This is a revision resource for A level and IB economics students on a range of key indicators and issues for the Chilean economy.

1. Economic Growth and Development in Chile
Key Macro Data (2015)
Latest annual GDP
Growth (%)
2.6%
GDP or GNI per capita
(US $, PPP)
$22K
Inflation (%) 4%
Unemployment rate
(% of labour force)
5.8%
Fiscal balance
(% of GDP)
-2.%
Govt debt (% of GDP) 16%
Yield on 10-Yr Govt
Bonds (Per Cent)
4.4
Investment
(% of GDP)
21%
Gross national savings
(% of GDP)
20%
Background Information
Currency unit Pesa
Exchange rate system Float
Policy interest rate 3.5%
Member of a Regional
Trade Agreement
Pacific
Alliance
Current account
balance (% of GDP)
+3%
Main corporate tax
rate (Per Cent)
22%
Competitiveness rank 33/144
Corruption Perception
Ranking
21/175
Ease of Doing Business
Ranking
41/189
External Debt
(% of GDP)
57%
Aspects of Development
Latest HDI ranking 41/187
Income inequality HDI
ranking
Gender inequality HDI
ranking
% of population living
in extreme poverty
0.8%
Life Expectancy at
birth (years)
82
Gini coefficient (Latest
published estimate)
0.52
Inward FDI (% of GDP) 8%
Remittances (% of
GDP)
0.1%
Aid (% of GDP)

2. Contextual Background on Chilean Economy
Economic Structure
Share of GDP by value added (% of GDP)
Primary: 3%
Industrial: 35%
Services: 62%
Main export industries (+ major firms)
1/ Copper (refined copper and copper ore)
2/ Food – fish, grapes, wines
3/ Wood
Key risks to sustainable growth
1/ Falling copper price – lower terms of trade
2/ Long term effects of very high inequality
3/ Exposed to slowdown in Chinese economy
Development and Growth Issues / Policies
3 factors limiting development progress
1/ Limited safety net – few have pensions
2/ Lowest education scores in OECD nations
3/ Low female participation rates
3 policies used to improve the supply-side
1/ Human capital to diversify the economy
2/ Reduce segregated education system
3/ Infrastructure – only one main highway
Long term challenges facing this country
Challenge 1: Make econ growth inclusive
Challenge 2: Improve quality of teaching
Challenge 3: Transition away from copper

3. Main Strengths and Weaknesses for Chile
Competitive Strengths
1/ Low corruption + strong institutions
2/ Strong fiscal policy – govt aims for surplus
3/ World’s biggest exporter of copper
4/ Big progress in reducing extreme poverty
5/ Has avoided the middle-income trap
Other Notes
Extreme poverty has fallen from 14% of the
population in 1990 to just 2% now (living on
less than $1.90 a day PPP)
Chile making progress in building a “start-up”
culture among entrepreneurs – this will help
to diversify the country in years to come
Key challenge is to move away from a
resource intensive economy to one where
more income comes from ideas
Main Weaknesses in their Economy
1/ Heavy dependence on copper (47% of X)
2/ Highest Gini coefficient in OECD nations
3/ Lowest R&D spending among rich nations
4/ Big gender inequality issues to address
5/ Transport infrastructure is relatively poor
Other Useful Contextual Knowledge
The richest 10% in Chile earn 27 times the
income of the poorest 10%.
A new centre-left government was elected
in 2014 and is trying to introduce reforms to
expand welfare provision
Youth unemployment (16%) is three times
the average for the country
Many Chileans have borrowed in overseas
currencies – vulnerable to a devaluation