Country Investment Report: Chile

Country Investment Report: Chile

I recommend investing in Chile because of its sustained economic growth, social progress, openness to foreign investment, and skilled workforce.

Country Background

Chile, one of South America’s most emerging economies, gained its independence from Spain in 1818. Sebastian Pinera was the elected president of the country in 2010. Pinera is a billionaire businessman, economist, and politician that gained presidency through a democratic election with 52% approval from the Chilean population ( ). He is a right-wing conservative, although he has taken a moderate approach to presidency. His election was historic because it ended a 20 year rule from Chile’s left-wing.

The country is divided into 15 regions, each being headed by an intendant that is appointed by the president. Each region is then broken down into multiple provinces. Within each province is a group of communes, which are similar to cities in the United States.

Geographic Landscape

Chile is a long narrow ribbon of land that stretches along the west coast of South America. It rests between the Andes Mountains and the Pacific Ocean and borders Peru, Bolivia, and Argentina. Chile occupies a total of about 295,000 square miles and is marked by a variety of climate zones. The north region of the country contains a highly dry climate due to the Atacama Desert (known to be the world’s driest desert). Central Chile remains humid and subtropical while the south and east are marked by an oceanic climate consisting of glaciers and rainforests. The diverse geographic landscape of the country allows it to be rich in numerous natural resources such as copper, nitrate, coal, and precious metals (PWC).

Demographics

The total population of Chile is over 17 million which consists of about 49% males. The median age of the country is 32.8 years and life expectancy is up to 78 years. It is important to note that the life expectancy has grown significantly over the last few decades due to important strides in improving the country’s healthcare system. They currently have a dual healthcare system in which 65% of the total population is covered under the National Health Fund and 18% by private companies ( ). Although total population has grown steadily over time, the growth rate has slowed over recent years due to a decrease in the birth rate. The chat below shows the population growth in Chile from 2004 to 2012.

Sustained Growth

Despite economic turmoil worldwide over the past few years, Chile remains one of South America’s most stable and growing nations. Much of this has been a result of social and economic modifications that the country has taken over the past 20 years. Some of these initiatives include improving business freedom, securing property rights for its citizens and creating transparency in order to eliminate corruption. Chile currently leads all Latin American nations in competitiveness, income per capital, and globalization ( ). Although countries in its region, such as Brazil, have larger economies, they have struggled to maintain growth over the past few years. In contrast, Chile has continued to develop and emerge as one of the worlds most profitable business investments.

GDP Growth

The GDP of Chile has experienced heavy growth since the 1990’s. In 2012, the GDP grew 5.6% compared to 2011 and in 2013, there is expected to be another 5.5% growth. Copper mining remains the biggest boost to the country’s economy, accounting for 20% of the total GDP and 60% of the total exports. In fact, Chile has the largest copper mine in the world and accounts for 1/3 of total production ( ). Agriculture and forestry are also large reasons for the growth in GDP.

The growth experienced by Chile proves that it is worth investment. As one of the worlds most emerging economies, it proves to provide lucrative returns from business ventures. The world experienced an economic crisis in 2009, and many nations continue to struggle in order to sustain growth. Chile has bounced back from the economic downturn with significant expansion. The graph below outlines the growth rate of Chile’s GDP from 2003-2013.

Source: Central Bank of Chile

Social Progress

One of the most prevalent issues with many emerging countries in today’s world is social progress. Chile has taken big steps