Thinking About Chile

Chile has the highest GDP per capita of the South American countries. At $15,000, it is slightly higher than Argentina, Venezuela, and Urugay, and is about fifty percent more than Brazil's $10,000 figure. The other seven countries do not crack the five-figure threshold. Chilean GDP is $200 billion and government expenses are $40 billion; this is 20% of GDP versus U.S. federal government spending of 25% of GDP.

Chile also has a set of budget rules that essentially require a fiscal surplus over time. In 2011, the government's budget was expected to be in surplus by roughly one percent. Also according to EconoMonitor, the gross Chilean government debt was 8.8 percent of GDP, "which is less than the government’s holdings of financial assets, meaning that net debt is negative. On top of all that, it has a current account surplus approaching 2 percent of GDP."

The pillars of the Chilean economy are mining (one-third of the world's copper output), forestry (pulpwood), salmon (40% of worldwide sales), and agriculture. The country is heavily dependent on copper prices in much the same way that Russia is dependent on petroleum prices.

Interestingly, Chile exports high-value agricultural products even though a miniscule proportion of the country is arable land. Chilean agricultural output comes from its Central Valley, between the Coastal Range and the Andes. This area runs N-S across roughly ten degrees of latitude, creating a variety of climate regions and allowing staggered, extended harvesting seasons. Also, it has agricultural seasons that are the inverse of the consumer countries in the northern hemisphere.

I found a paper (from 2004) called Doing Business in Chile, which is a handy reference.Simon black from SovereignMan has been writing extensively about Chile.