Business Environment Analysis of Chile

Business Environment Analysis of Chile

Introduction

The following paper is based on studying the business climate and competitiveness of Chile market in relation to the Political/Economical and Legal environment. The motive is to study the Chilean market in depth and to figure out the potential business opportunities.

Political Environment

Sebastian Pinera was selected as a president for a four year term for the first time in Chile in March 2010. Pinera victory was the first victory for the right wing since last 20 years because in the past governance was based on coalition of the left wing parties. Pinera won a considerable support for numerous incremental policy reforms; however, on the other hand, he struggled to deal with a series of protest that rose against him over the issues of energy policy and education system. Political analyst stated that Chilean populace has resorted to such tactics because this is the way to demonstrate its ever increasing dissatisfaction towards the political class of the country, which seen as an unresponsive to the demands of the citizen and showing no willingness to address the high level of inequality. The political environment in Chile not favoring the business because there is a generalized sense of discontent prevailed in the society, which continuously showing the steady decline of Pinera popularity among the masses (The Economist, 2011). For instance, in April 2013, 34% of the Chilean stated that they are satisfied from Pinera performance, whereas, 54% showed dissatisfaction from the performance.

At this moment, Pinera is left with only 6 months in the presidency and thus constitutionally he is not eligible to call for the presidential election, as the political scene is focusing towards the November 2013 presidential election. However, the early polling surveys revealed that the former president Michelle Bachlet most likely to be elected as a president who belongs to left wing party block and then he would be the one who will stabilize the political environment of Chile. Therefore, in this regard, from the business point of view, political environment is not much stable and to go for investing in Chile would be a brave decision.

Economic Environment

After a decade of witnessing a tremendous growth rate, Chile experienced a downturn during 1999, which resulted because of the global economic slowdown. Due to this economy remained sluggish till 2003, however in 2004, economy started showing evidence of recovery by achieving 3.3% real GDP growth. Chilean economy closed 2005 with 6.3% GDP. In this regard, the surveys and reports stated that in Latin American, Chile will be the only country to close 2006 with more than 5% of GDP. The government role in the economy is mainly limited to regulations; however, on the other hand, state owned and operates the biggest copper company and a few other sizeable corporations.

Unemployment reported remained between 8 to 10% in recent years and it is well above 1999's stats of 5 to 6%. In 2005, Chile's GNP per capita was reported $6151 US dollars ...