Republic of Chile

República de Chile Republic of Chile


Motto Por la razón o la fuerza
Anthem Himno Nacional de Chile


Capital	Santiago de Chile

Government	Presidential republic
President
- From 2010	Sebastián Piñera

Legislature	National Congress
- Upper house	Senate
- Lower house	Chamber of Deputies

History
- September 18, 1810	Self-government
- February 12, 1818	Declaration of Independence
- April 25, 1844	Recognized by Spain
- September 11, 1980	Current constitution

Area	756,950 km²

Population
- 2010	17,094,270
Density	22.5/km²

GDP	2010 (PPP)
- Total	US$ 255.3 billion
- Per capita	US$ 14,939

Currency	Peso

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The Republic of Chile is a presidential republic in South America.

Background

Prior to the coming of the Spanish in the 16th century, northern Chile was under Inca rule while the indigenous Mapuche inhabited central and southern Chile. Although Chile declared its independence in 1810, decisive victory over the Spanish was not achieved until 1818. In the War of the Pacific (1879-83), Chile defeated Peru and Bolivia and won its present northern regions. It was not until the 1880s that the Mapuche Indians were completely subjugated. After a series of elected governments, a three-year-old Marxist government of Salvador ALLENDE was overthrown in 1973 by a military coup led by Augusto PINOCHET, who ruled until a freely elected president was installed in 1990. Sound economic policies, maintained consistently since the 1980s, have contributed to steady growth, reduced poverty rates by over half, and have helped secure the country's commitment to democratic and representative government. Chile has increasingly assumed regional and international leadership roles befitting its status as a stable, democratic nation.^[1]

Economy

Chile has a market-oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Exports account for more than one-fourth of GDP, with commodities making up some three-quarters of total exports. Copper alone provides one-third of government revenue. During the early 1990s, Chile's reputation as a role model for economic reform was strengthened when the democratic government of Patricio AYLWIN - which took over from the military in 1990 - deepened the economic reform initiated by the military government. Growth in real GDP averaged 8% during 1991-97, but fell to half that level in 1998 because of tight monetary policies implemented to keep the current account deficit in check and because of lower export earnings - the latter a product of the global financial crisis. A severe drought exacerbated the situation in 1999, reducing crop yields and causing hydroelectric shortfalls and electricity rationing, and Chile experienced negative economic growth for the first time in more than 15 years. In the years since then, growth has averaged 4% per year. Chile deepened its longstanding commitment to trade liberalization with the signing of a free trade agreement with the US, which took effect on 1 January 2004. Chile claims to have more bilateral or regional trade agreements than any other country. It has 57 such agreements (not all of them full free trade agreements), including with the European Union, Mercosur, China, India, South Korea, and Mexico. Over the past seven years, foreign direct investment inflows have quadrupled to some $15 billion in 2010, but FDI had dropped to about $7 billion in 2009 in the face of diminished investment throughout the world. The Chilean government conducts a rule-based countercyclical fiscal policy, accumulating surpluses in sovereign wealth funds during periods of high copper prices and economic growth, and allowing deficit spending only during periods of low copper prices and growth. As of September 2008, those sovereign wealth funds - kept mostly outside the country and separate from Central Bank reserves - amounted to more than $20 billion. Chile used $4 billion from this fund to finance a fiscal stimulus package to fend off recession. In December 2009, the OECD invited Chile to become a full member, after a two year period of compliance with organization mandates. The economy started to show signs of a rebound in the fourth quarter, 2009, and GDP grew more than 5% in 2010. The magnitude 8.8 earthquake that struck Chile in February 2010 was one of the top ten strongest earthquakes on record. It caused considerable damage near the epicenter, located about 70 miles from Concepcion - and about 200 miles southwest of Santiago.^[2]