An Analysis of the Chilean Economic System

What is the economic system of Chile? The economy of Chile is based on a mixed economy, that resembles a market economy. The country’s economic system combines elements of a market economy and a planned economy, individuals are free to work, produce, consume, and invest in any way they please.

In Chile, the economy comprises a private sector, consisting of individuals and businesses that make autonomous decisions based on self-interest, and a public sector, where the state determines the production and distribution of specific goods and services. No country is purely capitalist or purely communist.

What do the freedom indexes tell about the economic system of Chile?

Now, to determine if a country is mostly a market economy or a planned economy, it is useful to examine some economic indexes. For instance, according to the 2022 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, Chile is ranked 20th globally and 2nd in the Americas indicating that the country has a mostly free economy.

In a similar way, the 2022 Freedom House index evaluates the state of political rights and civil liberties globally. Generally, market economies tend to align more with democracy and freedom, while command economies tend to be characterized by greater state control and fewer democratic and civil liberty protections. Chile gets a score of 94/100, which qualifies it as free. Chile is a country where the government does not control what people do for political reasons, and people have the freedom to choose (what, how much and how to produce, whether to buy or not, selling price, etc.)

The Link Between Public Sector Employment and the Economic System of Chile

An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Chile, according to ILOSTAT, the number of public sector employees as a percentage of the total workforce is 13.1% (2021).In the country, the public sector tends to be small and efficient. As result, the number of public sector employees as a percentage of the total workforce is low compared to other countries.

What does the biggest company in Chile say about the country’s economic system?

The biggest company my market cap in Chile should also be looked at, as well as whether it is a state-owned or private company. In this case, Falabella is a private company. It is owned by the Solari family. It is a major retailer in Chile and has a presence in multiple countries in Latin America.

Top 10 Biggest companies by revenue in Chile (2023 data)

The historical factors that have influenced the economic system of Chile

The current mixed economy system of Chile in the last century is a result of a combination of economic reforms, increased foreign investment, and the growth of the private sector. These reforms made the country move away from a centrally planned economy and towards a market-based system, allowing for greater economic growth and development. The increased foreign investment has increased access to capital, technology, and resources, while the growth of the private sector increased competition and efficiency in the Chilean economy.


An Analysis of the Chilean Economic System


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