OECD economic surveys Chile February 2021.

125 Pages·2021·2.889 MB·English

OECD Economic Surveys
CHILE
FEBRUARY 2021

OECD Economic Surveys:
Chile
2021
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Please cite this publication as:
OECD (2021), OECD Economic Surveys: Chile 2021, OECD Publishing, Paris, https://doi.org/10.1787/79b39420-en.
ISBN 978-92-64-92597-7 (print)
ISBN 978-92-64-84663-0 (pdf)
OECD Economic Surveys
ISSN 0376-6438 (print)
ISSN 1609-7513 (online)
OECD Economic Surveys: Chile
ISSN 1995-378X (print)
ISSN 1999-0847 (online)
Photo credits: Cover © @Kavram/Shutterstock.com.
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© OECD 2021
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Table of contents
Executive summary 9
1 Key policy insights 14
Recent macroeconomic developments and short-term prospects 19
Avoiding hysteresis effects on inequality after the outbreak and building a stronger middle class 31
Closing productivity gaps to make mid-size firms thriving and support the recovery 47
Continuing to decouple economic growth from environmental impacts 58
References 61
2 Making digital transformation work for all in Chile 63
Promote connectivity and close the digital divide 65
Unlocking digital skills development and innovation capacity 72
Boosting business dynamism and the diffusion of knowledge in the digital era 84
Preserving social cohesion and helping workers make the most out of a dynamic labour market 96
Achieving sustainable and reliable digital infrastructures 111
References 117

Tables
Table 1. Chile is set for a gradual recovery 10
Table 1.1. Macroeconomic indicators and projections 25
Table 1.2. Events that could lead to major changes in the outlook 27
Table 1.3. The structural budget deficit was stable until recently 29
Table 1.4. Past OECD recommendations on macroeconomic policies 31
Table 1.5. Past OECD recommendations on inclusive growth 46
Table 1.6. Past OECD recommendations on productivity 55
Table 1.7. Illustrative GDP-per-capita impact of recommended reforms 57
Table 1.8. Illustrative fiscal impact of recommended reforms 57

Figures
Figure 1. Progress in poverty reduction has been impressive but inequality remains high 10
Figure 2. The outbreak may reinforce the already high share of vulnerable households 11
Figure 3. The tax and transfer system could do more to reduce inequality 12
Figure 4. Competitive pressures remain low 12
Figure 1.1. Growth, inclusiveness and well-being outcomes in Chile 16
Figure 1.2. Growth started to decelerate before the outbreak 20
Figure 1.3. The labour market has been significantly hit 21
Figure 1.4. Inflation is on target and expectations remain anchored 22
Figure 1.5. The current account has moved into surplus during the pandemic 23
Figure 1.6. Financial conditions stay favourable 24
OECD ECONOMIC SURVEYS: CHILE 2021 © OECD 2021
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Figure 1.7. The concentration of specialised exports to China and the United States is a risk to growth 27
Figure 1.8. Monetary policy is accommodative 28
Figure 1.9. Illustrative public debt paths 30
Figure 1.10. Social mobility is low in Chile 32
Figure 1.11. Economic vulnerability is high while income is concentrated at the top 33
Figure 1.12. Core spending falls disproportionately on the poorest sections of the population 34
Figure 1.13. Quality and inclusiveness of education are low 35
Figure 1.14. Spending in pre-primary, primary and secondary education is lagging behind 36
Figure 1.15. Enrolment in early childhood education has increased but quality remains low 37
Figure 1.16. Duality and informality remain high 38
Figure 1.17. Training programmes do not reach the most vulnerable 40
Figure 1.18. The tax and transfer system could provide more protection for vulnerable households 41
Figure 1.19. The personal income tax structure has little redistributive power 42
Figure 1.20. Illustrative income redistribution effects of selected tax reforms 44
Figure 1.21. Chile has the one of the highest gap in health status between education groups 45
Figure 1.22. Out-of-pocket spending for health care are amongst the highest in the OECD 45
Figure 1.23. Productivity is low and polarised 48
Figure 1.24. Competitive pressures remain low 49
Figure 1.25. The complexity of some regulations remains the highest in the OECD 50
Figure 1.26. The impact of new regulations should be systematically assessed 52
Figure 1.27. The insolvency regime can be eased further 53
Figure 1.28. Corruption remains low 54
Figure 1.29. Green growth indicators 59
Figure 2.1. Increasing access to fixed broadband and reducing the regional disparities are the main
challenges 66
Figure 2.2. Regulatory barriers on communications are high 68
Figure 2.3. There are wide disparities in Internet use 70
Figure 2.4. Access to Internet at home is widely determined by socio-economic variables 71
Figure 2.5. Digital adoption lags behind mainly in micro firms 72
Figure 2.6. Chilean workers lack the skills to thrive in the digital era 73
Figure 2.7. Training teachers to be drivers of digital transformation should be a priority 75
Figure 2.8. Risks of digital transformation and extreme use of Internet should be avoided 76
Figure 2.9. ICT skills are increasingly demanded in Chile 77
Figure 2.10. Chile is experiencing a clear shortage of ICT workers 78
Figure 2.11. Bridging the innovation divide is necessary to increase productivity 80
Figure 2.12. R&D and innovation spending remains low 81
Figure 2.13. Public support for innovation has increased but remains limited 82
Figure 2.14. Business collaboration should be strengthened 83
Figure 2.15. The diffusion of digital tools needs a boost 85
Figure 2.16. Digital adoption leads to higher firm level productivity 86
Figure 2.17. E-commerce in Chile has been growing at a fast pace 87
Figure 2.18. Competitive pressures remain low and the regulatory burden is high 89
Figure 2.19. Chile has room to increase the number of Fintech start-ups 92
Figure 2.20. The development of venture capital has stalled in Chile 92
Figure 2.21. Digital Services Trade Restrictiveness is high 94
Figure 2.22. The interoperability of national regulatory frameworks with the region could improve 95
Figure 2.23. Employment in digital-intensive sectors remains low in Chile 97
Figure 2.24. The Chilean labour market shows signs of polarisation 98
Figure 2.25. More than half of jobs are at risk of automation, affecting more low and middle-classes 99
Figure 2.26. Employment in routine manual occupations and those with high risk of automation has decreased
in the last decade 100
Figure 2.27. Automation risk and labour market transitions in Chile 101
Figure 2.28. Artificial intelligence and labour market transitions in Chile 101
Figure 2.29. Automation risk leads to lower wages for the low-income, but artificial intelligence has a positive
impact 102
Figure 2.30. Online platforms have increased at a fast pace in Chile 103
Figure 2.31. Self-employment, temporary and informal jobs are prevalent in Chile 104
Figure 2.32. Participation in training is high in Chile 108
Figure 2.33. Most vulnerable workers receive less training 109
Figure 2.34. The uptake of digital government services remains low 112
OECD ECONOMIC SURVEYS: CHILE 2021 © OECD 2021
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Figure 2.35. Cybersecurity capacities are lacking 113
Figure 2.36. Data privacy violations are the highest in the OECD 114

Boxes
Box 1.1. Policy responses to the COVID-19 pandemic 17
Box 1.2. Keys features of the social agenda in response to October 2019 protests 19
Box 1.3. How does a negative income tax work? The example of the Earned Income Tax Credit in the United
States 43
Box 1.4. Illustrative impacts of a more inclusive tax system on income inequality 43
Box 1.5. The Zero Licensing Initiative in Portugal 51
Box 1.6. Potential impact of structural reforms on per capita GDP 57
Box 1.7. Quantifying the fiscal impact of structural reforms 57
Box 2.1. Ongoing projects to extend fibre cables throughout Chile 67
Box 2.2. The divide in household Internet usage in Chile 71
Box 2.3. Digitalisation is already having a positive impact on Chilean firms’ productivity 86
Box 2.4. Is the impact of digital technologies already visible in the Chilean labour market? 100
Box 2.5. The impact of digital transformation on wages in Chile 102

OECD ECONOMIC SURVEYS: CHILE 2021 © OECD 2021
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OECD ECONOMIC SURVEYS: CHILE 2021 © OECD 2021
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This Survey is published on the responsibility of the Economic and
Development Review Committee of the OECD, which is charged with the
examination of the economic situation of member countries.
The economic situation and policies of Chile were reviewed by the
Committee on 16 and 17 July 2020. The draft report was then revised in the
light of the discussions and given final approval as the agreed report of the
whole Committee on 3 August 2020.
The Secretariat’s draft report was prepared for the Committee by Nicolas
Ruiz and Paula Garda under the supervision of Piritta Sorsa. Statistical
research assistance was provided by Marnix Dek and editorial coordination
by Carolina Gonzalez. The Survey also benefitted from contributions by
Jessica Mena, Mauricio Hitschfeld and Clara Marköö.
The previous Survey of Chile was issued in 26 February 2018.
Information about the latest as well as previous Surveys and more
information about how Surveys are prepared is available at
http://www.oecd.org/eco/surveys.

OECD ECONOMIC SURVEYS: CHILE 2021 © OECD 2021
8 
Basic statistics of Chile 2019
(Numbers in parentheses refer to the OECD average)1
LAND, PEOPLE AND ELECTORAL CYCLE
Population (million, 2018) 18.7 Population density per km² (2018) 25.2 (37.8)
Under 15 (%, 2018) 19.8 (17.8) Life expectancy at birth (years, 2018) 80.0 (80.2)
Over 65 (%, 2018) 11.5 (17.1) Men (2018) 77.6 (77.6)
Foreign born (%, 2015) 2.6 Women (2018) 82.4 (82.8)
Latest 5-year average growth (%) 1.3 (0.6) Latest general election November 2017
ECONOMY

Gross domestic product (GDP) Value added shares (%, 2018)
In current prices (billion USD) 282.8 Agriculture, forestry and fishing 4.0 (2.5)
In current prices (billion CLP) 198 440.7 Industry including construction 32.8 (27.3)
Latest 5-year average real growth (%) 2.1 (2.2) Services 63.3 (70.2)
Per capita (000 USD PPP, 2018) 24.8 (46.4)
GENERAL GOVERNMENT
Per cent of GDP
Expenditure (2018) 25.4 (40.3) Gross financial debt (OECD: 2017) 37.2 (109.0)
Revenue (2018) 23.9 (37.3) Net financial debt (OECD: 2017) 7.1 (69.0)
EXTERNAL ACCOUNTS

Exchange rate (CLP per USD) 701.76 Main exports (% of total merchandise exports)
PPP exchange rate (USA = 1) 415.68 Crude materials, inedible, except fuels 36.9

In per cent of GDP Manufactured goods 26.0
Exports of goods and services 28.2 (54.2) Food and live animals 22.8

Imports of goods and services 28.6 (50.4) Main imports (% of total merchandise imports)
Current account balance -3.9 (0.3) Machinery and transport equipment 36.1
Net international investment position -23.7 Mineral fuels, lubricants and related materials 16.0
Manufactured goods 12.3
LABOUR MARKET, SKILLS AND INNOVATION
Employment rate (aged 15 and over, %) 55.2 (57.5) Unemployment rate, Labour Force Survey (aged 7.0 (5.4)
15 and over, %)
Men 65.3 (65.6) Youth (aged 15-24, %, 2018, OECD: 2019) 17.6 (11.7)
Women 45.5 (49.9) Long-term unemployed (1 year and over, %) 1.2 (1.4)
Participation rate (aged 15 and over, %) 59.4 (61.1) Tertiary educational attainment (aged 25-64, %, 25.2 (36.9)
2017, OECD: 2018)
Average hours worked per year (2018) 1,941 (1,734) Gross domestic expenditure on R&D (% of GDP, 0.4 (2.6)
2016, OECD: 2017)
ENVIRONMENT
Total primary energy supply per capita (toe, 2.1 (4.1) CO2 emissions from fuel combustion per capita 4.7 ( 8.9)
2018) (tonnes, 2018)
Renewables (%, 2018) 27.5 (10.5) Renewable internal freshwater resources per 49.8
capita (1 000 m³, 2014)
Exposure to air pollution (more than 10 μg/m³ of 97.3 (58.7) Municipal waste per capita (tonnes, 2017, 0.4 (0.5)
PM 2.5, % of population, 2017) OECD: 2018)
SOCIETY
Income inequality (Gini coefficient, 2017, 0.460 (0.310) Relative poverty rate (%, 2017, OECD: 2016) 16.5 (11.6)
OECD: 2016)
Median disposable household income (000 9.6 (23.9) Education outcomes (PISA score, 2018)
USD PPP, 2017, OECD: 2016)
Public and private spending (% of GDP) Reading 452 (487)
Health care (2018) 8.9 (8.8) Mathematics 417 (489)
Pensions (2017, OECD: 2015) 4.4 (8.5) Science 444 (489)
Education (% of GNI, 2018) 4.6 (4.5) Share of women in parliament (%) 22.6 (30.7)
1. The year is indicated in parenthesis if it deviates from the year in the main title of this table. Where the OECD aggregate is not provided in
the source database, a simple OECD average of latest available data is calculated where data exist for at least 80% of member countries.
Source: Calculations based on data extracted from databases of the following organisations: OECD, IEA, ILO, IMF, World Bank.
OECD ECONOMIC SURVEYS: CHILE 2021 © OECD 2021