Chile is economically based on the extractive industry, more specifically on that of copper (of which in 2007 it was the first world producer), but can count on other substantial mineral resources (such as nitrates, silver, molybdenum) and on forestry; however, despite the enormous wealth of the subsoil and a no less high energy availability, represented above all by the hydroelectric potential of the Andean area, the underlying structure remains that of a country that is secularly poor. A solid national industry is lacking, while agriculture, enclosed in the mesh of an under-exploited large estate and an extremely subdivided and therefore scarcely productive micro-fund, only partially satisfies the food needs of the population. In the country there is an imbalance in the organization of production spaces: the most active area is the central one; to this are opposed the areas of North and South, territories rich in resources and of recent development, mainly for exports to the world market (nitrates, copper). The reasons for this situation of serious weakness in the Chilean economy are manifold. As far as the mining activity is concerned, it was started, after the first modest colonial interventions, by important North American companies (such as Anaconda Co.), to which the actual profits went; at the same time industrialization, undertaken with a certain commitment only starting from the 1940s, ended up favoring speculative capital, essentially foreign, while the productive apparatus remained lacking in all basic sectors. S. Allende as President of the Republic there were the first concrete manifestations of a new course of the country’s economic and social life. Mining and, subsequently, all other essential economic sectors were nationalized. In the agricultural field, the expropriation of large estates and the distribution of land to peasants were carried out, while restrictive measures were introduced regarding imports, to safeguard the national industry. These initiatives, flanked by a policy of wage increases, welfare commitments and social reforms, aroused the immediate reaction of the Chilean conservative forces (which among other things carried out a massive flight of capital) and the no less immediate retaliation of the North American multinationals. Like this, for a concurrence of responsibility of the Chilean ruling classes, of the small and medium bourgeoisie dissatisfied with the loss of traditional privileges, of the international financial circles (which blocked all credits destined for Chile and demanded the immediate return of those already granted), as well as for a erroneous assessment of the actual consistency of the forces supporting the government program, Allende was easily overwhelmed by the opposition and corporatism. This favored the success of the 1973 bloody military coup, which immediately brought about the total overthrow of the previous economic approach. In fact, a clearly liberal economic policy was adopted through the dismantling of customs protections, the opening of very large spaces for foreign financial initiatives, the reprivatization of all companies already nationalized, as well as the payment of substantial compensation to foreign companies that had previously operated in Chile and the right granted to them to exploit new mining areas (with the exception of mines only copper, remained nationalized). Visit cachedhealth.com for Chile as a destination country.
The estates already expropriated and the agricultural cooperatives dissolved were also returned to the previous owners; Finally, a drastic cut was made in public and welfare expenses, which had constituted a significant source of income for the poorest classes. The lack of a development program heavily influenced the trend of the agricultural sector; more generally, unable to resolve the country’s serious economic crisis, the military junta, with the almost total liberalization of imports, on the one hand it produced the general ruin of the small local industry, with a low technological level and unable to withstand international competition, while on the other hand it made the initiatives of multinationals flourish enormously, attracted by the abundant underpaid labor, from the possibility of low-cost exploitation of raw materials, from the ample tax concessions. In this way, some sectors were encouraged which worked essentially for foreign industries and which, therefore, were largely extraneous to the real needs of the internal market. This led to the growing importation not only of foodstuffs but also of large-scale industrial products. With the gradual return to democracy (late 1980s), a reform of the economic system was initiated in the country: the private sector continued to play a primary role, while the state assumed the functions of guidance and regulation. In the nineties, inflation appeared considerably reduced compared to the values of the seventies (300 ÷ 500%), reaching 15% in 1988, but this was largely thanks to financial maneuvers, in particular the continuous devaluation of the currency (GDP per capita was $ 2,730 in 1992). “Official” unemployment fell, in 1989, to around 7% of the active population, without however considering the widespread underemployment; however, real wages had lost, in the first half of the 1980s alone, more than 50% of their effective purchasing power. However, the undeniable economic progress achieved (with new cuts in social spending, especially health and education) led Chile to obtain a restructuring of its foreign debt. At the same time the trade balance maintained a constant surplus in the period 1986-1991 (main partner the United States). In 1997, a vast program of privatization and modernization of the port system of Latin America was launched, with the participation of foreign investors. In the same year 1997, the country also initiated a restructuring of the banking system. In August 1994 Chile became an associate member of MERCOSUR and, in November of the same year, a full member of the APEC.; the country has signed free trade agreements with the USA, the European Union, Canada, China and South Korea, has participated in the CSN (Comunidad Sudamericana de Naciones) and is committed, with Brazil and Argentina, to giving democratic stability to South America and in the creation of the AFTA. In the course of 1999-2000, the economy overcame a phase of mild recession and began to grow again thanks above all to the strong recovery in industrial production. The GDP, which in 2008 amounted to US $ 169,573 million (with a per capita GDP of US $ 10,124), is growing. The country’s economy appears, in the first decade of the 2000s, to be among the strongest in Latin America: inflation is relatively low and the unemployment rate, one of the lowest in South America, is falling.