Business Visit - Politics and the Economy of Chile

On Tuesday morning, we hopped on the bus and drove to a beautiful French-style building surrounded by colorful flowers. Our morning visit provided us with information supporting the strategies of business within Chile.

The location for our morning business meeting.

The presentation is ready to start!

Our speaker was Rodrigo Contreras who has worked in the Chilean government, studied several business fields related to international business and he is now a Professor. The presentation was titled "Chilean Economic and Political Panorama". We learned about the evolution of Chile through economic and political perspectives, most specifically related to the evolution of economic policy over the last 100 years. The presentation began with a six minute video which emphasized all of the amazing aspects of Chile. Chile has optimum conditions for olive oil production and cultivation, they are a premium exporter of wine, it has strong institutions, free trade agreements with 58 countries, fresh fruit during every season, and there are ten biodiversity reserves. 

There were many interesting topics and facts spoken throughout this presentation. Mr. Contreras was knowledgeable about Chilean practices and helped to create an engaging atmosphere that encouraged questions from the group. One key component that defines trade in Chile is that it is the only country that has the same tariffs on all of their products. So, this means that there are no incentives given to specific items. If a company wishes to excel then they will have to find what sets them apart from other similar products. Mr. Contreras said, "if you are competitive, you will remain in your industry". Related to this question, Wes had asked "Do you think the universal tariffs help or hurt the country?". The response to this question was that this is an open question because it all depends on what the country is trying to achieve in their model for trading. A country can use the minimal tariff strategy to gain new investors who will trade more in that country. The increased availability of products and interest in the country will then in turn create more revenues.

Chile follows an Agroexport model, which applies the strict Neoclassical Economic Model and full liberalization of the economy which supports the rapid growth of production. Over the past 5 to 10 years, there have been noticeable changes in the consumers of Chile. These consumers are aware of governmental impacts on their lives, most recently decreasing the use of plastic bags and becoming more environmentally aware, as well as being conscious of food nutrients which are represented through changes in the labeling of products (due to the Food and Advertising Law). During the question and answer period, Swathi had asked "Is voting mandatory in Chile?" and the response was that it used to be but it is no longer mandatory. Everyone in the room was amazed when Mr. Contreras mentioned the percentages of voter turnout. When voting was mandatory, 45% of people were active and now without the mandatory laws in place, that number is closer to 30% of voters. There is a lack of trust in the potential individuals who could be voted into the branches so citizens chose to ignore the elections. The Chilean economy is often driven by political changes. The world of business is always evolving and several policies can shape the success of a country's economy.