The economy of Chile: features, state and calculation

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:45

Chile is a state on the South American continent. It is located on the southwestern edge of South America. It has an elongated form from north to south, located in different climatic zones. It borders the Pacific Ocean to the west, Argentina to the east, Peru to the north, and Bolivia to the northeast. The length of the state of Chile is 6435 km. The country also owns vast adjacent waters of the Pacific Ocean. Chile's economy is considered the most successful in Latin America. Copper exports are of the greatest importance.

History of Chile

In antiquity, starting from the 11th century BC. e., the country was inhabited by various Indian tribes. There were armed clashes between them, connected with the intention to seize foreign territory. After about 1500 AD, the territory was gradually conquered by the Spaniards. First of all, they conquered the northern lands, where resistance was weak. The movement to the south was more difficult due to the furiousresistance.

The economy of the state has been developing poorly for a long time. The Spanish conquerors did not discover deposits of rare valuable metals, so they started farming. This happened in the XVII-XVIII centuries. Development was carried out in the central part of Chile. Here they began to grow grapes, barley, wheat, hemp. As well as sheep and cattle.

Starting from the 18th century, the mining of fossil copper began to have a decisive influence on the country's economy. The active mixing of the local and alien population led to the fact that at the beginning of the 19th century, 4/5 of the entire population were Spanish-Indians, who are called mestizos. During this period, Chile becomes an independent state.

Before the Second World War, there was economic growth associated first with the mining of copper and s altpeter, and then with coal and silver.

After 1970, the country experienced difficult times. An economic crisis developed. It was accompanied by high inflation and shortages of goods, as well as strikes and riots. In many ways, this crisis was associated with external pressure, as well as internal conflicts. At that time, the country was ruled by Salvador Allende, against whom the CIA was set up.

The Pinochet regime and Chile's economy

The crisis ended with a military coup, during which dictator Augusto Pinochet came to power illegally. In addition to the repressions he carried out and the mass destruction of dissenters, there was also a sharp increase in prices for basic products, as well as an increase in poverty in the country. This is most likelywas connected with the personal ambitions and selfish interests of the dictator himself, members of his family and other figures of that regime.

But there is still no single point of view on the impact of the Pinochet regime on the Chilean economy. Right-wing authors speak of significant economic success during his reign. Now Chile's economy is considered the most efficient among Latin American countries and there is a low level of corruption.

In 1989, the country moved from a dictatorship to a democracy.

Economy after Pinochet

But the current state of Chile's economy may be due to the reforms carried out after the reign of Pinochet. Thanks to them, it has fitted well into the global world economy and has become more open. In the 2000s, free trade agreements were signed with the EU and the US. During this period, poverty was reduced, he alth care reform was carried out, unemployment benefits began to be paid, pensions improved, housing construction improved, public transport and sports infrastructure developed.

The crisis of 2008-2009, despite the coincidence with the earthquake, was passed by the country easily and with almost no consequences. Unemployment continued to fall while wages rose.

Modern achievements

Chile's economic development course today is aimed at increasing openness. According to analysts, Chile has a fairly efficient economy. The country ranks first in terms of competitiveness among South American countries and 27 in the world in this indicator. And also belongs tocountries with minimal payment risk.

In terms of GDP, Chile's economy is in 6th place among Latin American countries, and in terms of per capita income - in first place. Chile is classified as a high-income country. In terms of GDP per capita, the country ranks 53rd in the world. The inflation rate is only 1.3% per year. The unemployment rate is 6.9%, and the poor are only 11.7% of the total population. In 2018, the state's GDP growth amounted to 3.3%.

It is also one of the fastest growing economies in Latin America. It has the lowest level of corruption in South America, and the social situation has not worsened over the years.

The state debt is 17.4% of GDP, and the external debt is $145.7 billion. Government spending is in the region of $56 billion and revenues are $48 billion.

Peculiarities of Chile's economy

Now the services sector is of the greatest importance for the country's economy. It gives 61.6% of GDP. In second place is the extraction of fossil raw materials. Up to 15% of GDP is associated with it. The main industries are: extraction and processing of raw materials, agriculture and forestry, fishing, cement and light industry.

Chile ranks first in the world in the production of lithium, copper, iodine. A lot of iron ore is mined. Salmon, trout, grapes, plums, blueberries, dried apples are exported in large quantities.

In a small amountextract oil, gold, silver. With the surge in global demand for lithium, which is required for the development of electric vehicles, the Chilean economy may receive an additional boost.

Agriculture

Vinemaking is of great importance for the country. Chile is one of the largest exporters of wine products. The cultivation of grapes in the highlands is traditionally developed here.

In Chile, only 8% of the country's total area is used for agriculture. The main part of this territory is reserved for the cultivation of vegetables and grain crops. The most common are wheat, sugar beets, barley, oats and potatoes. Wheat yields, despite the lack of mechanization, are quite high. Crops of this crop are especially widespread in the middle part of Chile.

Livestock is focused on the domestic consumer. Sheep are raised in the far south, and cattle and dairy cattle are raised in the north.

In total, 15% of the population is involved in agriculture.

The presence of forests in the south led to the development of the timber industry. Exports of beech, laurel and pine wood predominate.

Chile has 2 free economic zones: in the extreme south and in the northern port of Iquique.

Trade relations

The most important trade relationship is the export of copper. At present, the export of lithium, which is used to produce batteries for smartphones, electric vehicles, etc., is of increasing importance. The export of minerals is about half ofof all product exports. Chile's economy is heavily dependent on global copper prices.

Wine, fish and fish products, paper and pulp, chemicals, fruit are also exported.

Oil, oil products, gas, cars, various types of equipment, chemicals are imported into the country. The most important trade links are with China, USA, South Korea, Argentina and Brazil.

Economy Forecast

The calculation of the future economic indicators of the state shows multidirectional trends for the coming years. The most important forecast data is presented in the table:

Conclusion

Thus, the economy of Chile has come a long way since the first Europeans appeared on its territory. At first it was agrarian and underdeveloped, and then it became more diversified and focused primarily on the extraction of resources. Since the 1990s, much attention has been paid to social policy and trade relations with other countries.

Now the Chilean economy is considered the most successful in Latin America. But it also has a weak point - a high dependence on world copper prices. Because it is the main export product of the country. Chile's role in world trade will grow due to the rapid growth in demand for lithium, the reserves of which are the largest in the world.