Chile Economy Essay

Chile's economy is particularly open to free trade and the government rarely intervenes with protectionist measures. The economy is based on maintaining and developing policies that favour foreign investment an international trade (Marketline 2015). Consequently, openness and transparency towards FDI is embodied in their foreign investment statute, known as DL600. This statute offers security of investment as any investor may ask to sign an FDI-contract with the State of Chile. DL600 has been the main regulatory norm for FDI in Chile during the last 40 years, and the majority of investors have chosen to use this mechanism (CIEChile 2015). Chile's Foreign Investment Committee (FIC) has the responsibility for administering DL600 and establishes

As a result of Chile’s sustained economic growth and social progress they became the first South American country to join the Organization for Economic Co-operation and Development – OECD in 2010 (CIEChile 2015). Moreover, the Chilean government have different measures to motivate inward investment. According to Santander Trade, is Chiles economic policies one of the country’s strengths as they are founded on the principle of simplicity, capital transparency and non-discrimination against foreign investors. By treating foreign and domestic investors the same, Chile establishes a favourable investment climate for inward FDI (Santander 2015). Furthermore, continuous improvement of laws such as simplification of administrative procedures supplementary to the highly stable democratic government and well-developed legal system help to boost investor confidence. Besides, Chile has a much lower tax-level than most countries in the world, and they have the lowest personal income tax of any OECD country. Hence, foreign investors also benefit on a fiscal level from a moderate income tax on companies. Additionally, their capital can be repatriated without being taxed at the level of the invested funds (Santander

Chile’s active policies of bilateral, regional and multilateral trade agreements, combined with their open economy have underpinned their position as an active international partner (CIEChile 2015). One of these agreements is the Pacific Alliance from 2011, a trade bloc between Chile, Colombia, Mexico and Peru. The aim of the alliance is to advance economic integration, free trade and free movement of people. An additional part of the Alliance was the Integrated Latin American Stock Market or MILA. The background of establishing MILA was to offer a greater supply of stocks, issuers, and funding to investors throughout Latin America (Marketline 2015). Another FTA is the Trans-Pacific Partnership (TPP). Amongst others Australia, Chile, Malaysia, Peru, New Zealand, Singapore and Vietnam are in negotiations of the TPP. Due to Chile’s large number of FTA’s their average tariff rate is less than 1% and most imports enter duty-free, besides more than 90% of their trade is conducted on a preferential basis because of the FTA’s 
(Marketline