MARKET REPORT – CHILE

BA 447

ALI CHEEMA

BOBBY FERGUSON

JONATHAN JOHANSON

Chile Marketing/Country Situation

Background

Prior to the coming of the Spanish in the 16th century, northern Chile was under Inca rule while Araucanian Indians (also known as Mapuches) inhabited central and southern Chile. Although Chile declared its independence in 1810, decisive victory over the Spanish was not achieved until 1818. In the War of the Pacific (1879-83), Chile defeated Peru and Bolivia and won its present northern regions. It was not until the 1880s that the Araucanian Indians were completely subjugated. A three-year-old Marxist government of Salvador ALLENDE was overthrown in 1973 by a military coup led by Augusto PINOCHET, who ruled until a freely elected president was installed in 1990. Sound economic policies, maintained consistently since the 1980s, have contributed to steady growth, reduced poverty rates by over half, and have helped secure the country's commitment to democratic and representative government. Chile has increasingly assumed regional and international leadership roles befitting its status as a stable, democratic nation.

Geography

Location: / Southern South America, bordering the South Pacific Ocean, between Argentina and Peru
Geographic coordinates: / 30 00 S, 71 00 W
Map references: / South America
Area: / total: 756,950 sq km
land: 748,800 sq km
water: 8,150 sq km
note: includes Easter Island (Isla de Pascua) and Isla Sala y Gomez
Area - comparative: / slightly smaller than twice the size of Montana
Land boundaries: / total: 6,339 km
border countries: Argentina 5,308 km, Bolivia 860 km, Peru 171 km
Coastline: / 6,435 km
Maritime claims: / territorial sea: 12 nm
contiguous zone: 24 nm
exclusive economic zone: 200 nm
continental shelf: 200/350 nm
Climate: / temperate; desert in north; Mediterranean in central region; cool and damp in south
Terrain: / low coastal mountains; fertile central valley; rugged Andes in east
Elevation extremes: / lowest point: Pacific Ocean 0 m
highest point: Nevado Ojos del Salado 6,880 m
Natural resources: / copper, timber, iron ore, nitrates, precious metals, molybdenum, hydropower
Land use: / arable land: 2.62%
permanent crops: 0.43%
other: 96.95% (2005)
Irrigated land: / 19,000 sq km (2003)
Total renewable water resources: / 922 cu km (2000)
Freshwater withdrawal (domestic/industrial/agricultural): / total: 12.55 cu km/yr (11%/25%/64%)
per capita: 770 cu m/yr (2000)
Natural hazards: / severe earthquakes; active volcanism; tsunamis
Environment - current issues: / widespread deforestation and mining threaten natural resources; air pollution from industrial and vehicle emissions; water pollution from raw sewage
Environment - international agreements: / party to: Antarctic-Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Seals, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Wetlands, Whaling
signed, but not ratified: none of the selected agreements
Geography - note: / strategic location relative to sea lanes between Atlantic and Pacific Oceans (Strait of Magellan, Beagle Channel, Drake Passage); Atacama Desert is one of world's driest regions

People

Population: / 16,454,143 (July 2008 est.)
Age structure: / 0-14 years: 23.6% (male 1,987,962/female 1,899,489)
15-64 years: 67.6% (male 5,556,867/female 5,563,666)
65 years and over: 8.8% (male 602,789/female 843,370) (2008 est.)
Median age: / total: 31.1 years
male: 30.1 years
female: 32.1 years (2008 est.)
Population growth rate: / 0.905% (2008 est.)
Birth rate: / 14.82 births/1,000 population (2008 est.)
Death rate: / 5.77 deaths/1,000 population (2008 est.)
Net migration rate: / NA (2008 est.)
Sex ratio: / at birth: 1.05 male(s)/female
under 15 years: 1.05 male(s)/female
15-64 years: 1 male(s)/female
65 years and over: 0.72 male(s)/female
total population: 0.98 male(s)/female (2008 est.)
Infant mortality rate: / total: 7.9 deaths/1,000 live births
male: 8.7 deaths/1,000 live births
female: 7.06 deaths/1,000 live births (2008 est.)
Life expectancy at birth: / total population: 77.15 years
male: 73.88 years
female: 80.59 years (2008 est.)
Total fertility rate: / 1.95 children born/woman (2008 est.)
HIV/AIDS - adult prevalence rate: / 0.3% (2003 est.)
HIV/AIDS - people living with HIV/AIDS: / 26,000 (2003 est.)
HIV/AIDS - deaths: / 1,400 (2003 est.)
Nationality: / noun: Chilean(s)
adjective: Chilean
Ethnic groups: / white and white-Amerindian 95.4%, Mapuche 4%, other indigenous groups 0.6% (2002 census)
Religions: / Roman Catholic 70%, Evangelical 15.1%, Jehovah's Witness 1.1%, other Christian 1%, other 4.6%, none 8.3% (2002 census)
Languages: / Spanish (official), Mapudungun, German, English
Literacy: / definition: age 15 and over can read and write
total population: 95.7%
male: 95.8%
female: 95.6% (2002 census)
School life expectancy (primary to tertiary education): / total: 14 years
male: 14 years
female: 14 years (2006)
Education expenditures: / 3.2% of GDP (2006)

Government

Country name: / conventional long form: Republic of Chile
conventional short form: Chile
local long form: Republica de Chile
local short form: Chile
Government type: / republic
Capital: / name: Santiago
geographic coordinates: 33 27 S, 70 40 W
time difference: UTC-4 (1 hour ahead of Washington, DC during Standard Time)
daylight saving time: +1hr, begins second Sunday in October; ends second Sunday in March
Administrative divisions: / 15 regions (regiones, singular - region); Aisen del General Carlos Ibanez del Campo, Antofagasta, Araucania, Arica y Parinacota, Atacama, Biobio, Coquimbo, Libertador General Bernardo O'Higgins, Los Lagos, Los Rios, Magallanes y de la Antartica Chilena, Maule, Region Metropolitana (Santiago), Tarapaca, Valparaiso
note: the US does not recognize claims to Antarctica
Independence: / 18 September 1810 (from Spain)
National holiday: / Independence Day, 18 September (1810)
Constitution: / 11 September 1980, effective 11 March 1981; amended 1989, 1991, 1997, 1999, 2000, 2003, and 2005
Legal system: / based on Code of 1857 derived from Spanish law and subsequent codes influenced by French and Austrian law; judicial review of legislative acts in the Supreme Court; has not accepted compulsory ICJ jurisdiction; note - in June 2005, Chile completed overhaul of its criminal justice system to a new, US-style adversarial system
Suffrage: / 18 years of age; universal and compulsory
Executive branch: / chief of state: President Michelle BACHELET Jeria (since 11 March 2006); note - the president is both the chief of state and head of government
head of government: President Michelle BACHELET Jeria (since 11 March 2006)
cabinet: Cabinet appointed by the president
elections: president elected by popular vote for a single four-year term; election last held 11 December 2005, with runoff election held 15 January 2006 (next to be held in December 2009)
election results: Michelle BACHELET Jeria elected president; percent of vote - Michelle BACHELET Jeria 53.5%; Sebastian PINERA Echenique 46.5%
Legislative branch: / bicameral National Congress or Congreso Nacional consists of the Senate or Senado (38 seats; members elected by popular vote to serve eight-year terms; one-half elected every four years) and the Chamber of Deputies or Camara de Diputados (120 seats; members are elected by popular vote to serve four-year terms)
elections: Senate - last held 11 December 2005 (next to be held in December 2009); Chamber of Deputies - last held 11 December 2005 (next to be held in December 2009)
election results: Senate - percent of vote by party - NA; seats by party - CPD 20 (PDC 6, PS 8, PPD 3, PRSD 3), APC 17 (UDI 9, RN 8), independent 1; Chamber of Deputies - percent of vote by party - NA; seats by party - CPD 65 (PDC 21, PPD 22, PS 15, PRSD 7), APC 54 (UDI 34, RN 20), independent 1; note - as of 8 January 2008: Senate - seats by party - CPD 18, (PDC 5, PS 8, PPD 2, PRSD 3), APC 16 (UDI 9, RN 7), independent 4; Chamber of Deputies - seats by party - CPD 57 (PDC 16, PPD 19, PS 15, PRSD 7), APC 53 (UDI 33, RN 20), independent 10.
Judicial branch: / Supreme Court or Corte Suprema (judges are appointed by the president and ratified by the Senate from lists of candidates provided by the court itself; the president of the Supreme Court is elected every three years by the 20-member court); Constitutional Tribunal
Political parties and leaders: / Alliance for Chile (Alianza) or APC (including National Renewal or RN [Carlos LARRAIN Pena] and Independent Democratic Union or UDI [Juan Antonio COLOMA]); Coalition of Parties for Democracy (Concertacion) or CPD (including Christian Democratic Party or PDC [Jorge BURGOS], Socialist Party or PS [Camilo ESCALONA Medina], Party for Democracy or PPD [Pepe AUTH], Radical Social Democratic Party or PRSD [Jose Antonio GOMEZ Urrutia]); Communist Party or PC [Guillermo TEILLIER]; Humanist Party [Marilen CABRERA Olmos]
Political pressure groups and leaders: / Roman Catholic Church; United Labor Central or CUT includes trade unionists from the country's five largest labor confederations
other: revitalized university student federations at all major universities
International organization participation: / APEC, BIS, CAN (associate), FAO, G-15, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt (signatory), ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC, LAES, LAIA, Mercosur (associate), MIGA, MINUSTAH, NAM, OAS, OPANAL, OPCW, PCA, RG, UN, UNASUR, UNCTAD, UNESCO, UNHCR, UNIDO, Union Latina, UNMOGIP, UNTSO, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO
Diplomatic representation in the US: / chief of mission: Ambassador Mariano FERNANDEZ
chancery: 1732 Massachusetts Avenue NW, Washington, DC 20036
telephone: [1] (202) 785-1746
FAX: [1] (202) 887-5579
consulate(s) general: Chicago, Houston, Los Angeles, Miami, New York, Philadelphia, San Francisco, San Juan (Puerto Rico)
Diplomatic representation from the US: / chief of mission: Ambassador Paul E. SIMONS
embassy: Avenida Andres Bello 2800, Las Condes, Santiago
mailing address: APO AA 34033
telephone: [56] (2) 330-3000
FAX: [56] (2) 330-3710, 330-3160
Flag description: / two equal horizontal bands of white (top) and red; a blue square the same height as the white band at the hoist-side end of the white band; the square bears a white five-pointed star in the center representing a guide to progress and honor; blue symbolizes the sky, white is for the snow-covered Andes, and red represents the blood spilled to achieve independence
note: design was influenced by the US flag

Economy

Economy - overview: / Chile has a market-oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Exports account for 40% of GDP, with commodities making up some three-quarters of total exports. Copper alone provides one-third of government revenue. During the early 1990s, Chile's reputation as a role model for economic reform was strengthened when the democratic government of Patricio AYLWIN - which took over from the military in 1990 - deepened the economic reform initiated by the military government. Growth in real GDP averaged 8% during 1991-97, but fell to half that level in 1998 because of tight monetary policies implemented to keep the current account deficit in check and because of lower export earnings - the latter a product of the global financial crisis. A severe drought exacerbated the situation in 1999, reducing crop yields and causing hydroelectric shortfalls and electricity rationing, and Chile experienced negative economic growth for the first time in more than 15 years. In the years since then, growth has averaged 4% per year. Chile deepened its longstanding commitment to trade liberalization with the signing of a free trade agreement with the US, which took effect on 1 January 2004. Chile claims to have more bilateral or regional trade agreements than any other country. It has 57 such agreements (not all of them full free trade agreements), including with the European Union, Mercosur, China, India, South Korea, and Mexico. Over the past five years, foreign direct investment inflows have quadrupled to some $17 billion in 2008. The Chilean government conducts a rule-based countercyclical fiscal policy, accumulating surpluses in sovereign wealth funds during periods of high copper prices and economic growth, and allowing deficit spending only during periods of low copper prices and growth. As of September 2008, those sovereign wealth funds - kept mostly outside the country and separate from Central Bank reserves - amounted to more than $20 billion.
GDP (purchasing power parity): / $252.9 billion (2008 est.)
GDP (official exchange rate): / $181.5 billion (2008 est.)
GDP - real growth rate: / 4% (2008 est.)
GDP - per capita (PPP): / $15,400 (2008 est.)
GDP - composition by sector: / agriculture: 4.8%
industry: 50.5%
services: 44.7% (2008 est.)
Labor force: / 7.32 million (2008 est.)
Labor force - by occupation: / agriculture: 13.2%
industry: 23%
services: 63.9% (2005)
Unemployment rate: / 7.5% (August-October 2008)
Population below poverty line: / 18.2% (2005)
Household income or consumption by percentage share: / lowest 10%: 1.4%
highest 10%: 45% (2003)
Distribution of family income - Gini index: / 54.9 (2003)
Investment (gross fixed): / 23.7% of GDP (2008 est.)
Budget: / revenues: $46.5 billion
expenditures: $37.7 billion (2008 est.)
Fiscal year: / calendar year
Public debt: / 3.8% of GDP (2008 est.)
Inflation rate (consumer prices): / 8.8% (2008 est.)
Central bank discount rate: / 6% (31 December 2007)
Commercial bank prime lending rate: / 8.67% (31 December 2007)
Stock of money: / $16.6 billion (31 December 2007)
Stock of quasi money: / $80.42 billion (31 December 2007)
Stock of domestic credit: / $127.1 billion (31 December 2007)
Market value of publicly traded shares: / $212.9 billion (31 December 2007)
Industries: / copper, other minerals, foodstuffs, fish processing, iron and steel, wood and wood products, transport equipment, cement, textiles
Electricity - production: / 50.37 billion kWh (2006 est.)
Electricity - consumption: / 45.52 billion kWh (2006 est.)
Electricity - exports: / 0 kWh (2007 est.)
Electricity - imports: / 1.628 billion kWh (2007 est.)
Electricity - production by source: / fossil fuel: 47%
hydro: 51.5%
nuclear: 0%
other: 1.4% (2001)
Oil - production: / 11,610 bbl/day (2007 est.)
Oil - consumption: / 253,000 bbl/day (2006 est.)
Oil - exports: / 32,500 bbl/day (2005)
Oil - imports: / 222,900 bbl/day (2006 est.)
Oil - proved reserves: / 150 million bbl (1 January 2008 est.)
Natural gas - production: / 1.8 billion cu m (2007 est.)
Natural gas - consumption: / 4.2 billion cu m (2007 est.)
Natural gas - exports: / 0 cu m (2007 est.)
Natural gas - imports: / 2.4 billion cu m (2007 est.)
Natural gas - proved reserves: / 97.97 billion cu m (1 January 2008 est.)
Current account balance: / -$1.574 billion (2008 est.)
Exports: / $69.1 billion f.o.b. (2008 est.)
Exports - commodities: / copper, fruit, fish products, paper and pulp, chemicals, wine
Exports - partners: / China 14.8%, US 12.5%, Japan 10.5%, Netherlands 5.8%, South Korea 5.7%, Italy 5.1%, Brazil 5% (2007)
Imports: / $59.17 billion f.o.b. (2008 est.)
Imports - commodities: / petroleum and petroleum products, chemicals, electrical and telecommunications equipment, industrial machinery, vehicles, natural gas
Imports - partners: / US 16.7%, China 11.2%, Brazil 10.3%, Argentina 9.9% (2007)
Economic aid - recipient: / $0 (2006)
Reserves of foreign exchange and gold: / $21.99 billion (31 December 2008 est.)
Debt - external: / $64.57 billion (31 December 2008 est.)
Stock of direct foreign investment - at home: / $108.9 billion (2008 est.)
Stock of direct foreign investment - abroad: / $29.98 billion (2008 est.)
Currency (code): / Chilean peso (CLP)
Currency code: / CLP
Exchange rates: / Chilean pesos (CLP) per US dollar - 509.02 (2008 est.), 526.25 (2007), 530.29 (2006), 560.09 (2005), 609.37 (2004)

Communications

Telephones - main lines in use: / 3.379 million (2007)
Telephones - mobile cellular: / 13.955 million (2007)
Telephone system: / general assessment: privatization begun in 1988; most advanced telecommunications infrastructure in South America; modern system based on extensive microwave radio relay facilities; fixed-line connections have dropped in recent years as mobile-cellular usage continues to increase, reaching a level of 85 telephones per 100 persons
domestic: extensive microwave radio relay links; domestic satellite system with 3 earth stations
international: country code - 56; submarine cables provide links to the US and to Central and South America; satellite earth stations - 2 Intelsat (Atlantic Ocean) (2007)
Radio broadcast stations: / AM 180 (8 inactive), FM 64, shortwave 17 (1 inactive) (1998)
Radios: / 5.18 million (1997)
Television broadcast stations: / 63 (plus 121 repeaters) (1997)
Televisions: / 3.15 million (1997)
Internet country code: / .cl
Internet hosts: / 847,215 (2008)
Internet Service Providers (ISPs): / 7 (2000)
Internet users: / 5.57 million (2007)

Transportation

Airports: / 358 (2007)
Airports - with paved runways: / total: 79
over 3,047 m: 5
2,438 to 3,047 m: 8
1,524 to 2,437 m: 22
914 to 1,523 m: 25
under 914 m: 19 (2007)
Airports - with unpaved runways: / total: 279
2,438 to 3,047 m: 2
1,524 to 2,437 m: 12
914 to 1,523 m: 49
under 914 m: 216 (2007)
Pipelines: / gas 2,550 km; gas/liquid petroleum gas 42 km; liquid petroleum gas 539 km; oil 1,002 km; refined products 757 km; unknown (oil/water) 97 km (2007)
Railways: / total: 6,585 km
broad gauge: 2,831 km 1.676-m gauge (1,317 km electrified)
narrow gauge: 3,754 km 1.000-m gauge (2006)
Roadways: / total: 80,505 km
paved: 16,745 km (includes 2,414 km of expressways)
unpaved: 63,760 km (2004)
Merchant marine: / total: 44
by type: bulk carrier 9, cargo 7, chemical tanker 8, container 1, liquefied gas 2, passenger 4, passenger/cargo 2, petroleum tanker 7, roll on/roll off 1, vehicle carrier 3
registered in other countries: 40 (Argentina 7, Brazil 1, Cyprus 1, Isle of Man 6, Marshall Islands 4, Norway 2, Panama 12, Singapore 6, Venezuela 1) (2008)
Ports and terminals: / Coronel, Huasco, Lirquen, Puerto Ventanas, San Antonio, San Vicente, Valparaiso

Military

Military branches: / Army of the Nation, Chilean Navy (Armada de Chile, includes naval air, marine corps, and Maritime Territory and Merchant Marine Directorate (Directemar)), Chilean Air Force (Fuerza Aerea de Chile, FACh), Carabineros Corps (Cuerpo de Carabineros) (2008)
Military service age and obligation: / 18-45 years of age for voluntary male and female military service, although the right to compulsory recruitment is retained; service obligation - 12 months for Army, 22 months for Navy and Air Force
Manpower available for military service: / males age 16-49: 4,242,912
females age 16-49: 4,182,509 (2008 est.)
Manpower fit for military service: / males age 16-49: 3,542,448
females age 16-49: 3,500,059 (2008 est.)
Manpower reaching militarily significant age annually: / male: 147,518
female: 141,139 (2008 est.)
Military expenditures: / 2.7% of GDP (2006)

Trans-National Issues

Disputes - international: / Chile and Peru rebuff Bolivia's reinvigorated claim to restore the Atacama corridor, ceded to Chile in 1884, but Chile has offered instead unrestricted but not sovereign maritime access through Chile to Bolivian gas and other commodities; Chile rejects Peru's unilateral legislation to change its latitudinal maritime boundary with Chile to an equidistance line with a southwestern axis favoring Peru, in October 2007, Peru took its maritime complaint with Chile to the ICJ; territorial claim in Antarctica (Chilean Antarctic Territory) partially overlaps Argentine and British claims; the joint boundary commission, established by Chile and Argentina in 2001, has yet to map and demarcate the delimited boundary in the inhospitable Andean Southern Ice Field (Campo de Hielo Sur)
Illicit drugs: / transshipment country for cocaine destined for Europe and the region; economic prosperity and increasing trade have made Chile more attractive to traffickers seeking to launder drug profits, especially through the Iquique Free Trade Zone, but a recent anti-money-laundering law improves controls; imported precursors passed on to Bolivia; domestic cocaine consumption is rising, making Chile a significant consumer of cocaine

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