Why is Chile not a developed nation

Chile becomes a member of the OECD

With the admission to the OECD the efforts of Chile for the development of the market economy in the country should be rewarded, so Secretary-General Angel Gurría. Chile is considered an example of political and economic stability in South America. "This is a federation of democratic states, with strong institutions, the countries that have the greatest transparency and have developed the best instruments in the fight against poverty are united", said the Chilean finance minister Andrés Velasco in a statement on his membership of the OECD Country. "If we sit at this table, we will make faster progress for the good of all Chileans," the minister continued.

The crowning glory of Bachelet's presidency

President Michelle Bachelet will crown her term of office by joining the OECD

The outgoing President Michelle Bachelet, who will step down from office in early March, sees Chile on the way to becoming a developed nation. "In the past 20 years we have left the underdevelopment behind us," she said in Santiago. Now it is important not to disappoint the international recognition of this success. In a runoff election for the presidency on January 17th, the candidate of the ruling coalition, the Christian Democrat Eduardo Frei, and the right-wing opposition candidate and entrepreneur Sebastian Piñera will compete against each other. The coalition of Christian Democrats, Social Democrats and Socialists, which has ruled for 20 years, has squandered a lot of political capital through numerous corruption scandals. Michelle Bachelet, on the other hand, enjoys great sympathy among the population. 80 percent of Chileans are satisfied with the way they run their office.

Successful economic policy

Wealth....

The Chilean economy has grown steadily over the past ten years, with rates ranging between 3 and 6 percent. At 17,000 dollars per capita, the gross national product clearly exceeds that of neighboring countries. This puts Chile on the same level as Greece or Portugal at the beginning of this decade.

Public finances are healthier than in most European countries. The state has legally committed itself to paying surpluses in boom years into a fund that can be drawn from in crisis years. It is thanks to this measure that Chile survived the crisis years 2008 and 2009 relatively unscathed. However, the country is extremely dependent on exports. 40 percent of the gross domestic product comes from foreign trade. The main export products are copper and food.

In Transparency International's annual corruption index, Chile is consistently among the 20 corruption-free countries in the world, ahead of some European countries such as France, Spain and Italy.

Social inequality

... and poverty collide hard in Chile.

Since the end of the dictatorship, poverty has been reduced significantly. Three million people have experienced a significant improvement in their economic situation in the past 20 years. But 13 percent still live below the poverty line. The wealth in Chile is still extremely unevenly distributed. According to official figures, three out of four households have less than $ 1,000 a month, which is the national median income.

This extreme imbalance and the resulting lack of purchasing power for large sections of the population is slowing the domestic economy. In view of the low domestic demand, many companies have invested heavily abroad in recent years. In addition, the extreme social inequality also hampers the chances of children from poor backgrounds to education and the development of their intellectual abilities, the government recently warned.

During a visit to Chile last year, the President of the Federation of German Industries (BDI), Hans-Georg Keitel, criticized the industry's lack of development. "Chile cannot build its economy on natural resources in the long term. It has to transform itself into a technology-driven economy," said the BDI President. Keitel sees good long-term opportunities for German companies, especially when it comes to building and modernizing technological capacities.

Author: Mirjam Gehrke
Editor: Oliver Pieper