Chile Economic Conditions

By | December 1, 2021

The Chilean economy was characterized by a ‘colonial’ development (export of minerals: copper and nitrates) until after the second half of the 20th century; the rapid growth of an internal market and the entrenchment (in the population of more recent European origin) of kinds of life fully in line with those of the advanced Western countries, however, brought to maturity, in the late 1960s, the intrinsic contradictions of the system economic. The socialist interlude of the early 1970s attempted a rebalancing in internal social relations (expropriation of large estates, nationalization of mines and industries, control of the action of dominant financial and multinational groups), albeit at the cost of dizzying inflation and heavy productive imbalances.. Forcibly interrupted that process, the subsequent economic policy guidelines, strictly neoliberal observance, returned a predominant role to private capital, in particular to large industrial groups, while hindering the spread of small peasant ownership and the growth of internal consumption, reducing public spending, especially in the sector social services, and expanded the range of products with low added value (agricultural, forestry and fish), destined with minerals for export; in those years there was also the collapse of the international price of copper, which had serious repercussions on the country’s economy. On the whole, however, at the cost of a high social cost (unemployment at 20%, expansion of poverty), public finances were restored, inflation brought under control, foreign capital again encouraged to invest in sectors that profit from the availability of cheap labor and raw materials. The restoration of political management legitimized by popular consensus has seen the basic choices only partially modified. Starting from the 1990s (having overcome a decline at the end of the decade), the Chilean economy has experienced rather consistent growth, albeit at the cost of a temporary worsening of the other indicators (foreign debt, trade deficit and unemployment), which is compensated for from the increase in interchange within the area of MERCOSUR, with which Chile is associated (as it is in fact associated with NAFTA) and foreign investments. For Chile business, please check

For the purposes of productive propensities, the northern region is essentially mining; the central one has allowed the greater development of agriculture and livestock, as well as of the processing industry and in general of advanced economic activities; the southern region lends itself to forestry and pastoral exploitation. The area destined for arable and arboreal crops is just 3.1% of the total, the forest area at 20.7%, the grassland and pasture at 17.2%; the rest corresponds to unproductive or uncultivated land. The cultivable surfaces are very small in the desert or arid North, where small property prevails, and much more considerable in some central provinces; across the country, three quarters of agricultural land is owned by large companies, often in the classic form of large estates. The prevalent production, by extension, is that of cereals; among these, wheat clearly predominates (about 420,000 ha and 18 million q in 2005), especially in central Chile, while further south, barley, corn, oats are grown; however, in general, production is not sufficient for internal needs. Much more relevant from an income point of view are fruit and vegetable production, including viticulture (22 million q of grapes and about 8 million hl of wine), which places Chile in tenth place in the world among wine-growing countries; the development of preservation and conditioning systems, as well as the reduction of air transport costs, have made Chilean products competitive on the markets of the northern hemisphere, where they are made available, thanks to seasonal changes, as out-of-season products. Forests extend to the South, they contain precious essences and provide a growing contribution to exports, attracting a considerable share of foreign investments. The breeding now sees a clear prevalence of cattle (4.5 million), widespread above all in central Chile, and a growing presence of pigs (3.4 million), demonstrating both the increase in domestic consumption and increase in export flows; sheep (3.4 million), in the southern regions, on the other hand, have almost halved in the last twenty years, although wool production continues to be very significant. Fishing has had a very considerable development, whose output from 65,000 t in 1948 has risen to 4-5 million t per year, fueling, together with meat processing, a consistent use of labor in the canning industry.

However, Chile is still mainly a producer of minerals. The exploitation of the cupriferous deposits (Chuquicamata, El Teniente, Potrerillos), which places the town in first place in the world ranking (5.3 million t in 2005); the refining plants are located in the mines, which are generally ‘open cast’, and work mainly for export, such as the iron foundries, also largely extracted (7.4 million tons) in the central-northern regions; also important are the production of silver and gold. Of particular importance is the production of sodium nitrate (1,400,000 t), one of the greatest traditional riches of the Chile, despite the strong competition from synthetic fertilizers; it is built N, in the intermediate area between the coastal reliefs and the Andes, and supplies raw material for the chemical industry. Apart from the large availability of water that guarantees half of the energy needs, the production of coal, oil and natural gas has some importance.

The most developed industries, in addition to those in the agri-food, metallurgical and chemical sectors, are the textile (especially wool and cotton), mechanical (automobile assembly in Arica) and paper industries, which are in strong progress. The activities that can be defined as tertiary activities have recorded a very sustained increase over the last twenty years; in particular, it deals with banking and financial services, largely in the hands of foreign or transnational companies.

Given the coastal development, maritime communications are of great importance for cabotage services; the ports (main Valparaíso, which is essentially an importer) are numerous and well equipped, especially those intended for the export of minerals (Antofagasta, Iquique). The railway network, based on a longitudinal line from Zapiga (70 km N of Iquique) to Puerto Montt, from which four trans- Andean sections branch off, has been drastically downsized in recent years (about 2000 km of development) to the advantage of the road one., also as a consequence of a rapid increase in the car fleet: on a road network of approximately 85,000 km (including a section of the Pan-American and a trans-Andean motorway), the number of vehicles in circulation now reaches 2.3 million. Air navigation is highly developed. The tourist influx (1.8 million visitors in 2004) is constantly growing, albeit moderately, mainly in the southern, Andean and island regions.

Chile Economic Conditions