INTERNATIONAL TRADE

International Trade

International Trade

1. Country background

Chile is a republic located in southwestern South America. On the north side of Chile lies Peru, to the east is Bolivia and Argentina, and on the south Peru is bounded by the Pacific Ocean. The Archipelagoes Islands extend along the southern coast of Chile from Chilo© Island to Cape Horn. Among these islands are the Chonos Archipelago, Wellington Island, and the western portion of Tierra del Fuego. Some other islands that belong to Chile include the Juan Fern¡ndez Islands, Easter Island, and Sala y Gmez. All of these islands lie in the South Pacific. Chile also happens to claim a section of Antarctica. The capital and largest city of Chile is Santiago.

The Chilean economy has been dominated by the production of copper. Chile is one of the leading industrial nations in Latin America as well as one of its largest mineral producers. The government used to be very involved in the economy. Chile's estimated gross domestic product (GDP) in 1998 was $78.7 billion. All the products, that Chile exports would be called tertiary activities because they are business and labor specialties. Chile has a commercial economy. Producers freely market their goods and services.

2. Reason for your selection

The reason for chossing this topic is baecause, Chile sound fundamentals and management that have enabled him to escape recession. Chile's economy is dominated by the industrial and service sectors, these sectors contribute nearly 95% of GDP.

3. Environment - political, social, economic, legal, technological - present and main future concerns

During the last decade, Chile has held to a rigorous in its macroeconomic management (rule of the structure fiscal surplus, monetary policy of inflation targeting and flexible exchange rate). In addition, Chile has implemented structural and institutional reforms with trade openness and prudent management of mineral resources (principally copper). These reforms and good governance have helped boost economic growth in Chile. Nevertheless, the country has not escaped the economic crisis. The earthquake and tsunami at the end of February stopped the strong recovery that began in the second quarter of 2009. The acceleration in growth led to a reduction of the gap in per capita income (GDP per capita increased from 38% in 2000 to 44% of the OECD average in 2009) between Chile and OECD countries by reducing poverty and improving income distribution. It is important to note that income distribution in Chile is among the most unequal in Latin America or the world.

In 2001, the Chilean government introduced the rule of the structural budget surplus, forcing it to generate an annual surplus of 1% of GDP. However, this rule includes a fix to mitigate the effects (procyclical) economic cycle and changes in copper prices on public finances. The government has consistently applied this rule and a policy of monetary inflation targeting and flexible exchange rate, despite the change of government in 2006. This rule has allowed Chile to accumulate in its sovereign wealth funds, public assets equivalent to 12% of ...