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OECD Economic Surveys: Chile 2007

image of OECD Economic Surveys: Chile 2007

This 2007 edition of OECD's periodic survey of Chile's economy focuses on key challenges being faced including managing the economy after the copper price boom; efficiency in health care, education and housing services; informality; and raising labour force participation of women and youth.

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Fostering long-term growth: The challenges ahead

Chile’s economic performance remains strong. Growth has picked up since 2003, and the economy is well equipped to weather the effects of copper-price cycles. This is due to a strong policy setting combining a freely floating exchange rate, inflation targeting and a fiscal rule that has delivered a gradual decline in public indebtedness to a net creditor position. Sustained growth over the longer term will be essential for reducing Chile’s still sizeable income gap with respect to the OECD area, reducing poverty and improving income distribution. But more will need to be done to make sure that this convergence process is maintained in the future, especially through sustained policy reform initiatives that can lift the economy’s long-term growth potential. This overarching policy challenge can be addressed through action dealing with three main structural areas: efficiency of government spending on selected social programmes, informality in the labour market and the business sector, and labour force participation among underrepresented groups, females and youths in particular. Initiatives in these policy domains reinforce each other and complement those highlighted in the 2005 Survey, which focused on options for boosting the economy’s business innovation potential and for strengthening the regulatory framework in network industries.

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