Chile
1. Recent trends
Poverty in Chile was at 8.1% in 2022, remaining below the Latin America and the Caribbean (LAC) average of 24.1%. Extreme poverty was at 2.1% in 2022, below the LAC average (8.3%). The Gini index was 44.9 in 2020, almost on par with the LAC average (44.8). Regarding investment and production transformation indicators, total investment in Chile increased from 24.1% of GDP in 2016 to 24.8% in 2022, remaining above the LAC average, which increased from 20.8% to 21.3% over the same period. Private investment slightly rose in Chile, from 20.9% of GDP in 2016 to 21.1% in 2019, above the LAC average (15.8% in 2019). Chile’s labour productivity, measured against output per employed person in the United States, remained almost unchanged, increasing from 41.3% in 2016 to 41.4% in 2023, substantially above the LAC average of 27.1% in 2023. The share of exports of high-tech products in total exported manufactured goods increased from 8.4% in 2016 to 12.4% in 2021, above the LAC average (7.2%). Positive perceptions of foreign direct investment (FDI), which declined across the LAC region, dropped significantly in Chile as well, from 68.1% in 2016 to 45.7% in 2020. Contrary to a declining trend in the region, Chile’s fiscal revenues increased from 20.2% of GDP in 2016 to 22.2% in 2021. Similar to the LAC average, environment-related tax revenues remained almost unchanged at 1.0% of GDP in 2021.
2. Long-term policies to promote investment and production transformation
Chile has made significant efforts to attract and mobilise high-quality investment, focusing mainly on simplifying, facilitating and optimising investment processes. It established the Invirtamos en Chile plan to: establish tax incentives for private investment; improve access to finance; generate proposals to improve public investment; promote foreign investment; improve the efficiency of regulatory and permit procedures; and promote public-private partnerships for investment. Since 2016, Chile has had an FDI promotion agency called InvestChile, created by Law 20.848. InvestChile leads the active search for specific foreign companies to attract to the country. In turn, it supports them in their prospecting and installation process. The agency also promotes reinvestment of companies already established in Chile to develop new projects and deepen their ties with local producers, particularly with small firms and companies located at the sub-national level. Since 2023, InvestChile has been implementing its Strategy for the Promotion and Encouragement of Foreign Direct Investment, which seeks to actively contribute, through a proactive policy of attracting FDI projects, to the economic recovery and sustainable development.
To advance an inclusive and sustainable production model, Chile has focused its 2030 Agenda for Sustainable Development on strategic lines of action: people; planet; prosperity; peace, justice and institutions; and partnerships. The main objective of this agenda is to provide a roadmap for sustainable and inclusive development in a context of peace, justice and partnership. It is flexible and adaptable to the specific needs of each region and locality, as it intends to generate the enabling conditions for elaborating sub-national strategies for sustainable development, based on a national roadmap and a sub-national organisation that facilitates representation of diverse local actors. Since 2020, Chile has a National Green Hydrogen Strategy, which has three main stages: the first (2020-25) seeks to activate the domestic industry and develop exports; the second (2025-30) aims to leverage local experience to enter strongly into international markets; and the third (2030 onwards) will exploit synergies and economies of scale to advance as a global supplier of clean energy.
In terms of regional and international partnerships to support the attraction of quality investments, Chile has established collaborative initiatives with partners both within and beyond LAC. Within the region, Chile has several co-operation projects with Argentina, such as the initiative “Transfer of experiences and good practices in the area of foreign trade, opportunities and barriers for the free flow of goods and services between the Province of Neuquén and the Region of La Araucanía,” which aims to strengthen trade between these two regions. Beyond LAC, Chile and the European Union (EU), as part of the EU’s Global Gateway Initiative, are co-operating to create local value chains for critical raw materials that support the clean energy and digital transitions (e.g. lithium), develop green hydrogen and produce carbon-neutral fuels using wind energy. The European Investment Bank (EIB) will finance climate action projects in Chile for more than EUR 300 million. Under the Ecovivienda programme, its first green mortgage loan outside Europe, the EIB will finance mortgages for new homes with improved energy efficiency standards. The EIB while also support Chile’s renewable hydrogen industry, which will contribute to reaching the country’s goal of 100% clean energy by 2050.