High levels of connectivity and Internet use
• Excellent quality of life

35. Chile’s Trade EU EFTA
Canada (European Free Trade Association,
Agreements Iceland-Norway- Suitzerland-
Liechtenstein)
USA China
Turkey
South
Korea
Mexico Japan
Cuba
El Salvador Vietnam
Costa Rica New Zealand
Malaysia
Guatemala
Brunei
Panama Colombia
Honduras
Peru Uruguay
Paraguay Singapore
Argentina Australia
Brazil
In Force Bolivia India
Venezuela
Signed Ecuador
Under Negotiation
Chile has Preferential Market Access to 86% of world GDP

36. Spain
Double_taxatio Portugal Norway
Denmark
n Agreements UK
Sweeden
Poland
France Croatia
Canada Switzerland Belgium Hungary
Ireland Holland Czech Republic Russia
Italy Finland
South
Korea
USA
Mexico
Cuba Malaysia
China
India
Argentina
Brazil
South Africa
In Force
Ecuador
Australia New Zealand
Peru
Signed Paraguay
Under Negotiation Colombia
Venezuela

37. A Further Competitive Edge
• A growing network of Free Trade Agreements
• High levels of transparency
• Strong institutions
• Competitiveness
• A Freedom Economy
• High levels of connectivity and Internet use
• Excellent quality of life

38. Corruption Perceptions Index 2007
(Out of 180 countries; 1 = least corrupt)
New Zealand 1
Australia 11
United Kingdom 12
United States 20
Chile 22
Spain 25
Portugal 28
Italy 41
South Korea 43
Turkey 64
China 72
Argentina 105
Russia 143
Developed countries Other emerging LATAM
Source: Transparency International (www.transparency.org)

39. A Further Competitive Edge
• A growing network of Free Trade Agreements
• High levels of transparency
• Strong institutions
• Competitiveness
• A Freedom Economy
• High levels of connectivity and Internet use
• Excellent quality of life

40. % of
% of
Pupulati
Pupulati
on
on
Quality of Institutions
(Out of 125 economies)
Finland 1
Singapore 4
Germany 7
New Zealand 8
Ireland 17
Chile 25
United States 27
Spain 36
Korea 47
Mexico 69
Italy 71
China 80
Brazil 91
Developed countries Other emerging LATAM
Source: World Economic Forum (www.weforum.org)

41. A Further Competitive Edge
• A growing network of Free Trade Agreements
• High levels of transparency
• Strong institutions
• Competitiveness
• A Freedom Economy
• High levels of connectivity and Internet use
• Excellent quality of life

42. World Competitiveness Scoreboard (IMD)
(Out of 66 economies)
USA 1
Australia 12
United Kingdom 20
Chile 26
India 27
Spain 30
Russia 43
Mexico 47
Brazil 49
Poland 52
Croatia 53
Venezuela 55
Developed countries Other emerging LATAM
Source: IMD, 2007

43. Global Competitiveness Index 2006 (WEF)
(Out of 125 countries)
Switzerland 1
USA 6
Japan 7
United Kingdom 10
Chile 27
Spain 28
Italy 42
India 43
Poland 48
China 54
Russia 62
Colombia 65
Ukraine 78
Developed countries Other emerging LATAM
Source: World Economic Forum, 2007

44. A Further Competitive Edge
• A growing network of Free Trade Agreements
• High levels of transparency
• Strong institutions
• Competitiveness
• A Freedom Economy
• High levels of connectivity and Internet use
• Excellent quality of life

45. Economic157 economies)
(Out of
Freedom Index
Honk Kong 1
United States 4
United Kingdom 6
Chile 11
Japan 18
Germany 19
Spain 27
Portugal 43
France 45
South Africa 52
Italy 60
Indonesia 110
China 119
Developed countries Other emerging LATAM
Source: Heritage Foundation (www.heritage.org)

46. A Further Competitive Edge
• A growing network of Free Trade Agreements
• High levels of transparency
• Strong institutions
• Competitiveness
• A Freedom Economy
• High levels of connectivity and Internet use
• Excellent quality of life

47. The Networked Readiness Index 2006–07
(Out of 122 economies)
Denmark 1
Switzerland 5
United States 7
United 9
France 23
Chile 31
Spain 32
Czech 34
Italy 38
India 44
South Africa 47
Mexico 49
Turkey 52
Brazil 53
Costa Rica 56
Poland 58
China 59
Argentina 63
Russia 70
Developed countries Other emerging LATAM
Source: World Economic Forum (www.weforum.org)

48. A Further Competitive Edge
• A growing network of Free Trade Agreements
• High levels of transparency
• Strong institutions
• Competitiveness
• A Freedom Economy
• High levels of connectivity and Internet use
• Excellent quality of life

49. Human Development Index
(Out of 177 countries)
Norway 1
United Kingdom 18
Chile 38
Croatia 44
Mexico 53
Malaysia 61
Russia 65
Brazil 69
Thailand 74
China 81
Turkey 92
Indonesia 108
South Africa 121
Developed countries Other emerging LATAM
Source: United Nations Development Programme

50. Why all these
economic indicators
are important?

51. Reduction of Poverty (1990-2006)
40 38,6
35
30
25,6
25 23,2
20,2
20 17,5
14,6 13,7
15 13,0
10,5
10
5,7 5,6
5 3,2
0
1990 1996 2000 2006
Total Poverty Non Extreme Poverty Extreme Poverty

52. Economic Growth, Trade and Poverty (1990-2006)
120 45
40
100
35
% of Population
US$ Billions
80 30
25
60
20
40 15
10
20
5
- 0
1990 1992 1994 1996 1998 2000 2003 2006
PIB TRADE POVERTY

53. Chile: An Overview
Mr. Carlos Mladinic
New Dehli, November 2007