1 Cristian Larroulet Executive Director Libertad y Desarrollo Beijing, September 2005 Chile: A case of sustainable development

2 Index Chile’s Economic Conditions before the Reforms Main Economic and Social Reforms Main Results New Challenges New Challenges

3 Chile’s economic conditions before the reforms A closed and highly intervened economy Low Growth (%) 3,4 High Inflation (%) 48,0 Fiscal Deficit (% GDP) 6,0 Tax on Trade 90,0 (1973) Source: Libertad y Desarrollo.

4 Free market economy Free market economy Sound macroeconomic policies Sound macroeconomic policies Free trade Free trade Microeconomic reforms - social security - privatization - others Microeconomic reforms - social security - privatization - others Environmental policies - Standards and “ whoever contaminates must pay” Environmental policies - Standards and “ whoever contaminates must pay” Social policies - Focus on extreme poverty groups Social policies - Focus on extreme poverty groups Main economic and social reforms

5 Central Government Primary Fiscal Expenditures (% GDP) Source: Libertad y Desarrollo.

6 Inflation rate ( % December to December) Source: Central Bank of Chile.

7 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Taxes on Trade Source: Libertad y Desarrollo.

8 High Rate of Growth Diversification of Exports Diversification of Exports Reduction in Poverty Reduction in Poverty Better Health Better Health Higher Coverage in Education Higher Coverage in Education Less Contamination Less Contamination Main Results

9 Growth Factors ( % contribution to growth) Source: Libertad y Desarrollo. 3,1 5,3 7,6

10 Total Exports 1970 US$ millions Total Exports 2004US$ millions Diversification of Exports Export Products (% of total exports) Source: Central Bank of Chile. Libertad y Desarrollo.

11 Evolution of Extreme Poverty As % of population Source: Libertad y Desarrollo.

12 Health Indicators Life expectancy at birth (in years) (1) Infant mortality rate (per live births) ,97,8 Undernourished ( % of children being controlled under six years old ) 15,511,57,48,87,67,7 Source: National Statistic Institute. Notes: (1) average of Notes: (1) average of

13 Education Average number of years in school 4,59,09,29,59,810,1 Years in school of the 20% low income population n.a.7,47,3 7,89,9 % of children in high poverty without access to primary education 434,53,83,52,3n.a % of population with access to secondary education ,6 % of 20% of low income with access to secondary education n.a ,5 Source: Ministry of Education.

14 Evolution of sources of contaminating emissions in Santiago’s Area Tons/years Number sources Number of sources Emissions Source: Libertad y Desarrollo.

15 New challenges Free Trade Agreements Quality in Education Quality in Education Innovation, Research and Development Innovation, Research and Development Better Environmental Policies Better Environmental Policies

16 Chilean Trade Agreements (% of Imports 2004) Mexico (2,5%) Canada (1,4%) MERCOSUR (28,5%) Bolivia (0,2%) Colombia (1,1%) Ecuador (0,6%) Peru (2,8%) Venezuela (0,7%) UE (14,4%) United States (13,5%) Korea (2,8 %) Approved In Study India (0,4 %) India (0,4 %) China (7,4 %) China (7,4 %) Japan (3,2 %) Japan (3,2 %) N. Zealand (0,1 %) N. Zealand (0,1 %) Singapore (0,1 %) Singapore (0,1 %) Source: Libertad y Desarrollo.

17 TIMSS 2003 Trends in Mathematics Achievement (Average) Source : Full Reports TIMSS 2003

18 Source: Human Capital Report (2003) Brazil0,20,6 Chile0,31,0 Korea1,370,1 Hungry10,43,6 Span2,26,8 Ireland8,832,4 Portugal0,41,1 Finland37,1119,4 New Zealand15,228,0 Patents Granted in USA (Per million inhabitants )