The Relationship Between Chile And The United States

1378 words - 6 pages

Political Environment
Political Freedom
For most of Chile’s life, it has practiced democracy and has adopted a constitutional government, with exception to the period of 1973-1990, in which Augusto Pinochet carried out a military coup and overthrew the government, exercising an authoritarian rule. However, since the end of his ruling, Chile has had a stable democratic government in which practices a rule by law. The president is elected for a four year term and 38 members constitute the senate that serve an 8 years term with half up for elections every 4 years (Freedomhouse). Free speech is granted in Chile and there is little censorship on the media and no government restrictions are placed ...view middle of the document...

In addition, the government has set in place several monitoring measures to ensure that its police are not corrupted. Thus, the Chilean police force are held in high regard by its population and are known to be relatively efficient and impartial. Due to Chile’s sound governmental policies, it is ranked 22 out of 177 countries by Transparency International in terms of its corruption perceptions index, with a score of 71 out of a 100 (TransparencyInternational), with a 100 being free of corruption. Comparing this rating to countries in Latin America, Chile is ranked just below Uruguay, second in its region for being corruption free.
As a whole, Chile’s political system is one of the strongest in its region. It is thus vital for countries to take advantage of such a political environment should they wish to expand into Latin America. Due to a democratic rule, free from strong dictatorship ruling, entering companies can expect to be able to compete effectively in the domestic market and not be subjected to high tariffs and other protectionist policies that come with an environment concentrated with state owned enterprises. Such political freedom leads to greater business freedom as well and businesses can be incorporated within less than 10 procedures, though license agreements continue to be time consuming and costly (heritage.org). In addition, companies do not have to deal with the rife presence of corruption unlike in other Latin American countries. Thus, they do not have to constantly pour in effort and money in appeasing political personnel and instead can focus on steering their businesses to be more customer centric, thus achieving greater economic success.
Economic Environment
Chile is one of the most open, business friendly and competitive economies in Latin America with an ideal economic environment. As mentioned earlier on, Chile is ranked the 7th freest economy in the world according to the 2014 Index of Economic Freedom. Chile has continued to sustain continuous economic growth and this is reflected in FIGURE XX that shows Chile’s total Gross Domestic Production (GDP) growth from 2004 till 2013.

As of last year, Chile’s total GDP was $268 billion dollars and its Real GDP growth rate was 4.1%. Moreover, inflation has been relatively low at 3% as of December 2013 (tradingeconomics). A stable GDP growth rate coupled with a low inflation rate represents a stable economy, and thus foreign firms can be reassured that investing in Chile will provide less uncertainty and prove less risky as compared to investing in other parts of Latin America facing fluctuating or declining GDP growth rates and higher inflation rates.
Such economic success can be attributed to low government interference with firms and their business. The government only plays the role of the regulator and only owns Chile’s copper plant CODELCO and a few other enterprises such as the bank Banco Estado (globaledge). Moreover, Chile is actively playing a role in the global...

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