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2018 OECD Economic Surveys: Chile 2018

image of OECD Economic Surveys: Chile 2018

The quality of life of Chileans improved significantly over the last decades, supported by a stable macroeconomic framework, bold structural reforms, such as trade and investment liberalisation, and buoyant natural-resource sectors. A solid macroeconomic policy framework has also smoothed adjustment to the end of the commodity boom, contributing to low unemployment, resilient household consumption and a stable financial sector. Still, progress has recently slowed and Chile’s catch-up in living standards is challenged by low and stagnant productivity and a still high level of inequality. Raising incomes and well-being further will depend on strengthening skills and greater inclusion of women and low-skilled workers in the labour force. Increasing the quality of education, reforms to ensure the training system benefits the unemployed and inactive and measures to reduce the segmentation of the labour market would enhance productivity and inclusiveness. Promising firms also still lack opportunities to grow, export and innovate, despite recent reforms to ease business entry costs and export procedures. Further simplification of trade and regulatory procedures, and reforms in the transport sector, would strengthen productivity and investment.

SPECIAL FEATURES: BOOSTING EXPORT PERFORMANCE; POLICIES FOR MORE AND BETTER JOBS

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Boosting Export Performance in Chile

Over the past three decades, Chilean exports have contributed to higher growth and well-being, supported by a stable macroeconomic framework, bold structural reforms, such as trade and investment liberalisation, and buoyant natural-resource sectors. However, export performance has disappointed since the global financial crisis. The commodity boom hid weak non-commodity exports and low productivity. Exports remain concentrated in terms of goods, firms and destinations. Many micro and small firms have low productivity and the quality of the public and private capital stock is lagging, which weighs on potential new exporters and export performance. The regulatory framework remains complex, infrastructure gaps hamper exports and competition is limited in some key sectors affecting competitiveness. Recent measures have aimed at simplifying the opening of new businesses, improving competition and energy supply and easing trade procedures. Additional reforms are needed to offset the geographical remoteness and improve exports and productivity over the medium term. This includes further enhancing competition and increasing investment in innovation, removing barriers to capital and labour reallocation, promoting railway and international connections and increasing benefits from agglomeration by improving urban planning.

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