The world's biggest copper producer. Political stability and free market policies of the Aylwin government led to a massive inflow of investment, which has kept the economy growing at 5% a year since 1991. Continuing sell-off of the state sector û ruthlessly cut by Pinochet to leave it small and efficient û will attract further investment.
Weaknesses
Dependence on the USA as its largest single trading partner makes Chile vulnerable to changes in US trade policy. Copper revenues are vulnerable to shifts in world market prices.
Profile
Chile's economy has been a battle-ground for competing ideologies. Under Allende, socialist policies brought huge corporations into the state sector. The Pinochet dictatorship which overthrew him introduced radical monetarist policies. Drastic cutting of the state sector and the selling-off of state enterprises at below market value led to large profits for investors and speculators. Tough economic measures, irrespective of the social consequences, reduced Chile's inflation rate from 400% to 15%.
The Aylwin and Frei governments have continued the market-led approach to the economy with some success. In particular, exports are continuing to rise, helping to finance the capital goods imports which are vital to the modernization of Chile's industrial sector.
