Overview | Development Progress | Partnership Strategy | Projects in Chile | Contacts
OVERVIEW Chile stretches some 4,630 km (2,880 miles) from Peru in the north to Cape Horn in the southern tip of South America. At its widest point, it is only 430 kilometers (265 mi) from the Pacific Ocean to its border with Argentina on the other side of the snow capped Andes. It is a country of enormous topographical diversity. The northern Atacama Desert contains great mineral wealth, primarily copper and nitrates. The Central Valley, including the capital city of Santiago, is the home of Chile’s agriculture as well as most of 15 million people. Going south, Chile has forests, mountains, lakes, fjords and canals. About 85% of the country's population lives in urban areas, with 40% living in Santiago and its surroundings. Since the return of democracy in 1990, the country has established record of committed economic reform, proactive social investments, clean, transparent public sector management, and stable, consensual governance. Chile has a new Government, led by Michelle Bachelet, which is building on these hard-won achievements, and is articulating a new vision to prepare for the challenges ahead. The Bachelet administration is pursuing a coherent development program built around the theme of equality of opportunity. The program aims to accelerate growth, expand global commercial linkages, improve education, safeguard natural resources, and strengthen competitiveness while addressing acute and longstanding social problems. back to top
DEVELOPMENT PROGRESS Chile has been the fastest growing economy in Latin America during the last 15 years, with an average annual per capita growth rate of 4.1 percent over the fifteen years following the return of democracy in 1990. Per capita incomes have doubled in real terms, and the relative income gap between Chile and high-income OECD countries has also been substantially reduced. Chile has consolidated macroeconomic stability in part through the adoption of a floating exchange rate regime and full-fledged inflation-targeting.
Most important has been a carefully calibrated fiscal policy, which has balanced an expanding program of investments in social programs with an unquestioned commitment to countercyclical and disciplined fiscal policy. The country’s financial system is large and well-diversified relative to its regional comparators, and the system is viewed as resilient to shocks, with a sound regulatory and supervisory framework. back to top
WORLD BANK COUNTRY PARTNERSHIP STRATEGY The Bank has a new Country Partnership Strategy (CPS) for Chile, for the period 2007-2010, with the aim to support Chile’s goal of convergence with OECD income levels and living standards through faster growth and greater equality of opportunity. The CPS has been developed to meet the changing needs of a highly successful, globally integrated middle income country (MIC) committed to both growth and social equity. The need for the Bank to continue its engagement with Chile is driven by the country’s development needs. Despite substantial improvements in living standards and a GNI per capita of US$5,870 at end-2005, some 15 percent of Chileans live below the poverty line, with many millions precariously just above it. Indeed, annual income for most Chileans remains very low. The distribution of income is among the most unequal of any country in the world, and upward social mobility is scarce. Chile has invested proactively in social protection programs, but the middle class as well as the poor remain highly vulnerable to shocks. Notwithstanding a significant improvement over 20 years, infrastructure and public services still remain outside the reach of many Chileans. Chile is exceptional within the LAC region in that, as a middle-income country with a strong external financial position, it has no need to borrow from the Bank for purposes of resource transfer. On the other hand, Chile is an open society that is very receptive to ideas from abroad and clearly wishes to forge strong ties with the international community at large. In that respect, the Bank has had a role to play in facilitating the transfer of knowledge and experience. The 2007 Country Partnership Strategy was prepared with that objective in mind and within the framework of the Bank’s agenda for middle-income countries. back to top
BANK PROGRAMS IN CHILE The objective of the Country Partnership Strategy is to support Chile’s efforts to converge with OECD income levels and living standards by (i) accelerating sustainable growth and (ii) increasing equality of opportunity. Chile has identified the following topics as key for its development vision and where, in the context of productive engagement with the Bank, it perceives the Bank Group might be well positioned to provide assistance: • Innovation
• Infrastructure and public services
• Public Sector Management
• Sustainable development and the environment
• Improving education
• Social protection The key features of our program in Chile include the following projects: • Chile Solidario is an innovative package of legislative and administrative reforms that significantly improved the policy framework for poverty reduction and social protection. The reforms have extended the coverage and effectiveness of social protection, and have contributed to poverty reduction. The Bank supported the Chile Solidario initiative in 2003 with a Social Protection SAL for US$200 mn. and a Social Protection Technical Assistance Loan in the amount of US$10.7 mn. • Chile Califica is a lifelong learning initiative with a special focus on working adults who need additional skills that would enable them to find jobs and advance in the labor force. The Bank has supported Chile Califica since its inception in 2002. The principal vehicle for Bank support has been a loan in the amount of US$75.75 mn. in support of a Lifelong Learning and Training Project. • Higher Education. The Bank has been actively engaged in supporting the Chilean higher education reform agenda since 1999. The Higher Education Improvement Project (1999-2005) helped introduce quality assurance in tertiary programs and established a competitive fund for quality improvement. To help continue this progress, the Bank is now supporting the first phase of the Tertiary Education Finance for Results Program, which pilots multi-year performance agreements negotiated between the Ministry of Education and participating universities. • Integrated State Financial Management System (SIGFE). The program supports more effective budget processes and controls. SIGFE has been adopted by some 350 out of a total of 389 public sector agencies including 192 hospitals. The Bank supported SIGFE in 2002 with a loan of US$23.2 mn. Also in public sector management, the Bank carried out an impact assessment of the country’s flagship evaluation system for enhancement of the quality of public expenditure. A SIGFE II project was approved in August 2007 for 23 million dollars. • Transantiago, an urban transport plan designed to improve the transport system in the capital city, aims to reduce congestion and pollution and increase safety. The Bank supported Transantiago with a US$30 mn. DPL and a technical assistance loan to support implementation, monitoring and evaluation. Related environmental issues are also being supported with a GEF grant. The program is facing significant challenges in implementation, and the Bank is restructuring the technical assistance project to assist the authorities overcome these challenges. • Millennium Science Initiative is helping streamline financial support to the scientific community. The project is improving productivity of top researchers and increasing the number of scientists necessary for a competitive knowledge-based economy. The Bank supported the project in 1999 through a LIL, which was followed by an APL to Improve the Innovation System (2003-2007), which is also funding innovative multi-sectoral research consortia. A project on innovation and competitiveness is planned. • Rural Infrastructure for Territorial Development is a program to prepare territorial development plans in 75 territories through a highly participatory, locally based effort that complements current Ministry of Planning and Cooperation (MIDEPLAN) priorities for infrastructure in rural communities. • Environmental Management. The Bank has provided broad support to Chile from analysis of options for the next generation of environmental institutions and policies, to funding by the GEF, Montreal Protocol, and Carbon markets for land degradation, biodiversity conservation, renewable energy (including three mini-hydro projects in Chacabuquito, Quilleco and Hornitos), climate change mitigation, and implementation of the Montreal Protocol on ozone depleting substances. Analytical Agenda: In line with Chile’s desire to use the Bank as a conduit for knowledge transfer, our analytical program is strong. During the last five years, the Government demand for Bank work on the Government’s SME agenda, territorial development, household risk protection, and managing contingent liabilities. Key products included a poverty assessment, a gender assessment, and a financial sector assessment. Chile has also featured prominently in recent LCR flagships; including: From Natural Resources to the Knowledge Economy: Trade and Job Quality (2002); Inequality in Latin America: Breaking with History (2003), and Closing the Gap in Education and Technology (2003). For more information on World Bank assistance to Chile, including lending breakdown and project reports, please see: Proposed Projects
All Projects back to top
CONTACTS In Argentina:
Yanina Budkin
Communications Officer
Tel: (54-11) 4316-9700
Fax: (54-11) 4313-1233
email: ybudkin@worldbank.org Diego Ambasz
Public Information Coordinator
Tel: (54-11) 4316-9700
Fax: (54-11) 4313-1233
email:dambasz@worldbank.org Updated October 2007 |
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