Ratings and Rankings

Chile, at 31st—one position down but with a slight improvement in its score this year—remains the most competitive economy in the region. A solid institutional framework (26th) with a high level of trust in the rule of law and transparent public governance mechanisms, coupled with a sound and traditionally counter-cyclical macroeconomic policy (14th), have set solid foundations that have allowed Chile to growat a steady pace since the early 1990s and benefit from one of the highest per capita incomes in the region.

Early measures to open and liberalize its markets by introducing high levels of domestic (24th) and foreign(17th) competition, a relatively flexible labor market (49th), and one of the most sophisticated and efficient financial markets (21st) have also helped the country to maintain its long-term growth prospects in the past decades. Moreover, in recent years, the increase in international prices of commodities such as copper has provided Chile with an important source of revenue that has boosted the economic prospects of the country: GDP growth forecasts are at 6.5 percent for 2011 and 5.1 percent for 2012. This source of growth should provide the government with enough financial muscle to undertake the reconstruction needed after the 2009 earthquake without jeopardizing public finances, and to invest in those areas where the country depicts a weaker performance.

As Chile moves quickly toward higher levels of rent and the next stage of development, the solid basic requirements and efficiency enhancers that have paved the way for the economic success of the country thus far will give way to innovation, a pillar where at present Chile is lagging behind. Companies with low investment in R&D (60th) and a weak capacity for innovation (66th) act in an innovation environment characterized by relatively low-quality scientific research institutions (51st) and weak university-industry collaboration in R&D (44th). Moreover, the perceived poor quality of the overall educational system (87th)— especially of primary education (123rd), along with poor results in math and science (124th)—hinder the capacity of the economy to generate, diffuse, and use knowledge that can be brought into the market in the shape of new products or services. Making sufficient progress on this front is the major challenge that Chile will face in the next decade.

Chile is the best performer in the region, both in terms of the attractiveness of its environment for private investment in infrastructure and development of its infrastructure network. Nevertheless, the indexes highlight a number of areas in which there is room for improvement.

Transparency International (TI) defines corruption as the abuse of entrusted power for private gain. This definition encompasses corrupt practices in both the public and private sectors. The Corruption Perceptions Index (CPI) ranks countries according to the perception of corruption in the public sector. The CPI is an aggregate indicator that combines different sources of information about corruption, making it possible to compare countries.