ECONOMY

Chile has been referred to recently as the "jaguar" of Latin America, with its success in economics and reforms. In its recent democracy, Chile has opened its economy, privatized most of the industries that were previously under government control (including the social security system), and accepted a free trade ethic. These economic changes came at quite a cost in terms of human rights, but they appear to be working well at this time.

Chile has historically had an export economy, and as such, has had to endure major upsets when its exports did not match the world market. It began as an exporter of wheat and animals, then silver, then nitrates and on to copper. When the markets fell in each of these areas, Chile had to adjust and regroup to survive. It wasn't until the late 20's that Chile began to develop some of its own industry, to help offset these fluctuations in the market.

Fairly recent figures show the GNP per capita at $3070 U.S. Unemployment is at 4.6%. In 1995, the savings rate was at 28%, helped immensely by the private retirement system. The economy has grown at a steady rate from '91 to '96 ranging from 4.2% to 11%, with an average of 7%. Inflation has dropped from 26.5% in 1958 to 13.5% in the 90's. Chile's exports are now better diversified, with 35% to Asian countries, 18% to North America, 20% to Latin America, and 27% to Europe. Foreign investment continues to grow, and recently, manufacturing and services outstripped mining for the first time. Poverty rates have declined from 44.6% to 23.2% in the last 9 years. Chile's exports total over $1 billion U.S. Fruit is now the 2nd most important export after copper. Other export products include cereal crops, vegetables, timber and wood exports, and fish. Chile has a wealth of natural resources, including 1/4 of all the world's molybdenum reserves and 40% of lithium.

This is not to say that Chile has some great challenges in the future. Poverty still affects about 25% of the population. The average U.S. salary is about $25,000, whereas in Chile it is between $5000 and $8000. Chile still has a dependence on traditional exports of mining and fruits and vegetables, many of which are not processed in country.

On a societal level, about 10% of the population is in the upper class, made up of professionals, businessmen, and aristocracy. The middle class stands at about 60%, mostly professional and commercial people. The lower class is about 30% of the population, and includes retired people, students, rurals, maids, service workers, and some indigenous groups. Retired people usually get checks from $75 to $300 per month, a maid will make $250 to $500, the middle class around $600 to $5000 per month, and teachers earn from $500 to $700. A very telling statistic is the distance between the poor and the rich, which has increased to 18 to 1. For every dollar the poor person earns, the upper class earns 18. In Chile, the poverty level is about $250 per month.

Many economists believe that if Chile is to continue its economic expansion, and keep its statistics in the positive arena, a number of reforms must be accomplished. Improvement on the infrastructure must continue. The problems with income distribution must be addressed. The reforms in education must be enforced and resources allocated, so that the middle class can continue to grow.

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