In Chile, there is a partly extreme market economy, combined with some state enterprise. The military regime returned the activities of the Allende government socialized into private ownership. Private investment, especially of foreign capital, has been encouraged in order to build up capital-intensive industries and develop the mining sector. Since the mid-1980s, the country’s economy has shown stable growth.
Chile has emerged as an economic pattern country: growth is steady, exports are rising, investments are high, inflation is under control and the cost share of external debt is falling. One of the few worrying clouds is the country’s great dependence on copper exports. Certainly, copper exports’ share of the 1970-96 export value decreased from 88 to 40 percent, but the great dependence makes the country sensitive to changes in the world market price. Chile was reminded of this in 1997-98 when the economic crisis in Asia had a negative impact on the country’s economy.
Half of the country’s total area is unusable for the arable industries (agriculture, forestry and livestock management). About 12 percent of Chile is covered by forest, 16 percent is utilized as meadow and pasture land and just over 6 percent is cultivated land. The economic-political situation of the last few decades has meant very different conditions for agriculture as an industry. Agriculture is of great importance for employment and partly also for the country’s exports (fruit, grapes), but it has generally been conducted inefficiently in both large goods and small farms.
In the northern parts of the country there are irrigated oasis cultures. Otherwise, agriculture is highly concentrated in the fertile long valley of central Chile. In the part of this area that has a Mediterranean climate, grapes, fruits and vegetables and maize and rice are grown. Further south, where the climate is more temperate, large quantities of wheat are produced, but also other cereals and sugar beets. Animal production is also of great importance here. Farthest south, in western Patagonia and on Tierra del Fuego (Lake of Fire), sheep breeding is important.
South of Concepción, agricultural areas are increasingly being transformed into a forest region. Of Chile’s 15 million ha of forest, 1/4 is suitable for economic forestry. Transportation difficulties constitute a limitation. Primarily, conifers and fast-growing eucalyptus are used. The center for forestry is Valdivia, but forest industries are also found in, among other things. Concepción and Puerto Montt. Forest products, especially pulp and wood chips, account for an increasing share of the country’s exports. In recent years, the increasing deforestation has meant that the forest stock decreased rapidly alarmingly.
Fishing is of great economic importance. The Humboldt stream provides good conditions for this industry, which has expanded greatly in recent years. In terms of catch volume, Chile is now one of the world’s five largest fishing nations. About 6 million tonnes of fish are landed annually. Over 90 percent of the catch (sardines, mackerel) is used as industrial fish. Fishmeal (mainly for feed) is an important export product. The growth of fish farms in southern Chile has made the country the second largest salmon exporter after Norway.
Chile has very rich mineral resources. Most important are copper, where Chile accounts for 1/4 of the world’s known reserves and has 1/6 of world production. The mines are mainly located in the northern parts, with the privately owned La Escondida and the state Chuquicamata as the largest and most famous. Copper means a lot to government revenue and accounts for 40 percent of Chile’s export earnings. Upon extraction, valuable by-products, including molybdenum, are obtained. Other important metals are gold, silver and manganese. Northern Chile also has the world’s largest reserves of lithium.
The salt extraction, which dominated the economy of Chile before the First World War even more than copper in recent decades, is now of limited importance, but in terms of iodine by-product, Chile is a world leader. In the Coquimbo area, 370 km north of Santiago, there are large assets of high-quality iron ore (over 60 percent), which is partly exploited by the country’s own industry and partly exported.
Significant oil resources can be found at the Magellan Strait in southern Chile. They are expected to eventually be able to meet the country’s own needs, which are now covered by 2/3 of imports, mainly through imports of oil and gas from Argentina. A liquefied gas plant has been built at Punta Arenas in the south. The coal mining, including low-grade coal south of Concepción, has some significance. Chile’s water energy resources (per capita) are considered to be among the largest in the world. In recent years, a major expansion has been carried out, and several power plants are under construction.
In Chile, even before the Second World War, a relatively extensive industry was developed, protected by tariffs and geared towards consumer goods. The light industry that survived the introduction of free trade policy is mainly concentrated in the Santiago area, which also has the bulk of the engineering and electronics industries, among others. In recent years, industrial policy has focused on the export sector (canned goods, fishmeal, etc.) and on heavier industries. The pulp and paper industry has expanded to the south. In the Concepción area, since 1950, a large industrial complex (San Vicente) has grown up, with iron and steel plants, oil refinery and petrochemical industry. Also in the country’s third major industrial area, Valparaíso, there are petrochemicals and various consumer goods industries.
The introduction of free trade policy affected all parts of the business community and also Chile’s foreign trade. Trade has widened in terms of both trading partners and goods, and exports have increased significantly. According to Countryaah, copper accounts for 40 percent of the export value and other mining products account for 8 percent. The focus on other products has been successful: fruits, grapes and the like (8 percent), forest products (mainly pulp, percent). Furthermore, exports from the fishing industry (fishmeal) are significant. Imports consist of machinery and transport equipment, oil and raw materials, as well as food and other consumer goods. The most important trading partners are China, the USA and Brazil.
Tourism and gastronomy
For the past 20 years, Chile has invested in building a tourism industry, including large investments have been made in the tourist and ski centers. The investment has yielded results and the country was visited in 2016 by 5.6 million visitors. Foremost are tourists from Argentina, Europe and the USA.
Chile has a very diverse landscape. Within the sterile coastal area in the north, the Andes rise, with green valleys and blue lakes between snow-capped volcanoes of over 6,000 m. a rich bird fauna.
In central Chile lies the capital of Santiago, one of the most visited European-style city tourists, located on the Mapocho mountain river. The historical museums and the pre-Columbian art museum are also very worthwhile for the experienced museum visitor. Several rickety and kitschy collectors’ homes from the turn of the century have been turned into museums. Palacio Cousino. In Santiago’s older city center, Lastarria, you will find antique shops, boutiques and small restaurants, while the large restaurant and entertainment districts are in Belavista on the other side of Rio Mapocho. The San Francisco Monastery from the Baroque era is also worth seeing.
The port city of Valparaiso, located west of Santiago, offers fine views and picturesque buildings. To the north, the tourist towns close by the coast, to the better known include Viña del Mar. A few miles from Santiago, there are a number of well-equipped ski resorts, available during the months of summer in Europe. Chile’s more interesting areas include the lake district south of Santiago, with blue lakes, rushing streams and snow-capped volcanic cones. In these parts of Chile one can often make themselves understood in German; the well-to-do farms have not rarely belonged to three or four generations of German immigrants since.
From the area of Puerto Montt you can get out on ferries and country roads to the island world south of it. Interesting is Chiloé, Spain’s last area in South America, which was first stated in 1826. The landscape is untouched, rugged and sparsely populated; there are huge, two-hundred-year-old wooden churches in villages with a few houses. The clear, cold water with its penguins is reminiscent of the southern tip of the continent, with Punta Arenas and Cape Horn.
The Easter Island of Chile, Polynesia’s easternmost island, has become a popular tourist destination with its stone pillars and other historical attractions.
From a gastronomic point of view, the country is characterized mainly by the extremely rich fishing. Mussels, crabs, shrimp, oysters and various fish species are crowded into stews and stews, here is the chance to devour the caldillo de congrio, sea bass stewed with potatoes, onions and tomatoes. Erizos are large sea urchins, eaten raw with chopped onion, lemon juice, salt and pepper; chupe de mariscos are scallops with cheese and cream sauce. Grilled lamb is advantageously eaten in the southern part of Chile. Empanadas, meat or fish pies, are available in many varieties, and chicken an esabeche, cooked in a vinegar-based sauce, or Cazuela de ave, which is a stew on rice, corn, chicken, beans, pumpkin and peas, is everyday food. One form of preparation that learns to originate from the Aruacian indigenous people is the technique of preserving meat and berries (eg cranberries) together by drying and eating porotos granados as boiled beans, corn and chopped pumpkin as an accessory or as an exclusive.
Chile’s wines are the best in South America, see Chilean wines.