The following OECD assessment and recommendations summarise Chapter 1 of the Economic Survey of Chile 2005 published on 4 November 2005.
The overarching policy challenge is to lift the economy’s growth potential
The Chilean economy has recovered in earnest from the 1998-2003 slowdown. The external environment has been supportive, with still abundant international liquidity and buoyant commodity prices, notably for copper. The rebound in private investment has been vigorous, raising the investment-to-GDP ratio to 25% in 2004, well above the level prevailing on average during Chile’s “golden age” of rapid GDP growth (1985 97). Registered unemployment is only now beginning to come down, despite the closing of the output gap, largely because labour force participation, particularly for females, has up until recently outpaced job creation. The overarching policy challenge is to ensure that the momentum of the recovery, in particular the strength of private investment, is sustainable and translates into a durable increase in the economy’s growth potential in the years to come. This can be achieved by encouraging innovative activity, continuing to strengthen pro-competition regulation, particularly in network industries, and lifting labour force participation and productivity. By doing so, Chile’s income gap with respect to the OECD area is likely to close at a speedier pace. Chile’s per capita income (adjusted for purchasing power parity) is currently less than 40% of the OECD average and less than 30% of that of the United States, leaving ample scope for further catch-up in relative living standards. The greatest long-term gains would be expected from progress in accumulating human capital, where Chile lags the most.
Chile’s large real income per capita differential relative to the OECD area
is explained primarily by lower productivity
Percentage point differences in PPP-based GDP per capita with respect
to the United States
1. Based on total hours worked per capita.
2. Includes overseas departments.
3. GDP for Turkey is based on the 1968 System of National Accounts.
Source: Central Bank of Chile and OECD Productivity database (December 2004).
Return to the Economic Survey of Chile 2005
A printer-friendly Policy Brief (pdf format) can also be downloaded. It contains the OECD assessment and recommendations, but not all of the charts included on the above pages.
Este es el enlace con la versión española de las recomendaciones del Estudio Económico de la OCDE sobre Chile.
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For further information please contact Chile Desk at the OECD Economics Department at email@example.com. The OECD Secretariat's report was prepared by Luiz de Mello and Nanno Mulder under the supervision of Silvana Malle.