...Tariffs in Chile From 1930 through 1960 the Chilean economy was highly protected with import and export quotas, import permits, tariffs, noninterest-bearing import deposits and multiple exchange rates imposed by the government. The Central Bank negotiated, with each importer, which exchange rate to apply to each transaction. Moreover, imports included only intermediate and capital goods and a few essential consumer goods. Guidelines to approve products from other countries were followed and several goods were prohibited for importation. Because of this situation, there were three attempts to eliminate tariffs and all restrictions. By 1974, changes started taking place. Trade liberalization allowed Chile to develop where they had a comparative advantage and reduced the production of goods and services where there was no comparative advantage. Chile growth performance has dramatically changed over the last years and the elimination of trade barriers has played an important role. Chile has become one of South America’s most prosperous nations and its economy has grown an average of 5% in the last 4 years. Chile is dependent on foreign trade and its trade in good’s share in GDP rose from 44% in 1990 to 69.6% in 2008.The diversity of imports has increased and the number of countries where Chile exports their products has increased as well. Chile main imports are: crude, petroleum, chemicals, electronics and telecom equipment, natural gas, industrial machinery, vehicles, mobile...
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...Compañia de Teléfonos de Chile (CTC) is a telecommunication company based in Chile. By the late 1980s, Chile did not have a broad telecommunications network. The country ranked only 12th out of 24 Latin American and Caribbean nations. They were a state-owned corporation that experienced a below average record for servicing customer needs. Hundreds of thousands of potential customers had been on the waiting list for service for several years. Due to the underdevelopment of telecommunications, need for expansion and a mediocre record at servicing customers’ needs, was evidence that the privatization of CTC was an unavoidable option for the Chilean government. In 1987 government put CTC up for bid to attract a firm that would be able to expand, modernize and improve their telecommunications network, and also offer them some financial security. Bond Company submitted an all-cash bid of $114.8 million for 151 million shares of CTC’s stock and was accepted. By 1988 Bond owned 49.5% of CTC stock. They planned to increase the number of service lines, add cellular service and high-speed data transmission networks. Why does CTC need funds? Are internal funds sufficient to meet the needs? Can CTC raise funds in its own country? What are the potential sources of funds in Chile? In April of 1990 CTC had embarked upon an aggressive expansion program that required substantial capital resources putting the company into a financially challenging dilemma. The expansion program...
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... | |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...
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...Differences in the Political Economies During the cold war the United States had several rivals which included Chile. Whereas, in Honduras the United States bases were provided so that Nicaraguan rebels could be funded and trained by the U.S. Mexico has never been a major confliction but there have never tried to be a key player when it comes to be a go between with the other nations of Latin America. Recently, the countries of Honduras, Mexico and Chile have become encouraging for the business industry from the U.S. because the political environment has changed. Authorities from the rightwing have lobbied for closer relations with the U.S. Because of such relations it has caused Mexico to become the third largest trading associate of the U. S. However, Mexico and Honduras are dealing with a high crime rate when compared to Chile and Honduras and Mexico have had cases of political intimidation (Kingstone, 2013). The Cultural Barriers Tradition and family values are highly regarded in the Mexican culture. For example, working outside the home in a commercial organization is not as important to women then working in their homes. The children remain at home longer then in the U.S particularly the families that have middle and high incomes. The culture in Honduras has been integrated with the Spanish and Native American cultures. Spanish is the main culture in Chile. However, there are different strains such as the cosmopolitan strain which is the urban and prosperous populace...
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...Table of Contents Executive Summary 3 Issue Identification 4 Slowing Growth in NAFTA Trade 4 Continuation of NAFTA Strategy versus Expansion into Latin America 4 Taking Advantage of Economic Growth in Asia and Emerging Markets 4 Expanding Overseas 4 Environmental & Root Cause Analysis 5 Slowing Growth in NAFTA Trade 5 Continuation of NAFTA Strategy versus Expansion into Latin America 5 Taking Advantage of Economic Growth in Asia and Emerging Markets 5 Expanding Overseas 6 Alternatives and/or Options 6 Slowing Growth in NAFTA Trade 6 Continuation of NAFTA Strategy versus Expansion into Latin America 6 Taking Advantage of Economic Growth in Asia and Emerging Markets 7 Expanding Overseas 7 Recommendations and Implementation 7 Slowing Growth in NAFTA Trade 7 Continuation of NAFTA Strategy versus Expansion into Latin America 7 Taking Advantage of Economic Growth in Asia and Emerging Markets 8 Expanding Overseas 8 Monitor and Control 8 Executive Summary Since Canadian National Railway Company (CN)’s privatization by the Canadian government in November 1995, CN has not stopped growing its sales, profits, cash flow and, as a result, market value. Privatization and deregulation of the rail industry led to some of CN’s success, but CN had to cut costs and increase revenues. Cutting costs meant reducing workforce and closing or selling unprofitable tracks. It also meant investing in more efficient rail equipment and technology. Increasing revenues required focusing...
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...Asia-Pacific Research and Training Network on Trade Working Paper Series, No. 99, April 2011 Utility of Regional Trade Agreements: Experience from India’s Regionalism by Sejuti Jha* * PhD Scholar, Indian Institute of Foreign Trade, New Delhi. The author is grateful to Biswajit Nag, Rajan Sudesh Ratna and Mia Mikic for valuable comments. The paper benefited from the comments received from the participants at the second Empirical Issues in International Trade and Finance conference, organized by IIFT at New Delhi, 16-17 December 2010. The opinion, figures and estimates are the sole responsibility of the author and should not be considered as reflecting the views or carrying the approval of the United Nations, ARTNeT and the Indian Institute of Foreign Trade. Any errors are the responsibility of the author, who can be contacted at sejuti.jha@gmail.com. The Asia-Pacific Research and Training Network on Trade (ARTNeT) is aimed at building regional trade policy and facilitation research capacity in developing countries. The ARTNeT Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about trade issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. ARTNeT working papers are available online at www.artnetontrade.org. All material in the working papers may be freely quoted or reprinted, but acknowledgment is requested, together with a copy of the publication containing...
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...employee of the World Bank has been asked to research unemployment concerns in Chile and to write a report of his/her findings. The employee has been asked to research data sets for unemployment and state the relationships between unemployment and Chile’s economy. The employee must answer what trends he/she finds in the data sets and to support those trends with statistical evidence. In today’s economic turmoil one only needs to look at Chile to gain a better view. According to www.thisischile.cl the country is ranked second according to the Economic Climate Index (ICE). Chile is ranked second after Brazil in Latin America. Chile has reached a 7.8 ICE score a vast improvement over the 1990 score of 2.9. According to the New York Times (2011) “Chile is home to the world's largest copper producer.” Chile also produces wines and fruit with agriculture accounting for 15 percent of Chile’s total exports. As stated by Krugman & Wells (2009) “Unemployment is the number people who are actively looking for work but aren’t currently employed.” Krugman & Wells (2009) also states that “The unemployment rate is the percentage of the total number of people in the labor force who are currently not unemployed.” A country’s economy has a direct effect on the unemployment rate. If the economy is good unemployment rates are usually low, if the economy is bad the unemployment rate is usually high. Chile is currently enjoying a stable economic climate with unemployment numbers...
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...A PROJECT REPORT ON COPPER: THE BROWN GOLD Submitted to the Mumbai University in partial fulfillment of the requirement for the award of M.M.S. Degree GUIDE MR. SANJIV BARVE by SURESH CHANDRAN MMS - FINANCE ATHARVA INSTITUTE OF MANAGEMENT STUDIES MALAD-MARVE ROAD, MALAD (WEST), MUMBAI 400095 BATCH 2006-2008 CERTIFICATE This is to certify that the project entitled “COPPER: THE BROWN GOLD” is the bonafide work carried out by Mr. Suresh Chandran, student of M.M.S. Batch 2006-2008, Atharva Institute of Management Studies, during the year 2007-2008 in partial fulfillment of the requirements for the Post Graduate Degree of Master of Management Studies and that the project has not formed the basis for the award of any other degree, associate-ship, fellowship or any other similar titles. Sd/- Mr. Sanjiv Barve Project Guide & Faculty Member Atharva Institute of Management Studies Date: Place: ACKNOWLEDGEMENT I would like to take this opportunity to express my sincere and heart-felt gratitude towards my institute, Atharva Institute of Management studies for giving me this wonderful experience to guide my first steps into a Career in Finance. I express my appreciation towards our Dean, Mr. N. S. Rajan, who believed in me and provided me with a great learning canvass to expand my perspectives and learning horizons. I offer my sincerest thanks to my eternal academic guiding star, Mr. Sanjiv Barve, my project guide for his immense help. His guidance...
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...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...
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...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...
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...markets for the underlying assets; (ii) lack of adequate regulatory, legal and market infrastructure, and (iii) restrictions on the use of derivatives by local and foreign entities.2 The problem of misuse of derivatives is perceived to be more acute in emerging market countries where prudential regulation, credit information infrastructure, and risk management practices are not fully developed and maybe in conflict with reasonable economic, investment or portfolio objectives. This note provides a background for a discussion on policy measures to promote the benefits of derivative markets in EM countries, while acknowledging existing and forthcoming challenges. It is based on case studies of the development of derivative markets in Brazil, Chile, Hungary, India, Israel, Korea, Mexico and Poland. B. Current Stage of Development of EM Derivative Markets There are large...
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...Case Analysis: Compania Telefonos De Chile CTC’s Fund Requirements CTC is in need of funds as it is in the middle of an aggressive expansion program which requires substantial capital resources. The expansion program includes substantial reduction in the time to get telephone service from 10 to 4 years, and expansion of the capabilities of the company to provide some of the latest high-tech capabilities in the telecommunications industry. Unfortunately, internally generated funds are not sufficient to meet the requirements of the expansion project. As a matter of fact there are barely internally generated funds as it has been the long time practice of CTC to distribute 100 per cent of its income to its stockholders as dividends, though this percentage was eventually decreased to 60 per cent. Hence, CTC has to look for external sources of funds. CTC can raise funds within Chile, but there is doubt that the country’s financial market can fully finance 100 per cent of the fund requirements of the telecommunications giant. First, the local stock market is relatively small. Second, Chilean banks are small and that they are legally restricted from committing majority of their funds to just one company, and also if they are allowed to do so, that would mean a very high exposure to CTC alone. American Depositary Receipt (or ADR) Thus, CTC is forced to look for the funds it needs outside Chile. One option is through the issuance of American Depositary Receipts (or ADR). According...
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...Case Analysis: Compania Telefonos De Chile CTC's Fund Requirements CTC is in need of funds as it is in the middle of an aggressive expansion program which requires substantial capital resources. The expansion program includes substantial reduction in the time to get telephone service from 10 to 4 years, and expansion of the capabilities of the company to provide some of the latest high-tech capabilities in the telecommunications industry. Unfortunately, internally generated funds are not sufficient to meet the requirements of the expansion project. As a matter of fact there are barely internally generated funds as it has been the long time practice of CTC to distribute 100 per cent of its income to its stockholders as dividends, though this percentage was eventually decreased to 60 per cent. Hence, CTC has to look for external sources of funds. CTC can raise funds within Chile, but there is doubt that the country's financial market can fully finance 100 per cent of the fund requirements of the telecommunications giant. First, the local stock market is relatively small. Second, Chilean banks are small and that they are legally restricted from committing majority of their funds to just one company, and also if they are allowed to do so, that would mean a very high exposure to CTC alone. American Depositary Receipt (or ADR) Thus, CTC is forced to look for the funds it needs outside Chile. One option is through the issuance of American Depositary Receipts (or ADR)...
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...for the valuation of business of Paginas Amarelas was given to Juan Lopez, a new associate of JP Morgan’s Latin America M&A Group who had better understanding of the business markets where they were conducting their businesses.. Juan Lopez estimated the future cash flow (in US$ as requested by the client) of the operations in the three Latin American countries (Argentina, Brazil and Chile) where they were competing. After calculating the future cash flow, Lopez estimated the weighted average cost of capital (WACC) to find out the target rate of return for each country operation through which he determined the DCF value of the three country operation as well. JP Morgan Company was basically a global financial service provider and considered as a major global player in the investment – banking industry. JP Morgan generally made use of three approaches-DCF (Discounted Cash Flow) method, trading multiples and transaction multiples for estimating the valuation of the company. The Argentine subsidiary achieved 33 percent of Paginas Amarelas total net revenue whereas Brazil and Chile accounted for 52 and 15 percent of total revenue respectively. In these three countries the telephone companies were state-owned and in monopoly position. The privatization of state-owned companies ended the operation of monopoly marketers and it resulted in creating superior services with lower charges which was followed by a remarkable increase in the number of lines. This privatization...
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...Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive Company) is an Indian multinational automotive manufacturing company headquartered in Mumbai, Maharashtra, India and a subsidiary of the Tata Group. Its products include passenger cars, trucks, vans, coaches, buses, construction equipment and military vehicles. It is the world's seventeenth-largest motor vehicle manufacturing company, fourth-largest truck manufacturer and second-largest bus manufacturer by volume.[5] Tata Motors has auto manufacturing and assembly plants in Jamshedpur, Pantnagar, Lucknow, Sanand, Dharwad and Pune in India, as well as in Argentina, South Africa, Thailand and the United Kingdom. It has research and development centres in Pune, Jamshedpur, Lucknow and Dharwad, India, and in South Korea, Spain, and the United Kingdom. Tata Motors' principal subsidiaries include the British premium car maker Jaguar Land Rover (the maker of Jaguar, Land Rover and Range Rover cars) and the South Korean commercial vehicle manufactuer Tata Daewoo. Tata Motors has a bus manufacturing joint venture with Marcopolo S.A. (Tata Marcopolo), a construction equipment manufacturing joint venture with Hitachi (Tata Hitachi Construction Machinery), and a joint venture with Fiat which manufactures automotive components and Fiat and Tata branded vehicles. Founded in 1945 as a manufacturer of locomotives, the company manufactured its first commercial vehicle in 1954 in a collaboration with Daimler-Benz AG...
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