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OECD Territorial Reviews: Chile 2009

image of OECD Territorial Reviews: Chile 2009

Chile has achieved strong economic growth during the last 20 years. Nevertheless, its economy depends on a few resource-based sectors located in a small number of regions. The performance of Chilean regions varies significantly and regional disparities in GDP per capita are very high compared to those in OECD countries. Chilean regions have thus far so not fully utilised their assets and reached their potential for growth. This report recommends moving towards a territorial approach to development in Chile in order to better adapt public management to the different opportunities and needs of the diverse territories of the country. Chilean regions would particularly benefit from context-specific policies to boost productivity, such as those targeting innovation and entrepreneurship, and to improve education and training.

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Assessment and Recommendations

During the past two decades Chile’s GDP per capita has risen strongly. Between 1988 and 1997, Chile grew at an average annual rate of 7.9%. In 1998 growth slowed to 3.2% and in 1999 the economy contracted (–0.8%). Then, from 2000 to 2003, growth returned, and in 2004 and 2005, real GDP rose sharply by 6.2 and 6.3%, respectively. Macroeconomic stability has been a key factor of growth. Balanced fiscal accounts have been complemented by low inflation, an open trade regime and favourable legislation for foreign direct investment (FDI). The opening of the economy has centred mainly on resource-based sectors, primarily copper mining and sub-products and the agro-food sector. A series of trade reforms along with favourable international conditions, such as high copper prices, raised the ratio of exports to imports to GDP from 45.7% in 1976- 84 to 60.3% in 1995-2002. At the same time, the strength and reliability of Chile’s institutions have also had a favourable effect on growth. The quality of institutions and the stability of Chile’s regulatory framework are comparable to those of OECD countries. As a result of this situation, Chile has been among the most successful countries in reducing poverty levels worldwide: in 1990 almost 40% of Chilean population lived in poverty; in 2006 the poverty rate was 13.7%. 

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