Economy
The economy in Chile
The economy of Chile is one of the most stable in South America. The economy has been growing for more than ten years. In the Human Development Index, a list of all countries that measure income, but also the health and education of its residents, Chile ranks 42nd (out of 189 countries) – and thus has the highest place in any South American country. It also takes one of the best places in corruption, that is, there is little corruption. Chile has the best value in Latin America after Uruguay. In 2010 Chile became a member of the OECD, the first country in South America.
Natural resources: copper, lithium and gold
Copper and lithium are extracted and processed. Copper is one of the country’s most important mineral resources. The two largest copper mines in the world are located in Chile. Chile is the world’s largest producer of copper. In the case of gold, Chile is not currently one of the major producers, but there are still large deposits in Chilean soil.
Agriculture: fruit and salmon
Agriculture only makes a very small contribution to the country’s economy (4.2 percent). 9.2 percent of the population work in agriculture. Fruits such as apples, pears, apricots, cherries and peaches as well as asparagus, flowers and wine are increasingly being grown. These products are mainly exported to South America and the USA. The traditional cultivation of wheat, maize and sugar beet is declining and is more intended for domestic sales, as is the raising of cattle, sheep and poultry.
Fish is also caught on the coast. Salmon is grown in aquaculture. Chile now exports as much salmon as Norway, would you have thought? Chile is increasingly becoming an important fishing nation. The huge swarms of anchovies and sardines are processed into fish meal and exported, mainly to Germany.
Industry
A third (33 percent) of GDP is generated by industry with 23 percent of the working population. There are factories for food, fish processing, iron and steel, wood, cement and textiles. Profits from exports, i.e. sales to other countries, are mainly for copper. It also sells fruit (especially grapes and apples), fish, paper and wine.
Tourists bring money
Services contribute 63 percent to Chile’s economy. This includes shops, restaurants, banks, transportation, electricity providers and much more. Tourism is one of them. 6 million people come to Chile every year – at least that was the number in 2018. After Mexico and Brazil, Chile is one of the most frequently visited travel destinations, along with Peru, which is visited by a similar number of tourists. Thus tourism is an important branch of the economy.
History
Settlement of the south
With the victory over the Mapuche in 1881, the south of the country was also increasingly populated. On Tierra del Fuego, the grasslands were used to graze sheep. The Selk’nam people who lived here did not want their land to be taken away so easily and resisted. The Selk’nam were systematically persecuted by the sheep farmers and murdered until they were exterminated.
Copper instead of saltpetre
From 1904 copper was mined, which soon overtook saltpeter as the best export good. Because since it was now possible to produce artificial fertilizers, saltpetre was hardly ever needed.
Great Depression and the time up to World War II
In the Great Depression, however, the price of copper and saltpeter fell so much that Chile was hit particularly hard. One began to fundamentally change economic policy: imports were severely restricted by tariffs. In this way, the company’s own production was boosted. But initially there was economic and political chaos. Several coups took place. The left-liberal Radical Party ruled between 1938 and 1952 with three presidents. In 1948 the Communist Party was banned.
The 1950s and 1960s
In 1949 women were allowed to vote for the first time. In 1958 the Communist Party was re-admitted. The Christian Democratic Party became the strongest party in the country when it was founded in 1957. With Eduardo Frei Montalva, she was the president from 1964 to 1970. With his reforms such as the partial nationalization of the copper industry, he did not go far enough for the left and the right saw him as a communist.
Restricting imports – an economic strategy
Import substitution is what is called in the technical term when one restricts imports. That means that you levy duties on goods from abroad. You want them to be made in your own country. This is the first step in developing their own industry in developing countries. In Latin America, import substitution was followed in most countries from around 1930 and this strategy followed until around 1980. In Chile, it was successful.
