... | |Chile: A Changed Jungle For the Latin American Tiger | | | | | |2011-11-10 | Executive Summary This report first analyzes the economy of Chile in terms of strengths, which are the abundance in natural resources, and the weakness of heavy reliance on copper. Then identified two severe threats the nation was facing in 1998: Asian financial crisis and current account deficit. The two threats interact with the characteristics of Chilean economy which lead to the risks of currency crisis and a economic slowdown. The second section then investigates Chile’s current policies on inflation, trade and exchange rate. In terms of inflation, the central bank uses tight monetary policy and controls on capital inflows such as Unremunerated Reserve Requirement. For trade, the country relies on entering free trade agreements. For foreign exchange policy, Chile maintains a crawling peg system but is increasing the trading band. Facing the current challenges, we recommend that Chile should focus first on solving the potential currency crisis, then...
Words: 1533 - Pages: 7
...Sintetos Alex Vela ECON317 Sec:0301 Chile Chile has been one of the most studied economies in recent history due to its impressive feats during global recessions. Being a small, copper export dependent economy until the 1980s, Chile often went under the radar on the global marketplace. Due to policy changes starting in 1985 and a political regime change in 1990, Chile began to thrive. Chile now boasts an economic model which encourages economic freedom, competitiveness, and investment. This model has allowed for Chile to have the highest per capita income in Latin America. Although Chile has had successes with its economy, it is still considered a developing country. Large efforts have been made for the past century to secure development. While these efforts have brought Chile closer to its goal, high inequality and a relative dependency on copper prices has made it difficult for any of these efforts to have a final impact allowing for the actual transition to developed status. This paper analyzes the timeline of Chile’s economy, focusing specifically on the period of high growth of 1985 to present day and any recessions that fell between these dates. It also aims to highlight the successes and failures of the policy reforms of the past as a way to determine what will be effective in the future for allowing Chile to achieve its goal of development. Before the arrival of the Spanish in the 1500’s, the Inca ruled the northern part of Chile while the Mapuche inhabited the central...
Words: 3737 - Pages: 15
...A Short History and Summary of the Current Conditions in Chile and Its Geographical Situation Stephanie McFearin HUMN 305-Q3WW A Short History and Summary of the Current Conditions in Chile and Its Geographical Situation Geography and Background Chile is a country situated on the west coast of South America. It is also known as The Republic of Chile. The size of Chile is 289,112 square miles with a width of less than 100 miles. It is basically a little larger than Texas. Chile is divided into three main parts, mainland and two territorial islands named Isla Sala y Gomez and Easter. Chile has an interesting history and it has seen many ups and downs in its economic development (Hudson, 1994). A description of the history of the 20th century of Chile and its current economic and political situation is presented below. The history of the 20th century of Chile is mainly focused on its entrance to the parliamentary system and thus it saw the changes in its political situation. In the beginning of the 20th century, Chile was stable despite of having lesser power in the hands of presidents. During this time, congress selected the president for the country. The presidents of this century mainly includes: Germán Riesco Errazuriz, Pedro Montt, Ramón Barros Luco, and Juan Luis Sanfuentes. During the 1920’s, there was an increasing gap between the middle class and lower class of society (Bizzarro, 1987). Due to this gap, the masses were dissatisfied and they called a new leader...
Words: 1297 - Pages: 6
...Part One: The Chile Wine Industry The Chilean wine industry has experienced various transformations over the past 30 years – its quality revolution led by the complete technological renovation during the 1980s, the export boom of the 1990s, and the new terror developments during the 2000 decade. This transformation has allowed a new generation of talented viticulturists and winemakers to capitalize on Chile’s viticultural paradise and to produce World Class Wines of unique character and personality. Chile is the world’s eighth largest wine producer and the fifth largest exporter, reaching a market share of 8% by volume of the global international wine market at the close of 2010. However, and most importantly, Chile exports 70% of its wine production, making it the world’s most globalized wine industry, with great flexibility, innovation and a long-term commitment to quality and service. With 150 destination countries and 1.5 billion consumers for each year, Chilean wines are positioned as the country’s most emblematic and best known world ambassador. In the late 1970s and early 1980s, Chileans adopted advanced technology and invested in new machinery for optimizing the winemaking process in the field. The winemaker offered an innovative higher-quality product that was conducive to the development of new wine varieties. Later producers also perfected their wine cellars and invested in better labels and packing, such as boxes, bottles and cartons, that were more attractive to...
Words: 1518 - Pages: 7
...multinational strategy and to be well-known worldwide. The countries of potential choice are Mexico and Chile. The analysis has been done by comparing the overall information and in-details of each indicator. From evaluation of indicators of both countries, such as economic, social, legal and infrastructure, the analysis has shown that the economy of both countries are quite similar. However, the infrastructure, technological and legal environment seem to be better in Chile. As the Chilean government support the foreign investment in textile sector by promoting the education, technological development and the special policy especially for textile. For instance, tax reduction and promoting education in labour forces. Thus, Chilean labour forces would have the better off in comparison with Mexican labour forces. Another highlighted indicator in the country comparison - which the recommendation has inclined - is infrastructures. Both countries have the similar relative figures in number of infrastructure such as roadway, waterway and airports. But the infrastructure of electricity and internet/telephone networks seems to be at a higher level in Chile. The analysis of relevant regulations which affect Feltex’ direct investment in Chile shows that the company can gain a huge amount of benefits from the high integration in the international trading and investment framework. Chile is a member of the WTO and has signed several bilateral and regional free trade agreements. The country...
Words: 8704 - Pages: 35
...Bureau of Economic Research. ©2004 by Frederic S. Mishkin. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Can Inflation Targeting Work in Emerging Market Countries? Frederic S. Mishkin NBER Working Paper No. 10646 July 2004 JEL No. E5, F3 ABSTRACT This paper explores issues in emerging market countries to make inflation targeting work for them. It starts by outlining why emerging market economies are so different from advanced economies and then discuss why developing strong fiscal, financial and monetary institutions is so critical to the success of inflation targeting in emerging market countries. Then it discusses two emerging market countries which illustrate what it takes to make inflation targeting work well, Chile and Brazil. It then addresses a particularly complicated issue for central banks in emerging market countries who engage in inflation targeting: how they deal with exchange rate fluctuations. The next topic focuses on the IMF's role in promoting the success of inflation targeting in emerging market countries. The conclusion from this analysis is that inflation targeting...
Words: 10638 - Pages: 43
...competitive market, people have more choice and this provides great market research availability to find out what people want. Fig.1, Michael Porter, Porter’s National Diamond (1990) Throughout this report an analysis of the Chilean wine industry’s competitiveness at an international level will be carried out. Care will also be taken when considering how well the company in question will be suited to expanding into this market. The diagram above, figure 1, displays Porters National Diamond which will be the main focus for the analysis. Figure 2 shown below shows Porter’s National Diamond adapted to suit the Chilean wine industry. Fig.2 (Ayala, 2013) Chile has a market-oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions and sound policy. According to the CIA World...
Words: 3013 - Pages: 13
...to face additional financial loss or reputation loss (Gupta, 2011). Research of Corporate Communication Institute found that during crises the ability of have an effective communication team and the ability to master the media is an important tool for the each of the three stages of the crises management plan. The most effective communication strategy is audience segmentation (Gupta, 2011). Audience segmentation will allow the spokesperson to speak to key market segments, which have different concerns than other segments. In the example of the Chile mine collapse the main segments are; Chile mine owners, trapped miners, family members, media, Chile government, and the corporation’s employees. In the case of the Chile mine collapse the owners did not have a crises management plan in place to handle the crises. They failed to handle the crises communication, contingency planning, containment, and had no plan for a resolution. The troubled mine owners even attempted to hide the fact of the collapse but were unsuccessful thanks to the miner’s families. The families of the trapped miners who built a camp near the accident site played a vital role to draw their government attention to the problem. The president of Chile instructed the state secretaries to take direct charge of the rescue mission (Meza, Vidal, 2011). The Chile Government proved to be very effective in the ability to handle the crises. They successfully segmented the stakeholders and maintain control of the messages for...
Words: 848 - Pages: 4
...superiority to wool and other natural fibers. It has higher durability, softness, water repellency, and broader thermal properties than wool. It is flexible at very cold temperatures, has inherent stretch for mobility, retains thermal properties when wet, and is hypoallergenic. It is therefore better suited to this intended purpose than most manufactured fibers. As a renewable resource and biodegradable product, alpaca fiber is consistent with GMS environmental policies and offers the opportunity to market it as a “Green”, environmentally friendly product. Purpose: This study will explore the feasibility of creating a subsidiary company in Chile. The company, GMS Chile, would produce the appropriate alpaca fiber with a target of being the sole supplier for this product line. This will allow superior in-house quality control and selective breeding practices for required fiber...
Words: 6730 - Pages: 27
...What would be UT’s country risk exposure if it were to establish itself in Chile? The term Country Risk is usually used to express the possibility of changes in a specific country’s economic environment that can adversely affect business operations in terms of profitability or asset value. Country risk includes several factors that need to be considered when establishing operations abroad. For example, “financial factors such as currency controls, devaluation or regulatory changes or stability factors such as mass riots, civil war and other potential events contributing to companies' operational risk”. Chile is one of the Latin American countries with the lowest country risk. The different opinions of international institutions and investment banks provide an objective and impartial assessment of Chile’s performance. According with the data they provide, Chile appears with political and economical stability, reliable macroeconomic fundamentals and positive business environment. The 2008 Index of Economic Freedom covers 157 countries across 10 specific freedoms such as trade freedom, business freedom, investment freedom, and property rights; this are the results: “Chile's economy is 79.8 per cent free, according to our 2008 assessment, which makes it the world's 8th freest economy. Its overall score is 80 basis points higher than last year, mainly reflecting an improved investment climate. Chile is ranked 3rd out of 29 countries in the Americas and has been a regional leader...
Words: 276 - Pages: 2
...Taylor Covert (3/9/16)- ISP Country Analysis Report I. Country Introduction: Chile v. Peru Extending 2,880 miles down the western coast of South America, between the Pacific Ocean and the Andes mountains, is the remarkably slender country known as Chile. Due to its large geographical scale, encompassing 38 degrees in latitude, Chile has a range of climatic zones, from the arid Atacama Dessert in the north to the subtropical regions in the south. These diverse climates and topographies provide Chile with a wealth of natural resources including timber, iron ore, hydropower and most prominently, copper, an element known for its inherent ductility and electrical conductivity. Beginning in the mid 1960s, concurrent with China’s exploding GDP growth rate, the value of copper in the modern industrial market place began to soar due increased global demand. Chile, whose copper reserves account for 28% of the world’s total supply, experienced the positive economic impact from this increased demand, as seen through the country’s GDP growth of over 400% between 1970 and 2014, adjusting for inflation, (Appendix 1). Coupled with the solid GDP growth over the last 45 years, Chile was also able to establish strong institutions, an efficient government with relatively low levels of corruption, and solid macroeconomic stability, which subsequently established Chile as the most competitive economy in Latin America according the 2015 Global Competitiveness Report (GCR) (Appendix 2). Directly...
Words: 2514 - Pages: 11
...individuals within a culture (Locker & Kienzler, 2010, p. 140). There are many topics that are to be considered when assigned to Chile beside the language barrier. History of Chile Chile is surrounded on three sides by virtually impassable mountains and remained largely unknown to the outside world until the middle of the fifteenth century, when the Incas began their great conquests of much of the continent (www.geographia.com, 2010). The Incas encountered the Mapuche, one of the three Araucanian peoples who occupied the Rio Maule in the Lake District. The Spanish landed in 1541 and in February, Pedro de Valdivia, founded Santiago. In 1817 Chile gained independence from Spain after seven years of war. General Augusto Pinochet Ugarte seized control of the government with help from the United States Central Intelligence Agency in 1973 and maintained control for the next decade and a half. Population Chile's population is composed predominantly of mestizos, who are descended from marriage between the Spanish colonizers and the indigenous people (www.geographia.com, 2010). The major ethnic groups in Chile are Mestizo (mixed Native American and European ancestry), which comprise 66 percent of the population; Europeans, which compromise 25 percent of the population and Native American who make up 7 percent. Literacy is very high in Chile, and the majority of the people are Roman Catholic (www.historycentral.com, N.D.). As of July 2002 the population was 15,498...
Words: 1622 - Pages: 7
...character. Chile currently is one of the leading nations in the global in the wine industry, currently ranked at 8th as the world’s largest wine producer and ranked 5th as the largest wine exporter. Chile exports a massive 70% from its own wine production making Chile the world’s most globalised wine industry. Even with the enjoyed success by the nation, Chilean wines find themselves facing huge competition globally in different markets as the wines produced in Chile sells at a relatively low average price therefor directly affecting the profit levels in return. (Emeraldinsight, 2010) 2. Factor Conditions As of 2011, Chilean vineyards have been facing shortage of filed workers as most employees are migrating to construction, agriculture director Santa Rita is quoted saying “between 15% and 20% fewer workers now than two years ago” Working in vineyards is not a preferable profession to the locals anymore as they end up working eight hours more just to get the minim wage. (MecrcoPress, 2011) This means finding field workers for the vineyards will prove difficult unless the company is prepared to pay the minimum wage. 2.1 The unemployment rates in general in Chile is also decreasing, it has decreased to 5.70% in November 2013 from 6.19% in November 2012, with over 61% of people between the ages 15 - 64 working in paid employment. (Trading Economies, 2013) 2.2 Water availability for industrial purposes has been a problem in Chile in the recent years, Chile as a country...
Words: 3401 - Pages: 14
...1. Was Falabella prepared for internationalization in 1991? (Justify your response with the readings). “Falabella’s aim is to become the leading retail operator in Latin America, both in terms of presence as well as financial results, combing world-class management quality with commitment to local communities” At that time Chile had a relatively mature and saturated market, so Falabella decided to expand and open their first store in Mendoza, Argentina. As a Chilean company which had been in the market for more than a century, they understood the local market very well and had a value proposition based on local preferences. Falabella knew how to create value for Chileans and thought it would work the same way in Argentina, due to previous experiences with tourists buying in department stores and decided to replicate the same proposition, assuming there would be similar preferences and consumer tastes in both countries. Falabella was not prepared for internationalization and confronted a completely different environment than the one in Chile. Legal norms, difficulties of importing, consumer preferences and shopping habits turned out to be totally different and were not understood before they decided to internationalize and resulted in lower sales than the expected. Falabella didn’t fully understand the Argentine culture and the importance of the European influence and heritage on their culture. Exclusivity was the most important thing at the time of selecting and buying their...
Words: 1279 - Pages: 6
...Chilean Economic Structure An analysis of the Chilean economic structure reveals that this country has overcome the 1970’s Marxist economic rule, austerity and mass privatization to obtain the strongest sovereign bond rating in South America. Under the rule of socialist President Salvador Allende from 1970 to 1973, Chile experienced civil unrest and the county spun out of control as President Allende’s economic policies polarized an already fragile nation. During President Allende’s brief tenure, the astronomical rise in the prices of goods and services coincided with a plummeting consumer purchase power rate cased massive inflation that plunged the country into a huge recession. The following details the Chilean economic structure and the role the government played during its pedestrian growth in the 1950’s, its fall in the 1970’s and its current day resurrection. During the 1950’s to 1970, Chile had the poorest economic performance among Latin America’s large and medium-sized countries. This pedestrian growth was attributed to the government and its overvaluation of the domestic currency. The government continually resorted to controlling agricultural prices in order to subsidize the urban and middle classes. This subsidy caused a lag in the growth of the agricultural sector, was one of the most glaring symptoms of Chile’s economic woes during the 1950’s. At the beginning of the 1950’s, inflation, which had already and economic problem and been since the 1880’s, became...
Words: 2413 - Pages: 10
