View Header


Office of the Press Secretary

For Immediate Release February 26, 1997


Chile: Political-Economy and International Relations

Over the past decade, Chile has made a difficult, but highly successful transition from military rule to democracy and sustained economic growth. In addition, Chile has begun to assume a leadership role in regional and global fora. Chile's record of good government makes it an ideal partner with the United States in shaping the direction of the hemisphere for the 21st century.


In all areas of economic performance, Chile's modernization policies have produced positive and, in some cases, outstanding results. Its sustained turn towards free markets and growth strategies have made it a leader in the hemisphere. Importantly, the Frei Administration is now attempting to alleviate poverty and improve distribution of the benefits that free market policies have produced.

Domestic Economy

Chile has achieved solid macroeconomic performance leading to stable and sustainable economic growth.


Real GDP growth has averaged approximately 6 percent annually since 1994.

Inflation fell to 6.6 percent in 1996, the lowest level since 1960.

Economic growth for 1996 was approximately 6.9 percent.

Unemployment in 1996 declined to an average of 6.4 percent, the

lowest rate in 36 years.

In 1996, real wages rose by 4.1 percent.

In 1996, foreign investment increased by approximately US$6

     billion.  U.S. investment in Chile amounted to US$ 2.24 

The Chilean Government has generated fiscal surpluses since 1988

and public sector debt has declined steadily.

Chile has become a capital exporter to other countries in the

region, particularly Argentina.


In recent years, Chile has maintained a budget surplus equivalent to about 2 percent of GDP.

Current expenditures have been reduced from about 30 percent of

     GDP in 1984 to about 18 percent of GDP in 1994.  Taxes also 
     declined during this period from about 19 percent of GDP in 
     1984 to about 17 percent currently.

Domestic Savings

Chile has a high level of domestic savings which reached about 25 percent of GDP in 1994. These extremely high levels of domestic savings make Chile unique throughout the Western Hemisphere.

High levels of domestic savings are a key factor in Chile?s

     economic stability, offering the country a buffer against 
     short-term capital flows.

Financial System

Chile has a soundly supervised banking system.


The Frei Administration seeks to continue the economic gains achieved thus far through continued privatization, liberalization of capital markets and upgrading of Chile?s transportation and public works infrastructure.

Social/Economic Indicators

Infant mortality was reduced from 66 per 1000 live births in 1973 to 15 per 1000 in 1991.

Over the last 20 years, access to safe water in urban areas

     increased from 67 percent to 98 percent of the urban 

Life expectancy at birth of the population grew from 64 years in

the mid-1970s to 72 years at the beginning of the 1990s.

Real per capita GDP has more than doubled over the last 20 years,

     measured in 1994 dollars, from $1,715 in 1973 to $3,719 in 

Minimum wage in Chile is roughly $155 per month, adjusted


Chilean labor law reflects basic international norms.

Approximately 95 percent of the adult population is literate.



Chile has shown a growing and deepening commitment to democracy.

The Frei Administration took office in March 1994. His Administration is the second democratically-elected government since the country's return to democracy in 1990.

President Frei remains committed to pursuing constitutional reforms that would deepen democracy in Chile.

Law Enforcement

Chile has shown a commitment to the rule of law.

Although illegal narcotics is not a major problem in Chile, Chile has strengthened laws against trafficking.

Chile?s agenda includes training law enforcement officers, prosecutors, magistrates, interdiction and prevention.

Chile was one of the strongest supporters of concerted OAS action against corruption. Chile was among the first Latin American nations to sign the OAS Inter-American Convention Against Corruption - the world's first binding international agreement that criminalizes transnational bribery.

International Security

Chile is assuming an expanding role in making contributions to peace and security in the international community.

Chile is currently a non-permanent voting member of the UN Security Council. Its term expires on December 31, 1997.

Chile is a guarantor of the Rio Protocol which addresses the Peru-Ecuador border dispute. In its capacity as guarantor, Chile has joined the United States, Brazil and Argentina in providing observers to the Military Observer Mission for Ecuador and Peru (MOMEP), a peacekeeping mission that monitors the demilitarized zone while the parties work to settle their differences peacefully.

In November 1995, Chile hosted a successful OAS meeting on

     confidence and security-building measures (CSBMs).  The goal 
     of such meetings is to reduce tensions and rivalries in the 

The Santiago Declaration resulting from the CSBM meeting seeks to promote transparent defense policies and doctrines, observation of military exercises, sharing of military acquisition information, and other confidence-building steps.

Chile provided police trainers to the UN mission in El Salvador.

Chile provides helicopters to the UNSCOM mission in Iraq.

# # #