A healthy economy of great potential

Chile leads regional indexes and attracts foreign direct investment for 200,000 million dollars

Chile has a population of more than 18 million and a gross domestic product (GDP) of around 500,000 million dollars, and is considered among the ten most open economies in the world. In the past 12 years, it has received $200 million in  foreign direct investment, equivalent to just under 50% of its GDP.

The foreign investor has become a familiar figure and very visible among Chileans. At least 15% of the available labour force serves in companies, the current owners of which come from abroad.

In 1990 the Chilean per capita income was approaching $5,000 a year in purchasing power parity, far from the rich in the world and below the average in Latin America. Today, 25 years later, it is above $25,000, 5 times higher, and 40% above the average for Latin America.

According to the World Credit Report 2016, prepared by Banco Credit Suisse, in relation to Chile and the rest of Latin America, this development is described as “surprising”. The report points out that, while the Chilean per capita GDP is 37% higher than that of Argentina and 22% than that of Brazil, ” its average wealth, measured by the net worth of households, is more than double that of Brazil and three times greater than that of Argentina.”

A large amount of foreign investment took its first steps in Latin America, entering through Chile. The investors made this country their platform to enter the region. We are referring to the beginning of the 1980s, coinciding with the advent of new technologies. It is true, of course, that foreign investors had already existed in strategic niches, mainly in mining, electricity, telephony or fuels, among others, prior to this.

Chile has signed 26 free trade agreements with 64 markets which represent 64.1% of the world’s population and 86.3% of global GDP. The longest nation on earth has enormous advantages in almost all economic sectors and services and auxiliary industries across most of them. Of note are mining, energy, the food industry, physical and technological infrastructure, tourism, forestry, aquaculture and global services. Likewise, natural laboratories offer opportunities for research centres around the world. The best example is current astronomical presence: it makes up 40% of the existing capacity on the terrestrial map, and by 2020 it will be 70%.

The investor can use the state programme of support to strategic projects in the pre-investment stage: this co-finances pre-investment studies and finances up to 70% of the cost of feasibility studies (to a maximum of $260,000) for projects worth more than 2 million dollars. In high technology, co-financing may be requested for expansion or new investments in technology. The programme finances up to 30% of high-tech proposals with a maximum of 5 million dollars. This and some other programmes are not incompatible with those obtained in their places of origin.

Chile is among the “finalist countries” of most of the companies that are considering investing in South America or increasing their investment in the region. On the table there are plenty of possible different businesses, most of them in the Chilean regions, almost all open to the Pacific.

Author:
William Ruz