A WORLD BANK COUNTRY STUDY PUB-2390 CHILE An Economy in Transition JANUARY 1980 CHILE An Economy in Transition This report is based on the findings of a mission that visited Chile in March/April 1977. The mission was composed of: Fred D. Levy, chief of mission Juan A. Giral-Bosca, public finance Angel Boccia, OAS tax system Julio Gonzalez del Solar, consultant, financial system Peter Gregory, consultant, wages, employment and social programs Rosalinda Dacumos, national accounts, prices, and balance of payments Gerhard Thiebach, mining sector Vinod Thomas, forestry sector Abraham Stein, consultant, industrial sector Jose Almeida, OAS industrial sector Darel C. Fallen-Bailey, energy sector David P. Hughart, energy sector Ruth McCrea, research assistant Bertha P. Cassorla, mission secretary Written contributions were received from: Robert Brown, agricultural consultant Robert E. Rafloski, transport Nuhad J. Kanaan, ECLA, transport Julius Varallyay, public sector investment program Catherine Pierce, population Miss Alexandra Blackhurst typed the report and tables. The mission also acknowledges the assistance of the FAO Forest Resources Planning and Development Group for Latin America. The Report was discussed with the Chilean Government in April 1979 and subsequently updated to include major developments which occurred during 1978. Latin America and the Caribbean Regional Office The World Bank Washington, D.C., U.S.A. The World Bank issues country economic studies in two series. This report is a working document and is, as such, part of an informal series based wholly on materials originally prepared for restricted use within the Bank. The text is not meant to be definitive, but is offered so as to make some results of internal research widely available to scholars and practitioners throughout the world. A second, more formal series entitled World Bank Country Economic Reports is published for the Bank by The Johns Hopkins University Press, Baltimore and London. Titles of these and all other Bank publications may be found in the Catalog of Publications, which is available free of charge from World Bank. Publications Unit, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. This report is a free publication. A small charge may be made if airmail postage is required. The views and interpretations in this report are the authors' and should not be attributed to the World Bank, to its affiliated organizations, or to any individual acting in their behalf. Copyright , 1979 The International Bank for Reconstruction and Development/The World Bank The World Bank enjoys copyright under Protocol 2 of the Universal Copyright Conven- tion, Nevertheless, permission for reproduction of any part of this report is hereby granted provided that full citation is made. PREFACE World Bank country economic reports, such as this report on Chile, provide the information and analysis which the Bank needs for planning its country lending programs as well as for reviewing national development policies with the officials of the country concerned. Circulation of these reports is normally restricted to the "official community" -- member governments of the Bank and international organizations concerned with development problems. When the World Bank and the Government concerned agree that a report may be of use to a wider audience, it is published by the Bank. This is such a case. While this report is based on a working document, rather than a study prepared with a view to broader distribution, in the interest of brevity, certain annexes detailing sectoral issues have been omitted from this published version. These annexes will be made available to interested readers by the Bank. While this report traces the development of the Chilean economy since the Great Depression of the 1930's, its major emphasis is on the traumatic economic events of the 1970's and their effect on Chile's economic prospects. During the last decade Chile had three different Governments with different economic philosophies: the Christian Democratic Frei Administration, the socialist Popular Unity AJ.lende Administration, and the free-market oriented military Government headed by General Pinochet. These changes were accompanied by complementary political and social policies; indeed, many recent analyses of Chile's economy have stressed the importance of political and social events, often to the virtual exclusion of economic analysis. In our analyses of the economies of member countries, consistency between stated ot,jectives and the use of policy instruments to achieve those objectives is of paramount importance. In supporting the integral development of the member countries and their peoples, our analyses normally try to show the inter-relationships between the development goals and the effectiveness of the use of policy instruments within the political framework existing in those countries. In this light, the Chilean experience of recent years is whorthwhile analyzing. The work included in this report is useful in our on-going dialogue with the Chilean authorities, and it may also prove to be useful for those interested in the development process of other nations. While the report remains the responsibility of its authors, particularly Mr. Fred Levy, the mission chief, the Bank believes it will prove valuable to those interested in Chile as well as a wider audience. Although it does not attempt to review the political and social environment in which economic changes occurred, it is a detailed, empirical analysis of one of the world's most controversial economies. The complex development issues that were faced by Chile in the 1970's are often similar to those confronted daily in other developing countries. Nicolas Ardito Barletta Regional Vice President Latin America and the Caribbean T CHILE: AN ECONOMY IN TRANSITION LIST OF TABLES COUNTRY DATA SHEET MAP SUMMARY AND CONCLUSIONS Page No. CHAPTER I: A HISTORICAL OVERVIEW OF CHILEAN ECONOMIC POLICY A. INTRODUCTION .................................................. 1 B. OVERVIEW OF THE MACROECONOMY .................................. 3 1. Population .............................................. . 3 2. Production . .............. . 7 3. Employment ................................................ 11 4. Price Stability .......................................... 12 5. Summary ................................................... 14 C. POLICIES THAT HAVE SHAPED THE CHILEAN ECONOMY ................. 14 1. Copper and the National Economy .......................... 16 a. The Early Years of Copper ........... .. .............. 16 b. The Nitrate Fantasy .............. .. ................. 17 c. The Birth of the Gran Mineria del Cobre ...... ....... 18 d. Chile's Share of Copper Earnings ....... .. ........... 18 e. The Stability of Copper Earnings ....... .. ........... 23 2. Foreign Trade Policies ............... .. .................. 25 a. Exchange Rate Policy ................................ 25 b. Import Restraints ................................... 30 c. Export Policy ....................................... 34 d. Import-Substitution and Domestic Economic Stability.. 35 3. Fiscal and Monetary Policies ............ .. ............... 36 a. Public Finance ...................................... 37 b. Monetary Policy ..................................... 40 (i) Money Supply ................................... 40 (ii) Interest Rates ................................. 41 (iii) Selective Credit Controls ...................... 47 c. Foreign Debt ........................................ 50 4. Wage Policies ............................................ 53 a. Minimum Wages and Salaries .......................... 53 b. Family Allowances ................................... 54 c. Average Wages and Salaries .......................... 55 d. Conclusions ......................................... 58 D. SUMMARY OBSERVATIONS .......................................... 59 Page No. CHAPTER II: THE CHILEAN ECONOMY 1970-SEPTEMBER 1973 A. INTRODUCTION ................................................... 61 B. THE REACTIVATION OF THE ECONOMY: 1971 ........................ 62 1. Wage Policy . .............................................. 63 2. Fiscal Policy ............. ............................... 63 3. Monetary Policy ........... ............................... 64 4. Foreign Trade Policy ........ ............................. 65 5. Price Controls ............ ............................... 66 6. Establishment of the Social Property Area .... ............ 66 7. Land Reform . .............................................. 67 8. Results of the First Year ............... ................. 69 a. Output and Employment ...... .......................... 69 b. Prices . .............................................. 70 c. Real Wages and Salaries ............................. 70 d. The Foreign Sector ....... ........................... 71 e. Summary . ............................................ 73 C. THE ECONOMIC DECLINE: 1972-SEPTEMBER 1973 .74 1. Output, Employment and Prices ..74 a. Output .74 b. Employment .75 c. Prices .76 2. Wages ........ 77 3. Fiscal Performance .80 4. Monetary Policy .82 5. The Foreign Sector ..82 a. Exchange Rate Policy .82 b. Other Exchange Restrictions .84 c. The Balance of Payments .84 6. Structural Transformation .. 88 a. Expansion of the Social Property Area .88 b. The Agrarian Reform .88 7. Summary .91 Page No. CHAPTER III: THE ECONOMY SINCE SEPTEMBER 1973 A. MACROECONOMIC OVERVIEW ........................................ 93 1. Introduction ....................... ...................... 93 2. The Short-Term Context ....... ........ .. .................. 93 B. THE FOREIGN SECTOR ............................................ 97 1. Foreign Sector Policies .................................. 97 a. The Exchange Rate ....... ........ .. .................. 97 b. Import Restrictions ...... ........ .. ................. 99 (i) Tariff Policy .................................. 99 (ii) Nontariff Barriers ............................. 101 c. Export Policy ....................................... 101 d. Other Trade and Exchange Measures ........ ........... 101 e. The Treatment of Foreign Capital .................... 102 2. Foreign Sector Performance ................. ... ........... 103 a. Exports . ............................................ 103 (i) Copper ......................................... 103 (ii) Other Exports .................................. 107 b. External Debt and Capital Flows ....... .. ............ 109 (i) Public Medium- and Long-Term Capital .... ....... 109 (ii) Private Capital Flows .......................... 110 C. Imports ..................... ........................ 112 d. The Balance of Payments ............................. 114 e. Borrowings from the IMF ........... .. ................ 114 C. MACROECONOMIC POLICY .......................................... 116 1. Public Finance . .......................................... 116 a. The Central Government Budget ....................... 117 (i) Expenditures ....... ............. ... ............ 118 (ii) Taxes .............................. ............ 119 b. The Public Enterprises ................ ... ........... 121 2. Monetary Policy .................... ...................... 124 a. Money and Credit .................................... 126 b. Interest Rates ...................................... 132 c. Selective Credit .................................... 137 D. EMPLOYMENT . .................................................... 138 1. Aggregate Experience ................. .................... 138 2. Major Sectors and Occupational Categories .. .............. 140 3. Government Measures to Deal with Unemployment ..... ....... 142 a. The Minimum Employment Program ...................... 142 b. Wage Subsidies ....6 ................................. 143 c. Unemployment Insurance .............................. 143 d. Special Training Program ............................ 143 Page No. CHAPTER III: THE ECONOMY SINCE SEPTEMBER 1973 (Continued) E. PRICES . .............................................. 144 F. WORKER COMPENSATION ........................................... 146 1. Wages, Salaries and Cash Benefits ............ ... ......... 146 a. September 1973-1974 ............... .................. 146 b. The 1975 Recession .................................. 149 c. Recovery ............................................ 150 2. Social Security .......................................... 151 G. THE DISTRIBUTION OF INCOME .................................... 153 1. The Costs of Austerity ................................... 154 2. The Impact of the Basic Reforms ....... ................... 154 a. Price Policies ...................................... 154 b. Compensation Policies ............................... 156 c. Tax Policy .......................................... 160 d. Social Expenditures ................................. 163 H. SUMMARY OBSERVATIONS . ......................................... 164 Page No. CHAPTER IV: THE MAJOR SECTORS A. INTRODUCTION .................................................. 167 B. AGRICULTURE .................................................. 168 1. Geographical and Historical Overview ...... ............... 168 2. Agricultural Policies Since September 1973 . . .174 a. Price Policy ..175 b. Credit Policy ..177 c. Technical Assistance. 179 d. Irrigation and Water Use . .179 e. Consolidation of the Land Reform . .180 3. Agricultural Performance Since 1973 . . .184 a. Output ..184 b. Foreign Trade ..185 c. Economic Status of Small Farmers . .186 (i) The Reformed Sector .187 (ii) Minifundistas .189 4. Summary and Mission Observations ....... .................. 190 C. THE FOREST SECTOR ............................................ 194 1. Forest Resources ....................................... 194 2. Forest Industries ....................................... 196 3. Forest Product Exports ................................... 199 4. Mission Observations ..................................... 201 D . FISHERIES ....................................... 202 E. THE MINING SECTOR ........................................ 205 1. Copper .......................... ............. 206 a. Large Mining ....................................... 208 b. Small and Medium Mines ............................... 212 c. Potential for Expansion .............................. 213 2. Other Non-Fuel Minerals .................................. 214 a. Iron Ore ....................................... 214 b. Molybdenum and Other By-Products of Copper .... ....... 216 c. Nitrate and Iodine ................................... 216 Page No. CHAPTER IV: THE MAJOR SECTORS (Continued) F. FUELS AND ENERGY ............................................... 217 1. Oil ................................................. 218 a. Production ........................................... 219 b. Exploration . ........................................ 220 c. Foreign Participation ....... ........................ 221 d. Domestic Price Policy ....... ........................ 222 2. Gas .................................................. 222 3. Coal .................................................. 224 4. Hydroelectric Power ........... ........................... 227 5. Other Energy Sources ................. .................... 228 a. Nuclear . ............................................ 228 b. Geothermal ........................................... 228 c. Liquified Petroleum Gas ....... ...................... 229 6. Summary and Mission Observations ......... .. .............. 230 a. Natural Gas Development ............................. 230 b. Magallanes Coal Development ......................... 230 C. LPG Expansion . ...................................... 231 F. INDUSTRY .................................................. 232 1. Historical Background ........................... 232 2. Industrial Performance, 1971-1973 .237 3. Industry Since 1973 ..238 a. Processed Foods .243 b. Beverages .243 c. Textiles .243 d. Chemicals .244 e. Petrochemicals ................................ A ..... 244 f. Iron and Steel ........... ........................... 244 g. Nonferrous Metals ......... .......................... 245 h. Metal-Mechanical Industries ......................... 245 4. Mission Observations ........... .......................... 246 G. TRANSPORT .................................................... 247 1. Highways ................................................. 249 2. Railways ................................................. 251 3. Ports ................................................. 253 4. Coastal and International Shipping ....................... 254 5. Civil Aviation . .......................................... 255 6. Pipelines ................................................ 256 7. Urban Transportation ........... .......................... 256 Page No. CHAPTER V: MACROECONOMIC PROJECTIONS AND POLICY RECOMMENDATIONS A. MACROECONOMIC PROJECTIONS . ........................... ........... 258 1. The External Sector ......... ............................. 258 2. National Accounts Projections ............................ 262 B. SAVINGS AND INVESTMENT POLICIES .............. ................. 265 1. Taxes, Tariffs, and Copper ....... ... ................... .. 265 a. Taxes ............................................... 266 b. Public Enterprise Earnings ............... ... ........ 266 2. Expenditures and Transfers ....... ............. ........... 268 a. Public Investment * .... ................. ................ 268 b. Social Overhead Expenditures ............... ... ...... 269 3. Policies Affecting Private Investment ......... ... ........ 271 a. Interest Rates .................. .................... 271 b.. Competition in the Financial Market ..... .. .......... 272 c. The Exchange Rate .................................... 273 d. Agricultural Price Stabilization ....... .. ........... 273 C. THE DISTRIBUTION OF INCOME ................. ................... 274 1. Social Expenditure Programs ....... ............ ........... 274 2. Wage and Employment Policies ...... ............. .......... 276 3. The Ownership of Productive Assets ............ ... ........ 279 4. Taxes .................................................... 279 Appendix I: NOTE ON CHILEAN ECONOMIC STATISTICS ................... 281 A. Price Indices ....................... ...*........................ 281 B. Employment Data ............................................... 284 C. National Accounts ..... ........................................ 289 1. Production Data .......................................... 289 a. Agriculture ........................... .............. 289 b. Manufacturing ......................... .............. 290 c. Construction .......................... .............. 290 d. Problems of Aggregation ...... ............. .......... 291 2. Savings, Investment, and Consumption .......... ... ........ 294 3. Foreign Trade Statistics ....... ........... ... ............ 297 D. Wages and Salaries .. .......................................... 298 E. Public Sector Accounts ........... ............................. 299 Appendix II: STATISTICS . ........................................... 301 CHILE: AN ECONOMY IN TRANSITION LIST OF TABLES CHAPTER I Page No. Table No. I.1 Rates of Birth, Death and Natural Growth of Population, 1920-1975 (Percent) ....... .............................. 3 I.2 Comparative Rates of Birth and Natural Increase, 1975 ..... 4 I.3 Summary Measures of the Age Distribution of the Population, 1950-1985 (Percent). 6 I.4 Comparative Education Indicators, 1970 (Percent of Relevant Age Group). 7 I.5 Growth Rates of GDP and GDP per Capita, 1952-1970 (Percent) 8 I.6 Comparative Growth Rates of GDP per Capita (Percent) 8 I.7 Sectoral Distribution of GDP, 1940-1970 (Percent) 10 I.8 Distribution of Economically Active Population by Sectors, 1940-1970 (Percent) .12 I.9 Chile's Retained Share of the CIF Value of Copper Production, 1925-1970 (Percent) .19 I.10 Summary of Growth and Stability of Real Copper Revenues, 1952-1970 (Percent) .24 I.11 Average Annual Exchange Rates, 1958-1970 (Escudos per US dollar) .27 I.12 Indices of Real Exchange Rate and Non-Mining Exports, 1958-1970 (1969 = 100) .................................. 28 I.13 Effective Protection Rates, by Sector, 1967 (Percent) ..... 33 I.14 Price Comparisons, Selected Metal-Mechanical Products, 1969 (First Semester) (US dollars) .34 I.15 Public Sector Financial Performance, 1960-1970 (Percent of GDP) ........................................ 38 I.16 Supply of Money, 1952-1970 (Millions of Escudos) .......... 41 I.17 Central Bank Credit Outstanding to the Treasury, 1955-1970 43 I.18 Variation in Central Bank Credit to Treasury in Relation to Previous Year's Money Supply, 1956-1970 .43 I.19 Maximum Legal Annual Interest Rates for Banking System, 1940-1970 (Percent) .45 I.20 Distribution of Banking System Credits to Private Sector, 1950-1970 (Percent) .50 I.21 Outstanding Public External Debt, 1960-1970 (Millions of US dollars) .52 - ii - CHAPTER II Page No. Table No. II.1 Year-to-Year Changes in Real GDP by Sectors, 1971-1973 (Percent) ............................................... 74 II.2 Index of Industrial Production by Quarters, 1971-1973 (III) (1969 = 100) .75 II.3 Year-to-Year Increase in Consumer Prices, 1971-September 1973 (Percent) .77 II.4 Index of Average Annual Real Receipts of Minimum-Income Blue-Collar and White-Collar Workers, 1970-1973 (1968 = 100) .78 II.5 Indices of Real Average Wages and Salaries, 1970-1973 (April 1968 = 100) .79 II.6 Central Government Revenue and Expenditures, 1970-1973 (Millions of pesos at December 1969 prices) .80 II.7 Central Government Tax Revenues by Type of Tax, 1970-1973 (Thousands of pesos at December 1969 prices) .82 II.8 Average Annual Exchange Rates, 1970-73 (Escudos per US dollar) .83 II.9 Summary of Merchandise Trade, 1966-73 (Millions of US dollars) .85 I.10 Real Imports by Type of Good, 1970-73 (Millions of US dollars) .86 I.11 Resource Flows between Chile and Foreign Lenders, 1970-73 (Millions of US dollars) .87 I1.12 Summary Balance of Payments and International Reserves, 1970-73 (Millions of US dollars) .88 II.13 Progress of Land Expropriations, 1965-73 (Thousands of hectares) .90 CHAPTER III III.I Year-to-Year Changes in Real GDP by Sectors, 1974-1977 (Percent) .95 III.2 Aggregate Savings and Investment Ratios, 1973-1976 (Percent of GDP) .95 III.3 Average Annual Exchange Rates, 1969 and 1973-78 (Escudos per US dollar) .98 III.4 Average and Maximum Nominal Tariff Levels, 1973-1979 (Percent of CIF value) .................................. 100 III.5 Average Price of Copper, 1971-1978 (US cents per lb) ...... 104 III.6 Copper Production, 1970-1978 (Thousands of metric tons) ... 106 III.7 Copper Exports, 1971-1978 (Millions of US dollars) ........ 107 III.8 Non-Copper Exports, 1971-1978 (Millions of US dollars) .... 108 III.9 Selected Non-Copper Exports, 1970, 1973 and 1977 (Millions of US dollars) .108 - iii - CHAPTER III Page No. Table No. III.10 Resource Flows Between Chile and Foreign Lenders, 1973-1977 (Millions of US dollars) ................................. 110 III.11 Approved Foreign Direct Investment Projects by Sector, 1974-August 1978 (Millions of US dollars) .... ............ 112 III.12 Imports by Type of Good, 1973-1978 (Millions of US dollars) 113 III.13 Summary Balance of Payments and International Reserves, 1973-1978 (Millions of US dollars) ....................... 115 III.14 Central Government Revenue and Expenditures, 1973-1977 (Millions of pesos at December 1969 prices) .... .......... 118 III.15 Tax Revenues, 1973-1977 (Thousands of pesos of December 1969) ............. ....................................... 120 III.16 Real Price Index for Selected Public Enterprises, 1972-1976 (December 1974 = 100) .......................... 122 III.17 Growth of Money Supply by Quarters, 1973(IV)-1978 (Percent) 128 III.18 Banking System Credit Expansion in Relation to Supply of Money and Quasi-Money at Beginning of Period, 1973(IV)- 1977 (Percent) ........................................... 129 III.19 Quarterly Changes in Employment Labor Force and the Rate of Unemployment in Greater Santiago, 1973(IV)-1978 (Percent) .......... ...................................... 139 III.20 Monthly Changes in Official Consumer Price Index, 1974-78 (Percent) ........... ..................................... 145 III.21 Index of Real Receipts of Minimum-Income Blue-Collar and White-Collar Workers, 1970-1977 (Average 1970 = 100) ..... 148 III.22 Index of Average Real Wages and Salaries, 1970-78 (Average 1970 = 100) ......... 149 III.23 Central Government Expenditures for Social Programs, 1965- 1977 (Millions of 1976 US dollars) .165 CHAPTER IV IV.1 Distribution of GDP by Sectors, 1965-1977 (Percent) 168 IV.2 Agriculture: Area Planted and Production, Crop Years 1965/66-1972/73 (1964/65 = 100) .173 IV.3 Exports and Imports of Agricultural Products and Processed Foods as Proportion of Merchandise Exports, 1965 and 1970-73 (Percent) .174 IV.4 Indicators of Agriculture's Terms of Trade, 1965-1977 (1965 = 100) .176 IV.5 Agricultural Credit and Distribution by Type and Lending Institution, 1970-1976 .178 IV.6 Disposition of Expropriated Land (through February 1978) 184 IV.7 Area Planted and Production, Crop Years 1972/73-1977/78 (1964/65 = 100) .185 - iv - CHAPTER IV Page No. Table No. IV.8 Trade in Agricultural Products and Processed Foods as Proportion of Merchandise Exports, 1973-1977 (Percent) 186 IV.9 Area Planted Annually, 1970-1976 (Thousand hectares) ...... 194 IV.10 Projected Availability of Pinus Radiata, 1976-2000 ........ 196 IV.11 Indices of Physical Production and Exports of Wood Pulp, 1965-1976 (1970 = 100) . .198 IV.12 Indices of Physical Production and Export of Paper and Paperboard, 1965-1976 (1970 = 100). 198 IV.13 Forest Product Exports, 1970-1977 (Millions of US dollars) 199 IV.14 Annual Catch of Fish and Other Seafood, 1955-1976 203 IV.15 Fisheries Exports, 1960-1977 (Millions of US dollars) 204 IV.16 Chile's Share of World Mining Output and Reserves (Percent) 206 IV.17 Copper Production, 1966-1977 (Thousands of metric tons) 209 IV.18 Distribution of Copper Production by Type, 1961-1977 (Percent) .209 IV.19 Employment and Labor Productivity in the Large Copper Mining Sector, 1952-1977 ...... .......................... 210 IV.20 Iron Ore Exports, 1960-1977 (Millions of US dollars) ...... 216 IV.21 Energy Consumption by Sources and Sectoral Use, 1975 (Percent) .217 IV.22 Production and Imports of Crude Oil, 1950-1977 (Thousands of cubic meters) .220 IV.23 Production of Natural Gas, 1969-1977 (Millions of cubic meters). 223 IV.24 Gross Production of Coal, 1940-1977 (Thousands of metric tons) .225 IV.25 Index of Average Electric Power Tariffs (ENDESA), 1969-1978 (Average 1969 = 100). 228 IV.26 Average Annual Rate of Growth of Manufacturing Value-Added by Sub-Periods, 1915-1970 (Percent) .233 IV.27 Structure of Manufacturing Output and Employment, 1967 (Percent) .236 IV.28 Index of Manufacturing Output by Type of Good, 1970-1973 (1969 = 100) .237 IV.29 Manufacturing Output by Type of Good, 1973-1977 (1969 = 100) ......... ................................... 239 IV.30 Composition of Industrial Exports, 1960-1977 (Percent) .... 241 IV.31 Change in Physical Output by Manufacturing Subsectors, 1970-1977 (Percent). 242 IV.32 Distribution of National Cargo Movement by Mode of Transport, 1975 (Millions of metric tons) .248 IV.33 Operating Revenues and Expenditures of State Railway, 1969-1977 (Millions of 1976 US dollars) .252 CHAPTER V Page No. Table No. V.1 Projected Copper Prices (US cents/lb) .... ................ 258 V.2 Projected Current Account Balance (Millions of current US dollars) ....259 V.3 Projected Loan Disbursements by Source (Millions of US dollars) ........................................... 260 V.4 Projected Debt Indicators ...... .......................... 261 V.5 Projected National Accounts Variables .................. .. 262 V.6 Projected Growth of Central Government Savings, 1977-1990 Base Run (Percent of GDP)... 264 V.7 Employment Growth Rates Required to Reach 7 Percent Unemployment Rate in Greater Santiago by 1983 ......... 278 Appendix I A.1 Increase in Price Indices .............. .. ................ 283 A.2 Construction Indicators, 1970-1977 ....................... 291 A.3 Hypothetical Expenditure Stream, 1974/75 (current pesos and pesos of December 1974) .............. . 292 A.4 Chile Price Indices, 1965-1977 ............ .. ............. 294 A.5 Implicit Deflator for Private Consumption Expenditures and CPI, 1966-1977 ..297 Page 1 of 2 pages COUNTRY DATA - CHTLE AREA 2/ POPULATION DENSITY 756,826 knf- 10.7 million (mid-1978) 14 per k2/ Rate of Growth: 1.7 (from 1970 to 1978) 232 per kr/of arable land POPULATION CHARACTERISTICS (1975) 24HEALTH (Io7f) Crude Birth Rate (per 1,000) Population per physician 2,323 Crude Death Rate (per 1,000) 7 Population per hospital bed 311 1/ Infant Mortality (per 1,000 live births) 55 INCOME DISTRIBUTION (,19Z6) DISTRIBUTION OF LAND OWNERSHIP % of national income, highest quintile 51 % owned by top 10% of owners lowest quintile 4 % owned by smallest 10% of owners ACCESS TO PIPED WATER (1976) ACCESS TO ELECTRICITY (1975) % of population - urban 98 % of population- urban Y0 - rural - rural 35 NUTRITION (1975) EDUCATION (1978) 2/ Calorie intake as % of requirements 117 Adult literacy rate % 90 Per capita protein intake (grams) 78 Primary school enrollment %102 GNP PER CAPITA in 1977Th US $1,170 GROSS NATIONAL PRODUCT IN 1973 ANNUAL RATE OF GROWTH (/. constant prices) US $ Mln. % 1965-70 1970-75 1976 GNP at Market Prices-/ 16,635 100.0 3.9 -0.4 4.3 Gross Domestic Investment- 1,768 10.6 3.8 -10.9 -9.2 Gross National Savings 5/ 981 5.9 3.9 -12.1 122.2 Current Account Balance -730 -4.3 Exports of Goods, NFS 3,080 18.6 3.9 6.9 20.0 Imports of Goods, NFS 3,413 20.5 9.6 -0.2 -14.6 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1970 Value Added Labor Forced/ V. A. Per Worker US $ Mln. % Mln. % US $ % Agriculture 593 7.2 0.55 21.1 1,079 34.3 Industry 3,500 42.6 1.57 60.2 2,229 70.8 Services 4,127 50.2 0.30 11.5 13,757 436.7 Utiallocated ___0.19 7.3 ___ Total/Average 8,220 100.0 2.61 100.0 3,150 100.0 GOVERNMENT FINANCE Public Sector Central Government tesos Mln.) % of GDP (Pesos Mln.) % of GDP 1977 1977 1974-76 197 7 1977 1974-76 Current Receipts * 63,521 19.8 20.5 Current Expenditure * * 54 902 17.1 16.2 Current Surplus 24,731 7.7 7.7 , 19 2.7 L.3 Capital Expenditures 28,586 8.9 11.0 8,138 2.5 3.4 External Assistance (net) -642 -0.2 -1.5 -5,443 -1.7 -2.5 1/ Data for 1975. 2/ Data for 1970. 3/ The Per Capita GNP estimate calculated by the conversion technique of the 1978 World Atlas. All other conversion to dollars in this table are at the average exchange rate prevailing during the period covered. 4/ Preliminary estimate. 5/ From preliminary data; inventory changes are not known for 1977-78, thus the investment and national savings are underestimated. 6/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists mainly of unemployed workers seeking their first job. not available not applicable Page 2 of 2 pages COUNTRY DATA - CHILE MONEY, CREDIT and PRICES 1973 1974 1975 1976 1977 1978 (Million pesosoutstanding end period) Money and Quasi Money 324 1,166 4,602 16,767 41,280 81,979 Bank Credit to Public Sector 777 3,832 19,040 45,630 88,281 -- Bank Credit to Private Sector 131 565 2,928 12,562 49,063 __ (Percentages or Index Numbers) Money and Quasi Money as % of GDP 1/ 26.7 12.1 10.9 11.3 12.9 23.8 General Price Index (Dec. 1969=100) - 2,315 10,177 48,339 150,812 289,o64 404,839 Annual percentage changes in: General Price Index 461.9 339.4 375.0 212.0 91.7 40.1 Bank credit to Public Sector 2/ 726 393 397 140 93 _ Bank credit to Private Sector?! 424 331 418 329 291 _ BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1976-78) 1976 1977 1978 US $ Mln % (Millions US $) Exports of Goods, NFS 2,392 2,636 3,089 Copper 3,635 54.4 Imports of Goods, NFS 1,946 2,723 3,413 Paper and Cellulose 429 6.4 Resource Gap (deficit = -) + -87 -324 Canned and Frozen Fish 253 3.8 Iron Ore 247 3.7 Interest Payments (net).3/ -323 -339 -424 All other commodities 2 117 31.7 Workers' Remittances - - - Total 1 lO0,0 Other Factor Payments (net) -3 -23 -39 Net Transfers +28 +50 +57 EXTERNAL DEBT, DECEMBER 31, 1977 Balance on Current Account +148 3-99 _77 US $ Mln Direct Foreign Investment +7 +30 +187 Net MIT Borrowing Public Debt, incl. guaranteed 3,583 Di sburserents 737 888 2,124 Non-Guaranteed Private Debt XiOrtizatfon 3- 85t5 -o852 -9ti) Total outstanding & Disbursed Subtctal +52 +36 +1,214 SUb'_,_ta] ~~~~~~~~~~~~~~~~~~~~~3/ Capita' Grants - - - DEBT SERVICE RATIO for 1978 - Other Capital (net) +84 +254 +6 % Other items n.e.i +164 +72 _60 4/ Increase in Reserves (+) +455 -7 +617 Public Debt, incl. guaranteed 43.2 Non-Guaranteed Private Debt cross Reserves (end year) 783 827 1,521 Total outstanding & Disbursed Net Reserves (end year) -96 -103 +515 RATE OF EXCHANGE (Average December Rates) IBRD/IDA LENDING, (March 31, 1979) (Million US $): 1975 1976 1977 1978 US $ 1.00 = Ch$ 8.25 17.03 27.59 33.84 IBRD IDA Cht_ 1.00 = US $ .1212 .0587 .0362 .o296 Outstanding & Disbursed 156.3 21.2 Undisbursed 60.5 0.0 Outstanding incl. Undisbursed 216.8 21.2 I/ IBsD index of consumer prices in Chile. 2/ Change measured from December to December. 3/ Ratio of Debt Service to Exports of goods and Non-Factor Services. 4/ Amounts shown. for principal and interest repayments are taken from Central Bank estimates and are not the same as those reported by IBRD External Debt Division. not available nct appilicable LC1DD June 12, 1979 EXCHANGE RATES, ANNUAL AVERAGES U.S. Dollar Peso 1970 1.00 0.0118 1971 1.00 0.0135 1972 1.00 0.0219 1973 Jan.-Sept. 1.00 0.0588 1973 Oct.-Dec. 1.00 0.4052 1974 1.00 0.8637 1975 1.00 4.903 1976 1.00 13.052 1977 1.00 21.540 1978 1.00 31.670 GLOSSARY OF ABBREVIATIONS AID = Agency for International Development BECH = Banco del Estado de Chile (State Bank of Chile) BIH = Hectareas Basicas de Riego (Basic Irrigated Hectares) CANAEMPU = Caja Nacional de Empleados Publicos (National Fund for Public Employees) CAP = Corporacion Acero del Pacifico (Pacific Steel Corporation) CAR = Certificado de Ahorro Reajustable (Adjustable Savings Certificate) CEDEM = Centro de Estudios Estadisticos (Center for Statistical and y Matematicos Mathematical Studies) CELADE = Centro Latinoamericano de Demografia (Latin American Demographic Center) CEPLAN = Centro de Estudios de (Center for National Planning Planificacion Nacional Studies) CEPP = Caja Nacional de Empleados (National Fund for Public Publicos y Periodistas Employees and Journalists) CEPRO = Centro de Produccion (Production Center) CERA = Centro de Reforma Agraria (Agrarian Reform Center) CHILECTRA = Compania Chilena de Electricidad, S.A. (Electric Company of Chile) CIF = Cost, Insurance, and Freight CNR = Comision Nacional de Riego (National Irrigation Commission) CODELCO = Corporacion del Cobre (State Copper Corporation) CONAF = Corporacion Nacional Forestal (National Forestry Corporation) CONPAN = Consejo Nacional para la (National Council for Food and Alimentacion y Nutricion Nutrition) CORA = Corporacion de la Reforma Agraria (Agrarian Reform Corporation) CORFO = Corporacion de Fomento de la (Development Corporation) Produccion CORVI = Corporacion de Vivienda (Housing Corporation) CPI = Consumer Price Index DINAC = Direccion Nacional de (National Directorate for Comercializacion Marketing) ECA = Empresa de Comercio Agricola (Agricultural Marketing Enterprise) EMPART = Caja de Prevision de Empleados (Private Employees' Social Particulares Security Fund) - ii - EMPORCHI = Empresa Portuaria de Chile (Port Authority of Chile) EMPREMAR = Empresa Maritima del Estado (State Maritime Company) ENACAR = Empresa Nacional de Carbon (National Coal Company) ENDESA = Empresa Nacional de Energia, S.A. (National Energy Company) ENAP = Empresa Nacional de Petroleo (National Petroleum Company) ENADI = Empresa Nacional de Distribucion (National Enterprise for Fuel Distribution) ENAVI = Empresa Nacional de Avicultura (National Poultry Enterprise) ETC = Empresa de Transporte Comercial (Urban Bus Company) FAM = Fondo de Asistencia Medica (Fund for Medical Assistance) FAO = U.N. Food and Agriculture Organization GATT = General Agreement on Tariffs and Trade GDP = Gross Domestic Product GDY = Gross Domestic Income GNP = Gross National Product IANSA = Industria Azucarera Nacional, S.A. (National Sugar Industry, Inc.) ICIRA = Instituto de Capacitacion e (Agrarian Reform Training and Investigacion en Reforma Agraria Research Institute) IDB = Inter-American Development Bank IFICOOP = Instituto de Financiamiento (Institute for Cooperative Cooperativo Finance) ILO = International Labour Office INDAP = Instituto de Desarrollo Agropecuario (Agricultural Development Institute) INE = Instituto Nacional de Estadistica (Nacional Institute of Statistics) INFORSA = Industrias Forestales, S.A. (Forest Industries, Inc.) INIA = Instituto Nacional de Investigacion (National Institute for Agropecuaria Agricultural Research INPROA = Instituto de Promocion Agricola (Institute for Agricultural Promotion) INTA = Instituto de Nutricion y Tecnologia (Institute of Nutrition and de los Alimentos Food Technology) JAP = Junta de Abasticimiento y Precios (Supply and Price Committee) JANEB = Junta Nacional de Auxilio Escolar (National Council for Educational y Becas Assistance and Scholarships) JNJI = Junta Nacional de Jardines (National Council of Nursery Infantiles Schools) LAN = Lineas Aereas Nacionales (National Airlines) MINVU = Ministerio de Vivienda y (Ministry of Housing and Urbanizacion Urbanization) MOP = Ministerio de Obras Publicas (Ministry of Public Works) ODEPA = Oficina de Planificacion Agricola (Office of Agricultural Planning) ODEPLAN = Oficina de Planificacion Nacional (National Planning Office) PEM = Programa de Empleo Minimo (Minimum Employment Program) PREALC = Programa Regional del Empleo para (Regional Employment Program for America Latina y el Caribe Latin America and the Caribbean (I.L.O.)) - iii - SAG = Servicio Agricola y Ganadero (Agricultural and Livestock Service) SARA = Sociedad Agricola de Reforma (Agricultural Society of Agraria Agrarian Reform) SEAM = Servicio de Equipos Agricolas (Agricultural Equipment Empleados Service) SERVIU = Servicio de Vivienda y Urbanizacion (Housing and Urbanization Service) SINAP = Sistema Nacional de Ahorros (National System of Savings y Prestamos and Loans) SMA = Salario Minimo Agricola (Agricultural Minimum Wage) SMI = Salario Minimo Industrial (Industrial Minimum Wage) SNA = Sociedad Nacional de Agricultura (National Agricultural Society) SNS = Servicio Nacional de Salud (National Health Service) SOCA = Sociedad de Cooperacion Agricola (Society for Agricultural Cooperation) SOFOFA = Sociedad de Fomento Fabril (Industrial Development Society) SOQUIMICH = Sociedad Quimica Minera Chilena (Chilean Chemical Mining Corporation) SSS = Servicio de Seguro Social (Social Insurance Service) SV Sueldo Vital (Vital (Minimum) Salary) UAF = Unidad Agricola Familiar (Family Agricultural Unit) UC = Universidad de Chile (University of Chile) UF = Unidad de Fomento (Development Unit) UP = Unidad Popular (Popular Unity) VAT = Value-Added Tax VHR = Valores Hipotecarios Reajustables (Readjustable Mortgage Securities) WPI = Wholesale Price Index FISCAL YEAR January 1 - December 31 < :Em R g . < . U ~~~~6i- 0 .X.0Al:t0g: MAY 1979 | $ 0 t W .: 0 '' '0 232> 0 0 ;00 7 0 0 e t$ > 1 X h >;~~~~~A4 ; f,To0 X , 9~~~~~~~l~ i . rAA_, HA ..u 05 X : 0 \ _q) : 00 0 U409 , , j A . P A Y S p E k 0 < , 2 ; 21 L,,, 0 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~i N 0 X 712 X S $0 i 0 r 0 0 7#' 4 . .' 0r - . | o x M.e4Id° 45 - i - SUMMARY AND CONCLUSIONS 1. Few economies have been more studied, debated, and prescribed for for so many years as has the Chilean. While the Chilean people are highly developed politically, culturally, and demographically, their economy is not. Once ranked among the most advanced of the developing countries, Chile's relative position eroded steadily since the 1930s; by the mid-1970s, its per capita income was below that of Brazil, Panama, Mexico and many others. The wide ideological swings that occurred from one election to another may have been partly due to voter dissatisfaction with the pace of economic progress. Successive governments brought abrupt changes in economic philosophies, from the mild socialism of the Popular Front regimes of the late 1930s through the 1940s, to the charismatic populism of President Ibanez (1952-58), Alessandri's partial restoration of orthodox capitalism (1958-64), Christian Democracy under Frei (1964-70), and the Marxist socialism of Allende (1970-73). The latter administration was ended by a military coup daetat, resulting in a sharp swing toward laissez faire capitalism under the present Pinochet Administration. 2. Despite the major shifts in economic doctrine and the varying demand management problems encountered by each administration, several consistent policy threads characterized the fabric of economic policy from the Great Depression until 1973. In pursuit of greater insulation from exter- nally generated economic shocks, as well as domestic growth, stabilization, allocative, and distributional objectives, governments actively intervened in the economy. They did so directly, through state ownership of production, distribution, and financial enterprises; and indirectly, through controls on prices, wages, interest rates, selective credit allocation, subsidies, tax exemptions, multiple exchange rates, import quotas, and so on. Among the tendencies which dominated the period were: a. Overvalued exchange rates supported by high levels of tariff and nontariff protection; b. Negative real interest rates; c. Low administered prices for food and other wage goods; d. Legally mandated wage adjustments intended, in varying degrees, to control inflation, protect real incomes in the face of inflation, and alter income distribution; e. High and growing levels of social benefits; f. Large public sector deficits financed in varying proportions by monetary expansion and foreign loans; and g. Many specific exemptions from taxes, tariffs, controls, rules, and subsidies in pursuit of special distributional or alloca- tive objectives. - ii - 3. As the inconsistencies among these various policies became evident, additional controls, expenditure programs, tax exemptions, etc., were overlaid on the existing structure in an effort to offset the negative effects. Support of these activities required a substantial shift of resources to the public sector, a shift accomplished to a significant degree by inflationary monetary expansion and foreign borrowing. 4. Periodic efforts were made to reform the tax system, improve incen- tives to farmers, simplify and streamline the public administration, reduce the strong bias of the above-mentioned policies against export industries, and otherwise improve the allocation of resources. Important progress was also made in the expansion of education, the provision of medical services, the improvement of working conditions, and the redistribution of agricultural land. Nevertheless, in the post-Depression decades, Chile experienced slow growth of output and employment; rapid inflation; frequent balance of payments crises; a growing foreign debt burden; a highly protected, concentrated and inefficient manufacturing sector; and continued dependence on a single primary export commodity, copper. 5. The poor performance of the Chilean economy has frequently been attributed to underlying structural rigidities, such as the land tenure system, monopolistic industries, the secular deterioration of the international terms of trade of primary commodities, the protection of foreign markets, and the capital intensity of imported technology. Without denying the importance of many of these structural characteristics of the Chilean and world economies, responsibility must also be shared by domestic economic policy. Low produc- tivity in agriculture, for example, may have derived partly from the psychology of latifundistas but was also the logical consequence of discriminatory price controls and an overvalued exchange rate. Similarly, concentrated industrial markets were encouraged by high levels of protection and a cascading sales tax; the foreign trade regime inhibited the growth and diversification of exports as well as the integration of the copper sector into the national economy; subsi- dized interest rates and heavy payroll taxes stimulated the substitution of capital for labor; and the steady annual expansion of Central Bank credit to the Treasury, which averaged 33 percent of the previous year's total money supply between 1956 and 1970, was a powerful source of inflation. 6. Helped by high copper prices and a debt rescheduling, substantial progress was made during the first two years of the Frei Government (1965-1966). The growth of output accelerated, while unemployment and inflation declined. Government spending grew rapidly, but improvements in the progressiveness and buoyancy of the tax system produced an even faster growth of revenues. The current account deficit of the balance of payments was reduced, and net international reserves increased. The introduction of a crawling peg exchange rate stimulated significant export diversification; improved terms of trade for agriculture elicited a strong production response; and the State acquired for the first time an equity position in the large copper mines, while assur- ing a major expansion of mine capacity. - iii - 7. By 1967, however, momentum was slipping. Investment and output lagged, while the rates of inflation and unemployment began to rise. Many important programs in education, agriculture and pbulic housing launched by the Christian Democrats also appeared to be losing momentum. Nevertheless, the external accounts remained strong, and net international reserves rose to record levels. 8. The immediate economic objectives of the Allende Government, which took office in November 1970, were the reactivation of the economy, early progress toward the establishment of direct state control over those sectors whose resources and functions were deemed essential to fulfillment of the Government's development plan, an increase of the wage share of national income, acceleration of the agrarian reform set in motion by Frei, and reduc- tion of the rate of inflation. Although rapid initial progress was made on all these fronts, the limits of resource availabilities were soon met, and the unavoidable trade-offs among objectives proved unmanageable. 9. Aggregate demand expanded rapidly in 1971, stimulated by a 58 percent nominal increase in central government expenditures, a 55 percent average wage adjustment, tapered to provide larger proportional increases to the lower paid workers, and a more than doubling of the money supply. Idle industrial capacity, an excellent agricultural harvest, and the drawing down of interna- tional reserves contributed to a strong supply response. Real GDP rose almost 8 percent and real consumer goods imports increased 17 percent over the previous year. At the same time, increased price controls, the fixing of the exchange rate, and the freezing of public enterprise tariffs helped to restrain inflation. Thus, employment expanded, and average real wages rose almost 20 percent. Also during 1971 the State took control over more than 80 enterprises, including the copper, iron, nitrate and coal mines; 16 commer- cial banks accounting (along with the State Bank) for more than 90 percent of outstanding credit; and the major enterprises in the metallurgical, metal- mechanical, cement, textile, fisheries, beer, and wholesale marketing sectors. Furthermore, under the land reform, almost as many farms were expropriated in 1971 as in the previous six years under Frei. 10. Although 1971, viewed in isolation, was thus a year of spectacular progress toward the Government's objectives, serious problems were becoming apparent as the year ended. Capacity limits had been reached in a number of sectors, breakdowns were occurring in the distribution system, and labor- management conflicts were increasingly disruptive. Supply shortages of both immediate and consumer goods were increasingly evident, and more and more trans- actions were being shifted to the black market. Private investment declined, and instead of providing investable resources for the rest of the economy, as intended, the state-run enterprises found their own profits squeezed by the redundant expansion of their work forces, increased wages, controlled prices, and inexperienced management. Net medium- and long-term lending dropped drastically, and international reserves were rapidly being exhausted. By year-end Chile had suspended foreign debt service. 11. While some external events were not helpful to the administration -- such as a fall in copper prices -- the administration's most serious economic problems were associated with domestic and monetary policies which resulted in substantial fiscal deficits, exploding growth in - iv - the money supply, an extensive system of subsidies, and gross price distortions. World copper prices fell in 1971 and 1972, and there was a net withdrawal of resources by international creditors in 1971. Moreover, after 1971, Chile's usual sources of short-term credits dried up; in spite of a shift to socialist and neighboring country sources, the total volume of short-term credit dropped. Even had these sources of foreign exchange remained at or above their previous levels throughout the Allende period, however, the economy could not long have withstood the strains placed upon it. 12. All told, some 500 enterprises were taken over during the 1971-73 period, and more than one-fourth of total agricultural land was expropriated. The period was marked by deepening economic and political crises. Before it ended, real GDP per capita and real wages had fallen well below the levels of 1970, agricultural output had dropped to the level of the early 1960s, monthly inflation had reached an annualized rate above 1,000 percent, the deficit of the central government alone exceeded 20 percent of GDP, the black market exchange rate had risen to over 10 times the official rate, and net international reserves were negative. 13. The Pinochet Government, which took power on September 11, 1973, made a clear break with the development approach of the preceding four decades. The import-substitution model of the past was rejected in favor of opening Chile to the world economy. The present authorities view the proper economic role of government as one of setting the overall rules of the game and other- wise facilitating the allocative decisions of the private sector. The State is to play a "subsidiary" part, intervening only where there exist clear diver- gencies of social and private benefits and costs or to attack the causes and relieve the effects of "extreme poverty." Preferred policy tools are those which are general and indirect and minimize distortions to the price system. At this stage the goal of improved economic efficiency is given highest priority. Improving the efficiency of government programs -- particularly that of social programs -- is an important objective. The present poverty emphasis is directed towards reducing absolute poverty. 14. Accordingly, since September 1973 virtually all prices, including interest rates, have been progressively freed; most tax and subsidy distor- tions to relative prices have been removed; tariff and nontariff trade barriers have been drastically reduced, the exchange rate was massively devalued and a crawling peg reestablished, exchange controls have been largely eliminated, and foreign investment is being actively encouraged. In addition, reforms have been introduced in the tax structure, public sector budgetary process and bank- ing legislation; land expropriations were ended and by mid-1978 individual titles had been issued to some 37,000 peasant farmers; and most of the enter- prises taken over by the Allende Government have been returned to the private sector. In one of the few exceptions to the general aversion to subsidies, a massive reforestation program was undertaken which will approximately quad- ruple Chile's long-fiber forest resources by the late 1990s. Programs in the social area are being restructured in an effort to better identify and more efficiently reach the truly needy while eliminating subsidies to the middle- and upper-income groups. v 15. Adjustment to these changes, which amount to a total restructuring of the economy, has been complicated by difficult short-term economic conditions. High copper prices and initially increased resource flows from foreign lenders helped to sustain a mild recovery in 1974. Not foreseeing the problems ahead, the authorities failed to take adequate stabilization measures which might, in retrospect, have attenuated the need for drastic austerity that became evident in early 1975. With real copper prices falling to their lowest level in two decades, copper earnings fell almost 50 percent, a resource loss to the economy equivalent to about 10 percent of the 1974 GDP. Additional resources, equiv- alent to 2.5 percent of GDP, were withdrawn from the economy in the form of net repayment and interest to foreign lenders. Chile was also hard hit by the leap in oil prices; it imports three-fourths of its oil needs. 16. In response to the severe foreign exchange crisis and reaccelerating inflation, the Government introduced a drastic austerity program in April 1975, and the Chilean economy suffered its worst depression since the 1930s. Real GDP fell more than 11 percent, and per capita GNY (adjusted for the deteriora- tion of the terms of trade) fell 19 percent. Open unemployment reached 20 per- cent of the labor force of Greater Santiago in spite of a major government work program that offered emergency employment to about one-third of the unemployed. 17. The economy bottomed out during the first quarter of 1976, and output, employment, and real wages have been growing buoyantly since. The public sector deficit has been virtually eliminated, net international re- serves are at their historically highest levels and inflation has been reduced from 400 percent in 1973 to 30 percent in 1978. Agricultural and manufactured exports each grew more than seven-fold between 1973 and 1978; agricultural value-added rising about 9 percent per year over this period. Copper output has reached record levels, even though one of the large mines has been shut down since 1975. This fast turnaround was accomplished despite continued low copper prices, a heavy foreign debt service burden, and with the only significant external official support being provided by the IMF. 18. These achievements, however, were accompanied by great material sacrifice on the part of the vast majority of Chilean citizens. By 1978, per capita GDP had only regained the level of 1968; in effects the shocks endured since 1970 have cost the nation a full decade of economic growth. The loss of real income and employment during the austerity period brought wide- spread hardship, particularly for the urban unemployed who lacked a cushion of savings to fall back on. Nevertheless, while it may be possible to criticize some aspects of economic management during this period, it is difficult to see how a major economic downturn could have been avoided in view of the nation's negative international reserves and high debt service obligations, the disas- trous decline in its capacity to import, and the lack of confidence and/or hostility of foreign lenders. 19. In the mission's judgment, many of the policies introduced since 1973 have opened the door to a more rapid and sustained growth of output and employ- ment and to a steady reduction of Chile's historical dependence on a single primary export commodity. Many of these structural reforms are consistent with advice long offered Chile by the World Bank and other international institutions. - vi - The steps taken to liberalize trade, rationalize the exchange rate, and eliminate price distortions have substantially reduced the former biases against export diversification and in favor of capital-intensive production, and provide a powerful prod to the improvement of productive efficiency generally. Inflation and inflationary expectations have fallen steadily. This, along with the greatly improved financial performance of the public sector and the appearance of positive real interest rates significantly enhances the system's ability to generate savings and should raise the efficiency of investments. 20. Caution is called for in the use of Chilean economic statistics. The rapid changes that have occurred in recent years have made their interpre- tation subject to a wider than normal range of error. Despite such caveats, however, the mission believes that it has been possible to identify correctly the fundamental trends of economic policy and performance in Chile over the past several decades and that conclusions of the report are supported by the evidence. The mission's projection of future growth is, therefore, based on economic logic as well as empirical measurement. It is still too early to define secular trends; to a large extent these are obscured by the overwhelming impact of the 1975-76 depression. It was not until 1977, for example, that the competition of imports became an influential force in the local marketplace. It is clear, however, that the ultimate success of the Government's development strategy depends heavily on the private sector's ability to rise to the challenge of increased competition and to supply the entrepreneurship required to sustain export expansion; and on the ability of the Government to demonstrate that the fruits of efficient resource allocation and growth can be shared equitably. It is toward these issues that most of the mission's recommendations are directed. 21. In brief, the mission believes that the considerable uncertainties created by the sudden and profound change in the rules of the Chilean economic game--exacerbated by the very difficult financial situation in which many enterprises found themselves after the management disruptions of the early 1970s, the reduced cash flows of the depression years, the freeing of interest rates, and five consecutive years of three-digit inflation; as well as certain structural rigidities in Chilear. financial markets--have severely inhibited the private investments needed to fulfill the Government's development objec- tives. In spite of some government efforts, small farms and enterprises remain hard pressed. The probable consequences of ignoring these adjustment problems may be slower growth, the unnecessary failure of some enterprises with otherwise favorable prospects for survival, higher levels of frictional unemployment and increasing concentration of asset ownership. Among the trans- itional measures recommended by the mission are the introduction of an invest- ment tax credit, dropping real interest rate levels, expanded programs of credit and technical assistance to small farms and industries, expanded train- ing and information programs to promote labor mobility, an improved program of agricultural price stabilization, the maintenance of restrictions on the sale of reformed sector land, and a review of the adequacy of existing antitrust law and its enforcement, with particular attention to the interlocking owner- ship of industrial, financial, and commercial enterprises. 22. While the Government shares many of the concerns of the mission, it believes that presently high domestic interest rates averaging, for example, 43 percent in real terms in 1978 for short-term funds, will drop significantly in the near future, thus encouraging investment and reducing the differential - vii - between foreign and domestic loans. To promote this reduction in differentials, in early 1979 the Government placed reserve requirements on most foreign borrowed funds thus increasing their cost. The authorities remain convinced that,, as the economy readjusts and interest rates drop, those advantages presently enjoyed by larger private corporations will be drastically reduced. While antitrust action may be useful in specific situations, the Government places greater reliance on the elimination of market distortions and the opening of the economy to foreign competion to deter the negative impact of market concentra- tion on efficiency and income disparities. The Government agrees that volatile agricultural prices could indeed lead to misallocation in agriculture and will attempt to dampen these possible oscillations through the establishment of a futures market for agricultural products. Finally, the authorities are generally satisfied with the pace of investment recovery and question the desirability of an investment tax credit in view of the possible abuses and resource distortions such a credit might encourage. Instead, they intend to concentrate on the still very high wage (social security) tax as the major area for tax relief. 23. The Government's strategy gives emphasis to the role of private initiative. Nevertheless, the public sector, in addition to its traditional responsibility for economic and social infrastructure, will continue for the foreseeable future to control a substantial proportion of Chile's produc- tive capital in both mining and industry. The anticipated growth of copper revenues and the buoyancy of the present tax system imply that the State will continue to generate a significant share of domestic savings in the years ahead. If Chile is to achieve the very high marginal savings rate now required, decisions regarding the extent to which the public sector's savings potential is to be mobilized and how it is to be shared among private and public sector uses, through either net lending by the public sector or tax reductions, must be made an explicit part of the planning and budgeting process. 24. With effective administrative control having been established over public sector activities, and the imperatives of the austerity period now relaxed, more aggressive programming and expenditure policy is called for in meeting the sector's legitimate high priority needs. Better coordination is required among public sector agencies for the proper programming of investments in such areas as energy, transport, and water resource development. While the recently established energy commission is an encouraging step in resolving this problem, more effort is needed. Greater resources must also be devoted to such essential pre-investment activities as basic data collection, resource surveys and sector studies. Government action is also needed to reduce the adverse impact of copper price fluctuations on the economy. Toward this end, the Government is considering a mission recommendation to establish a special fund to even the flow of copper receipts into the economy. 25. Chilean governments have traditionally ascribed high priority to considerations of equity and income distribution. The means chosen to accom- plish these objectives, however, often resulted in a severe distortion of resource allocation, and the primary beneficiaries were frequently members of the urban middle class rather than the truly poor. The present Government has declared the elimination of "extreme poverty" to be one of its primary socio-economic objectives. Consistent with its overall strategy, strong - viii - preference is given to programs of direct subsidies and/or remedial services carefully targetted at identified groups or individuals rather than on general programs of price controls or subsidies which distort market incentives and are available to everyone. 26. Lack of data, the complexity of past controls and of the policy shifts that have occurred, the massive changes in price levels and in relative prices that have taken place, and other problems described in the text make it impossible to reach any confident determinations regarding the impact that recent policies have had on the distribution of income. Moreover, the long- term trends are once again obscured by the tremendous impact of the 1975-76 depression. Although the report offers a number of tentative observations, the essential conclusion is that each individual has been affected differently as both a buyer and a seller, and none of the conventional sectoral, function, or income categories can be treated homogeneously as net gainers or losers. 27. A number of significant and promising innovations have been introduced in the Government's specific antipoverty programs, particularly in the field of nutrition. Important steps have also been taken to rationalize the social secturity system and to improve the distribution and quality of its benefits. In general, however, program development has been slow because of the general constraints on public sector expenditures, managerial weaknesses, lags in working out the operational details of the new approach, and the statistical and administrative difficulties inherent in target group identification. With tKvc zreater fiscal and managerial resources now becoming available, it is hoped trhat the Government's full energies will be devoted to making its antipoverty effort more effective. 28. Apart from progressively reducing the regressive inflation "tax," the greatest contribution of the new strategy to the long-term improvement of income distribution will perhaps derive from the enhanced prospects for employment generation derived from faster growth and more rational factor pricing. Toward this end, the mission notes with satisfaction the progress made in lowering payroll taxes and urges that this process be continued as rapidly as is financially practicable. The speed and magnitude of the structural change through which the economy is currently passing, however, can be expected to create significant problems of frictional unemployment and skill obsolescence. Unemployment remains a nagging problem. While the number of employed has grown steadily in the past few years, the unemployment rate in the greater Santiago area remained at almost 14 percent at the end of 1978. Improved information flows are needed to monitor this process, so that the magnitude and content of publicly funded retraining programs can be properly adjusted. While the emergency employment program, introduced during the depression, will be continued at least through the transition period, its education and training components could be enriched. Interim technical assistance and credit programs for small farmers and industries should also be considered for their possible favorable impact on employment. 29. Finally, the mission notes its concern that the existing tendency towards a concentration of asset ownership may have negative long-term implica- tions for both income distribution and the future viability of the present Chilean economic strategy. The continued growth and stability of strong, oligopolistic interests may ultimately become incongruent with the present liberal, open trade strategy. Nonsubsidized assistance to small enterprises and a vigorous enforcement of antitrust regulations may be the key to avoiding this possible, future issue. CHAPTER I A HISTORICAL OVERVIEW OF CHILEAN ECONOMIC POLICY A. INTRODUCTION 1. Chile is an economically underdeveloped country as that term is normally understood. Among its identifying characteristics are a heavy dependence on a single primary export commodity, low productivity in agricul- ture, a high rate of infant mortality, high chronic unemployment and under- employment, and significant absolute poverty. In contrast, however, its per capita income, extensive manufacturing sector, and high degree of urbanization rank Chile among what has come to be treated as a middle tier of nations, while its moderate population growth, early introduction of social security other public welfare programs, and the literacy and sophistication of its people place it close to the ranks of developed countries. To complicate the image further, although prosperous in comparison to the subject countries of most World Bank reports, Chile's relative position has eroded steadily for the past several decades. While development began to accelerate in many Latin American and Asian countries, Chile experienced slow growth, extreme price instability, and recurrent balance of payments crises. 2. During the 19th Century, Chile was one of the leading economies of South America. Its markets and people were open to both trade and ideas; and Chilean statesmen and institutions had a great influence throughout Latin America. Unlike Uruguay and Argentina, however, the Chilean population was not supplemented by large waves of non-Spanish immigration. The proportion of foreigners to the total population peaked in 1907, but was then only 4.2 percent. While German immigrants had a great impact in developing the south central part of the country, and British surnames are common, the Chilean population is mostly of Hispanic and Indian origin. Moreover, equally unlike Argentina or Uruguay, Chile was spared bloody disputes over land and the relative political power of landowners and urban workers. Large farms and ranches coexisted with a growing urban work force. Their relative influence was disputed through an electoral process that increasingly shifted power from the land and agriculture to urban, industrial employers and employees. By 1940 more than half of Chile was urban, and resources were increasingly shifted towards urban voters. 3. In the four decades that followed the Great Depression, successive governments accepted increasing responsibility for promoting economic develop- ment and achieving a more equitable distribution of its fruits. In seeking to guide the allocation of resources accordingly, governments increasingly intervened in the determination of the prices of both goods and factors of production, erected high protective barriers against foreign competition, offered special tax and other incentives, and entered directly into production and distribution activities as well as the allocation of credit and foreign exchange. The results of these efforts, as evidenced by economic performance over most of this period, did not match the intent. Because of failures in execution or design, the increasingly large and complex governmental machinery required to administer these policies was often diverted to the - 2 - service of private individual or group interests. Policies invoked to accomplish one end--e.g. hold down the cost of living of urban workers--fre- quently conflicted with other objectives--e.g. increased domestic food produc- tion and external payments viability--and a new set of taxes, subsidies or controls and/or a new public agency would have to be added to repair the damage. Support of these activities required a substantial shift of resources from the private to the public sector. Given the political inability to cover all the costs via taxation and the weakness of the domestic capital market, the transfer was accomplished via inflation and foreign borrowing. 4. The picture was not, of course, unremittingly negative and unidirec- tional. In recognition of the above problems, periodic efforts were made to reform the tax system, dampen inflation, simplify and streamline the public administration, reduce the bias against export industries, and otherwise improve the allocation of resources. Moreover, important progress was made in the expansion of education, the provision of medical services, the improvement of working conditions, and agrarian reform. Nevertheless, in reviewing the period one is still faced with a reality of slow growth, rapid inflation, frequent balance of payments crises, heavy foreign debt burden, backward agriculture, a highly concentrated, inefficient manufacturing sector and continued dependence on a single primary export commodity--the very condition the policies adopted were most intended to change. That the Chileans them- selves were dissatisfied with this progress is evident in the wide ideological swings that occurred from one election to another, as the voters repeatedly gave up on the party in power. 5. The Government that took power in September 1973 has made a clear break with the development approach of the past. The present authorities view the proper role of government in the economy as one of setting the over- all rules of the game and otherwise facilitating the resource allocation decisions of the private sector. Government is to play a "subsidiary" role, intervening only where there exist clear divergences of social and private benefits and costs or to achieve a more equitable distribution of income. 1/ In carrying out this reduced responsibility, clear preference is given to policy tools which are general and indirect and minimize distortions to the price system. 6. The historical overview presented in this chapter and supplemented in later chapters and annexes is essential to understanding the magnitude of the policy change that has occurred and of the process of adaptation through which the economy must now move. It also points up the difficulty of project- ing the future of the Chilean economy in any precise terms. The policy parameters that shaped such basic relationships as consumption functions, import elasticities, capital-output ratios, input-output coefficients, the buoyancy of tax collections, etc. have changed not marginally, but radically. Chilean decision-makers are now operating in a very different world, and the future cannot be extrapolated from the past. 1/ A statement of this philosophy may be found in ODEPLAN, Eficiencia Economica para el Desarrollo Social: Plan Nacional Indicativo de Desarrollo, 1976-1981, Santiago, 1976. - 3 - B. OVERVIEW OF THE MACROECONOMY 1. Population 7. Chile had a population in 1978 of approximately 10.7 million per- sons. 1/ Table I.1 summarizes the decline of both birth and death rates since 1920. Inasmuch as Chile has not experienced significant net migration in recent decades, population growth has been explained almost entirely by natural increase. The rate has historically run considerably below the average both for Latin America and for countries with comparable per capita incomes (Table I.2). The more rapid decline of the mortality rate during the 1940s and 1950s led to a sharp increase in the population growth rate, but by the mid-1960s the birthrate had also dropped substantially. In demo- graphic terms, Chile now appears relatively advanced. Since 1970, total population has been growing at about 1.7 percent per year. Table I.1: CHILE - RATES OF BIRTH, DEATH AND NATURAL GROWTH OF POPULATION, 1920-1975 (Percent) Crude Birth Crude Death Rate of Natural Year Rate Rate Increase 1920 4.4 3.1 1.3 1930 4.3 2.4 1.9 1940 3.8 2.1 1.7 1950 3.4 1.5 1.9 1960 3.6 1.3 2.4 1970 2.7 0.9 1.8 1975 2.4 0.7 1.7 Source: INE; U.S. Bureau of the Census, Country Demographic Profiles 1/ The 1970 census showed a total population of 8.9 million, but the estimate used for 1970 is 9.4 million since there is estimated to have been an underenumeration of about 4.8 percent. (ODEPLAN, Proveccion de la Poblacion de Chile por Sexo y Grupos Quinguenales de Edad, 1950-2000, Santiago, 1975. - 4 - Table I.2: CHILE - COMPARATIVE RATES OF BIRTH AND NATURAL INCREASE, 1975 Crude Birth Rate of Natural Rate Increase Chile 2.4 1.7 Other Western Hemisphere Developing Countries 3.7 2.8 Middle Income Countries a/ 4.0 2.7 Industrial Countries 1.6 0.8 a/ Per capita incomes between US$376 and US$1,000 (1970 dollars). Source: Table I.1 and IBRD, World Development Report, 1978 8. The rapid fall in the death rate after 1940 was the result of the availability of new drugs, improved public health measures, and wider distribution of health services. Particularly dramatic has been the reduced number of deaths caused by tuberculosis, digestive disorders, and other parasitic infections. By 1970, the average life expectancy at birth had reached 62.6 years, compared to only 30.5 years in 1920 and 38.1 in 1940. 1/ Although infant mortality had declined by almost two-thirds since 1930, it still remained relatively high in 1970 at 78.8 deaths per 1,000 live births. Most of these infant deaths occurred after one month of age, indicating that a high proportion were attributable to exogenous causes. The more rapid reduction of mortality in the first month of life reflects improvements of prenatal care and average nutrition levels. 9. The falling birth rate mirrors important long-term trends in fertility. Age-specific fertility rates have fallen for women at all age levels, particularly sharply for those in the older childbearing years. In accordance with the fertility pattern prevailing in 1970, an average woman who survived the entire 35-year childbearing period could be expected to give birth to 3.5 children, as compared to 5.1 in 1960 and 5.5 in 1930. Among the factors contributing to declining fertility are rising education levels, urbanization and growing female employment opportunities outside the home, and expanded public health services which have since the mid-1960s included government sponsorship of family planning. 2/ 1/ Female life expectancy was 65.7 years in 1970; that for males was 59.5. 2/ The adoption of an official family planning program was apparently prompted more by concern about the medical problems which stemmed from the high rate of induced abortion, rather than an effort to control population growth per se. It was estimated that in Santiago in 1962-63 between 17 and 23 percent of pregnancies ended in induced abortion. 10. The distribution and rate of growth of population vary widely from one region to another. Not surprisingly, the greatest population concentra- tion and most rapid growth has occurred in the industrial centers and rich agricultural areas of the central zone, bordered by the Province of Aconcagua in the north and Linares and Maule in the south. By 1970, this zone included almost 60 percent of the population; the Province of Santiago alone accounted for more than one-third of the population. 1/ 11. Population has become increasingly concentrated in urban areas. According to Chilean census definitions, 75 percent of the population was urbanized by 1970, as compared to 60 percent in 1952 and 49 percent in 1930. 2/ Urban population grew 2.8 percent per annum between 1960 and 1970, as compared to a total annual growth rate of 1.9 percent. By 1970, there were seven cities with populations of 100,000 and over, in contrast to only three in 1952, and they accounted for over 43 percent of the population. The population of the Greater Santiago metropolitan area doubled during this period, reaching 3 million inhabitants in 1970. 12. Much of this urban growth is, of course, the result of internal migration. About one-fourth of Chile's population was found in 1970 to be living outside of the province where born, indicating a high degree of mobility. The greatest net gainers in these movements were the provinces of Santiago, Valparaiso, and Concepcion, the nation's major industrial-commer- cial centers. Much of this migration was between cities rather than directly rural-urban. A survey of migrants to Greater Santiago showed more than 42 percent had come from cities of 20,000 or more, while only 13 percent had come to the capital directly from rural areas. 3/ More than 60 percent of the migrants were young, unmarried adults, and 58 percent were female. 13. Table 1.3 summarizes the impact of the changing population growth rate on the age distribution of the population. The accelerated growth rate of the 1950s lowered the median age of the population at the same time that the falling mortality rate led to an increasing proportion of aged. The result through the late 1950s and early '60s was a small relative decline of the population of labor force age. This trend has been sharply reversed since the mid-1960s. Although the proportion of the population over age 65 continues to increase, the decline in the birth rate has reduced and will continue to reduce the fraction of the population below 14, thus generating a rapid rise in the proportion of the population of labor force age. 1/ For further detail, see Tables 1.4 - 1.5 in Appendix II. 2/ For census purposes, "urban" has been broadly defined as denoting a populated center of some regional and administrative importance which provides a certain level of public services. It thus does not depend on a specified minimum population or population density. 3/ Juan Elizaga, Migration in Metropolitan Areas in Latin America, CELADE, Santiago, 1970. - 6 - Table I.3: CHILE - SUMMARY MEASURES OF THE AGE DISTRIBUTION OF THE POPULATION, 1950-1985 (Percent) 1950 1960 1970 1975 1985 Median Age (years) 20.3 19.5 20.1 21.3 24.1 Proportion of Population (0-4 years) 14.8 15.4 12.9 11.8 9.8 Proportion of Population (5-14 years) 23.4 23.8 25.2 23.7 19.4 Proportion of Population (15-64 years) 57.8 56.5 57.2 59.5 64.8 Proportion of Women (15-49) 48.1 46.9 47.4 49.7 54.0 Proportion of Population (65+ years) 4.0 4.3 4.8 5.1 5.9 Total Age Dependency Ratio 73.0 76.9 75.0 68.2 54.3 Source: Appendix II, Tables 1.2 and 1.3 14. Chile has been a historic leader in the effort to provide universal education, at least through the primary grades. Primary enrollment growth was particularly rapid during the second half of the 1960s, averaging 9 percent per year compared to 4 percent from 1958 to 1964. The growth of secondary school enrollments averaged about 6 percent per year in both periods. 1/ University enrollments have grown even more rapidly, averaging 9 percent over the entire period 1958-1970 and 14 percent in the subperiod 1964-1970. Table 1.4 provides some comparative education indicators and shows Chile's position relative to both industrial and other developing nations. 1/ The expansion of primary education is slightly overstated and secondary education understated as a consequence of an educational reform in the late 1960s which increased the number of years of the former and reduced the number of years of the latter. (See: Christian Eyzaguirre, Educacion y Distribucion del Ingreso, Corporacion de Promocion Univer- sitaria, Santiago, 1974). Table I.4: CHILE - COMPARATIVE EDUCATION INDICATORS, 1970 (Percent of Relevant Age Group) Primary School Secondary School Adult Enrollment Ratio b/ Enrollment Ratio Literacy Rate Western Hemisphere Developing Countries 100.1 26.1 81.5 Middle Income Countries a/ 94.4 33.7 70.3 Chile 119.0 29.0 90.0 Industrial Countries 107.0 73.6 98.7 a/ Per capita incomes between US$376 and US$1,000 (1970 dollars) b/ Ratios greater than 100 result from the enrollment of students above the ordinary primary school age and indicate a combination of grade-level repetition and delayed entry. Source: IBRD, World Tables 1976 2. Production 15. Propelled by large mining exports, a relatively productive agricul- ture, high government spending, and foreign investments, the Chilean economy grew fairly rapidly before the Depression of the 1930s, and Chile achieved a comparatively prosperous middle-class status among the world's nations. 1/ Since that time, however, aggregate economic growth has been among the lowest in the developing world. After a cataclysmic decline during the Great Depression of the 1930s, the growth of per capita GDP averaged about 2 percent per year between 1937 and 1952, slowing to about 0.3 percent per year during the middle 1950s (Table I.5). Economic growth accelerated during the 60s, averaging 2.3 percent per capita, but still remained significantly below the average for developing countries generally (see Table I.6). 1/ It is estimated that per capita income grew around 2.7 percent per annum between 1908 and 1927, and 4.5 percent per year from 1915 to 1930. (Markos J. Mamalakis, The Growth and Structure of the Chilean Economy: From Independence to Allende, Yale University Press, New Haven, 1976.) Table I.5: CHILE - GROWTH RATES OF GDP AND GDP PER CAPITA, 1952-1970 (Percent) Per Capita GDP Population GDP 1953-1958 2.5 2.2 0.3 1959-1964 5.0 2.3 2.7 1965-1970 3.9 1.9 2.0 1952-1970 3.6 2.2 1.4 Source: Appendix II, Tables 1.1 and 2.2 and Instituto de Economia, U. de Chile, La Economia de Chile en el Periodo 1950-63, Santiago, 1963 Table I.6: CHILE - COMPARATIVE GROWTH RATES OF GDP PER CAPITA (Percent) 1950- 1960- 1965- 1950- 1960 1965 1970 1970 Higher Income Developing Countries a/ 2.7 3.5 3.6 3.1 Western Hemisphere Developing Countries: 2.0 2.1 2.8 2.1 Argentina (1.4) (2.0) (2.8) (1.9) Brazil (3.1) (1.2) (4.6) (3.0) Chile (0.5) (2.7) (2.0) (1.4) Colombia (1.3) (1.4) (2.4) (1.6) Mexico (2.4) (3.8) (3.3) (3.0) Peru (2.6) (3.6) (0.7) (2.4) Industrial Countries 2.8 3.9 3.6 3.3 a/ Per capita income above US$375 (1970 dollars) Source: Table 1.5 and IBRD, World Tables 1976 - 9 - 16. Table I.7 traces the evolution of the sectoral distribution of output since 1940. While these data must be treated with some caution, 1/ several important characteristics are evident. The first is the relatively small role of agriculture as a source of product. Even though agriculture's share is likely to be understated by the available data, it is well below the roughly 25 percent average for developing countries generally. In Latin America, only Venezuela reports a lower agricultural share in GDP. Once an important exporter of wheat and other agricultural products, output has not kept pace with population since the 1930s. It is also striking that more than half of Chile's GDP, at least since 1940, has been contributed by the non-goods producing sectors. Although manufacturing is reasonably well developed in comparison with most other developing countries, and mining is of considerable importance, Chile evolved as a heavily service-oriented economy. 1/ Among the statistical problems in dealing with Chilean national accounts data are the considerable price distortions among sectors created by years of rapid inflation, and the discriminatory application across sectors of price controls and effective protection against imports, the extent of which, moreover, has varied significantly over time. As a consequence, for example, the national accounts data undoubtedly tend to undervalue the sectoral products of agriculture and mining and to over- state manufacturing output. (See the Note on Chilean Economic Statistics appended to this volume). - 10 - Table I.7: CHILE - SECTORAL DISTRIBUTION OF GDP, 1940-1970 a/ (Percent) Sector 1940 1950 1960 1965 1970 Agriculture b/ 15.5 15.6 11.6 9.5 9.0 Mining 9.1 6.2 9.9 9.4 9.9 Manufacturing 18.3 19.6 22.8 24.4 24.0 Construction 2.7 2.2 5.1 5.3 4.6 Commerce 16.1 19.0 22.0 20.0 20.6 Public Utilities 1.0 0.9 1.4 1.5 1.5 Transport, Storage and Communications 7.3 6.4 3.1 4.4 4.4 Finance c/ 2.9 3.2 2.8 2.2 4.0 Government and Other Services 27.1 26.9 21.3 23.3 22.0 Total 100.0 100.0 100.0 100.0 100.0 a/ Product data for 1940 and 1950 were valued at 1960 prices; data for 1960-70 were valued at 1965 prices. b/ Includes forestry, hunting and fishing. c/ Includes banking, insurance and real estate. Source: 1940 and 1950 are taken from Instituto de Economia, op cit.; 1960-70 data is from ODEPLAN - 11 - 3. Employment 17. There are, unfortunately, no reliable national employment data for Chile, either historical or current. Systematic, regular labor force surveys are carried out only in the Santiago metropolitan area. These are supple- mented on the national level by information from the demographic census. 1/ With the rate of economic growth during the 1960s exceeding the post-depres- sion average, it is likely that employment grew more rapidly than the active labor force. This supposition is consistent with the estimated decline in the national rate of unemployment over the decade, from a range of 7-8 percent between 1960 and 1964 to an average of 5.5 percent from 1965 to 1970. 2/ How- ever, the sluggish growth of the total labor force, and particularly the numbers of persons attached to the goods-producing sectors and in wage-earning occupations, suggest little dynamism. 18. Although the proportion of the population of labor force age re- mained roughly constant from 1950 to 1970, a significant decline occurred in the labor force participation rate--the proportion of persons of labor force age actually employed or seeking employment. Over the 1960s, the economi- cally active population grew only 0.9 percent per year according to the 1960 and 1970 censuses. A tendency to retire at an earlier age as well as a rapid expansion of school enrollments are the primary explanatory factors for the falling participation rate. As a combined consequence of these phenomena, the economically active proportion of the total population dropped from 37 percent in 1952 to 29 percent in 1970. 19. Table I.8 shows the sectoral distribution of the economically active population as reported in the last four censuses. Its basic trends and characteristics parallel the evolution of output shown in Table I.7: viz, the secular decline of agriculture's role as a source of employment and the importance of non-goods producing activities in Chile. More than 100,000 persons (net) are reported to have left the agricultural labor force during the 1960s, flowing primarily into commerce and services. More surprising is 1/ The Direccion de Estadistica y Censos (precursor of INE) .carried out a series of household surveys in the late 1960s, based on a sample drawn from the 1960 census. In "blowing up" the sample results, however, the investigators apparently assumed much too high a rate of labor force growth during the interim. Consequently, the published data for employ- ment, total and by sectors, exceeds by a substantial margin the numbers given for economically active population (employed plus unemployed) in the 1970 census, even after the latter is corrected for probable under- enumeration. Similarly, ODEPLAN has published an employment series for the 1960s ("Balance de Poblacion Ocupada por Sectores Economicos 1960- 1970," in Balances Economicos de Chile 1970-1970, Santiago, 1973), which projects from the 1960 census on the basis of sectoral rates of output growth, assumed labor-output ratios, and the above-mentioned household surveys. This exercise, too, resulted in what appear to be, on the basis of the 1970 census, grossly inflated employment figures. 2/ ODEPLAN, "Notas Sobre el Desempleo en Chile," 1971. - 12 - the relative decline of the manufacturing labor force over the decade, des- pite the high priority given to the sector's development and the relatively rapid rate of growth of output. Although a decline in the labor force is not inconsistent with rising employment in the sector (if, for example, the sectoral unemployment rate were declining and/or unemployed persons formerly attached to the manufacturing sector dropped out to seek jobs in other sectors), it does suggest that the growth of job opportunities was limited. The largest increases in wage employment during this period apparently occurred in commerce, transport, and services. Table I.8: CHILE - DISTRIBUTION OF ECONOMICALLY ACTIVE POPULATION BY SECTORS, 1940-1970 a/ (Percent) Sector 1940 1952 1960 1970 Agriculture 35.0 29.7 27.7 21.1 Mining 5.4 4.8 3.8 3.0 Manufacturing 16.9 19.1 18.0 16.6 Construction 3.3 4.8 5.7 6.5 Commerce 9.2 10.4 9.2 11.2 Transport and Communications 4.2 4.5 4.9 6.1 Services 24.3 23.1 24.5 26.5 Not Specified 1.7 3.6 6.2 8.9 Total 100.0 100.0 100.0 100.0 a/ 1940 and 1952 data cover the economically active population 15 years of age and older; the 1960 and 1970 figures refer to those 12 and older. The inclusion of younger workers probably raises slightly the relative shares of agriculture and services. Source: 1940 and 1952 are from Instituto de Economia (op. cit.); 1960 is from Direccion de Estadistica y Censos, Caracteristicas de la Poblacion (Censo 1960), Santiago, 1964; 1970 is from INE, Resultados Definitivos del XIV Censo de la Poblacion 1970, Total Pais, Santiago, 1977 4. Price Stability 20. Accompanying the low rate of economic growth in recent decades has been a rate of sustained inflation which has perhaps been the highest in the world. Figure 1.1 shows the annual percent rise of the consumer price - 13 - FIGURE I.1 CHILE ANNUAL INCREASES IN CONSUMER PRICES 19!52-1978 t00 90 X CHANGE 88 70 so 40 :30 20 5 2 53 54 5 56 57 58 59 60 B t 2 63 64 65 66 67 68 69 70 Source: Appendix II, Table 9.1 - 14 - index since 1952 (data are from Table 9.1 of Volume III). In only two of those years, 1960 and 1961, did the rate of inflation fall below the two-digit level, as a consequence of a short-lived stabilization effort during the administration of President Alessandri. The average compound annual rate for the entire 19-year period 1951-70 was 32.2 percent. 5. Summary 21. Many other facets of the Chilean economic landscape--including its heavy continuing dependence on world copper markets, heavy foreign debt, relative egalitarianism, high degree of state ownership of the means of production, etc.--will be painted in the pages and chapters that follow. The foregoing brief overview serves, however, to present the paradox of a well- educated, highly sophisticated society propelled early into the ranks of the world's middle class but which lacked the momentum to sustain growth at a pace that would maintain its relative position in the world or satisfy the aspirations of its people. In short, applying the criteria and value judg- ments commonly associated with these terms, Chile may broadly be described as a nation whose citizens are highly developed--politically, culturally, and demographically--but whose economy is not. C. POLICIES THAT HAVE SHAPED THE CHILEAN ECONOMY 22. Few economies in the world have been as much studied, argued over, and prescribed for. Chile has continually been at the center of international debates regarding the causes and effects of inflation; the proper role of government in promoting development; the dependency of developing on developed economies; the instability arising from reliance on a single export commodity; and the implications for economic growth of democratic decision-mating, wel- fare programs, agrarian reform, foreign investment, and import-substitution industrialization. The poor performance of the Chilean economy since the 1930s, marked also by low domestic savings rates and high per capita foreign debt, has been attributed by various observers to such exogenous factors as the instability of world commodity markets and exploitation by foreign inves- tors, and to such domestic structural characteristics as the political domi- nation of a feudal landowning aristocracy and the lavish consumption propen- sities of the urban bourgeoisie. Whatever influence these and other factors may have had, however, the outcomes cannot be divorced from the policies ins- tituted by a long succession of Chilean governments. 23. Depending on the level of analysis, economic policy in Chile in the four decades following the Great Depression can be cited either for its un- settling instability or for the remarkable constancy of its overall approach and underlying trends. At the most general level of abstraction, changing governments brought abrupt changes in proclaimed economic philosophies, from the mild socialism of the Popular Front governments of the late 1930s through the 1940s, to the charismatic populism of President Ibanez (1952-58), the partial restoration of orthodox capitalism under Alessandri (1958-64), the shift to Christian Democracy with Frei (1964-70), the socialism of Allende (1970-73), and most recently the strong free-market orientation of the Pinochet - 15 - Administration. Thus, Chile has often been characterized as a laboratory in which many of the prevailing economic doctrines of the 20th century have had an opportunity, albeit brief, to be tested. The picture becomes even more confused, if one examines the details of policy within each adminis- tration. At this level one finds, at least through the Frei Government, con- tinued shifts in the direction of macroeconomic policy between expansionism and stabilization, and in basic approach between radicalism and orthodoxy, as policy measures were introduced and discarded in an effort to resolve finally the chronic problems of Chilean development. 24. Nevertheless, in another sense the fundamental approach to economic management of successive Chilean governments followed a remarkably stable trend in the four decades after the Great Depression. 1/ In the pursuit of greater independence from economic shocks originating abroad, as well as domestic growth, stabilization, allocative, and distributional objectives, governments of otherwise disparate philosophies increasingly intervened in economic decision-making at both the macro and micro levels. The adminis- tration of the economy was carried out directly, through the ownership of important production, distribution, and financial enterprises; and indirectly, via controls on prices, wages and interest rates, the direct allocation of credit, subsidies, special tax exemptions, multiple exchange rates, import quotas, and so on. 25. The extent and direction of government intervention varied in its detail over time, largely in response to successive booms and crises in the balance of payments, but some of the interrelated economic policies that dominated the period from 1930 to 1973 were: (a) An overvalued exchange rate, supported by high levels of tariff and nontariff protection; (b) Interest rates at negative real levels; (c) Price controls aimed primarily at food and other urban wage goods; 1/ A detailed accounting of Chilean economic policy over much of this period may be found in Ricardo Ffrench-Davis, Politicas Economicas en Chile: 1952-1970, Centro de Estudios de Planificacion Nacional (CEPLAN), Universidad Catolica de Chile, Santiago, 1973. Tariffs, exchange rates and other policies applied to the foreign sector since 1930 are given detailed examination in Jere R. Behrman, Foreign Trade Regimes and Economic Development: Chile, National Bureau of Economic Research, Columbia University Press, New York, 1976. The policies of the Allende Government are reviewed in Stefan De Vylder, Allende's Chile: The Political Economy of the Unidad Popular, Cambridge University Press, London, 1976. Finally a broad overview of economic performance across the entire period may be found in: Markos M4amalakis, op. cit. - 16 - (d) Legally mandated wage adjustments intended, in varying degrees, to control inflation, protect real incomes in the face of inflation, and alter the distribution of income; (e) High and growing levels of social benefits, financed largely by payroll taxes and government subsidies; (f) Large public sector deficits financed in varying proportions by monetary expansion and foreign loans; and (g) Numerous exemptions from taxes, tariffs, and quantitative controls, exceptions to rules, and direct subsidies in pursuit of special distributional or allocative objectives. 26. The remainder of this Chapter examines some of the forces and policies that shaped the evolution of the Chilean economy over the years prior to the elections of 1970. Particular attention is given to the copper sector, the foreign trade regime, monetary and fiscal policies, and wage policies. Chapters II and III will describe the evolution of the economy since 1970. Chapters IV and V and sectoral working papers available from the World Bank examine certain policies and sectors in greater detail, emphasizing the implications of recent policy changes on Chile's development prospects, as well as the short- and medium-term problems of adaptation. 1. Copper and the National Economy a. The Early Years of Copper 27. Archeological finds indicate that copper was being mined and worked in Chile at least 2,000 years before the Spanish conquest, and its production continued throughout the colonial period. 1/ The red metal first began to acquire significance for the national economy in the 1820s and 1830s when the growth of world demand, stimulated by the industrial revolution, coincided with the founding of the Chilean Republic and the invention in Chile of a progress for treating copper sulphates. 2/ By the 1940s, Chile was the second largest 1/ A short history of copper in Chile is found in Alexander Sutulov, "Ante- cedentes Historicos de la Produccion de Cobre en Chile," in El Cobre Chileno, CODELCO, Santiago, 1975. An analysis of copper's impact on the national economy during the period 1925-1959, as affected by public policies toward the sector, is provided by Clark W. Reynolds, "Develop- ment Problems of an Export Economy: The Case of Chile and Copper," in Markos Mamalakis and Clark Reynolds, Essays on the Chilean Economy, Richard Irwin, Homewood, Ill., 1965. A similar analysis for the 1952-71 period is found in two essays by Ricardo Ffrench-Davis in Ricardo Ffrench-Davis and Ernesto Tironi (eds.), El Cobre en el Desarrollo Nacional, CEPLAN, Santiago, 1974. Chile's relations with the inter- national copper companies is described in Theodore H. Moran, Multi- national Corporations and the Politics of Dependence: Copper in Chile, Princeton University Press, Princeton, N.J., 1974. 2/ Until that time, Chilean copper had been refined entirely from oxides which were becoming increasingly scarce. - 17 - producer of copper (behind England) and by the 1850s had taken over first place. At its relative peak in the 1860s, Chile accounted for 40 percent of total world production. Despite buoyant world demand, Chile's copper output began to fall both absolutely and relatively after 1880, as the highest grade ores were exhausted and output expanded rapidly in the U.S. mines. Productivity at Chilean mines was extremely low at the end of the 19th century, with only 50 of 748 operating mines reporting any degree of mechanization. 1/ Output had fallen to half the level of 20 years earlier and represented only about 5 percent of the world's total. Meanwhile, national attention and fortune had shifted to nitrates. b. The Nitrate Fantasy 28. Even at copper's absolute peak in the 1870s, Chile was also exporting large quantities of silver, wheat and other agricultural products. All of these were swamped, however, by the nitrate boom. The land won by Chile in the 1879-82 War of the Pacific made it owner of the world's only known source of natural sodium nitrate. 2/ Riding the boom created first by Nobel's inven- tions of nitroglycerin and dynamite, and then the discovery of sodium nitrate's value as a fertilizer, the volume of nitrate exports more than sextupled from 1880 to the end of the century and doubled again by 1913. From 1890 through 1924, nitrate production averaged almost one-fourth of the GDP. About one- third of the gross value of nitrate production over this period went to the government in the form of export taxes and accounted for 46 percent of its ordinary revenues. 3/ It is estimated that an additional 30 percent of nitrate value--about 7 percent of GDP--was repatriated by foreign mine owners. 29. The 50-year Chilean nitrate bonanza was slowed by the development of synthetic nitrates during World War I and ended by the Great Depression. In the meantime, however, it had provided Chile, through its government, with enormous investible resources. A substantial expansion did occur in economic and social infrastructure during this period, but much of this resource was dissipated as well on luxury imports and high wages for public sector em- ployees. While nitrate revenues were treated as ordinary income, other taxes were lowered or abolished thus reducing public sector savings, increasing the system's vulnerability to export fluctuations, and establishing an expectation among Chile's landed aristocracy and growing urban population of high levels of government benefits without a matching tax sacrifice. In short, nitrates catapulated Chile into international middle class status but failed to pro- vide, either directly or indirectly, an economic base that could sustain the momentum. 1/ Alexander Sutulov, op. cit. 2/ A brief history of nitrates in Chile and its impact on the national economy is found in Markos Mamalakis, "The Role of Government in the Resource Transfer and Resource Allocation Process: The Chilean Nitrate Sector, 1880-1930," in Gustav Ranis, Government and Economic Development, Yale University Press, New Haven, 1971. 3/ Data include export taxes on iodine. - 18 - c. The Birth of the Gran Mineria del Cobre 30. World copper consumption, which had tripled from 156,000 mt in 1880 to 500,000 mt in 1890, exceeded one million mt by 1912. Meanwhile, methods were being developed in the United States for the large-scale mining of lower- grade ores, as the higher copper-content ores were progressively exhausted. On the basis of these methods and the projected growth of demand, large-scale foreign investment (mostly U.S.) began in Chilean mines, with the founding of El Teniente in 1904, Chuquicamata in 1912, and Potrerillos in 1920. These three companies formed the heart of the resurgent Chilean copper industry and were legally and conventionally referred to as the Gran Mineria del Cobre (Large Copper Mining). 1/ Reflecting the rapid growth of the Gran Mineria, copper output rose from 26,000 mt in 1906 to 100,000 mt in 1917 and 320,000 mt by 1929. Chile once again had become the second producer worldwide (now behind the United States) and accounted for almost 17 percent of world production. At the same time, the gross value of copper production was, in 1929, equivalent to about 14 percent of GDP and 38 percent of export revenues. 31. El Teniente, which had been started by William Braden, was sold to the Guggenheims in 1908 and, in turn, to the Kennecott Copper Company in 1915. The Guggenheims also founded Chuquicamata, which they sold to the Anaconda Copper Company in 1923. A subsidiary of Anaconda, the Andes Mining Company, was responsible for Potrerillos. Thus, foreign ownership, which had accounted for only about 10 percent of copper output in 1876, had increased its share to 96 percent by 1918. With the subsequent collapse of the world demand for natural nitrates, copper became a dominant element in the Chilean economy and stood for four decades at the center of national political debate until its complete nationalization in 1971. The major policy issues discussed here concern the share of copper income captured by the national economy, and the impact on the economy of unstable world copper prices. d. Chile's Share of Copper Earnings 32. The enormous investment required to open the large mines and to install the infrastructure necessary to settle the desolate mining areas, mill and smelt the ores, and move the copper to the ports, and the need for exter- nally developed technology and ties to the highly integrated international copper market probably made inevitable the heavy dependence of the Gran Mineria on foreign capital. Chile's retained share of copper income was thus made up of the taxes exacted by the government and the sector's local operating and capital expenditures. Prior to 1955, little effort was devoted, either by the companies or by the public authorities, to integrate copper into the national economy. Indeed, as will be seen below, public policy inadvertently discouraged the industry's use of local inputs. With taxes also low in the early years, the income retained by Chile (excluding new investments) averaged 1/ Potrerillos was shut down in 1959 with the depletion of its economically exploitable ores and was replaced by El Salvador. The Exotica and Andina mines were added in 1970. Although Andina does not technically conform to the legal definition of a "large mine", it is usually included in both the data and discussion of the Gran Mineria. - 19 - only 35 percent of the gross value of Gran Mineria production during 1925-29. 1/ Thus, while copper production was equivalent to 14 percent of GDP in 1929, Chile's share of this value amounted to only 4.3 percent of GDP, the remainder accrued to foreign factors of production. 33. Table I.9 summarizes the growth of Chile's retained share of the value of copper output over time. From 1925 to 1970, Chile's retained share rose from little more than a third to reach three-fourths of the total value of copper output. 2/ Increased taxes in one form or another accounted for almost all of this growth. Taxes on company earnings were steadily increased from 1925 through 1954 and supplemented in 1932 with a law requiring the enterprises to return a minimum proportion of earnings to the local economy at a discriminatory fixed rate of exchange. The tax implicit in the differential between the copper exchange rate and the rate at which the dollars were sold by the Central Bank grew rapidly and by the early 1950s was equivalent to 17 percent of the gross value of production. While this exchange rate policy may not have been significant to the overall expansion of copper exports, it was important over a long period in shaping factor use in the sector. Table I.9: CHILE'S RETAINED SHARE OF THE CIF VALUE OF COPPER PRODUCTION, 1925-1970 (Percent) Local Fiscal Exchange Rate Operating Year Revenues Differential Expenditures Total 1925 4.9 - 33.1 38.1 1935 8.2 - a/ 24.8 33.0 1945 16.9 - a/ 41.2 58.0 1950-54 (average) 33.6 17.3 21.0 71.9 1955-59 ( " ) 32.5 2.1 25.3 59.9 1960-64 ( " ) 25.9 1.5 35.2 62.6 1965-69 ( " ) 35.2 1.0 32.0 68.2 1970 39.5 0.7 35.4 75.6 a/ Included in local operating expenditures. Source: Appendix II, Table 8.9 1/ Clark W. Reynolds, op. cit. 2/ The discussion in this section concerns relative shares and disguises the sharp fluctiations in absolute returns as a function of copper prices and the level of output. The absolute growth and stability of Chile's returns from copper are discussed in the next section. - 20 - 34. Table 8.7 in Appendix II summarizes the nominal exchange rate affecting local purchases of the major copper companies, as compared to the average rates applied to other exports and to foreign currency transactions generally. Until 1955, the rate at which the copper producers were able to convert foreign currency earnings into local currency to cover domestic expenditures was substantially inferior to the rate earned by other exporters or applied to foreign transactions generally and amounted to a tax of almost 100 percent on the cost of domestic inputs. Other foreign currency earnings of the companies were not affected by this tax, however, since there were no controls or offsetting taxes on purchases of capital goods or other inputs abroad. Moreover, the copper sector was exempted from prior import deposit requirements and a variety of customs surcharges. Consequently, the differen- tial exchange rate created a significant incentive to favor foreign over domestic inputs, and thus reduced whatever linkage effects the mining industry might otherwise have had on the local economy. 1/ In particular, there was an induced substitution of foreign capital goods for domestic labor. This discrimination against the use of labor was intensifed from 1948 to 1955 when the exchange rate for the local costs of investment were raised to .043 escudos per dollar, and then to .060 escudos per dollar, while the rate for local production expenditures remained fixed at .019. The distortion emanating from differential exchange rate treatment was largely eliminated after 1955. It reappeared again during the Allende Government, but by then the mines had been nationalized and factor use decisions were presumably responding to different criteria. 2/ 35. Also of interest was an additional 15 percent tax on copper company profits introduced in 1939 and earmarked for the newly created state develop- ment corporation (CORFO). This represented one of the few explicit measures to direct copper revenues to developmental purposes. Nevertheless, government developmental expenditures failed to keep pace with its growing retained share of copper output. In a pattern similar to that of nitrates, copper revenues were used in large part to cover the operating expenditures of the public sector, including operating subsidies to the railroad and other state enter- prises, rather than productive investment. 3/ It is thus not surprising that the fairly rapid increase of receipts from copper exports after 1940, and the government's rising share of those receipts, had little apparent impact on Chile's lackluster growth performance. 36. In reaction to a copper price-fixing agreement between the companies and the U.S. Government during the Korean War, the Chilean Government in 1952 took control over copper exports, requiring the sale of all copper to the Central Bank at the price the companies had previously agreed with the U.S.; 1/ This differential further exacerbated the situation created by the general deterioration of the real exchange rate (see paras. 49-51). Also, by raising production costs and thus lowering profits, revenues derived via the exchange rate differential were partially offset by reduced income tax collections. 2/ Even so, the use of imported inputs increased after 1970. 3/ See discussion in Reynolds, op. cit. - 21 - 24.5 US cents per pound. The copper was in turn sold on the open market, the profits resulting from the price differential going to the Chilean Treasury. 1/ This mechanism was maintained until 1955, even after the U.S. had removed price controls and copper was again trading freely. During this period, Chile's retained share of gross value increased to more than 70 percent, of which more than 50 percent of gross value flowed to the government in the form of taxes. 2/ 37. Although the national share of copper output had risen significantly, the absolute returns to Chile were being constrained by the virtual stagna- tion of total output, and concern was rising that perhaps the heavy taxation of the industry was, in effect, killing the goose. While output from the Gran Mineria had averaged 461,000 mt during World War II, it fell to 385,000 mt in 1946-49 and further to 359,000 mt during 1950-53, despite demand stimulated by the Korean War. Between 1945 and 1953, Chile's share of world production fell from 22 percent to 14 percent. 3/ Exports fell even more than production as unsold stocks accumulated in the government's hands. Also of increasing public concern was the declining share of domestic factors of production in the sector's operating expenditures. By 1955, domestic inputs (including dollar payments to executive personnel and import duties paid on imported inputs but excluding the exchange rate differential) accounted for less than 15 percent of the gross value of production. 4/ 38. The tax treatment of the Gran Mineria was completely revamped in 1955. The reform law, known as the Nuevo Trato (New Deal), replaced the old complex system of taxes, surtaxes, etc. with a new single 50 percent tax on company profits plus a variable surtax of zero to 25 percent inversely related to the level of production. 5/ Furthermore, the exchange rate differential was eliminated, accelerated depreciation was introduced for machinery and equipment purchases leading to expanded mining capacity, and favorable tax treatment was offered for investments in additional refining capacity. The law also created a new government agency, the Copper Department, to oversee production and export in the industry and to promote the use of domestic inputs. 1/ An agreement reached in 1951 with the U.S. Government to raise the fixed price by 3 cents per lb, that amount going entirely to the Treasury, failed to satisfy domestic political pressures and was effectively abrogated by the 1952 law. An earlier price-fixing agreement with the U.S. during World War II had been concurred in by Chile. 2/ Not all of this revenue appears in the fiscal accounts, since it resulted from the purchase and sale of dollars by the Central Bank and was used, in part, to subsidize private sector imports. 3/ See Appendix II, Table 8.1 for production data. World production figures do not include the centrally-planned economies. 4/ Chilean copper mining was far more capital-intensive than that found in other developing countries. According to Reynolds (op. cit.), the Gran Mineria of Chile in 1951 employed 20 workers per 1 million lbs of copper produced, while the corresponding ratio in Northern Rhodesian mines was 155. 5/ A base level of output was fixed at 95 percent of the average level of 1949-53. Production at the base level would carry the full 25 percent sur- tax, the latter declining gradually to zero as output approached twice the base level. - 22 - 39. Passage of the Nuevo Trato coincided with a new surge of world demand for copper and a resultant jump in both price and output. By 1959, output of the large companies had risen to almost 500,000 mt, and Chile's share of world output had climbed to 17 percent. Moreover, the share of domestic inputs rose sharply to 30 percent of gross output in response to the elimination of the exchange rate differential and the efforts of the Copper Department to restrict imports and promote import-substitution by local suppliers. On the other hand, the more favorable tax treatment of the Gran Mineria provided by the Nuevo Trato substantially reduced the Treasury's participation in gross output, leading to an overall decline in Chile's retained share to an average 58 percent in the five years following the law as compared to 71 percent during the 1950-55 period. Tax rates on the Gran Mineria were again raised in 1961. In response to this increase, and in the absence of a 20-year tax guarantee sought by the companies, plans were shelved for substantial new investments in mining and refining capacity. 40. The expansion of mining capacity and an increasing Chilean role in its management were central elements of the Christian Democratic electoral campaign in 1964. Even prior to his election, President Frei had entered into preliminary negotiations with the companies for a plan under which the State would gradually acquire an equity position in the industry at the same time that both mining and refining capacities would be greatly increased. The agreements reached and the enabling legislation were submitted to Congress at the beginning of 1965. After intense debate and some amendment, the legislation was approved a year later. 41. Acting on this mandate, the Frei Government proceeded to negotiate separate "Chileanization" agreements with the foreign mine-owners. Under its agreement with Kennecott, signed in 1967, CODELCO, the State Copper Corpora- tion (successor to the Copper Department) acquired 51 percent ownership of El Teniente for US$80 million. The remaining minority interest in El Teniente was retained by Kennecott, and the partners in the newly formed mixed enter- prise agreed on the joint financing of a $230 million investment program that would raise El Teniente's capacity to 280,000 mt per year by 1973 (compared to a 1967 output of 182,000 mt). Also as part of the agreement, the tax on Kennecott's share of the profits was reduced to a combination of 20 percent of income plus 30 percent of repatriated dividends. Added to its own dividends as majority shareholder, the Chilean State now received 72.6 percent of El Teniente profits. 42. Under agreements also reached in 1967 with Anaconda's operating subsidiaries, CODELCO entered into a mixed venture to open the Exotica mine contiguous with Chuquicamata. CODELCO acquired a 25 percent interest in the new enterprise, which was programmed to reach an output level of 162,000 mt by 1972. Investment programs were also agreed to expand mining and refinery capacities at both El Salvador and Chuquicamata at a cost in excess of US$126 million. The combined output of Anaconda mines was to exceed 500,000 mt by 1972, as compared to a 1967 output of 355,000 mt. Some modification of Anaconda's tax treatment was made, but the net rate of taxation did not change significantly. Finally, the Government also entered into a mixed enterprise agreement with the Cerro Corporation to begin operations at Andina with an investment of US$156 million. The Government's ownership share was 25 percent, and the mine was projected to reach an annual output level of 75,000 mt by 1972. - 23 - 43. Similar to what had occurred after the promulgation of the Nuevo Trato, completion of the Chileanization agreements of 1967 were followed by a sharp increase in the international price of copper. The resultant infla- tion of company after-tax profits brought renewed pressures for government action. 1/ Accordingly, in 1969 the Government negotiated the purchase of 51 percent ownership of both Chuquicamata and El Salvador for a total price of $182.2 million, with payment to be made over 12 years at 6 percent tax- free interest. In addition, Chile would also hold an option to buy out the remaining shares at any time between January 1, 1973 and December 31, 1981, purchase becoming mandatory by the latter date. 2/ Also in 1969, the taxa- tion of the companies' incomes was made uniform, and a new progressive tax was placed on net incomes deriving from copper prices in excess of US40 cents per lb. (For future purposes, the base price was indexed to the unit costs of production.) As a result of these measures, Chile's retained share of copper output rose to 76 percent in 1970, compared to a 67 percent average from 1965 through 1968. In December 1970, the new Government of President Allende introduced legislation calling for the complete nationalization of the Gran Mineria del Cobre, a proposal which received the unanimous con- currence of the Congress on July 11, 1971. e. The Stability of Copper Earnings 44. The vulnerability of a single-export economy to fluctuations in world commodity markets is well known, and copper has historically been among the most unstable. From 1925 to 1952, year-to-year changes in the real price of copper received by the companies forming the Gran Mineria averaged 16 percent, rising in 15 of those years, falling in 12. 3/ The sharpest single year decline, 43 percent, occurred in 1931, the mid-year of a three-year slide that saw the purchasing power of a pound of copper decline a total of 57 percent. Fluctuations in the volume of sales added to the instability, the average year-to-year change in sales value thus exceeding 27 percent over the same period. In terms of the domestic economy, what matters, of course, is the retained share of copper sales. Fluctuations in this variable averaged just under 22 percent per year. Its somewhat reduced volatility relative to total sales is explained largely by the buffering of demand changes via accumulation and decumulation of inventories, thus stabilizing local factor payments while imparting even greater volatility to the profits share. The cumulative decline of the value of Gran Mineria sales and of Chile's retained share from 1929 to 1932 totaled 86 percent and 70 percent, respectively. Combined with the final collapse of nitrates, the impact on the national economy was devastating. 1/ Anaconda's profits on Chuquicamata rose from US$32.1 million in 1965 to $73.8 million in 1968; profits at El Salvador over the same period rose from $3.3 million to $25.0 million. Kennecott earned US$26.9 million in 1968 from its 49 percent interest in El Teniente as compared to $8.5 million as full owner in 1965. 2/ For details of buy-out terms, see: IBRD Report No. 551-CH, Annex II, of October 18, 1974. 3/ From data in Reynolds, op. cit. - 24 - 45. The evolution of copper exports and Chile's retained share of the value from 1952 to 1970 is summarized in Table I.10. The world market was more stable in this latter period, and exports from the Gran Mineria grew at an average annual rate of 6.3 percent in real terms. Exports from the small and medium-mines grew even more rapidly, 11.0 percent per year, raising the overall rate of growth for copper exports to 7.1 percent. Nevertheless, the copper market and Chile's returns therefrom, continued to be marked by a high degree of volatility. The year-to-year fluctuations of the real copper price and the value of copper exports averaged 14 percent and 18 percent, respec- tively, over the period. 1/ This time, moreover, the instability of Chile's retained share was even greater than for copper sales generally. This insta- bility resulted primarily from major changes in the Government's policies toward the large companies as reflected in the real value of tax collections (Appendix II, Table 8.9). In particular, the lowering of taxes, including the exchange rate differential, as a result of the Nuevo Trato in 1955, sharply reduced the revenues flowing to the public sector. The public sector share was later increased abruptly by the Frei Government's decision in 1966 to start pricing copper exports on the basis of quotations from the London Metal Exchange rather than the controlled U.S. price. This action was followed by the Chileanization agreements and the reintroduction in 1969 of a graduated tax on "windfall" profits deriving from unusually high copper prices. Table I.10 - CHILE - SUMMARY OF GROWTH AND STABILITY OF REAL COPPER REVENUES, 1952-1970 a/ (Percent) Average Annual Average Year-to-Year Rate of Growth Fluctuation Real copper price 4.0 13.8 Copper exports 7.1 17.7 Gran Mineria (6.3) (17.6) Small and medium mines (11.0) (23.4) Retained value of Gran Mineria Output 7.0 19.0 Taxes (5.2) (28.0) Local production costs b/ (11.0) (14.4) a/ Deflated by IBRD index of Chile import prices. b/ 1952-1969. Source: Appendix II, Tables 8.6 and 8.8 1/ These averages are not precisely comparable to those cited above for the earlier period because of the use here of different price deflators and slight differences in coverage. - 25 - 46. As a consequence of these measures, as well as the inherent volatility of taxes based on profits, the public sector's retained share of copper revenues suffered an average year-to-year rise or fall of 28 percent. The growing share of local factors of production in the Gran Mineria's operating expenditures ameliorated somewhat this instability, however, and the average annual fluctua- tion for total retained value was 19 percent. On the other hand, the growing share of the small- and medium-mines in total exports probably raised the volatility of the national returns from copper as a whole. In any event, it is clear that the instability of copper exports, two-thirds of total exports, represented a significant chronic problem for economic management. 2. Foreign Trade Policies 47. Although many writers ascribe the origins of Chilean protectionism to the tariff law of 1897, tariffs were low (relative to later periods) and intended to serve primarily a revenue-generating function prior to the Great Depression of 1929. The economy was open, and import taxes were equivalent to an average of only 13 percent of import value. Taxes on trade (including income taxes from copper) accounted for 83 percent of total tax revenues during 1908-1927, while imports and exports each amounted to more than half of GDP. 1/ 48. No country was more traumatized than Chile by the collapse of the international economy that began in 1929. Copper production fell 32 percent in 1930, and nitrate output, already hurt by the development of synthetic nitrates during World War I, declined 47 percent. The collapse of Chile's foreign markets continued in 1931 and 1932. By the latter year, the capacity to import had fallen 82 percent from the 1929 level; the real value of imports had been reduced 87 percent; and per capita GDP had declined more than 50 percent. Imports were reduced to 7 percent of GDP as compared to 31 percent in 1929. In response to this economic disaster, Chile instituted a complex and highly restrictive system of trade and foreign exchange controls which generally prevailed, though varying significantly in detail, for the next 40 years. a. Exchange Rate Policy 49. In broad terms, the foreign trade regime of Chile in the four decades following the Great Depression was characterized by an overvalued exchange rate whose disequilibrating effect on the balance of payments required counter balancing exchange controls, high tariffs, quantitative restrictions on trade, and high levels of foreign borrowing. Estimates of the extent of overvaluation prevailing in the early 1960s suggest a range of 45 to 68 1/ Behrman, op. cit. Nevertheless, as Behrman points out, consumer goods industries have enjoyed at least moderate protection for most of the years since Independence. As a consequence, most of Chile's import- substitution industrialization occurred prior to the 1930s. - 26 - percent. 1/ As one crude indicator of overvaluation, the ratio of the black market exchange rate to the mean legal exchange rate averaged 1.64 during the period 1961-65. 2/ 50. Large devaluations occurred periodically in response to balance of payments crises, but the exchange rate would then again lag behind domestic inflation. Table I.11 reviews the course of the average nominal and real exchange rate beginning in 1958. 3/ After a substantial devaluation in January 1959, the nominal exchange rate was held fixed for the next three years despite a 66 percent increase in the consumer price level. Consequently, the peso exchange rate tended to appreciate once more in real terms before being devalued and beginning the cycle again in 1963. 4/ In April 1965, the Frei Administration introduced a crawling peg, the exchange rate being adjusted by small increments once or twice per month. The exchange rate was thus devalued some 25 percent before the crawling peg was abandoned during the 1970 electoral campaign. 5/ 1/ See Edmar Bacha and Lance Taylor, "Growth and Trade Distortions in Chile and their Implications in Calculating the Shadow Price of Foreign Exchange", in Richard Eckaus and Paul Rosenstein-Rodan, Analysis of Development Problems: Studies of the Chilean Economy, North-Holland, Amsterdam, 1973; Teresa Jeanneret, "Estructura de la Proteccion en Chile", in Bela Ballassa, et. al., Estructura de la Proteccion en Paises en Desarrolo, Centro de Estudios Monetarios Latinoamericanos, Mexico, 1972; and Dominique Hachette, "Efectos de la Sobre-valuacion del Escudo en la Distribucion del Ingreso en Chile," Cuadernos de Economia, Vol. 3, No. 10, December 1966. 2/ Behrman, op. cit., Table A.7. 3/ Chile maintained a multiple rate system throughout this period until 1975. The rate shown is a weighted average of prevailing legal exchange rates. 4/ The escudo replaced the "old" peso in 1962 as Chile's currency unit, at the rate of 1E =1,000 pesos. The escudo was in turn replaced by a "new" peso in October 1975, again at the rate of 1,000 to one. The currency unit used throughout this report is the "new" peso unless otherwise indicated. 5/ Behrman (op. cit.) calculated a real appreciation of the peso over this period, but he failed to take international inflation into account. Taylor and Bacha (op. cit.) suggest that the degree of overvaluation had fallen to around 25 percent by 1969. Nevertheless, the black market exchange rate exceeded the average legal rate by some 58 percent, apparently reflecting pre-electoral jitters. - 27 - Table 1.11 : CHILE - AVERAGE ANNUAL EXCHANGE RATES, 1958-1970 (Escudos per US dollar) a/ Nominal Ratio - Domestic Exchange to International Real Exchange Rate Year Rate b/ Prices c/ (1969 escudos per US$) 1958 0.715 0.0803 8.9 1959 1.049 0.1130 9.3 1960 1.049 0.1259 8.3 1961 1.049 0.1374 7.6 1962 1.153 0.1572 7.3 1963 1.871 0.2254 8.3 1964 2.418 0.3232 7.5 1965 3.237 0.4127 7.8 1966 4.000 0.5021 8.0 1967 5.080 0.5949 8.5 1968 6.860 0.7819 8.8 1969 9.040 1.000 9.0 1970 11.83 1.218 9.7 a/ The escudo replaced the peso as Chile's currency unit in January 1962 at the rate of 1,000 pesos = 1 escudo. The escudo was in turn replaced by a new peso in October 1975, again at the rate of 1,000 to 1. b/ Weighted average of legal exchange rates. Data are taken from Behrman, op. cit. c/ (1969=100) The Chilean consumer price index is taken as a proxy for domestic prices. The international price index applied is a weighted average of the CIF index of prices of developed-country manufactured exports and the IBRD price indices for agricultural exports, petroleum, and 34 commodities. Source: J. Behrman, p.pcit.; Central Bank of Chile; National Statistical Institute 51. The chronic overvaluation of the Chilean currency, by raising the cost of Chilean goods in foreign markets and reducing the returns to the domestic exporter, was a major retarding factor in the growth and diversifica- tion of exports, thus perpetuating the vulnerability of the economy to fluc- tuations in the world market for copper. Between 1930 and 1965, exports in per capita terms fell to around one-fourth the average level of the three decades preceding the Great Depression. Table 1.12 compares the growth of non-mining exports with changes in the real exchange rate. The relationship is illustrated in Figure I.2. Other factors, of course, have affected these - 28 - exports, including climatic conditions in agriculture and the level of domestic economic activity. Other policy variables such as export controls and special incentive schemes also had some impact. There is no doubt, however, that the real exchange rate played a major role in determining the rate of growth and diversification of exports. In addition to the absolute overvaluation of the real exchange rate, Behrman's econometric analysis shows that exports were further inhibited by the instability of the exchange rate -- the intermittant large adjustments and subsequent erosion through domestic inflation. The rela- tive stability achieved by the crawling peg from 1965 to 1970 was apparently an important factor in the growth of Chile's industrial exports during that period. Table I.12 - CHILE - INDICES OF REAL EXCHANGE RATE AND NON-MINING EXPORTS, 1958-1970 (1969=100) Real Exchange Agricultural Manufactured Year Rate Exports a/ Exports b/ 1958 98 91 42 1959 103 88 48 1960 92 91 39 1961 84 112 46 1962 81 112 37 1963 92 105 39 1964 83 102 50 1965 87 88 49 1966 88 82 81 1967 94 92 75 1968 97 99 87 1969 100 100 100 1970 107 116 105 a/ Deflated by IBRD index of agricultural export prices. b/ Excludes manufactures and semi-manufactures of copper. Deflation is by CIF index of developed-country manufactured exports to developing countries. Source: The exchange rate index is calculated from Table I.11. The data on agricultural and industrial exports are from the Central Bank of Chile. - 29 - FIGURE I.2 CltILE INDICES OF REAL EXCHANGE RATE AND NON-MINING EXPORTS 158-1977 -(t969=1t8) 258 22S5 - / 202 .1.. 175 . 75 - N. IIn''du' ' l.stria' l ' ' ' 58 59 80 8t 62 83 84 65 86 67 68 69 70 71 72 73 74 75 78 77 Source: Appendix II, Table 1.12 - 30 - b. Import Restraints 52. Just as it retards the growth of exports, an overvalued exchange rate, other things being equal, tends to encourage the growth of imports. Balancing external accounts therefore required the imposition of barriers to imports. Partly in reaction to the severe shock of the 1930s, moreover, the development of import-substituting industry was advocated as necessary to reduce Chile's vulnerability to external fluctuations and to assure sustained economic growth. Trade restrictions, therefore, were used to influence the composition of domestic output. While trade policy remained restrictive throughout the period, the mix of policy tools, the overall level of protection, and the relative protection levels accorded specific products were frequently varied in accordance with general stabilization objectives or with specific allocation or distribution objectives. These shifts occurred largely in response to changes in the short-term macroeconomic or balance of payments situation and the pressures of particular interest groups. 53. Among the many devices used to control imports and other foreign exchange outflows were a variety of tariffs, fees, customs surcharges, taxes on foreign exchange transactions, import quotas and licenses, intentional administrative delays in the processing of permits, and mandatory waiting periods for foreign exchange cover. The major policy tool in use since 1956 was the mandatory prior import deposit, with rates varying initially among product categories from 5 to 5,000 percent, and rising in some periods to as high as 10,000 percent. The exchange regime itself, through the use of multiple rates, was employed for specific allocative and distributive purposes throughout this period. In the early 1950s, for example, there were five legally-defined fixed exchange rates and three "free" rates, with a potentially infinite number of variations as some export goods were treated as combina- tions of various categories. 1/ 54. Whatever import regime was currently in force, there were always a large number of exceptions for particular purposes -- e.g. to promote development in the extreme north and south of the country--accounting for a significant proportion of total imports; and through most of the period, public sector agencies were exempted from duties and other restrictions. In short, the system was extremely complex, frequently modified, costly to administer, and offered substantial rewards to enterprises or industries able to gain special exceptions or other favored treatment. 55. Trade restrictions were tightened during the first years of the Frei Administration in response to the low level of Chile's international reserves and high impending debt service payments. In addition to prior import deposits, the major instrument of control was a "positive list" of allowable imports and a quota system by which import permits for a given commodity category in any month were subjected to a ceiling set at 5 percent 1/ The system was made even more complex by the continued existence of a number of bilateral trade agreements, initially negotiated in compensa- tion for foreign credits frozen in the 1930s, which fixed different dollar exchange rates for transactions with each trading partner. - 31 - above the average monthly imports of that category over the preceding twelve months. Rising copper prices, nontraditional export growth, and a reschedul- ing of foreign debt service improved the balance of payments situation and permitted some easing of restrictions. The positive list was significantly expanded to include all but 50 "sumptuary" goods. In addition, a major effort was made to simplify the system through unification of the exchange rate, reduction of the number of prior deposit categories and the number of goods subject to prior deposit; consolidation of the multitude of previously existing taxes and fees into a specific duty; elimination of the compulsory 120-day deferred payment period; and some reduction of the myriad of special regimes. The lowering of restrictions was not evenhanded, however, the greater liberalization occurring in favor of imported capital goods and industrial inputs not domestically produced. As a consequence, the level of effective protection accorded many final goods industries increased. 56. One indicator of the benefits afforded domestic producers by the quantitative import barriers described above is the "import premium" earned by sellers of the restricted goods, whether imported or produced at home. The import premium, defined as that percent by which the domestic price exceeds the CIF import price, converted at the applicable effective exchange rate, 1/ averaged 77 percent in Chile for the period 1946-1970, peaking in the mid- 1950s. The rate was around 69 percent in 1964, falling to 47 percent by 1970, 2/ but still providing substantial returns to importers and protected industries. 57. The level of protection was far from uniform across product cate- gories. In the decades following World War II, the effective exchange rate (including the import premium) for manufactured goods averaged twice the rate for mining and more than 50 percent above that for agricultural products. In other words, the total effect of the import regime was to raise very substan- tially the cost to the Chilean consumer of imported manufactured goods relative to agricultural or mining products. Within manufacturing, the highest effec- tive exchange rates and import premium were accorded to footwear, textiles, leather products, and nonmetallic mineral products -- traditional sectors that had enjoyed protected "infant industry" treatment since the beginning of the century. Barriers were generally highest for consumer goods, averaging more than 50 percent above the rates for either capital goods or inter- mediate goods. Finally, the system distorted profit incentives strongly in favor of import substitution and against export expansion. The effective exchange rate plus import premium for imported goods as a whole was more than 50 percent above that of export products. The distortions among sectors tended to narrow during the 1965-1970 period, but still remained considerable by 1970. 58. These distortions were reflected also in differential rates of effec- tive protection. Table I.13 summarizes the results of one study of effective 1/ The effective exchange rate is the nominal rate adjusted to take into account taxes, duties, surcharges, interest foregone on mandatory prior deposits, etc.; i.e. the actual local currency cost of a US$1.00 international transaction. 2/ Behrman, op. cit., Table 5.1. - 32 - protection rates for 92 products in 1967. 1/ The rates shown would be reduced somewhat in magnitude if corrected for overvaluation of the peso, but the wide variations observed among sectors would remain. The powerful bias favoring manufacturing over agriculture is evident, as is the high protection that continued to be accorded such long-shielded industries as textiles, processed foods, and certain consumer durables. Some shift in the pattern of protection had occurred, however, with respect to earlier years, in favor of nontradi- tional intermediate goods. 1/ Sergio de la Cuadra, "Towards a New Trade Policy for Chile", U.S. Agency for International Development, mimeo., Santiago, 1971. Effective protec- tion is defined as the percent by which domestic value-added exceeds value-added at international prices. - 33 - Table I.13: CHILE - EFFECTIVE PROTECTION RATES, BY SECTOR, 1967 (Percent) Effective Protection Sector Rate /a Agriculture and forestry -7 Manufacturing: Food products 365 Beverages -23 Tobacco -13 Textiles 492 Footwear 34 Clothing -2 Wood products -4 Furniture -5 Paper and paper products 95 Printing and publishing -15 Leather and leather products 18 Rubber products (tires) 304 Chemical products 64 Petroleum and coal products 1,140 Glass and glass products 723 Cement and cement products -11 Iron and steel 35 Metal products 92 Nonelectrical machinery 76 Electric engines 740 Household appliances 384 Naval construction -14 Bicycles 555 Unweighted Mean 217 /a Unweighted average of products within each category. Source: Appendix II, Table 8.15 59. These policy biases, along with others to be noted below, must have contributed to the slow growth of agriculture and of non-mining exports over the several decades since the 1930s. While the prices received by farmers were controlled in the interest of protecting the real wage of urban workers, the trade regime raised the cost of manufactures, contributing still further to - 34 - the deterioration of agriculture's terms of trade. Moreover, the very high levels of protection provided domestic industry made possible substantial profits from production for the domestic market with little pressure for improvements in efficiency. Table I.14 compares the prices of selected domestic manufactures with those of competing imports. Table I.14: CHILE - PRICE COMPARISONS, SELECTED METAL-MECHANICAL PRODUCTS, 1969 (first semester) (US dollars) Price in International /b Product Chile /a Price (1) (2) Electric sewing machine 366 120 3.05 Automatic washing machine 510 200 2.55 Home refrigerator 498 80 6.23 Gas stove 177 63 2.81 Air conditioner 1,156 150 7.71 TV set 415 110 3.77 Bicycle 133 27 4.93 Disc for agricultural implements 17 10 1.70 Industrial abrasive wheel 281 95 2.96 Electric drill press 593 140 4.24 Three-phase electric motor, 1/2 HP 101 33 3.06 /a Ex-factory or wholesale, with exception of washing machine which is priced at the consumer level. /b CIF Valparaiso. Source: Survey by Chilean Steel Institute, cited in Bacha and Taylor, op. cit., p. 129 c. Export Policy 60. The growth of non-copper exports has been influenced more by general exchange rate policy and the generous protection accorded production for the domestic market than by programs aimed at exports per se. Nevertheless, special mechanisms for the promotion of non-copper exports (including that of the small- and medium-scale copper mines) have existed at least since the 1930s, when some exporters were permitted to pay for imports directly out of their export proceeds, thus enjoying a preferential exchange rate. - 35 - Special treatment has long been given the nitrate industry and small- and medium-copper miners, and in the 1950's preferential treatment was also accorded to the fishing industry and exports from the northern provinces. Among the incentives offered non-copper exports were exemptions from indirect taxes affecting inputs to export products, tax rebates of a fixed percentage of FOB export value, and special credit facilities to exporters. By the mid-1960s, however, industrial exports were little higher, in real terms, than they had been in the early 1950s, and agricultural exports were substantially lower in both real and nominal terms. 61. In 1966, the Frei Administration introduced a new export incentive system under which exporters were granted tax refunds of up to 30 percent of the CIF price of the export. By 1968, about half of all non-copper exports received such rebates at a rate averaging 22 percent. In addition, the Central Bank provided preferential credits, both pre-shipment and post-shipment, for up to 80 percent of the FOB value of the export. The level and scope of both rebates and credits were cut back in 1969, on the grounds that devaluation of the peso had improved the international competitiveness of Chilean goods and reduced the need for subsidization, but both programs were later re- expanded under the Allende Government. These programs only succeeded in attenuating somewhat the anti-export bias of the overall trade regime. Because of 'the devaluation and relative stability of the real exchange rate, industrial exports doubled from 1965 to 1970. Once the exchange rate was again fixed in 1970, however, this momentum was lost. d. Import-Substitution and Domestic Economic Stability 62. One stated objective of Chile's import-substitution strategy was the reduction of short-run instability generated by fluctuations of the world copper market. The instability resulting from Chile's volatile export proceeds emanates primarily from its impact on the government budget and on Chile's capacity to import. In an aggregate sense, dependence on the external sector was reduced in both respects. The average ratio of imports to GDP fell from 52 percent in the 1908-27 period and 38 percent in 1928-30, to a range of 9-14 percent in the years since. At the same time, with the development of other taxes and the slow growth of imports and exports, the dependence of tax revenues on foreign trade declined from 83 percent of total taxes in 1908-27 to 21 percent in the period 1956-70. 1/ 63. Thus, although Chile remained heavily dependent on a single commod- ity, copper, for the bulk of its foreign exchange receipts, a dependence prolonged and exacerbated by a trade regime that inhibited export diversifica- tion, the economy as a whole became somewhat less vulnerable to trade fluctua- tion. The damage of volatile copper revenues was also attenuated by demand management and import control policies. Consequently, the year-to-year fluc- tuation of real imports was held to an average 8.8 percent between 1952 and 1970, as compared to 19.0 percent in the returned share of the value of copper production. Moreover, the greatest import fluctuations were concentrated 1/ The numerator includes all import and export taxes and income taxes paid by the Gran Mineria. Denominator includes social security taxes. - 36 - among the nonessential consumer goods and capital goods categories rather than the potentially more disruptive intermediate goods, industrial raw materials, and essential wage goods categories. 1/ Nevertheless, the continued necessary preoccupation with short-term economic management, the low efficiency of many of the import-substitution industries that had been created, and the high levels of subsidization needed to sustain them inevitably exacted a heavy price in terms of economic growth. Satisfactory growth and stability as joint long-term objectives would only be achievable in the context of vigorous export diversification. 3. Fiscal and Monetary Policies 64. As in the case of trade policy, Chile's monetary and fiscal history since the 1930s was characterized by extreme instability with abrupt changes in direction. Rapid expansions of public investment programs and credit were sharply curtailed after one or two years as a consequence of accelerat- ing inflation or balance of payments crisis, while intermittent stabilization efforts were aborted in the euphoria of rising copper prices or in the face of growing political pressures. New policy tools were created and destroyed with unsettling frequency. Nevertheless, a number of significant trends are clear in addition to the chronic underlying problems that generated the above-noted instability. 65. Government has long played a large role in the Chilean economy, deriving in part from the tax revenues generated by nitrate exports during the pre-Depression period. When this revenue source was irretrievably lost after 1929, the government was called upon to cushion the shock to the economy, alleviate its social costs, and to promote the development of the domestic economy in order to reduce its vulnerability to the vagaries of international markets. This role was played directly through large and steadily expanding social welfare programs, infrastructure investments, and state ownership and management of industrial and service enterprises. In addition, the State intervened extensively via controls on prices, wages, and interest rates, the use of special tax incentives, and the direct allo- cation of credit and subsidies, besides its controls on trade and foreign exchange. While public sector revenues also rose steadily, they chronically fell short of expenditures. The resulting deficits were covered by a combina- tion of monetary expansion by the Central Bank and foreign borrowings, and Chile became distinguished as having the highest chronic inflation rates and second highest level of per capita foreign debt in the developing world (after Israel). 1/ Jere Behrman, Macroeconomic Policy in a Developing Country: The Chilean Experience, North-Holland, Amsterdam, 1977. - 37 - a. Public Finance 1/ 66. By 1952, central government expenditures, including transfers to other public sector institutions and to the private sector, already accounted for around 18 percent of GDP, a relatively high ratio for developing countries even today. Tax collections chronically lagged behind expenditures as Chilean legislators and administrators lacked the political will to exact the cost of growing expenditures from the electorate, and inflation, an inelastic tax structure with an ever-increasing number of special exemptions and exceptions, delayed payments, and evasion continuously eroded the tax base. 2/ Prior to the partial implementation of the stabilization program recommended by the Klein-Saks mission in 1956, tax receipts failed even to cover current expen- ditures, and the overall deficit of the central government was equivalent to around 5 percent of GDP. Borrowings from the Central Bank and payments arrearages were the principal means of financing. Arrearages, for example, amounted to 20 percent of total expenditures in 1953. 3/ Central government expenditures were fairly constant in real terms during the 1950s, declining in 1956 with the adoption of some of the stabilization measures recommended by the Klein-Saks mission, but rebounding as the austerity program broke down. Current expenditures and transfers averaged 80 percent of the total and were determined primarily by the government's annual decisions regarding wage and salary adjustments. The central government's share of GDP declined slightly over this period. 67. Table I.15 summarizes public sector fiscal performance as a percent- age of GDP during 1960-70. Current revenues grew about 3.4 percent per year in real terms, slightly lower than the growth of GDP through the first four years of the decade, but then rose rapidly, about 14.6 percent per year from 1964 to 1970 as a result of rising copper prices, modifications to the tax treatment of the copper companies and major improvements in the general tax system. 4/ Among the improvements were the indexation of tax liabilities to protect against erosion from inflation and a reduction in the lag time on tax 1/ Although data are abundant, the analysis of Chile's public sector accounts (along with other elements of the national accounts) is made exceedingly difficult by lack of information, frequent changes of format, coverage, categories, and definitions within the accounts, as well as the problems of adjusting for price level changes and exchange rate movements in a highly inflationary economy. The discussion here is thus intended to emphasize orders of magnitude and trends rather than precise calcula- tions. (Some of the statistical problems alluded to are detailed in the Note on Chilean Economic Statistics, Appendix I). 2/ Mamalakis, (The Growth and Structure of the Chilean Economy) blames much of Chile's poor economic performance since the 1930s on the country's having become accustomed to finance its high public spending out of the revenues generated by nitrates, and the subsequent efforts of the middle- and upper-income groups to avoid picking up the burden when the nitrate sector collapsed. Congress throughout the 1952-73 period repeatedly voted down tax reforms and rate increases proposed by the Executive, frequently substituting new preferences for one or another favored group. 3/ R. Ffrench-Davis, (Politicas Economicas en Chile, 1952-1970). 4/ Data are provided in current and constant prices in Appendix II, Tables 5.0 and 5.Oa. Table I.15: CHILE - PUBLIC SECTOR FINANCIAL PERFORMANCE, 1960-1970 (Percent of GDP) 1968 1960 1961 1962 1963 1964 1965 1966 1967 1968 Adj. 1969 1970 A. Current Revenues 30.0 30.7 31.0 29.6 28.4 31.3 33.2 34.3 35.8 36.4 35.9 Ceentral government a/ 17.0 16.8 16.9 15.6 14.8 17.1 18.7 18.4 18.9 19.4 19.9 Other public sector b/ 13.0 13.9 14.1 13.9 13.6 14.2 14.5 16.0 16.9 17.0 16.0 B. Current Expenditures 25.6 26.2 26.2 23.8 22.7 25.4 26.0 26.9 27.3 27.2 29.6 Central government a/ 10.1 9.0 9.7 8.4 8.2 8.8 8.5 8.6 8.5 8.3 9.9 Other public sector b/ 15.5 17.2 16.5 15.4 14.5 16.6 17.5 18.3 18.8 18.9 19.6 C. Current Balance (A-B) 4.4 4.5 4.8 5.8 5.7 5.8 7.2 7.5 8.5 9.2 6.4 Central government 6.9 7.8 7.2 7.2 6.7 8.3 10.3 9.8 10.4 11.0 10.0 I Other public sector -2.6 -3.3 -2.4 -1.5 -1.0 -2.5 -3.0 -2.3 -1.9 -1.9 -3.6 w D. Capital Expenditures c/ 6.0 6.1 8.5 7.7 8.0 8.9 9.3 8.9 9.6 11.8 12.1 13.4 Central government a/ 2.5 1.9 2.4 22.4 3.2 3.1 2.5 2.5 2.5 2.4 2.5 Other public sector b/ 3.4 4.3 6.1 5.4 5.6 5.7 6.1 6.3 7.1 9.3 9.6 10.9 E. Overall Balance (C-D) -1.6 -1.6 -3.7 -2.0 -2.3 -3.1 -2.0 -1.4 -1.1 -3.3 -2.9 -7.0 Central government 4.4 6.0 4.9 4.9 4.2 5.1 7.1 7.2 7.9 7.9 8.6 7.5 Other public sector -6.0 -7.6 -8.5 -6.8 -6.5 -8.2 -9.2 -8.6 -9.0 -11.1 -11.5 -14.5 a/ Includes transfers to other public sector institutions. b/ Excludes transfers from central government. c/ Net of capital revenues and excludes amortization payments. d/ Data re capital expenditures of other public sector for 1968-70 include amounts imputed from foreign borrowings and are not exactly comparable to data for earlier years. Source: Appendix II, Table 5.0 - 39 - payments. In addition; tax rates were increased, and a number of new levies, including a tax on wealth, were introduced. By 1970, public sector current revenues were equivalent to 36 percent of GDP. 68. Public spending increased during the early years of the Alessandri Administration (1958-64) in an effort to stimulate the economy and in response to the availability of U.S. Alliance for Progress assistance. Investments were increased in housing and public works, in addition to relief for the 1960 earthquake. Central government expenditures during the period averaged about 15 percent of GDP, but slightly more than one-third of that amount was shifted to other public sector agencies as operating subsidies or capital transfers. Thus, the central government per se was required to generate a substantial fiscal surplus to offset, in part, the operating deficits of the public enterprises and social security institutions and to finance their investments. The public sector, by this time, accounted directly for around half of the economy's gross fixed capital formation, while providing credit or other financing for a significant proportion of the remainder. By 1962, the overall public sector deficit had again risen to about 4 percent of GDP, the gap being filled to a significant degree by external credit. 1/ The Government acted to curtail official wage and salary adjustments in 1963 and 1964, allowing public sector remuneration levels to fall in real terms, while holding real investment constant. 69. The growth of the public sector accelerated under President Frei, total expenditures rising 16 percent per year in real terms from 1964 to 1968, or from 31 to 37 percent of GDP. Government explicitly assumed primary re- sponsibility for promoting economic and social development. Capital outlays accounted for about 30 percent of public expenditures, as compared to 26 per- cent in 1960-64, but part of this difference was accounted for by the acquisition of existing assets - e.g., equity in the copper companies rather than fixed investment. An effort was also made, via wage adjustments, to restore to public employees the real income loss experienced under the previous administration. Nevertheless, the revenue growth described in para. 67 more than doubled the real current surplus of the central government, which reached 10 percent of GDP in 1968, and the overall deficit of the public sector fell to about 1 percent of GDP. This apparent improvement, however, disguised the seriously eroding situation of the decentralized agencies and enterprises (excluding the copper sector), whose current deficit had risen to about 9 percent of GDP as compared to 4 percent in 1964. 70. The data for 1968 (adjusted) - 1970 are not strictly comparable with those of preceding years, inasmuch as an estimate has been added of the un- accounted expenditures financed with foreign credits. 2/ The difference, which has been attributed entirely to other public sector investments, amounted in 1968 to about 2 percent of GDP. With this adjustment, the public 1/ Indeed, these data understate the size of the public sector and its deficit, inasmuch as some public sector investments financed abroad were not included in the public sector accounts (see para. 70). 2/ See IBRD, Report No. 551-CH of October 18, 1974. - ho - sector deficit for 1968 is calculated at 3.3 percent of GDP. Faced with accelerating inflation, the Government restrained the growth of expenditures in 1969 and cut the deficit below 3 percent of GDP. Large wage increases at the end of the year, however, in response to pressures from the military and a wave of strikes by public employees, pushed public sector expenditures up to 43 percent and the deficit to 7 percent of GDP as the Frei Administration ended. b. Monetary Policy 71. Rather than being determined simultaneously through the interaction of the monetary authority with the nation's money and capital markets, money supply, interest rates, and credit have tended to be administered as separate policy variables. (i) Money Supply 72. In the narrow sense of controlling the growth of the money supply, monetary policy was virtually nonexistent in the post-Depression period as a concern independent of the financial requirements of the public sector. The combined deficits of the central government, decentralized agencies, and public enterprises were financed in large part via monetary expansion, which permitted the public sector to bid away from the private sector the resources it was unable or unwilling to tax away directly. 73. Table I.16 reviews the growth of privately held currency and demand deposits since 1952. The average annual expansion of the money supply exceeded 40 percent through 1970. In real terms, however, the money supply shrank in several years of the period as inflation exceeded the growth of nominal money. Chileans have long sought to protect themselves against the erosion of their assets by inflation, thus preferring either to accelerate consumption or to hold land, real commodities, foreign exchange, or indexed instruments rather than money. - 41 - Table I.16: CHILE - SUPPLY OF MONEY, 1952-1970 a/ (Millions of escudos) Annual Money supply Annual Money Change (December change End of Year Supply a/ (%) 1969 prices) b/ (%) 1952 26.2 3203 1953 37.2 +42 3037 - 5 1954 53.4 +44 2747 -10 1955 91.8 +72 2503 - 9 1956 128.8 +40 2428 - 3 1957 164.8 +28 2512 + 3 1958 221.5 +34 2709 + 8 1959 293.7 +33 2699 - 0 1960 383.4 +31 3343 +24 1961 431.5 +13 3439 + 3 1962 556.7 +29 3450 + 0 1963 746.3 +35 3170 - 8 1964 1129.2 +51 3417 + 8 1965 1864. +65 4431 +30 1966 2590. +39 5221 +18 1967 3240. +26 5358 + 3 1968 4481. +38 5794 + 8 1969 6057. +35 6057 + 5 1970 10049. +66 7449 +23 a/ Supply of money is here defined as currency and demand deposits owned by the private sector. b/ Deflated by CPI. Source: Ricardo French-Davis (o.cit.); Central Bank of Chile - 42 - 74. To a considerable degree, the growth of the monetary base was fueled by credit to the public sector. Local currency loans outstanding from the banking system to the government rose seven-fold in real terms (52-fold in nominal terms) from 1955 to 1970 (Table 1.17). 1/ Over the same period, bank credits to the private sector, including some public enter- prises, grew only around 14 percent in real terms. Inasmuch as gross domestic product approximately doubled over this time, it is clear that the banking system was failing to meet the credit needs of the private sector, while making possible a substantial shift of resources to public sector control. Table I.18 relates the expansion of total Central Bank credit (both local and foreign currency denominations) to the Treasury to the previous year's money supply. This ratio averaged an astounding 33 percent for the fifteen years 1956-1970. 2/ I/ Jorge Gregoire Cerda and Hugo Ovando Zeballos, "El Mercado de Capitales en Chile", in Banco Central de Chile, Estudios Monetarios III, Santiago, 1974. These data, in fact, understate the growth of credit to the public sector, since they exclude many public enterprises as well as credits from nonbank sources -- e.g. CORFO. Moreover, many additional loans legally denominated in dollars were actually converted to pesos and used to cover local expenditures, and rediscounts to the commercial banks frequently included public sector securities. Prior to 1931, Central Bank credits to the public sector were subject to a legal limit of 30 percent of the Bank's capital and reserves. After that date, however, the limit was removed, and in addition, commercial banks could include government papers in their reserves with the Central Bank required to rediscount them upon demand. See: Rolf Luders, Una Historia Monetaria de Chile, 1925-1958. Law No. 7200 promulgated in 1942, authorized the government to borrow up to one-twelfth of its annual budget from the Central Bank. 2/ The relatively low level of Central Bank credit expansion to the govern- ment during the years 1956-59 is somewhat deceptive, inasmuch as a large part of the deficit in those years was financed by foreign loans which were added to reserves. Thus much of the monetary growth in that period is attributed statistically to foreign exchange transactions rather than to its underlying source--the fiscal deficit. - 43 - Table I.17: CHILE - CENTRAL BANK CREDIT OUTSTANDING TO THE TREASURY, 1955-1970 Local Currency Loans Foreign Currency End-Year: (Millions of escudos) (Millions of US dollars) (Escudo equivalent millions) a/ 1955 16.2 12.5 2.3 1956 18.5 40.1 14.1 1957 26.1 61.6 38.4 1958 38.9 100.1 71.6 1959 - 98.1 102.9 1960 0.1 191.4 200.8 1961 0.8 267.6 280.7 1962 16.4 367.2 423.4 1963 56.3 410.6 768.2 1964 81.2 455.8 1,102.1 1965 160.5 507.6 1,643.1 1966 177.7 556.8 2,227.2 1967 363.9 559.0 2,839.7 1968 303.2 566.6 3,886.9 1969 510.6 575.4 5,201.6 1970 839.5 617.9 7,309.8 a/ Converted at average legal exchange rates shown in Table 1.11. Source: Central Bank of Chile Table I.18 CHILE - VARIATION IN CENTRAL BANK CREDIT TO TREASURY IN RELATION TO PREVIOUS YEAR'S MONEY SUPPLY, 1956-1970 (Percent) 1956 15.4 1957 24.8 1958 27.9 1959 -3.4 1960 33.4 1961 21.0 1962 36.7 1963 69.1 1964 48.1 1965 54.9 1966 32.3 1967 30.8 1968 30.4 1969 34.0 1970 40.2 Source: Tables I.16 and I.17 - 44 - 75. Meanwhile, as would be expected in a chronic inflationary environ- ment offering few indexed financial instruments on either the assets or liabilities side, lending activity to the private sector shifted increasingly to nonbank financial intermediaries, including suppliers, who were able to place monetary correction clauses on their loans. By 1971, almost half the loans to the private sector originated in these institutions as compared with 34 percent in 1960, 21 percent in 1950, and only 3 percent in 1940. 1/ Moreover, the proportion of long-term credits out of total bank lending to the private sector fell from 45 percent in 1945 to 19 percent by 1960 and only 9 percent by 1965. 2/ (ii) Interest Rates 76. Prior to 1965, interest rates on loans were subject to an upper limit determined as a function of the average rate charged by the banking system during the previous six months. 3/ In addition, the Central Bank acted to keep interest rates low through direct lending to the private sector and by setting a maximum interest rate, substantially lower than the legal rate, on loans eligible for rediscounting. In 1966 the maximum rate became a policy variable to be set by the Central Bank. At the same time the Bank eliminated its direct lending activities to the private sector. 77. The maximum legal interest rate rarely exceeded the annual rate of inflation during the entire three decades following the 1930s (Table I.19). included, however, the real effective interest rate to borrowers was negative in most years prior to 1965 and, again with the exception of 1960 and 1961, was far below the real cost of capital. The exceptions occurred in 1960 and 1961, when unusually low inflation rates resulted in positive real interest rates on bank loans. On the other hand, the effective cost of borrowing was significantly increased by taxes and other charges applied to loan transactions. Even with these costs included, however, the real effective interest rate to borrowers was negative in most years prior to 1965 and, again with the exception of 1960 and 1961, was far below the real cost of capital. As a consequence, the banking system provided a substantial subsidy to those borrowers fortunate enough to have access to it. - 1/ Cerda and Ovando, op. cit. 2/ Ibid. 3/ The limit was set at 1.5 times the average rate of the previous semester until 1953, when the ratio was lowered to 1.2. 4/ Ffrench-Davis, (Politicas Economicas...) estimates that in 1964 the implicit subsidy to borrowers was equivalent to one-fifth of that year's total tax collections. - 45 - Table 1.19: CHILE - MAXIMUM LEGAL ANNUAL INTEREST RATES FOR BANKING SYSTEM, 1940-1970 (Percent) Maximum Real a/ Legal Real Effective Effective Year Interest Rate Legal Rate b/ Interest Rate c/ Rate b/ 1940-44 12.9 - 2.9 n.a. 1945-49 14.2 - 3.2 n.a. 1950-54 16.2 -13.2 22.9 d/ -14.2 d/ 1955 16.2 -38.4 22.8 -34.9 1956 16.6 -19.4 23.6 -14.5 1957 16.8 - 5.6 26.4 + 2.2 1958 18.0 - 5.3 30.5 + 4.7 1959 19.3 -10.4 32.8 - 0.2 1960 19.8 +13.7 33.6 +26.8 1961 19.6 + 9.3 27.5 +16.5 1962 17.9 - 8.3 26.2 - 1.9 1963 17.0 -19.8 24.8 -14.5 1964 17.4 -16.4 25.3 -10.8 1965 18.2 - 7.1 29.5 + 1.7 1966 19.0 + 0.9 36.8 +16.0 1967 19.0 - 2.4 33.4 + 9.4 1968 19.9 - 6.3 36.8 + 7.0 1969 23.2 - 4.7 41.6 + 9.5 1970 24.0 - 8.1 44.5 + 7.1 a/ Interest rate data for 1955-1970 are simple averages of semestral rates; other years give second semester rates only. Nominal rates shown for five-year periods are simple averages of second semester rates. b/ Deflated by annual changes in CPI. c/ Includes taxes and fees charged to borrower on a 90-day letter of credit, with interest prepaid. d/ 1952-54. Source: Jorge G. Cerda and Hugo Ovando Z., (op. cit.), Tables 25, 28, 33; Ricardo Ffrench-Davis (2p. cit.), Tables 32 and 54 - 46 - 78. In such an excess demand situation, the allocation of credit became a function of administrative decision rather than of price and relative rates of return. Except as modified by government-imposed selective credit controls (see below), these decisions almost certainly favored the relatively larger and longer established enterprises and those enjoying interlocking ownership with the financial sector. While subsidized interest rates were frequently advocated as incentives to investment and the expansion of priority sectors, it appears that many of the credits from both bank and nonbank sources were instead diverted by the original borrowers into highly remunerative, unregulated suppliers credits and consumer loans. 1/ Given the profits that could be earned from such financial transactions as well as from com- modity and foreign exchange speculation, it is perhaps not surprising to find little evidence that overall investment levels were raised by credit subsidies. At the micro-level, however, low interest rates may in many cases have stimulated excessively capital-intensive production techniques by those with access to credit, at the expense of employment opportunities. 79. The effective maximum interest rate, including taxes and other charges, was raised to positive real levels during the Frei period but became sharply negative again during the Government of President Allende (see Chapter tl). Both regimes extensively used selective controls to direct the alloca- tion of credit. 80. Low bank lending rates were matched on the liabilities side by zero or low nominal interest paid to depositors. Persistent inflationary expecta- tions were consistently proven justified and help to explain the low propensity of Chileans to hold unindexed financial assets. Prior to 1957, the rate on savings accounts had been fixed at 4.5 percent. In an effort to attract funds into the banking system and reduce dependence on Central Bank rediscount- ing, interest paid on term accounts was freed from controls in October 1957, but remained subject to the general maximum legal interest rate. Thus, while its terms improved, the interest offered remained at negative real levels. Interest on bank accounts was exempted from the income tax in 1959. In addition, measures were introduced to facilitate foreign currency denominated loans and deposits in the banking system with interest on savings accounts payable in foreign currency. By the end of the year, foreign currency accounts amounted to 12 percent of the money supply, and the increment in foreign currency loans during the year was equivalent to one-third of total bank credits outstanding. 1/ Ibid. - 47 - 81. Indexed savings accounts were introduced for the first time in 1960 with the creation of the savings and loan institutions. Such funds were to be loaned exclusively for housing construction or purchase; the loans, too, were indexed. The availability of indexed financial instruments was expanded in 1965 when the State Bank (BECH) was authorized to index its savings accounts, and the Central Bank began the issuance of adjustable savings certificates (CAR). It was not until 1967, however, that the State Bank was authorized to index medium-term loans. In the meantime, the savings account adjustment had to be financed by a new government tax on bank loans. The funds generated by the sales of CAR were used to finance the purchase of domestically produced capital goods. 82. In order to dampen the growth of liquidity, minimum holding periods were specified to qualify for monetary adjustments, and restrictions have generally been placed on the transferability of indexed instruments. Never- theless, the introduction of indexing spurred a rapid growth of private financial savings, real term liabilities of the financial system rising approximately three-fold between 1961 and the end of 1970. During this period, non-indexed certificates and accounts fell 35 percent in real terms, and by 1970 indexed instruments accounted for 80 percent of the total. The real holdings of financial savings instruments continued to rise in 1971 but declined sharply thereafter in the face of rising economic and political uncertainties. (iii) Selective Credit Controls 83. In addition to the setting of reserve requirements on BECH and commercial bank deposit liabilities, direct controls have frequently been used since 1953, though with varying effectiveness, to limit the rate of credit expansion or to guide its allocation. Selective rediscounting by the Central Bank and variations in the kinds of assets that could be counted as part of required reserves have been the major vehicles for effecting these policies. 84. During the 1950s monthly or semestral credit quotas were assigned to each bank, and banks which exceeded them were denied access to the re- discount window. The rediscount rate in general was kept well below commer- cial bank lending rates during this period and was not itself an effective instrument in limiting credit expansion. Quotas were frequently increased to meet unforeseen credit demands, and the Central Bank occasionally acquired portions of a bank's portfolio, thereby reducing the charges against its quota. The effectiveness of the quotas were thus weakend, permitting rapid monetary expansion. The use of differential rediscount rates was introduced in 1958, with preferential treatment accorded to credits for agriculture. Throughout the 1950s, the Central Bank reiterated the recommendation that credits be directed primarily toward the productive sectors, as opposed to commerce and speculative activities, but little was done to enforce this prescription. 85. Quantitative controls were removed by the Alessandri Government in 1959, and the rediscount rate was raised in an effort to force the banks to rely on their own resources. The admonition to direct credit to the produc- tive sectors was continued but remained unenforced until 1960, when the - 48 - Central Bank required that one-fifth of net increments to bank loan port- folios be directed to productive activities at specified preferential interest rates below the legal maximum. Funds were also diverted to the government via increased reserve requirements and the issuance of bonds which could be counted as part of legal reserves. 1/ Prices were effectively stabilized in 1960 and 1961. When inflation again began to accelerate, the Alessandri Government reimposed quantitative credit controls, but with little effect. 86. Improved control over the rate of monetary expansion and the redirection of credit toward "productive" activities, and in particular toward small- and medium-sized enterprises and the reformed subsector within agri- culture, were among the basic commitments of the Government of President Frei. The reserve requirement on commercial banks was raised, forcing greater dependence on Central Bank rediscounts. The amounts available for rediscount- ing and the interest rates charged were then varied among end uses in accord- ance with the Government's priorities. In addition, banks were assigned specific obligatory lending quotas by type of operation. Although interest rate differentials were narrowed over the 1965-70 period, quantitative controls were strengthened. 87. An overall credit expansion target was determined on the basis of a monetary program tied into the Government's development plan and the short- term economic outlook. Individual bank quotas and access to the rediscount facility were then made a function of the bank's previous performance in adhering to Central Bank guidelines as well as its success in attracting new deposits. Certain preferred activities -- e.g. acquisition of government bonds -- were not counted against the quota ceiling. Also exempted from these controls were the Government's overdraft privilege on the consolidated account of the public sector held by BECH. Nevertheless, it is estimated that around 90 percent of bank credit operations were subject to these quantitative guidelines by the end of 1969. 2/ 88. A large number of selective credit facilities were created in an effort to divert the flow of funds to priority uses. Preferential interest rates, supported by softer rediscount terms, were fixed for a variety of end-uses including low-cost housing construction, export credit, agricultural and industrial development, purchases of domestically produced capital goods, and artisan activities. In addition, special treatment was accorded to cooperatives and small enterprises generally. Interest rate differentials were narrowed over time, and rates generally were raised in real terms. Preferences continued to be granted, however, in the form of exemptions from legal reserve requirements and quotas and the amounts of rediscounting made available. 89. The most innovative of the special credit facilities was "the line of credit according to cash budget" established in 1965. To qualify, an enterprise was required to submit an annual cash budget to the commercial 1/ Such bonds constituted 18 percent of bank reserves by the end of 1960. 2/ IMF Report SM/70/109, June 17, 1970. - 49 - bank, or consortium of banks. Upon approval the latter would guarantee to provide the necessary financial resources. In addition to submitting an acceptable cash budget and meeting normal creditworthiness criteria, the enterprises were obligated to pay their suppliers on a cash basis and, beginning in 1969, to dedicate half of their annual profits to increasing working capital. All credit lines in excess of E0 500,000 had to be approved by the Central Bank. In considering renewals of outstanding credit lines, preference was to be given to enterprises that pledged to lower their prices in real terms and to increase output. The primary purposes of this program were to eliminate the day-to-day uncertainties faced by the typical Chilean enterprise in meeting its financial needs, to reduce its financial costs, to improve the financial planning and management of both the enterprises and the banks, and to strengthen Central Bank control over credit allocation. 1/ Banks were required to increase by specified stages the proportion of their total loan portfolios represented by this program and also to increase gradually the share of the program's loans allocated to borrowers of E 4 mil- lion or less. 90. Table I.20 summarizes the distribution of credits from the banking system to the private sector, by economic activity, from 1950 to 1970. The primary beneficiary of selective credit policies, to the extent they were effective, would appear to have been the industrial sector, whose share of credit outstanding might have been expected to rise in any case along with its growing relative importance in the economy. Despite the priority given to it by the Frei Government, agriculture's share of bank loans declined after 1964, the annual average of credits outstanding to the sector even declining slightly in real terms as compared to 1960-64. 2/ It may still be true, however, that a relatively larger share of credit went to small farmers as a consequence of the land reform and in accordance with Government policy objectives. 3/ Nevertheless, it remains apparent that selective controls were relatively ineffective in affecting the allocation of private credit. While the combined share of the "productive" sectors, agriculture and industry, had grown markedly relative to the commerce and services sectors, there is considerable evidence that monies borrowed for ostensibly productive purposes were in fact turned over and relent in the informal market. 4/ 1/ See: Maria Elena Ovalle de Vigneaux, "Linea de Credito segun Presupuesto de Caja," in Banco Central de Chile, Estudios Monetarios, Vol.I., Santiago, 1968. 2/ See Appendix II, Table 6.6. Indeed, the data in the table probably understate agriculture's relative decline, inasmuch as the earlier figures refer to June when agriculture's credit demands are season- ably lower than in December. 3/ The present section refers only to credits from the monetary system. Other institutional sources of credit to agriculture -- e.g. CORFO, INDAP, etc. -- are examined in Annex I. 4/ See: Javier Fuenzalida and Sergio Undurraga, El Credito y su Distribucion en Chile, Editorial Lambda, Santiago, 1968. - 50 - Table I.20: CHILE - DISTRIBUTION OF BANKING SYSTEM CREDITS TO PRIVATE SECTOR, a/ 1950-1970 (Percent) Years b/ Agriculture c/ Industry d/ Other 1950-54 (avg.) 24.5 32.0 43.5 1955-59 ( " ) 37.5 32.0 30.5 1960-64 ( " ) 32.9 34.9 32.2 1965-69 ( " ) 27.5 45.4 27.0 1970 24.6 47.3 28.1 a/ Banking system refers to private commercial banks and the Banco del Estado. b/ Data for 1950-64 refer to loan portfolios as of June 30; 1965-70 data refer to December 31. c/ Includes fishing and forestry. d/ Includes manufacturing, construction, mining, and transport and storage. Source: Appendix II, Table 6.6 c. Foreign Debt 91. Even prior to the Depression of the 1930s, Chile had relied heavily on foreign credits to help finance its budgetary deficits. In some years, external public debt service was as high as 35 percent of total government expenditures. External loan funds dried up in the wake of the world depression, and Chile was forced to suspend debt service in mid-1931. Outstanding credits were renegotiated, and service payments resumed in 1939. 92. Foreign borrowing began again after World War II, although at a relatively moderate level through the first postwar decade. Public loan authorizations from 1945 to 1955 averaged about US$21 million and emanated primarily from the U.S. Export-Import Bank (EXIMBANK), the IBRD, and private - 51 - U.S. banks. 1/ The inflow of foreign credit jumped sharply in 1956 with the negotiation of a US$75 million loan package in support of the stabilization program recommended by the Klein-Saks mission. The lenders were led by the IMF, which provided a $35 million standby credit; the rest of the package being made available by the U.S. Treasury and private U.S. banks. Although the stabilization program had essentially been aborted by the end of 1957, the loans were renewed and supplemented annually for the next several years with additional monies also supplied by EXIMBANK, the Federal Reserve Bank of New York, the International Cooperation Administration (precursor of AID) and the German Credit Institute for Reconstruction. Large untied credits for earth- quake relief, totaling over $100 million from U.S. government agencies alone, were added in 1961. 93. Specific project lending also increased after 1958, as the Alessandri Government actively sought foreign credits to supplement domestic savings in financing its investment program. This initiative coincided with the growing foreign aid commitment of the U.S. Government, as reflected in the launching of the Alliance for Progress and its participation in the establishment of the Inter-American Development Bank (IDB). 94. The major public agency borrower for investment purposes was the State Development Corporation (CORFO) and its affiliates, which included the public enterprises for power (ENDESA), steel (CAP), and petroleum (ENAP). CORFO, the oldest development corporation in Latin America, was established in 1939 as the agency principally responsible for planning and promoting Chile s economic development. It was authorized to make direct investments in enter- prises on either a wholly-owned or mixed-enterprise basis and to lend directly or act as guarantor of loans to public or private enterprises. Its major programs were carried out through independent affiliates, but its activities stretched also into agriculture, fishing, mining, tourism, and a wide variety of manufacturing industries. Through 1960, about 30 percent of CORFO's investments, including those of its affiliates, were financed externally. (It also received 5-6 percent of the national budget.) 2/ Other important public sector borrowers abroad were the State Railway Company and the Housing Corporation (CORVI). 1/ A detailed discussion of foreign public credits to Chile from 1945 to 1962 is found in Public International Development Financing in Chile, Columbia University School of Law, New York, March 1964. A public loan is defined here as one which at least one of the parties--borrower and/or lender--is a public agency. The more conventional definition used for later periods will include only loans to, or guaranteed by, public sector agencies. It thus excludes non-guaranteed loans to private borrowers regardless of the lender. Since nonguaranteed loans from public lenders to private borrowers have been few and small in magnitude, the differences in definition are for practical purposes not significant. Both concepts exclude direct transactions between purely private parties. 2/ A fuller discussion of CORFO is found in Chapter IV. See also: Mamalakis (op. cit.). - 52 - 95. Table I.21 shows the evolution of Chile's medium- and long-term public external debt during the 1960s. The data include separately the obligations of the public sector and non-guaranteed financial credits to the private sector. By the end of 1960, total public debt outstanding amounted to US$589 million, which was equivalent to 125 percent of that year's merchan- dise exports and approximately 20 percent of GDP. Over the next 5 years, the public debt rose 72 percent reaching US$1.0 billion at the end of 1965, or the equivalent of 149 percent of the level of exports and 26 percent of GDP. If paid, the total service of foreign capital (including profit remittances) would have amounted to 70 percent of exports in 1965. This burden was unmanageable, and the new Frei Government renegotiated the debt service schedule. The rescheduling of repayments of previous credits and the accumulation of new borrowings doubled the outstanding public debt to $2.1 billion, or about 38 percent of GDP and 186 percent of exports, by the end of 1970. An addi- tional element in the debt was the "Chileanization" agreement under which Chile was to acquire 51 percent ownership of the major copper mines in return for bonds. Table I.21: CHILE - OUTSTANDING PUBLIC EXTERNAL DEBT, 1960-1970 (Millions of US dollars) End of Debt Year Outstanding a/ 1960 589 1961 668 1962 762 1963 854 1964 940 1965 1,016 1966 1,104 1967 1,236 1968 1,461 1969 1,727 1970 2,066 a/ Medium- and long-term debts only; does not include undisbursed balances or loans from the IMF. Source: Central Bank; IBRD External Debt Division 96. The foreign financing of private sector expenditures also grew rapidly during this period. According to Central Bank estimates, foreign financial credits to the private sector (not including short-term credits to the monetary system) rose from US$63 million at the end of 1960 to $219 million in 1965 and $436 million by the end of 1970. - 53 - 4. Wage Policies 97. High chronic inflation rates and the early appearance in Chile (relative to other developing countries) of an organized urban labor force have long involved the government in the process of wage and salary determination. 1/ Wage policy has, in varying degrees over time, been intended to reduce inflationary pressures in the economy, protect real in- comes in the face of inflation, and/or alter the distribution of income in favor of the lower-income groups. The setting of wage and salary levels in the public sector has an important impact on remunerations paid else- where. In addition, the tools of wage policy have included the legisla- ting of minimum compensation levels, across-the-board wage adjustments, and mandatory fringe benefits and bonuses paid in the private sector. Also relevant are the substantial benefits paid out through the social security system. a. Minimum Wages and Salaries 98. Prior to 1974, wages and salaries were subject to three legally set minima: the sueldo vital (SV), first established in 1937 and applied to private sector, white-collar workers (empleados); the salario minimo agricola (SMA), established in 1953 for workers in the agricultural sector; and the salario minimo industrial (SMI), created in 1956 for blue-collar workers (obreros) in industry and commerce. The SV and SMA were set and adjusted on a regional basis in accordance with regional cost-of-living surveys, while a single SMI was fixed nationwide. Inasmuch as annual percentage adjustments of the legal minima were mandatorily applied to workers earning up to several multiples of the minimum, a large proportion of the labor force was theoretically affected. 99. As in other aspects of Chilean labor law, wage legislation historically discriminated between white-collar and blue-collar workers and between rural and urban workers. Thus, although the minimum wage was viewed at least partly as a device for narrowing income disparities, the SMA and SMI were initially set equivalent to only 25 percent and 45 percent, respectively, of the SV. This gap narrowed only slightly through the 1950s and early '60s. During the Administration of President Frei, however, dis- tributive objectives were given higher priority. Between 1964 and 1967, the SMA was increased 164 percent in nominal terms, in comparison to 103 percent for the SMI and SV. These adjustments brought the rural and urban minimum wages for manual workers into equality at a level equivalent to 48 percent of the SV. That relationship was maintained until 1970, when a 60 percent adjust- ment of the now uniform salario minimo brought the manual worker standard up to 59 percent of the SV. 100. Despite annual adjustments, however, the average real value of the sueldo vital eroded steadily from 1952 through 1960, losing 35 percent 1/ A more detailed review of wage and income policies and their effect is found in an internal working document of the World Bank. - 54 - of its purchasing power over this period. 1/ The real SV rose in 1961 and 1962, as the Alessandri Government's short-lived stabilization program sharply reduced the rate of inflation, but then lost these gains with the reacceleration of price increases in the following two years. The SV was adjusted upwards in real terms during the first two years of the Frei Administration but was then allowed again to erode. By 1970, the SV's average real value was back to the level of 1964 and 36 percent below the level of 1952. 101. The real values of the two blue-collar minima were better protected throughout the period. Both moved higher during the first half of the Alessandri period, the SMA in particular gaining 33 percent in real terms between 1958 and 1962. Both were then allowed to erode before real increases were achieved during the first half of the Frei Administration. Again, the SMA adjustment exceeded all others as it was brought into equality with the SMI. During Frei's final year, while the purchasing power of the SV continued to decline, the blue-collar minimum wage was increased 21 percent in real terms to an all-time high. b. Family Allowances 102. In addition to the minimum wage and salary, all workers covered by one of the institutions of the social security system (about 70 percent of the work force) were entitled to a monthly monetary allowance per dependent. While the size of the allowance was not tied formally to a worker's income, it did vary from one social security institution to another, and the system overall discriminated markedly in favor of already more affluent (on average) white-collar workers. When first extended to blue-collar workers in 1953, the allowance per dependent was fixed at only one-third the amount already being paid to private sector, white-collar workers (see note page 53). 2/ This disparity remained fairly constant through the 1950s and early '60s, 1/ The practice of adjusting minimum wages and salaries once a year, of course, yielded pay rates of varying value in real terms over succeeding months of the year. The real value was highest at the moment of adjustment and declined steadily thereafter as the price level rose. The deterioration of the real minimum wage is thus a function of the rate of price change. Even when fully indexed, more- over, the average real minimum wage may rise or fall from year to year depending on whether inflation is slowing down or accelerating. If, for example, the inflation is slowing, the nominal adjustment based on last year's price rise will exceed the erosion of purchasing occurring in the present year. The average real wage will thus have increased. If, on the contrary, inflation has accelerated, the average real wage will decline. 2/ In this discussion, the family allowances for blue-collar workers are those paid by the Social Insurance Fund (SSS), while the white-collar allowances refer to those paid by the Social Security Fund for Private Sector White-Collar Workers (EMPART). Together these two institutions account for almost 80 percent of workers covered by social security and virtually all those in the private sector. - 55 - the family allowance paid to white-collar workers falling somewhat less in real terms than that provided blue-collar workers. For a blue-collar worker with 3.5 dependents (census average), the family allowance was equivalent to from 24 percent (1964) to 40 percent (1957) of the minimum wage. The supple- ment was even more important for low-pay, white-collar workers, ranging from 43 percent of the SV in 1964 to 56 percent in 1960. Thus, the allowance served to narrow income disparities within the manual and white-collar categories and to increase significantly the absolute incomes of each, while at the same time contributing to the widening of the gap between them. 103. During the Frei Administration, the family allowance became an increasingly important tool of income redistribution, as the allowance paid to the dependents of blue-collar workers was increased 115 percent in real terms from 1964 to 1970, as compared to a 36 percent real increase for white- collar dependents. Within each group, the blue-collar allowance was now equivalent to 42 percent of the SMI (for a worker with 3.5 dependents), and the white-collar allowance had reached 58 percent of the SV. Nevertheless, the disparity of treatment between the two groups remained substantial, the allowance per dependent for blue-collar workers being equal to only 42 percent of that received by white-collar workers. 104. The addition of the respective family allowance to the minimum wage and salary to derive a minimum income level for urban blue-collar and white- collar workers 1/ does not significantly alter the picture from that observed for minimum wages and salaries alone. The more generous adjustments of family allowances increased the relative rate of improvement of low-paid workers after 1964. Total real receipts for minimum pay workers in 1970 were up 42 percent and 10 percent for blue-collar and white-collar workers, respectively, as compared to 1964. c. Average Wages and Salaries 105. The above discussion applies only to workers whose hourly or monthly pay rates were directly tied to the minimum wage and is not necessarily 1/ In fact, workers commonly received a large number of monetary and non- monetary benefits in addition to basic wages and family allowances, but there are no systematic data regarding their coverage or value over time. A survey of 55 large enterprises and public agencies in 1969, employing 108,000 workers, identified 98 different forms of compensation in addi- tion to the basic wage. These included inter alia sales commissions; bonuses for productivity, night work, overtime, and holidays; allowances for transportation, meals, housing, dependent education, tools, and work clothes; and provision in kind of housing, meals, clothes, sport facilities, nursery care, company products, etc. It was estimated that these non-wage incomes, along with family allowances, approximately doubled the compensation of white-collar workers (i.e. were equal in total value to average wages), and raised blue-collar incomes by a factor of about 2.2. (Sociedad Minera El Teniente, "Analisis Sobre Remuneraciones y Beneficios Accesorios en Chile a 31 de Mayo de 1969," Rancagua, 1969.) - 56 - reflective of the earnings of higher paid workers. In fact, although adjust- ments to the legal minima necessarily became a datum for wage negotiations, collective bargaining agreements or private wage contracts could and frequently did diverge from them both in timing and amounts. Figure I.3 compares the index of real average wages and salaries with that of the legal minima since 1963. 1/ 106. This comparison illustrates the limited impact of minimum wage and salary legislation on the course of average compensations paid in speed, direction, or the relationship between blue-collar wages and white-collar salaries. For example, while the real SMI was essentially flat from 1965 to 1969, average real wages rose 45 percent. The divergence between the legal minimun and[l i-le -ltr ge is even more striking with regard to white- collar workers. The SV rose slowly in real terms from 1964 to 1966 but then declined steadily; by 1970 it had returned to the 1964 level. Nevertheless, average real salaries rose steadily (except for a brief dip in 1968) and by 1970 were more than double the level of 1964. Despite the Government's efforts to reduce it, the gap between blue-collar and white-collar workers widened over the period. 107. It is clear that average wage and salary increases, at least in the urban sectors sampled, tended to exceed the legally mandated adjustments. Several explanations are possible; unfortunately, the data available do not permit them to be tested. If the proportion of workers whose earnings were at, or were tied to, the legal minima remained about the same, the above trends would indicate not only a widening of pay differentials between blue- collar and white-collar workers, but within each group as well. On the other hand, the divergence might reflect a generally tight labor market in which the rapid bidding-up of wages simply made the trailing legal minimum irrelevant over time for an increasing proportion of workers. Large adjustments, such as the one enacted in 1970, may have been a case of the law catching up with the market rather than of leading it. Finally, the divergence between legal minimum and average could also have resulted from rising unemployment concentrated among the lowest wage workers. The average wage compensation of employed labor would thus have risen as minimum wage workers simply dropped out of the survey. 1/ The data for average wages and salaries cover both public and private sector institutions and include basic wages; pay for vacations, holidays and overtime; and the value of all fringe benefits, in cash or kind, which are regularly provided. Excluded are irregular cash bonuses and family allowances. It should be noted that these data derive from a 1957 sample of the modern, large-enterprise industrial, mining, and public utility sectors and government, all of which have historically employed the elite of the manual work force, which together with the white-collar employees of these sectors form the backbone of the middle class of Chile. It is not certain that wages in non-surveyed enterprises consistently followed a similar pattern. Further detail on the survey's coverage is in the Note on Chilean Economic Statistics, Appendix I. - 57 - FIGURE 1T3 CHILE COMPARISON OF THE INDICES OF REAL AVERAGE WAGES AND SALARIES WITH THEIR LEGAL MINIMAS (1 89-100)* `170.' 6eo 16X REAL MINIMUM WAGE 140 -------- Ito - X t BL WAG X 80 -~~~~~~~~~~~~~~ 0 / REA~~L SALARIES / 60 REAL MINIMUM SALARY \E/ 58 \;~~~~~~~~~~~~~/ iso 40 , , , , ' L | Z s t S 63 64 65 86 67 88 69 70 7t 72 73 74 75 76 77 Source: Appendix II, Tables 9.21, 9.15a, 9.13a and 9.9a ' Note: Indices of fReal Average Wages and Salaries Derived from April Data while Legal Minirmas taken from Yearly Averages. Until 1967, there were two minimum wages--industrial and agricultural. Figure I.3 refers to industrial minimum wages. - 58 - 108. In the light of other economic indicators describing the progress of the late 1960s, the first explanation above appears the most probable, viz. an actual widening of pay differentials across the labor force. In view of the slow growth of the active labor force during the Sixties, the gains experienced by the better paid workers probably had more to do with the power of unions, the relative freedom from competition enjoyed by their employers, and the "demonstration effect" of high wages received by the copper miners and workers in the State enterprises. At the same time, the urban flow of labor displaced from the countryside, the heavy burden of payroll taxes, and the substantial subsidies offered by public policy for the adoption of capital-intensive techniques of production kept downward pressure on the wages of the unskilled. In such a situation, minimum wage legisla- tion may put a floor on the incomes of those who retain jobs in the covered sectors, but these benefits may come at the cost of jobs for some and/or of an inflationary shift of the entire pay structure which eventually erodes the real value of the floor income itself. 1/ It would, in any event, be difficult in a labor force as well organized as the Chilean had become to compress traditional wage differentials as implied by a redistribution policy relying only on a minimum wage. While such compression might be achieved briefly, the labor force "elite" groups are likely to reassert their customary differentials fairly quickly. d. Conclusions 109. Little can be said regarding the impact of wage policies on income distribution on the basis of available data (see note page 53). The most notable distributive effects probably occurred within the labor force, par- ticularly in the context of other policies that offered substantial subsidies to the purchase of capital goods while heavily taxing the employment of labor. The rapid real growth of average labor remunerations over the second half of the 1960s, coupled with a slow growth of employment, undoubtedly improved labor's share of national income. 2/ This probably came at the cost, however, of a slower rate of growth of job opportunities and some widening of income differentials among workers. Moreover, to the extent that the improvement of wages and fringe benefits were financed through inflation and/or taxation, the primary losers were the unemployed and workers in sectors not covered by social security or other labor legislation. 1/ The difficult trade-off between increased welfare for the employed labor force and the level of employment is heightened by the very high payroll taxes levied in Chile to support the extensive social security system (see Annex II, Section B.2.). The employer contri- bution alone to the two major institutions providing coverage to private sector workers amounted to 55 and 62 percent, respectively, of taxable payrolls in 1968. 2/ The national income accounts report an increase in labor's share from 45 percent in 1964 to 52 percent in 1970. Some of the problems involved in interpreting this data are studied in an internal working document of the World Bank. - 59 - D. SUMMARY OBSERVATIONS 110. Chile's long history of slow growth, rapid inflation, balance of payments difficulties, and frustrated aspirations is well known and has inspired many of the debates familiar to students of development economics. A number of these issues are encompassed within the body of literature commonly referred to as the monetarist vs. structuralist theories of infla- tion. 1/ According to the structuralists, the root causes for Chile's poor development performance were to be found in systemic structural rigidities explained by skewed land tenure, monopolistic industries, the secular decline in the international terms of trade of primary commodities, the instability of primary commodity prices, the demonstration effect of foreign luxury consump- tion, the protection of foreign markets, the power of foreign multinational corporations, and the capital intensity of modern production techniques. 111. Without denying the importance of many of these structural features of the Chilean and world economies, the discussion of this Chapter suggests that Chile's poor economic performance over recent decades is also not unrelated to domestic economic policies. The motivations of agricultural producers may rest partly in the psychology of latifundistas but are also negatively affected by discriminatory price controls and an overvalued exchange rate. Similarly, concentrated industrial markets were encouraged by high levels of protection, while a cascading sales tax made vertical integration profitable; the foreign trade regime inhibited exports as well as the integration of the copper mines into the national economy; subsidized interest rates and heavy payroll taxes stimulated the substitu- tion of capital for labor; and the chronic failure to cover the costs of public goods and services through tax collections and user charges helped to fuel the inflation. 112. Despite the pronounced social orientation of the Frei Government and the considerable progress achieved during its tenure, 2/ the economy presented a very mixed picture in 1970. Some improvements had been accom- plished in trade and monetary policies, education, agriculture, public housing, and other socioeconomic areas; and an agreement had been concluded with the copper companies for the Chileanization of the mines that promised large new investments in that sector. The balance of payments was strong, and international reserves were, for that period, at record levels. On the other hand, the fiscal situation was deteriorating, inflation was again accelerating despite slackening production and rising unemployment, private saving and investment remained low, and to many it appeared that the social programs launched by the Christian Democrats had lost their momentum. Con- sequently, the party that had won an unusual absolute majority of the votes 1/ See: Werner Baer and Isaac Kerstenetzky (eds.), Inflation and Growth in Latin America, Irwin, Homewood, Ill., 1964. 2/ For a detailed analysis, see: IBRD Report No. WH-202b of September 10, 1970. - 60 - in the 1964 presidential elections, finished a poor third in the three-way race of 1970. The winner was Salvador Allende as the head of a coalition of parties, the Popular Unity, which promised a radical departure from past policies, and whose stated central objective was "the replacement of the present economic structure, putting an end to the power of national and foreign monopolistic capitalism and of the latifundio, in order to initiate the construction of socialism." 1/ 1/ Presentation of Finance Minister Americo Zorilla to the Mixed Budgetary Commission of Congress, November 27, 1970 (mission translation). The potential for political polarization was clear in the vote totals. The right-wing National Party received 35 percent of the vote, only 39,000 votes behind the Popular Unity out of 3 million votes cast. The Christian Democratic candidate received 28 percent. - 61 - CHAPTER II THE CHILEAN ECONOMY 1970-SEPTEMBER 1973 A. INTRODUCTION 113. Although the present chapter is concerned with the evolution of the Chilean economy and of the economic policies that propelled it, it is necessary to recognize the highly charged political environment in which economic events unfolded. The Allende Government came to power in 1970 with its Popular Unity (UP) coalition receiving slightly more than one-third of the popular vote and facing a Congress firmly controlled by opposition parties. Nevertheless, the Government reiterated its determination to move its revolutionary program forward as quickly as possible and, moreover, to do so within the bounds of Chile's democratic, constitutional process. The atmosphere during this period was thus increasingly confrontational. The conflict was not limited to the polarization of Government and Opposition. As time passed, increasing disagreement appeared within the UP coalition itself regarding the acceptable pace of reform, the need for concessions to obtain or retain the support of one or another group--e.g., small shopkeepers and manufacturers--and the feasibility of achieving the Government's objec- tives by traditional means. Thus, the economic events of this period cannot be explained entirely by the production, consumption, and investment functions, savings propensities, etc. of conventional economic analysis. The economic behavior of workers, investors, and consumers was affected as much by the intensive enthusiasms, loyalties, fears, uncertainties and animosities being created as by economic policies per se, and the objective functions of the participants increasingly included political goals as well as material ones. 114. According to the UP analysis, Chile's poor economic performance since the 1930s was rooted in an economic structure characterized by dependence on the capitalist industrial economies, control of local markets by domestic and foreign monopolists, and the concentration of agricultural resources in the hands of a small, feudal landowning aristocracy. These characteristics resulted, inter alia, in the concentration of income and wealth, the virtual exclusion of large segments of the population from the economic mainstream, a pattern of production that emphasized sumptuary goods at the expense of basic needs, and the generally inefficient use of domestic resources, par- ticularly labor resources. 1/ The solution to these problems, therefore, lay in the fundamental restructuring of the economy--i.e., elimination of the crippling control exercised by foreign and domestic monopolists and latifundistas and establishment of the basis of a new socialist order. 1/ For an exposition of this analysis, see: Sergio Aranda and Alberto Martinez, "Estructura Economica: Algunas Caracteristicas Fundamentales," in Anibal Pinto, et. al., Chile, Hoy, Centro de Estudios Socioecononomicos, Universidad de Chile, Santiago, 1970; and Jose Ibarra, "Some Aspects of the Popular Unity's Development Model," in J. Ann Zammit (ed.), The Chilean Road to Socialism, Institute of Development Studies, University of Sussex, England, 1973. - 62 - 115. The UP's immediate economic objectives upon the inauguration of President Allende (November 4, 1970) were the reactivation of the economy, early progress toward establishing state control over the "commanding heights" of the economy--those sectors whose resources and functions were essential for assuring the fulfillment of the Government's development plan--and accelera- tion of the agrarian reform. The first objective was to be achieved by a combination of traditional public works programs, with an emphasis on housing construction, and a major increase in the wage share of national income. With regard to the second objective, three areas of the economy were defined: the social property area, consisting of all present and future state enterprises; the mixed area, in which the State would enter into partnership with domestic and foreign private entrepreneurs; and the private sector which would remain wholly privately-owned but subject to the planning, marketing and other guide- lines set by the State. Targeted for immediate expropriation and integration into the social area of the economy were the large copper, iron and nitrate mines, the financial system, export-import enterprises, large distribution companies, and all strategic activities, including, among others, utilities, petrochemicals, chemicals, pulp and paper. 1/ 116. The Government was committed, at the same time, to reducing the rate of inflation. While it viewed Chile's chronic inflation as resulting from structural characteristics, the Government expressed as a priority short-term goal the dampening of inflation through direct price controls (which also formed a basic part of the income redistribution strategy), the maintenance of a fixed exchange rate, special financial assistance for the elimination of supply bottlenecks, and proper programming of the fiscal deficit and the expansion of money and credit. 2/ Experience, however, would demonstrate the great difficulties involved in managing the unavoidable trade-offs among the UP's stated objectives, particularly in the context of Chile's increasingly polarized political environment. B. THE REACTIVATION OF THE ECONOMY: 1971 117. The first two years of the Frei Administration, helped by high copper prices and a debt rescheduling, had witnessed substantial economic progress. The growth of output accelerated, while unemployment and infla- tion declined. The central government's deficit was reduced in real terms despite a substantial increase in investment spending. Average real wages and salaries had grown by one-third (Appendix II, Table 9.21). The current account deficit of the balance of payments was greatly reduced, and net international reserves became positive for the first time since 1960. Significant improve- ments had been made in the progressiveness and buoyancy of the tax system, the foreign trade regime had been simplified and rationalized, and the State had taken steps to acquire for the first time an equity position in the Gran Mineria del Cobre while assuring large new investments in mine capacity. 1/ The entire program presented to the electorate during the campaign is presented in "The Popular Unity Programme," in J. Ann Zammit (ed.), op. cit. 2/ Americo Zorilla, op. cit. - 63 - 118. By 1967, however, the momentum was slipping. Inflation, which had fallen from 40 percent in 1964 to 18 percent in 1966, began once again to rise, albeit slowly, reaching 35 percent in 1970. Private investment lagged, and GDP grew only 2.4 percent in 1967 (as compared to 7.0 percent the year before) and averaged 3.3 percent in the subsequent three years. The unemployment rate was also rising slowly. On the other hand, copper prices, which dipped in 1967, recovered strongly and industrial exports were expanding rapidly. Thus, the current account situation was strong and, coupled with substantial capital inflow, resulted in a continuous growth of net international reserves to reach US$409 million by 1970, the highest in Chile's history. Foreign debt also grew to the highest level in history, however. The public external debt had more than doubled since 1964 to exceed US$2 billion at the end of 1970, while non-guaranteed foreign financial credits to the private sector had also more than doubled, amounting to an estimated $436 million. 1. Wage Policy 119. The first important economic action taken by the UP Government was with regard to the annual wage adjustment due in January. The UP program called initially for full restoration of real wages and salaries to the level of January 1970. If adhered to, this would have meant a general wage increase of 35 percent, the rate of inflation recorded during 1970. Instead, an adjustment averaging 55 percent was declared, tapered to provide larger proportional increases to the lower paid workers. The effort to improve the relative economic position of blue-collar workers vis-a-vis white-collar workers was also intensified by the Allende Government. Thus, the wage and salary minima were raised in nominal terms by 67 percent and 35 percent, respectively, in 1971, bringing the manual worker's minimum to 72 percent of that of salaried workers. Finally, the Government continued the Frei policy of adjusting the family allowance for blue-collar workers faster than for white-collar workers. A doubling of the blue-collar allowance in 1971, compared to a 44 percent increase for private sector white-collar employees, brought the former up to 53 percent of the latter. The result of these measures was a sharp increase in the real incomes of workers generally and particularly of the lowest paid members of the labor force. 2. Fiscal Policy 120. Central government expenditures were increased more than 66 percent in nominal terms in 1971 over 1970. 1/ Direct personnel expenditures alone rose 69 percent as a consequence of the massive adjustment of wages and benefits and the expansion of government employment. Capital expenditures, including transfers to other public sector agencies, rose 51 percent but fell as a proportion of the total budget. In this one year alone, total central government expenditures (excluding debt amortization payments) rose from the equivalent of 21 to 27 percent of the GDP. At the same time, central government current revenues rose only 24 percent, declining from 20 percent to 18.5 percent of the GDP, and resulting in a more than eight-fold increase in the nominal size of the fiscal 1/ Detailed breakdowas of the figures presented here are found in Tables 5.1- 5.9 of Appendix II. - 64 - deficit. In 1971, the deficit was equivalent to 29 percent of fiscal expendi- tures and 8 percent of GDP as compared to 4 percent and 1 percent, respectively, in 1970. 121. The consolidated expenditures of the public sector as a whole were roughly twice that of the central government alone. 1/ During the first year of the Allende Administration, public sector expenditures are estimated to have risen 57 percent in nominal terms to reach the equivalence of about 55 percent of GDP. Public sector revenues during the year grew only 34 percent, thus re- quiring a five-fold increase in the use of domestic credit; the public sector's use of domestic credit was equivalent to about 15 percent of GDP. 122. Unemployment was directly attacked through substantial expansion of public works programs and additions to the government payroll. The public sector alone undertook the construction of 76,000 new housing units in 1971, as compared with total public and private housing starts of fewer than 24,000 units in 1970. Of these, only 6,000 had been initiated directly by the public sector. 2/ 3. Monetary Policy 123. As in the past, the credit policies of the Central Bank were deter- mined largely by the financing needs of the public sector. The money supply was more than doubled in 1971, with the expansion of credit to the central government alone equivalent to 124 percent of the previous year's money supply. Central Bank local currency credits to the public sector rose, in nominal terms, more than eleven-fold, or over 1,000 percent, as local currency credits to the central government rose from E 0840 million at the end of 1970 to more than E 9.2 billion by the end of 1971, and local currency loans to the public enterprises grew from E0536 million to E05.4 billion. Not included in these figures is the parallel expansion of dollar-denominated credits from the Central Bank to the public sector. These loans totaled US$960 million at the end of 1971, compared to US$665 million a year earlier. As indicated in Chapter I, a large proportion of such dollar-denominated loans in fact constituted an expansion of domestic credit. For the monetary sygtem as a whole, credit to the public sector increased from E02.1 billion to E 16.1 billion in local currency loans and from US$691 million to $1.0 billion in dollar loans. 3/ Thus, more than 90 percent of the credit extended to the public sector in 1971 was in the form of "high-powered" money created by the Central Bank. 1/ The reliability of the public sector accounts is particularly precarious between 1970 and 1974 because of the rapid rate at which new agencies and enterprises were being incorporated into it (and later divested) and because of the breakdown of normal budgetary and accounting procedures. Consequently, the reader is again cautioned to read these data as orders of magnitude rather than precise measurements. Other difficulties of interpretation resulting from price and exchange rate changes are dis- cussed in the Note on Chilean Economic Statistics, Appendix I. 2/ The evolution of government housing policy is described in an internal working document of the World Bank. Data on annual housing starts is found in Table 8.52 of Appendix II. 3/ These data do not include local currency loans from the Central Bank to the development banks, some of which may have been relent to public enterprises. - 65 - 124. During the year, local currency credits from the banking system to the private sector expanded by 59 percent in nominal terms. Nevertheless, the private sector's share of bank credit fell from 77 percent of the total in 1970 to only 40 percent by the end of 1971. The use of bank credit to shift control over the real resources of the economy to the State was explicit Government policy, and part of these monies were applied directly to the acquisition of private sector assets. By the end of 1971, virtually the entire financial sector had itself been transferred to the social property area. 125. The maximum legal interest rate was lowered from 24 percent to 18 percent in 1971. As during the Frei Administration, selective credit policies continued to be a major tool for influencing resource allocation and the dis- tribution of income, with the further objective of facilitating the transition of the economy from capitalism to socialism. The differentiation of interest rates was widened with the whole rate structure (taxes included) reduced again to negative real levels. Preferences were increased for small enter- prises, the reformed agricultural sector, lower income groups generally, and to enterprises entering the social area of the economy. The "line of credit according to cash budget" (Chapter I, para. 89) was expanded and explicitly tied to production, price and employment targets. Approval of a credit line under this program, as well as that established for small producers, required the prior confirmation of the State Technical Cooperation Service that the enterprise was conforming to the Government's socioeconomic norms. Similarly, production credits to farmers were contingent on a contract for later deliveries to the State purchasing agencies. 1/ 4. Foreign Trade Policy 126. Immediately upon its inauguration, the Allende Government announced its intention to maintain a fixed exchange rate. The crawling peg which had been introduced by the previous administration was considered to be a genera- tor of cost increases and inflationary expectations. Consequently, the escudo, unchanged since July 1970, continued to appreciate in real terms. The average real exchange rate for the dollar fell from 9.7 escudos (1969 prices) in 1970 to 8.6 escudos during 1971, despite a large nominal devaluation finally effected in December in the context of the reinstitution of multiple exchange rates. 127. Exchange controls were tightened. Although a number of items were added to the list of goods eligible for import, the number of goods subjected to the 10,000 percent prior deposit requirement was also steadily increased. 2/ The public sector, however, was exempted from the prior deposit 1/ It has been alleged that credit was denied or impossible production and price conditions set in order to force enterprises into either insolvency or breach of contract, thus justifying state intervention or expropriation. 2/ All but the 10,000 percent prior deposit category had been eliminated in 1970. The cost to an importer of a 10,000 percent prior deposit require- ment at an annual real interest rate of 10 percent is around 2-1/2 times the value of the import at the end of 90 days, and 3-1/4 times the imported good's value after 120 days. - 66 - requirement, giving public agencies an effective monopoly over a number of imports and providing enterprises in the social property area of the economy a significant competitive advantage vis-a-vis the private sector. The public sector accounted for more than half of total imports in 1971 as compared to 34 percent in 1970. Finally, the Government expanded use of tax drawbacks and credit subsidies in an effort to stimulate exports. 5. Price Controls 128. The strict enforcement of price controls in the face of expansive demand management policies was viewed as essential both to meet the Govern- ment's anti-inflationary objective and to assure that the distributive gains achieved by labor were sustained and not siphoned back into the profits of monopolists and speculators. The expansion of the social property area would itself extend direct control over pricing in many key sectors, including important wholesaling activities. Thus the Government moved to enlarge the commercial functions of existing state marketing and control agencies, includ- ing the Agricultural Marketing Enterprise (ECA), the Society for Agricultural Operations and Construction (SOCOAGRO), and the Society for Assistance to Cooperatives (SACOOP); created several new national marketing agencies--the National Enterprise for Distribution and Marketing (DINAC), the National Poultry Enterprise (ENAVI), and the National Enterprise for Fuel Distribution (ENADI); and nationalized major private wholesaling and importing firms. In addition, the Government itself increasingly entered into direct purchasing agreements with private enterprises, and eligibility for credit through the various selective credit facilities was made contingent on pricing agreements. Finally, citizens' Committees on Supply and Prices (JAPS) were organized at the neighborhood level to keep vigil over the activities of local shopkeepers and assure the availability of popular consumer goods at official prices. 6. Establishment of the Social Property Area 129. The UP Government considered the socialization of large segments of the economy essential if the authorities were to possess the information and perspective necessary for the comprehensive planning of the economy, as well the direct control necessary to assure the desired allocation and distribution decisions. The sectors targeted for nationalization were those providing crucial inputs, including credit and foreign exchange as well as raw materials and intermediate goods, to the rest of the economy. Their profits were viewed, on the one hand, as monopoly rents to be redistributed to labor and to the formerly marginalized members of the society (via lower prices, higher wages, and the financing of the public sector's social programs) and, on the other, as an economic surplus to be tapped to raise investment levels throughout the economy. 130. The first priority was the expropriation of the large copper companies which was completed, with the unanimous approval of the Opposition-controlled Congress, in July 1971. Nationalized earlier in the year were the nitrate, coal, and iron mines. Also incorporated into the social area during 1971 were 16 commercial banks, accounting (along with the State Bank) for more than 90 percent of outstanding credits, and the major enterprises in the metallurgical, metal- mechanical, cement, textile, fisheries, beer, and wholesale marketing sectors. - 67 - In all, more than 80 enterprises were expropriated, requisitioned, or intervened in the first year of the Allende Government. 1/ 131. The eventual scope of the nationalizations to be undertaken was a matter of bitter conflict between the political left and right and within the UP itself. 2/ In October 1971, the Government sent a draft law to Congress which would have permitted the expropriation of enterprises whose capital at the end of 1969 exceeded E 14 million (about US$1.5 million), while providing guarantees against expropriation to smaller firms. It was estimated that 253 companies (some of which had already been nationalized), accounting for 90 percent of outstanding corporate shares, would have been eligible for expropriation under this criterion. The proposal was rejected by Congress, and the uncertainties created by the continuing lack of defini- tion of the social property area remained a serious disincentive to investment. 7. Land Reform 3/ 132. Land reform in Chile, which began in earnest during the Frei Administration, was governed by Law No. 16,640 of July 1967. This law greatly broadened the criteria for expropriation of land to include for the first time excessive size per se, as well as abandonment, poor exploitation, corporate or absentee ownership and breach of pertinent labor laws and regulations. Expropriable under the new law were landholdings in excess of 80 basic irrigated hectares (BIH). 4/ Certain exceptions were made by the law, or left to 1/ Presentation by Finance Minister Americo Zorilla to the Mixed Budgetary Commission of Congress, November 16, 1971. A variety of procedures were utilized to extend State control. Expropriation of the copper mines re- quired a constitutional amendment, while the iron, nitrate and coal take- overs were negotiated with their foreign owners. Existing legislation permitted the expropriation of industries of prime necessity found to be in violation of the law, but action under this statute required the payment of full court-determined compensation in cash. Because of its high cost, this authority was applied in only a few cases. In addition, however, an existing 1932 law permitted the requisition or intervention of an enterprise in order to prevent disruption of supplies or resolve a labor dispute. While such procedures were legally defined as temporary measures, in practice the affected owner frequently negotiated a sellout or simply abandoned the enterprise. In some cases, particularly the banks, the Government acquired control through the public purchase of shares. 2/ An excellent discussion of the practical and ideological dimensions of the issue within the UP is found in Stefan De Vylder, op. cit. 3/ An extended discussion of the land reform is undertaken in an internal Bank document. 4/ The BIH is legally defined as equivalent to one hectare of first quality, irrigated land in the Maipo valley of central Chile. BIH conversion coefficients had been assigned to each zone and sub-zone on the basis of a nationwide land survey carried out in 1965. - 68 - Executive discretion, for lands suitable only for forestry, vineyards forming part of an integrated wine-making enterprise, nonprofit experimental farms, and farms found to be exceptionally well managed and sharing profits with its workers. A landowner expropriated on grounds of excessive size was entitled to retain a "reserve" of up to 80 BIH. 133. The 1967 Law also substantially reduced the cost of expropriation to the Government by permitting compensation at tax assessment value, rather than market price, and allowing a cash downpayment of only 1 to 10 percent of the com- pensation award, the percentage depending on the cause for expropriation. The remainder could be paid in long-term bonds carrying a 3 percent rate of interest only partially indexed for inflation. 134. During the six years of the Frei Government, some 1,400 farms covering 3.6 million ha were expropriated, the process speeding up somewhat after passage of the 1967 Law. Expropriations greatly accelerated after 1970, however. Almost as many farms were taken in 1971 alone as in the previous six years. In contrast to the farm-by-farm approach taken by Frei, the Allende Government sought to implement the expropriation and settlement process on an area-wide basis. This was deemed essential to assure adequate control over sector planning and to take advantage of presumed economies of scale. The retention of legal reserves by the original owners conflicted with this integrated, area-wide concept, and the Government indicated its intention to seek repeal of that right. 135. While Congressional opposition ruled out modification of the Law, expropriations frequently spilled over the statutory boundaries. Parcels below the 80 BIH limit, legal reserves, and legally exempted forest lands were all taken. In some cases, the Government acted in response to a land seizure by the workers on the grounds that expropriation was thereby made necessary to maintain public order. Almost 1,300 land seizures were reported in 1971, compared with 340 in 1969 and 1970 combined. 136. The Allende Government, consistent with its objective of greater centralized planning and control, also altered somewhat the pattern of land settlement. During the Frei regime, workers on the expropriated estates were organized into cooperative settlements or asentamientos, which in turn entered into a three-year partnership agreement with the Agrarian Reform Corporation (CORA) to form an Agrarian Reform Society (SARA). To this partnership the asentados brought their labor and modest capital, while CORA provided the land, water, credit, and technical and administrative assistance. At the end of the transition period, which was extendable to five years, the asentados were to choose one of three forms of permanent land ownership--individual, cooperative, or mixed--and titles would be assigned accordingly. More than 900 asentamientos were formed during the Frei years, and 109 completed the transition period. Of these, 95 opted for cooperative ownership, and the remaining 14 chose a mixed form. 137. Although the SARAs continued to function at the individual settlement level after 1970, a new regional cooperative known as an Agrarian Reform Center (CERA) was created to exercise administrative and financial control over them. Operations requiring larger capital inputs, such as livestock, forestry and vineyards, were organized as state farms known as Centers of - 69 - Production (CEPROs). These organizational modifications apparently resulted, in practice, in little change in the operations of the asentamiento. 1/ The most serious effect was the uncertainty created for asentamiento members. Although some completed their three-year transition periods, no new titles were conferred, contributing to the deterioration of investment incentives in the agricultural sector. 8. Results of the First Year 138. The expansion of consumer demand engendered by the Government's wage, fiscal and monetary policies was met on the supply side by a signifi- cant increase in domestic production, the drawdown of accumulated inventories, and a rapid growth of imports. Thus the considerable excess industrial capacity and high international reserves left by the previous administration permitted a substantial supply response, and the rate of inflation in 1971 was, according to the official consumer price index, below that of 1970. Even if inflation exceeded the official figures, it is clear that the economy experienced a considerable increase in real production, and that the rise of both real wages and employment succeeded in achieving a substantial shift of distributive shares in favor of labor. By the end of the year, how- ever, serious supply shortages were becoming evident as inventories and foreign exchange reserves were exhausted, the distribution system was increas- ingly strained, and capacity limitations were being reached in many sectors. a. Output and Employment 139. The gross domestic product in 1971 grew an estimated 7.7 percent in real terms, resulting in a per capita gain of almost 6 percent. Gross indus- trial output was up an average 11 percent over 1970, the greatest gains being experienced by consumer durables and nondurables which grew 22 percent and 13 percent, respectively. Meanwhile, value-added in the construction sector rose 11 percent, and agriculture's contribution to GDP, benefitting from a good harvest, was up 7 percent. 2/ 140. Total employment 3/ initially dipped in the last quarter of 1970 and the first quarter of 1971 but then recovered strongly, and its average for the year was about 6 percent above the 1970 level. The unemployment rate in Greater Santiago, which had peaked at 8.3 percent in December 1970, was reduced 1/ Solon Barraclough and Almino Affonso, Critical Appraisal of the Chilean Agrarian Reform (November 1970-June 1972), Occassional Paper 73/12, Vienna Institute for Development, 1973. This paper is a summary of a joint FAO/UNDP report submitted to the Minister of Agriculture in November 1972. 2/ The sectoral breakdown of GDP is found in Appendix II, Tables 2.1 and 2.2, and breakdowns of the index of industrial production are presented in Tables 8.17 and 8.20. 3/ Data are for Greater Santiago only. Quarterly data by sectors and job classifications are found in Tables 1.15 - 1.19a of Appendix II. - 70 - to 3.8 percent by the end of 1971. The absolute number of persons reported as unemployed was cut by more than half. The greatest employment gains were in the manufacturing, construction, and government sectors. Unemployment in construction fell from 27 percent to 10 percent of the sectoral labor force. b. Prices 141. The problem of measuring and properly distributing through time the rise in prices that occurred between 1970 and 1974 is discussed in the Note on Chilean Economic Statistics. That the official CPI grossly understates the inflation of this period is beyond doubt. The most serious informa- tion gap concerns the chronology of estimated total inflation. In fact, different groups and individuals experienced the inflation very differently, depending on what proportion of their respective consumption demands each was able to satisfy at controlled prices as opposed to having to go to the black market or do without. 142. Two attempts have been made to construct alternatives to the official CPI, one by a 1974 Bank mission to Chile, and the other by the Department of Economics at the University of Chile. It is not possible to claim accuracy for either, and the expedient adopted here is to describe the inflation of the period within a range set by the two estimates. In general, the IBRD index would seem to apply best to those individuals who had to rely relatively heavily from the beginning of the period on the black market, while the UC index applies better to persons for whom the major breakdown of price controls did not occur until 1973. 143. With this introductory caveat, it is estimated that consumer prices rose between 27 and 53 percent between December 1970 and December 1971. 1/ In either case, the size of the increase is surprisingly small in view of the massive expansion of the money supply (114 percent) that occurred over the year and suggests a substantial decline in the velocity of money. Why the demand for money should have increased to such an extent in the face of obvious inflationary pressures and uncertainty is not clear. One possibility is that the growing uncertainty led to increased savings and asset liquidation on the part of the middle- and upper-income groups, and that a growing proportion was held in the form of cash to protect the anonymity of black market earnings and/or capital flight. 2/ The real cost of such cash-hoarding would have been extremely high, however, and one would expect it to have been turned over fairly quickly into foreign exchange or some other store of value. c. Real Wages and Salaries 144. The large adjustment announced in January 1971 of the legal minimum rates of remuneration and family allowances resulted in an immediate, sharp 1/ Monthly inflation rates according to the official and two adjusted CPIs are shown in Appendix II, Tables 9.3a-9.3c. 2/ See: Joseph Ramos, "Inflacion Persistente, Inflacion Reprimida e Hiperstanflacion: Lecciones de Inflacion y Estabilizacion en Chile," Cuadernos de Economia, December, 1977. - 71 - increase in the real incomes of the lowest paid workers. The average real receipts of a minimum-income blue-collar and white-collar worker, with 3.5 dependents, were some 56 percent and 23 percent higher during the first quarter of 1971 than their respective averages for all of 1970. Although these values were eroded over the course of 1971 by continuing inflation, the average real receipts for the year were roughly 37-41 percent above the 1970 level in the case of blue-collar workers, and 8-10 percent above for white-collar workers. 1/ 145. As shown in Chapter I, average wages and salaries do not closely follow the adjustments of the legal minima. The average real wages of blue- collar workers during 1971 were 18-19 percent above 1970, which when compared to the higher legal adjustment suggests a significant narrowing of wage differentials within the blue-collar ranks. 2/ In contrast, average white- collar salaries rose more rapidly than the legal minimum in 1971, running some 12-19 percent above the level of 1970 in real terms. This is not surprising considering the very tight market created for white-collar workers during the year. Data for Greater Santiago show the white-collar unemployment rate falling from 4 percent in December 1970 to less than 1-1/2 percent a year later. (Over the same period, the unemployment rate for manual workers fell from 12 percent to 5 percent.) Consequently, the intended narrowing of blue-collar/white-collar differentials apparently did not occur during the first year of the UP Government. 146. On the other hand, the wage policy, combined with the growth of employment and lagged price adjustments, resulted in a sharp increase in labor's share of the national income. Wages and salaries accounted for an estimated 61.7 percent of incomes in 1971, as compared to 52.2 percent in 1970 and an average of 48.4 percent for the decade 1960-69. Although the data are subject to considerable error and definitional problems, it is clear that a significant shift of national income in favor of labor was accomplished in 1971. Despite rising output, profits declined in real terms. d. The Foreign Sector 147. In 1970 the Allende Government inherited a historic high level of international reserves from its predecessor, significant momentum had been achieved in the growth of non-copper exports, and large investments had recently been made to expand copper mining capacity. On the other side of the ledger, however, a high outstanding debt and debt service requirement were also 1/ From 1971 on, real wages and salaries have been computed monthly (Appen- dix II, Tables 9.12a - 9.19b) because the high and variable inflation rate and the introduction of intra-year wage adjustments (in 1972) greatly reduce the usefulness of annual averages. Furthermore, because of the indicated doubts regarding the chronology of inflation from 1971 through 1973, and the fact that different individuals were affected differently depending on the relative proportions of their purchases made at official controlled prices and at black market prices, a range of real values is given for this period. 2/ Quarterly average wage and salary data are provided in Appendix II, Tables 9.20 and 9.21. - 72 - inherited, and during 1971 the average price of copper fell to US49.3# per lb from the 64.14 averaged in 1970, representing a real decline of 27 percent. 1/ The drop in the world copper price and declines in output at the three major mines 2/ resulted in a fall in the value of copper exports totaling US$140 million, or 16.5 percent of the 1970 value. This loss was only partially offset by the continued expansion of non-mining exports which grew 13 percent. In total, export earnings were off 10 percent. 148. A turnaround also occurred in Chile's relations with its traditional lenders. Gross disbursements on medium- and long-term public loans fell from US$397 million in 1970 to $190 million in 1971. 3/ Suppliers credits, bilateral assistance, and private bank lending all dropped sharply. Deducting payments for amortization and interest, the shift was from a net resource inflow of US$156 million to a net outflow of $52 million. 149. The exchange rate was held fixed until December 1971, even though domestic prices had risen some 34-60 percent since the last devaluation in July 1970. Tightening controls limited the increase of total real merchandise imports to 3 percent, less than the growth of GDP, despite the appreciating real exchange rate. The increase was very uneven across product categories, however, as real consumer goods imports rose 17 percent over the level of 1970. Despite the excellent 1970/71 harvest, the demand impact of the shifting income distribution and the substantial subsidies offered by the multiple exchange rate system was such that food imports alone rose 43 percent in real terms. In contrast, real capital goods imports fell 15 percent reflecting the decline in investment, the reduced availability of suppliers credits, and the tendency of the import control system to treat capital goods as a residual. 150. With the decline in exports and rise in imports the trade balance turned from a US$95 million surplus in 1970 to a $90 million deficit in 1971, a deterioration of $185 million. Net factor payments declined, however, partic- ularly the repatriation of profits, and the current account deficit was held to US$205 million, a deterioration of $102 million with respect to 1970. Combined with the worsening capital account situation, and despite the non- payment of $80 million in debt service due during the last two months of the 1/ Deflated by IBRD index of Chilean import prices (Appendix II, Table 9.8). 2/ A series of technical problems, the departure of technical and managerial personnel following nationalization, and a series of labor conflicts all contributed to the decline in mine productivity. The total output of the Gran Mineria went up, however, as a result of the opening of the Andina and Exotica mines. 3/ Included in these data are bilateral, multilateral, suppliers and other private credits, public bonds, and nationalization compensation agree- ments, owed or guaranteed by public sector agencies, of greater than one-year maturity, and repayable in foreign currency. For details see Appendix II, Table 4.1. - 73 - year, Chile's loss of net reserves during 1971 totaled US$300 million, or three-fourths of its holdings at the beginning of the year. As reserves fell to the equivalent of only one month's imports and with the situation worsening steadily, the Allende Government in November 1971 announced the suspension of debt service on most outstanding obligations, while it entered into negotiations with its creditors for a rescheduling agreement. e. Summary 151. Viewed in isolation, 1971 was a year of spectacular progress toward the Government's objectives. Production, employment and real wages were up strongly, and the supply of consumer goods had been augmented by a sizeable jump in imports. While inflation was high, it remained within the limits of Chilean historical experience, and for those with access to goods at official prices it actually fell below the rate of the previous couple of years. At the same time, the process of establishing direct state control over key sectors of the economy was well advanced, and the land reform had been greatly accelerated. The Government also instituted a significant expansion of social expenditures in both new and existing programs. School enrollments grew rapidly, public housing starts rose almost 13-fold, eligibility for free milk was extended to all children to age 15 as compared to the previous cutoff at age six, and social security benefits were improved. 152. Serious problems were becoming apparent, however. Capacity limits had been reached in a number of sectors, breakdowns were occurring in the distribution system, labor-management conflicts were increasingly disruptive, and these factors combined were resulting in serious supply bottlenecks and shortages of goods at the retail level. More and more transactions were being consummated in the black market, further disrupting normal distribution channels, undercutting the Government's proclaimed anti-inflationary and redis- tribution objectives, and eroding the tax base. Monetary expansion was out of control. Private investment had declined; and, instead of producing investable resources for the rest of the economy, the social area enterprises found their profits squeezed by the expansion of their work forces, increased wages and controlled prices, as well as by inexperienced management. Disagreement both within the Government and between the Government and the Opposition parties was growing regarding the scope of intended expropriations. Finally, inter- national reserves were rapidly being exhausted, and by year-end Chile suspended payment on its foreign debt. 153. In short, by the end of the first year of the Allende Government the economy was faced by severe economic constraints, and it was clear that the momentum achieved in 1971 could not be sustained. Indeed, the continuation of any forward motion and consolidation of the gains already made would depend on substantial reduction in the demand pressures being exerted by fiscal and monetary policies, as well as a strong recovery of the world copper price and increased flows of foreign credits. - 74 - C. THE ECONOMIC DECLINE: 1972-SEPTEMBER 1973 154. The next 20 months was a period of deepening crisis. The Government's ability to rein in the rapid growth of demand was limited by its commitment to maintain the real wage gains and expansion of social services achieved in 1971, the breakdown of financial control over the State enterprises and autonomous agencies, and the refusal of Congress to approve the tax increases proposed by the Executive. In addition, the economy was increasingly dis- rupted by strikes, boycotts, street demonstrations, land invasions, and outright sabotage of plant and equipment. Before it ended, real GDP per capita and real wages had fallen below the level of 1970, agricultural out- put had declined to the level of the early 1960s, monthly inflation had reached an annualized rate in excess of 1,000 percent, several years of debt service had to be rescheduled, and the nation's net international reserves were more than US$200 million in the red. 1. Output, Employment and Prices a. Output 155. Production stagnated in 1972, when the real GDP per capita is estimated to have declined 1.9 percent. The real changes by major sectors are summarized in Table II.1. Agriculture, mining and construction all declined in 1972, the latter being particularly affected by supply short- ages, stemming in part from disruptions in the transport sector. New public sector housing starts were cut back 75 percent from the record level of 1971. Manufacturing showed a small average increase in 1972 over 1971 as shown in Table II.2, but the subindices for durable and non-durable consumer goods production and sales fell below the 1971 level, reflecting the weakening of real personal incomes. I/ Table II.1: CHILE - YEAR-TO-YEAR CHANGES IN REAL GDP BY SECTORS, 1971-1973 (Percent) Total % Change Sectors 1971 1972 1973 1970-73 Agriculture 6.3 -3.0 -15.0 -12.3 Mining 2.0 -2.1 1.6 1.5 Manufacturing 13.7 2.8 -6.5 9.3 Construction 11.4 -9.3 -11.8 -10.9 Commerce 5.1 0.6 -0.5 5.3 Other 6.5 -0.1 -0.7 5.7 Total GDP 7.7 -0.1 -3.6 3.7 Source: Appendix II, Table 2.2a 1/ See Appendix II, Tables 2.2, 8.19, 8.22 and 8.52. - 75 - 156. The recession deepened in 1973, GDP and GDP per capita falling 3.6 percent and 5.3 percent, respectively. Agricultural value-added declined an estimated 15 percent, led by a 28 percent reduction in the output of the 14 major crops. 1/ After four consecutive years of slow increase, the land under crops had fallen 21 percent for the 1972/73 crop year. Substantial reductions were also suffered in construction and manufacturing; only mining showed a small gain in the wake of improving international prices. Table II.2: CHILE: INDEX OF INDUSTRIAL PRODUCTION BY QUARTERS, 1971-1973 (III) (1969=100) Quarter 1971 1972 1973 I 95.2 107.9 102.1 II 113.7 123.5 108.4 III 120.8 121.2 102.1 IV 129.2 117.8 Annual Average 114.7 117.6 104.2 a/ a/ Average of three quarters. Source: Appendix II, Table 8.16 b. Employment 157. Despite the drop in real economic activity, employment continued to increase. Average employment in Greater Santiago was 2.1 percent higher in 1972 than in 1971, and 3.4 percent higher during the first semester of 1973 as compared to the same period of 1972. 2/ Experience was very uneven across sectors, however, employment falling 28 percent in construction reflecting the materials shortages and curtailment of public works activities. This loss was more than offset by the growth of jobs in the government and 1/ Appendix II, Table 7.3a. 2/ Figures cited are calculated from simple average of labor force surveys carried out in the months of March, June, September and December by the Department of Economics at the University of Chile. (See the Note on Chilean Economic Statistics.) No survey was carried out in September 1973 because of the political upheaval then in progress. - 76 - service sectors, particularly in the white-collar and self-employed categories (see Appendix II, Tables 1.16 and 1.17). Incomplete data show a growth of the personnel roles of the general government (excluding public enterprises) of more than 60 percent between September 1970 and September 1973. 1/ Service sector employment continued to expand in 1973, with significant new growth also in manufacturing jobs. In view of the declining output, labor pro- ductivity was clearly falling rapidly. 158. The unemployment rate reached the lowest level ever recorded by these surveys, 3.0 percent, in September 1972 and was only 3.1 percent in June 1973, the last survey before the Allende Government was overthrown. During this period, the absolute number of persons reported as openly unemployed in the Greater Santiago metropolitan area was the lowest in more than a decade. Part of this reduction in unemployment, however, was the statistical result of an unusual and unexplained decline in the labor force participation rate that began in mid-1971. If the decline in participation were as great as the data suggest, it would account for around two-thirds of the observed reduction of the unemployment rate. 2/ c. Prices 159. Inflation was accelerating rapidly by the end of 1971. Table II.3 shows the average annual and December-December inflation rates as described by the official CPI and the two adjusted CPIs used in this report. As previously explained, the three indices implicitly assume different degrees of success in repressing inflation via price controls. In practice, experience varied widely among individuals, and it is probably not possible to consider any of the conventionally defined groups as having been affected homogeneously. 1/ Major groups not included in these data, for lack of information, are teachers and members of the armed forces. (See Appendix II, Table 5.22.) 2/ The mission has not found a satisfactory explanation for such a reduced rate of participation, which, in any event, is probably somewhat exaggerated by the data. For further discussion, see internal Bank working document. - 77 - Table II.3 - CHILE - YEAR-TO-YEAR INCREASE IN CONSUMER PRICES, 1971-SEPTEMBER 1973 (Percent) Jan.-September 1971 1972 1973 Annual Averages: Official CPI 20.0 77.8 188.1 IBRD-adjusted CPI 34.9 145.6 305.5 UC-adjusted CPI 25.0 105.7 239.9 December-December Change: Official CPI 22.2 163.4 192.9 a/ IBRD-adjusted CPI 53.4 253.7 227.9 a! UC-adjusted CPI 27.2 212.4 244.6 a! a/ December 1972 - September 1973. Source: Appendix II, Tables 9.3a - 9.3c 160. Moreover, given the differential effectiveness price controls were bound to have among goods, enterprises, and points in the distribution chain, and the continuing appreciation of the real exchange rate amid an increasingly divergent multiple rate system and tightening administrative controls, massive distortions inevitably arose in relative prices as well as large unintended shifts in the distribution of income and wealth. For example, with price controls more easily administered at the wholesale than at the retail level, it is likely that retailers were able to gain substantial windfall profits in black market operations. Similar rewards were available to those with access to foreign exchange or domestic credit at official exchange and interest rates. As illustrations of the opportunities existing, by 1972 the black market exchange rate was ten times the average legal exchange rate; and while the effective nominal interest rates on short-term loans from the banking system ranged from 18 to 51 percent, consumer loans were paying from 74 to 254 percent. 1/ 2. Wages 161. The Government's wage policy continued to be full compensation for the loss of purchasing power due to inflation since the last adjustment, with greater increases for the lowest paid workers and selected groups in the public sector--e.g. members of the armed forces. Thus in January 1972, the 1/ Cerda and Ovando, op. cit. By 1973, the ratio between the black market and average legal exchange rates reached 40:1. - 78 - sueldo vital was raised 22 percent, equivalent to the rise in the official CPI during 1971, while a 50 percent increase was decreed for the blue-collar minimum wage. At the same time, blue-collar and white-collar family allowances were raised 38 percent and 44 percent, respectively. With inflation accelera- ting, another pay adjustment was declared for October 1972, amounting to 100 percent for the SV and 111 percent for the SM. Family allowances for both blue-collar and white-collar workers were doubled. A further general wage and salary adjustment of 60.8 percent was approved in May 1973 and made retroactive to April 1. 162. As previously indicated, however, actual inflation exceeded that reported by the official CPI, as goods disappeared from store shelves and transactions shifted to the black market. Table II.4 shows the impact of these remuneration and family allowances adjustments on the real receipts of a minimum wage or salary blue-collar and white-collar worker having 3.5 dependents. For reasons presented earlier, the evolution of real receipts after 1970 are depicted in a range set by the two adjusted price deflators described in the Note on Chilean Economic Statistics. Table II.4: CHILE - INDEX OF AVERAGE ANNUAL REAL RECEIPTS OF MINIMUM-INCOME BLUE-COLLAR AND WHITE-COLLAR WORKERS, 1970-1973 a/ (1968=100) Ratio of Average Blue-Collar to Average White-Collar Blue-Collar White-Collar Receipts Year/Quarter Workers Workers (X) 1970 118 100 51 1971 I 186-182 125-122 65 II 176-169 118-113 65 III 155-162 103-107 65 IV 132-152 88-101 65 1972 I 170-186 101-111 72 II 138-157 82-94 72 III 105-116 63-69 72 IV 130-156 74-89 75 1973 I 93-136 52-76 77 II 65-116 35-62 80 III 48-70 26-38 80 a/ Minimum blue-collar receipts include the industrial minimum wage plus the family allowance paid by the Social Insurance Fund (SSS); minimum white-collar receipts are the sum of the sueldo vital and the family allowance paid by the Social Security Fund for Private Sector White-Collar Employees (EMPART). Both workers are assumed to have 3.5 dependents. Source: Appendix II, Table 9.17a-b and 9.19a-b. - 79 - 163. While the timing and extent of the eventual erosion of purchasing power are significantly different depending on which of the two deflators is used, the overall trends are the same. The massive wage and salary adjust- ments of January 1971 resulted in a quick and considerable improvement in the real earnings of workers in the lowest pay brackets. These gains rapidly began to fade away, however, as inflation accelerated. Despite the increasing frequency of adjustments, by the third quarter of 1972 the real minimum wage had fallen below the average level of 1970, and by the third quarter of 1973 it had fallen to or below the levels of the mid-1960s. In the meantime, smaller nominal adjustments were applied to the white-collar minimum salary: by the end of 1971, its real value had already fallen below the 1970 average, and it declined steadily thereafter. It is likely that the SV had by then become irrelevant as a salary standard. 164. Table II.5 describes the course of average wages and salaries over the same period. Comparison with Table II.4 suggests that wage differentials among blue-collar workers, initially squeezed by the large adjustment of the minimum wage at the beginning of 1971, gradually stretched out again. Although the minimum and average real wage were both deteriorating by 1972, the erosion of the receipts of minimum pay workers was much faster as the higher paid and better organized workers were apparently more successful in protecting their incomes through collective bargaining. Similarly, the average pay of white- collar workers held much better than the legal minimum, but white-collar workers on average appear to have been somewhat less successful in defending themselves against inflation than were blue-collar workers. Alternatively, the divergence of the average from the minimum may simply reflect the latter's growing irrelevance as the proportion of workers actually employed at that pay level declined. At any rate, it appears that for both wage and salary workers the gains achieved in 1971 had disappeared, and by mid-1973 many workers must have found that their real purchasing power had slipped back to the level of the mid-1960s. Table II.5: CHILE - INDICES OF REAL AVERAGE WAGES AND SALARIES, 1970-1973 (April 1968=100) Blue-Collar White Collar Year/Month Wages Salaries 1970 April 118 143 1971 January 135-129 157-150 April 149-141 186-176 July 149-147 179-176 October 136-150 159-175 1972 January 134-150 150-168 April 127-138 139-150 July 107-129 121-145 October 112-120 127-135 1973 January 96-129 100-135 April 66-113 65-112 July 61- 96 60- 94 Source: Appendix II, Table 9.21 - 80 - 3. Fiscal Performance 165. Table II.6 summarizes the evolution of central government revenues and expenditures in real terms during 1971-1973. 1/ The expansion of the central government budget continued in the second and third years of the UP Administration. After the 58 percent increase in 1971, nominal expenditures rose 85 percent in 1972 and almost 400 percent in 1973. 2/ With inflation also accelerating, however, these nominal increases represented real growth of only 10 percent and minus 17 percent, respectively, as compared to 35 percent in 1971. Real investment expenditures actually declined in 1972 and 1973, as a consequence of increasing supply shortages and dis- ruptions in the transport sector. Table II.6: CHILE - CENTRAL GOVERNMENT REVENUE AND EXPENDITURES, 1970-1973 (Millions of pesos at December 1969 prices) a/ % Change 1970 1971 1972 1973 1970-73 Current Revenues b/ 17.0 17.0 15.7 9.9 -41.8 Current Expenditures 13.7 18.3 21.3 d/ 18.6 d/ +35.8 Current Balance 3.3 -1.3 -5.6 - 8.7 n.a. Capital Expenditures c/ 4.0 5.5 4.9 3.1 22.5 Overall Balance -0.7 -6.8 -10.5 -11.8 1,585.7 a/ Nominal data for 1971 and 1972 are deflated by official CPI; 1973 data are deflated by a simple average of the official and IBRD adjusted CPIs. b/ Includes nontax current revenues. c/ Net of capital revenues and excluding debt amortization. d/ Includes some expenditures financed directly by the banking system. Source: Appendix II, Table 5.2 1/ It should be noted that both the tax and expenditure data in Table II.6 are deflated by the official consumer price index through the Allende Administration on the presumption that Government purchases were trans- acted at official prices. If our purpose were to measure the real sacrifice imposed by the tax system on taxpayers, the IBRD or UC adjusted CPIs would be more appropriate deflators. Application of the IBRD deflator would show real tax receipts falling after 1970, reaching only 55 percent of the 1970 level by 1973. 2/ Expenditures during the last quarter of 1973 were the responsibility of the Pinochet Government. - 81 - 166. Executive efforts to raise property and capital gains taxes were rejected by Congress, while the latter's legislation to impose a tax on foreign exchange sales was vetoed by the Executive. 1/ Meanwhile, a growing proportion of economic activity was shifting to black market channels, further eroding the tax base. In 1971, increases in income, property, and sales taxes had more than offset the loss of copper tax revenues that derived from the low copper price and the discriminatory exchange rate applied to the sector (Table II.7). By 1972, however,the revenue yields of all tax categories were falling in real terms with the sole exception of recently introduced production taxes. 2/ Thus, the deficit of the central government alone rose to unprecedented levels--reaching the equivalence of around 22 percent of GDP in 1973. Central government expendi- tures by then amounted to about 39 percent of GDP. 3/ 1/ These taxes would, in any event, have fallen far short of closing the fiscal gap. By the Government's own projections, the measures proposed in 1972 were to raise total collections by about 3.2 million pesos (prices of December 1969), or one-third of that year's eventual deficit. 2/ See Appendix II, Table 5.8. 3/ Because of the structural changes occurring in the size and definition of the social area of the economy, the large direct credits made avail- able to public sector enterprises and agencies outside of the normal budgetary procedures, and the gaps in information from many of these enterprises and agencies, the consolidated public sector accounts presented in Tables 5.13-5.18 of Appendix II are incomplete and subject to considerable error. Although it is known that the total deficit of the public sector during these years are substantially greater than that shown above for the central government alone, no effort is made here to quantify it. - 82 - Table II.7: CHILE - CENTRAL GOVERNMENT TAX REVENUES BY TYPE OF TAX, 1970-1973 (Thousands of pesos at December 1969 prices) 1970 1971 1972 1973 Direct Taxes 6,161 5,260 3,784 3,400 Income 3,027 4,082 3,110 3,063 Property 642 859 605 290 Copper 2,493 320 45 - Other - - 24 47 Indirect Taxes 8,563 9,914 9,830 7,082 Sales 3,814 5,124 5,019 3,659 Production 1,112 1,287 1,673 1,417 Foreign Trade 1,646 1,565 1,422 696 Other 1,991 1,938 1,715 1,309 Total 14,724 15,174 13,614 10,483 Source: Appendix II, Table 5.8 4. Monetary Policy 167. Despite increases in the commercial bank reserve requirement and the Central Bank's rediscount rate, the expansion of credit continued unabated. After the eleven-fold expansion in 1971, by August 1973, Central Bank local currency credit to the public sector had grown 12 times relative to the end of 1971--i.e., a total growth of Central Bank credit to the public sector of 125 times the level outstanding at the end of 1970. Local currency credit to the public sector from the monetary system as a whole grew 83 times over the entire period. The comparable figure for private sector credit shows a growth of 2.8 times from the end of 1971, for a total expansion of 4.5 times since the end of 1970. By August 1973, the private sector share of bank system credit had fallen to 14 percent. The money supply grew 576 percent from the end of 1971 through August 1973, for a total expansion of 1,345 percent relative to December 1970. 5. The Foreign Sector a. Exchange Rate Policy 168. The deteriorating balance of payments and dwindling reserves led the Government to abandon its pledge to maintain the exchange rate, and the escudo was devalued in December 1971. Despite further nominal devalua- tions in August 1972, May 1973, and August 1973, the exchange rate lagged significantly behind the accelerating domestic inflation, and the escudo appreciated in real terms to its highest level in history (Table I1.8). - 83 - Table II.8: CHILE - AVERAGE ANNUAL EXCHANGE RATES, 1970-73 (Escudos per US dollar) Nominal Ratio-Domestic Real Exchange Rate Exchange to International (1969 escudos per US$) Year Rate a/ Prices b/ (1) t (2) 1970 11.83 1.218 9.7 1971 13.47 1.568 8.6 1972 21.87 3.523 6.2 1973 Jan.-Sept. 37.56 11.077 3.4 a/ Weighted average of legal exchange rates. Data for 1970-1972 are taken from Behrman, op. cit.; 1973 calculation uses the average banker's rate. b/ (1969=100). The Chilean consumer price index (IBRD adjusted) is taken as a proxy for domestic prices. The international price index applied is a weighted average of the CIF index of prices of developed country manufactured exports and the IBRD price indices for agricultural exports and 34 commodities. Source: J. Behrman, op. cit; Central Bank of Chile; National Statistical Institute; and mission estimates 169. The December 1971 adjustment also marked the return to multiple exchange rates for imports. 1/ The rate applied to food and fuel oil imports 0 remained unchanged at E 12.21 to the dollar, while the rate applied to raw materials and government transactions rose to E 15.80 per dollar, capital goods and sEare parts to E 19.00, and consumer goods defined as sumptuary traded at E 25.00 per dollar. The August 1972 devaluation raised food and fuel imports to E 20 per dollar with the other categories stretched out to a top rate of E 080 per dollar for luxuries. The May 1973 adjustment expanded the range from E 20 to E 240, and the August 1973 adjustment created a rate I/ Foreign exchange operations in Chile were conducted through two legal markets: the bankers' market, which handled all trade-related receipts and payments, Government transactions, and certain private capital movements; and the brokers' market where most nontrade-related invisibles, private remittances, etc. were transacted. At the beginning of 1971, a multiple rate system already existed, in effect, in the brokers' market by virtue of differential taxes applied to transactions there. - 84 - spectrum with E025 for food and raw materials, now combined into a single category at one end, and a rate of E0300 for certain luxury goods at the other. 1/ 170. The adjustment of August 1972 also introduced multiple exchange rates on exports, ranging from E0 20 to the dollar for mining exports excluding iron, to E 30 per dollar for certain industrial exports. The range was successively widened over time, and devaluation was somewhat more rapid than in the case of imports. By August 1973, export rates ranged from E 45-300 to the dollar, copper in particular receiving the lower rate. One important consequence of this differential was to reduce the flow of copper profits and taxes to the Treasury, shifting them instead to the Central Bank where they were used directly to subsidize food and other imports. b. Other Exchange Restrictions 171. Many of the trade restrictions long in use in Chile, but simplified or reduced during the Frei Administration, were reintroduced after 1971. The 10,000 percent prior deposit requirement continued to be used as a device to shift control over imports to the public sector, but waivers were allowed when the administrative capacities of the pertinent agencies became strained. Mandatory delays for import cover were reinstituted and lengthened over the period. In 1972, the Government began comprehensive import budgeting, in which annual allocations were assigned by product and sector and "indicative" budgets were drawn up for each importing enterprise. These budgets were modified with changing priorities and forecasts of exchange availability, and were effected via the import registration process managed by the Central Bank. c. The Balance of Payments 172. The average copper price declined further to US48.6t per lb in 1972, a real decline of 11 percent relative to 1971, before rebounding strongly to 80.9i in 1973. 2/ The average through the first nine months of the year was 74.7r per lb. The value of copper exports thus declined US$83 million, or 12 percent, in 1972 but rose by $438 million (71 percent) in 1973 to go over US$1 billion for the first time in Chilean history. Non-copper exports also declined in 1972 and then regained part of the loss in 1973, as seen in Table II.9. 1/ In July 1973, the brokers' market was formally integrated into the bankers' market, with dollar exchange rates ranging by August from E0140 to E0895. 2/ Appendix II, Table 8.6. - 85 - Table II.9 - CHILE - SUMMARY OF MERCHANDISE TRADE, 1966-73 (Millions of US dollars) Average 1966-70 1971 1972 1973 Exports 987 997 847 1,311 Copper 740 702 618 1,056 Other mining 118 116 105 127 Industrial 103 140 103 103 Agricultural 26 39 21 25 Imports 846 1,015 1,103 1,447 Consumer goods 127 178 299 314 Food (53) (89) (180) (180) Other (74) (89) (118) (134) Intermediate goods 477 589 618 890 Food (105) (104) (158) (336) Fuels (29) (57) (64) (71) Other (343) (428) (396) (482) Capital goods 241 248 186 243 Merchandise Trade Balance 141 -18 -255 -137 Source: Appendix II, Tables 3.2 and 3.4 173. Imports continued to grow in nominal terms, rising 9 percent in 1972 and 31 percent in 1973. Food imports again led the expansion, rising 76 percent in 1972 and 53 percent in 1973. Total food import costs in 1973 were 3.7 times what they had been in 1970 and 3.3 times the 1965-69 average. 174. Prices were rising rapidly in international markets, however, and a somewhat different picture of imports emerges when deflation is made for world inflation (Table II.10). 1/ Total imports in real terms grew little from 1970 to 1973, but there was a major shift in the pattern of imports toward food to the detriment of capital goods and nonfuel raw material. By 1973, food imports, measured in 1970 prices, accounted for more than one-third of total imports as compared to only 14 percent three years earlier. At the 1/ No index of Chilean import prices is available. The international commodity price indices used here as deflators are listed in the foot- note to Table II.10. - 86 - same time, the share of capital goods in the total fell from 29 percent to 17 percent. Reflected clearly in these data are the change in the structure of demand between consumption and investment and the supply bottlenecks appearing by 1972 in the productive sectors of the economy. Also reflected, of course, is the massive subsidy provided to food imports by the multiple exchange rate system. The leveling of real food imports in 1973, in the face of a major decline in domestic production, would seem to confirm the large drop in real wages described above. Table II.10: CHILE - REAL IMPORTS BY TYPE, 1970-73 (Millions of US dollars at 1970 prices) a/ 1970 1971 1972 1973 Consumer goods 150.1 176.2 275.8 212.0 Food 53.9 93.8 177.1 119.3 Other 96.2 82.4 98.7 92.7 Intermediate goods 529.6 577.5 560.8 582.2 Food 84.7 110.0 155.1 222.8 Fuel 28.5 43.0 42.5 34.2 Other 416.4 424.5 363.2 325.2 Capital goods 276.2 228.6 154.8 168.3 Total 956.0 982.3 991.4 962.5 a/ Food products are deflated by IBRD food price index; capital goods and other consumer goods by the index of manufactured goods prices; fuel by the petroleum price index; and other intermediate goods by an average of the manufactured goods index and index of 34 commodities. Source: Table II.9 and mission estimates 175. Merchandise imports exceeded exports by US$255 million in 1972. Adding non-factor services, the resource balance showed a deficit of US$351 million, a net deterioration of $260.5 million compared to 1971 and $446 million relative to 1970. Despite a sharp reduction of interest payments abroad, the current account deficit reached US$405 million, equivalent to more than 6 percent of the 1972 GDP. The increase in copper revenues in 1973 more than than covered the higher cost of imports and interest on the debt, and the resource and current account deficits were reduced to US$91 million and $288 million, respectively. - 87 - 176. The capital account improved markedly in 1972 and 1973, as loans from the socialist countries and Latin American countries replaced Chile's traditional credit sources. A rescheduling agreement was reached with private U.S. banks in early 1972, and later in the year member nations of the Paris Club agreed to reschedule debt service falling due between November 1971 and the end of 1972. Later negotiations would become necessary to reschedule 1973, 1974, and 1975 service payments as well, but these were not completed until after the change of government in September 1973. During this period of prolonged negotiations, Chile resumed debt service at the reduced levels negotiated with those countries and private entities with which bilateral accords had been reached, but service remained suspended to Chile's major creditor, the United States, whose various public lending agencies held more than half of the outstanding debt and with whom a bilateral agreement was stymied by the issue of compensation to the expropriated mining companies. The net impact on the flow of resources stemming from public medium- and long-term credits is shown in Table II.11. Table II.11: RESOURCE FLOWS BETWEEN CHILE AND FOREIGN LENDERS, 1970-73 (Millions of US dollars) 1970 1971 1972 1973 A. Commitments 342.9 277.1 359.6 328.4 B. Disbursements 397.3 190.5 257.5 315.8 C. Repayments -163.4 -161.8 -71.1 -119.9 D. Net disbursements (B-C) 233.9 28.7 186.3 195.9 E. Interest -77.9 -80.4 -26.5 -36.7 F. Net resource Flow (D-E) 156.0 -51.7 159.8 159.2 Source: Appendix II, Table 4.1 177. As a result of the capital account improvement, the overall balance of payments improved relative to 1971 but remained heavily in deficit. By the end of 1973, the reserve loss since 1970 exceeded US$640 million and the net reserve position was more than $230 million negative. The evolution of the balance of payments over the entire period is summarized in Table II.12. - 88 - Table II.12: CHILE - SUMMARY BALANCE OF PAYMENTS AND INTERNATIONAL RESERVES, 1970-73 (Millions of US dollars) 1970 1971 1972 1973 Balance of Goods and Non-factor Services 95 -90 -351 -191 Net Factor Payments -199 -119 -59 -110 Net Transfers 2 4 5 13 Current Account Balance -103 -205 -405 -288 Net Disbursements of Public Medium- and Long-Term Loans a/ 215 102 216 242 Other Capital Transactions and Errors and Omissions, net - 2 -197 -40 -66 Change in Net Reserves 113 -300 -229 -112 Net Reserves, end of year 409 109 -120 -231 Gross Reserves, end of year 502 298 251 378 (Months of CIF imports) (6.3) (3.2) (2.7) (3.1) a/ Figure differs from that in Table II.11 because of differences in debt classifications. (See Tables 3.la and 3.lb in Appendix II.) Source: Appendix II, Tables 3.1a and 3.7 6. Structural Transformation a. Expansion of the Social Property Area 178. The bill proposed by the Government in October 1971 that would have limited expropriations to enterprises with assets exceeding E 14 million (as of the end of 1969), was rejected by Congress. The Christian Democrats countered by offering a constitutional amendment that would have required that all transfers of private firms to the social property or mixed areas of the economy be authorized by a specific act of Congress. It would further have required that requisitions of enterprises under the 1932 Law be authorized only when the supply interruption was the demonstrated fault of the firm's ownership or management and that such requisitions be subject to court appeal. All other interventions would be for a maximum period of 90 days, renewable for an additional 90 days. - 89 - 179. The Christian Democratic proposal, passed by Congress in February 1972, was unacceptable to the Executive, and attempts to work out a com- promise list of expropriable industries failed. The issue evolved into a major political confrontation over the vote necessary to override a presidential veto of a constitutional amendment, while the substantive question was left hanging unresolved. 1/ In the meantime, requisitions and interventions continued, with some 40 or more enterprises taken over during the massive strike of October 1972 led by truckers, shopkeepers, and professionals. By the middle of November, the Allende Government had added 119 enterprises to the social area of the economy with an addi- tional 41 enterprises at various stages of state acquisition. 2/ 180. In January 1973, the Government submitted a bill to Congress calling for the expropriation with compensation of 90 monopolistic or strategic enterprises and the establishment of a special commission to study and regularize the situations of firms that had been intervened or requisitioned. The possibility thereby raised that some firms might be returned to their owners was met with strong opposition by some of the groups within the UP coalition. In April, the long simmering constitutional issue was brought to a head when the Government overruled a decision by the Controller General of the Republic that the previous requisitioning of 43 enterprises had been illegal and that all such requisitions were, in any event, temporary. 3/ Also in April, the Government submitted to Congress a revised list of 93 enterprises to be expropriated and requested authorization for the permanent takeover of all firms intervened or requisitioned before April 30. In response, the Congress formally rejected by majority vote the Executive veto of the Christian Democratic amendment. 181. On June 29, in the wake of an aborted military revolt, worker occupations led to the takeover of 244 enterprises in a single day. 4/ The Government indicated its intention to return most of these firms to their owners once agreements could be negotiated between the owners and the workers. Nevertheless, negotiations between President Allende and the head of the Christian Democratic Party at the end of July to expedite that 1/ While the Opposition parties lacked the two-thirds vote clearly required to override the veto of ordinary legislation, the Law was vague regarding whether two-thirds or a simple majority was needed in the case of a constitutional amendment. This confrontation is described in detail in Paul E. Sigmund, The Overthrow of Allende and the Politics of Chile, 1964-1976, University of Pittsburgh Press, Pittsburgh, 1977. 2/ Presentation of Finance Minister Orlando Millas Correa to the Mixed Budgetary Commission of Congress, November 15, 1972. 3/ Under Chilean law, a decision by the Controller General could be overruled by a Decree of Insistence signed by all members of the Cabinet. 4/ Sigmund, op. cit. - 90 - process, as well as resolve other outstanding issues including the consti- tutional amendment defining the social property area, ended in impasse. That impasse was resolved only by the September 11 change of government. b. The Agrarian Reform l/ 182. The rate of land expropriation continued to accelerate in 1972. A total of 4,409 farms covering 6.4 million ha were expropriated by the Allende Government. By the end of the period, 296 CERAs and 76 CEPROs had been established, encompassing an estimated 50,000 families. Land ownership remained in state hands, however; no new titles being distributed during the Allende years. Table II.13: CHILE - PROGRESS OF LAND EXPROPRIATIONS, 1965-73 (Thousands of hectares) No. of Year Farms Area 1965-1970 (Total) 1,400 3,557 1971 1,374 2,027 1972 2,189 3,013 1973 836 833 Subtotal 1971-73 4,409 6,409 Total 1965-73 5,809 9,966 Source: Internal Bank working document, Annex I, Table 23 183. Combined with the land expropriated under Frei, a total of almost 10 million ha, almost half of Chile's total agricultural land, was taken. Moreover, the expropriations were concentrated among the richest lands in the country, more than 60 percent of irrigated land being transferred to the State for eventual distribution to peasant farmers and landless workers. Even at its most turbulent, the reform was carried out with remarkably little violence and destruction of property. The uncertainties and investment disincentives ultimately created, however, led to serious decapitalization and the precipitous decline in production suffered in 1972 and 1973. 184. The 1967 Agrarian Reform Law had significantly reduced the attrac- tiveness of land as an investment apart from its productive exploitation, while offering security against expropriation to the landowner whose holdings 1/ Further information and details on the Chilean agrarian reform process is available in an internal Bank document. - 91 - were within the 80 BIH limit, and with respect to an expropriated landowner's legal reserve, so long as the farm was operated efficiently. The marked acceleration of the growth of agricultural output that occurred in the mid-1960s suggests that indeed the reform, along with improved sectoral terms of trade, led to more efficient land use and an increased application of modern inputs. 1/ 185. This positive stimulus was seriously affected, however, by the public statements and accelerated expropriations of the Allende Government which threw into question the security of property rights of farms of less than 80 BIH and of the legal reserves. Some officials indicated that the upper limit of landholdings would eventually be lowered to 40 BIH, or even 20 BIH. 2/ Similar uncertainty was created for the asentados with the cessation of land-titling. Labor and other inputs--the latter heavily subsidized by the State--were increasingly concentrated on the peasants' individual garden plots, which in 1971 accounted for at least 13 percent of cropland in the reformed sector. The lack of wage incentives to devote effort to the collectively farmed lands, already apparent under Frei, was intensified by the growing disparity between official and black market prices. Finally, it should be noted that under neither administration did the agrarian reform per se provide significant benefits to the poorest members of Chile's rural labor force. Only around 12 percent of agricultural labor received land, and with preference being given to those previously attached to the expropriated estates, the indigenous communities, unattached day laborers, and minifundistas remained largely unaffected. 7. Summary 186. The elastic supply conditions, that had given leeway to the Govern- ment's expansionary and redistributive policies in 1971, were by 1972 exhausted. The Government was not able, however, to stem the demand pressures it had set in motion. As a consequence, inflation accelerated, supply shortages stifled production, and the real income gains achieved in 1971 were eroded away and, indeed, reversed. The economic decline was exacerbated by a drop in world copper prices in 1971 and 1972, by the withdrawal of international credits in 1971 and by the increasing tension and turmoil that characterized the domestic political situation. 187. The disenchantment of Chile's traditional lenders and the growing internal conflict were in part, of course, caused by, as well as contributors to, the economic difficulties. Moreover, although no confident "might-have- been" judgments can be made regarding Chile's political evolution, it seems 1/ See note, page 53. 2/ Meanwhile, a political confrontation similar to that described above regarding industrial expropriations was created between Congress and Executive when the Christian Democrats submitted a constitutional amendment to establish the nonexpropriability of farms below 40 BIH. - 92 - clear that the economic constraints posed by the fallen copper price and reduced credit could have been managed without major damage to the economy or to the Government's social and economic objectives. Viewed from the opposite direction, even had copper prices and capital flows remained at or above their former levels throughout the period of the UP Government, the economy could not have withstood for very long the strains placed upon it by the massive fiscal deficits, exploding money supply, appreciating exchange rate, consumption subsidies and gross price distortions that followed from the Government's own policies. 188. On September 11, 1973, a military coup de etat toppled the Govern- ment of President Allende. Political parties were proscribed, the Congress closed, and all subsequent legislation has been by decree. The new Govern- ment proclaimed its intention not only to restore economic stability and normalize relations with foreign creditors, but also to reverse the approach to economic development that Chile had pursued for four decades, of which the UP policies were seen as an exaggerated extension. - 93 - CHAPTER III THE ECONOIIY SINCE SEPTEMBER 1973 A. MACROECONOMIC OVERVIEW 1. Introduction 189. The military junta that assumed control of the government by a coup d'etat in September 1973 faced an extremely difficult economic situation. Infla- tion exceeded 20 percent per month (an annual rate of about 1,000 percent); produc- tion and employment were falling; the nation was unable to service its foreign debt; international reserves were negative; the central government and public sector enterprises were operating at enormous deficits; and the ownership and management of hundreds of the country's most important private enterprises were in disarray as government interventors were removed from their posts in the midst of the political upheaval, just as their private sector predecessors had been a short time earlier. Chile depended heavily on imported oil, the price of which was now rising rapidly. On the other hand, the new Government had the advantage of a high and still rising world copper price and the indicated willingness of Chile's major traditional lenders to resume operations and to reach' a rapid agreement for the rescheduling of service payments due in 1973 and 1974. 190. Among the actions taken during the first few months of the Pinochet Government were: the freeing of many prices and the massive adjustment of public enterprise tariffs and other remaining controlled prices; devaluation and simplification of the exchange rate and reinstitution of a crawling peg; a large new wage and family supplement adjustment, including the unification of the white-collar and blue-collar minimum wages and family allowances; the anullment of interventions and requisitions and the initiation of the process of returning socialized enterprises to the private sector; a substantial increase in taxes; the cessation of land expropriations; and the opening of negotiations for the rescheduling of the external debt, a standby agreement with the IMF, and the settlement of the outstanding expropriation claims of foreign investors. The above policy measures were expanded and reinforced over time evolving, inter alia, into major reforms of the international trade regime, tax system, public sector budgetary process, financial system, social welfare programs, and the organization of reformed sector farmers. 2. The Short-Term Context 191. The economy rebounded in 1974, after the declines of the two pre- vious years. GDP rose 5.6 percent in real terms, but growth was very uneven among sectors, as shown in Table III.1. In response to improved price incen- tives, increased public works spending, and stabilization of the political situation, recovery was particularly strong in agriculture, mining and construction. Industrial output remained depressed, however, reflecting - 94 - the continued weakness of private sector demand as well as the considerable disorganization associated with the transfer of expropriated and intervened assets back to private ownership and management. Investment demand con- tinued to account for a small proportion of GDP (Table III.2), despite the rise in public works activity. 1/ 192. Employment also stagnated in 1974, and the unemployment rate rose as labor force participation returned to pre-1972 levels. At the same time, little progress was made in bringing down the rate of inflation, which totaled 376 percent for the year as compared to 405 percent in 1973. 2/ Despite rapid import growth, the balance of payments improved, buoyed by the high copper price and increased mine output, the strong growth of non-copper exports, and the return of foreign and domestic capital. By the second half of the year, however, the copper price was falling sharply, and international lenders had once again begun to withhold their support. 193. These factors contributed to deteriorating public confidence as 1975 opened, and inflation began to accelerate, again exceeding 20 percent per month. Moreover, by the end of the first quarter, the economy clearly faced a serious balance of payments crisis. Between 1974 and 1975, the fall in the world demand for copper represented for Chile a loss in foreign exchange earnings from that source of more than US$825 million. In addition, 1975 saw a net outflow of more than US$200 million to Chile's foreign lenders. 3/ Combined, these two events signified a decline in the capacity to import equivalent to about 12.5 percent of the 1974 GDP and 46.5 percent of 1974 exports. With no international reserves to buffer the impact, there was no alternative to a sharp contraction of the economy. 194. In preference to the reestablishment of economic controls and a unilateral moratorium on foreign debt service payments, the Government introduced a severe austerity program relying on orthodox monetary and fiscal policies and devaluation of the exchange rate. Public sector expenditures were drastically cut back, taxes were increased, and credit was tightened. These policies have been widely criticized for having caused the steep recession that followed. While one may argue the relative merits of different approaches to managing the crisis, however, it is clear that the massive foreign exchange constraint made recession inevitable, whatever 1/ As indicated in Chapter II, Chilean national accounts data must be treated with great caution because of the largely unmeasured price distortions and structural changes of the past several years. The numbers presented here must thus be taken only as indicating orders of magnitude (see the Note on Chilean Economic Statistics, Appendix I). 2/ IBRD adjusted CPI. Annual inflation rates, unless otherwise indicated, are for the twelve-month period ending December 31. 3/ Net service of medium- and long-term loans to the public sector or guaranteed by the public sector. (See Table III.10.) - 95 - Table III.1: CHILE - YEAR-TO-YEAR CHANGES IN REAL GDP BY SECTORS, 1974-1977 (Percent) Total % Change Sectors 1974 1975 1976 1977 1973-77 Agriculture 16.7 3.8 2.6 14.1 41.9 Mining 15.9 -5.0 14.5 2.0 28.8 Manufacturing 0.9 -27.4 6.8 12.2 -12.2 Construction 20.0 -31.0 -18.8 3.5 -30.4 Commerce 2.5 -15.2 1.2 17.9 3.8 Other 4.1 -0.4 3.5 3.0 10.5 Total GDP 5.7 -11.3 4.1 8.6 6.o Source: Appendix II, Table 2.2a Table III.2: AGGREGATE SAVINGS AND INVESTMENT RATIOS, 1973-76 (Percent of GDP) 1973 1974 1975 1976 Gross domestic investment 13.9 13.5 6.3 5.4 Fixed investment (13.3) (12.4) (10.1) (8.7) Change in inventories (0.6) (1.1) (-3.8) (-3.3) Resource balance -1.8 0.4 -3.5 4.0 Exports (12.7) (16.9) (19.7) (20.8) Imports (-14.5) (-16.5) (-23.2) (-16.8) Gross domestic savings 12.1 13.9 2.8 9.4 Net factor incomes abroad +0.7 +1.1 +2.7 +2.5 Gross national savings 11.4 12.8 +0.1 6.9 Source: Appendix II, Table 2.5a - 96 - the policies adopted. Although inflation was not greatly affected in the short-run, the program did succeed in reducing imports to a financeable level, enabling Chile to service its large external obligations. 195. Nevertheless, the social costs of the enforced austerity were extremely high in terms of lost production and employment, as the Chilean economy suffered its worst recession since the 1930s. Although agricultural output continued its recovery, industrial production fell 27 percent from the 1974 level, construction was down 31 percent, and real GDP overall declined more than 11 percent. Taking into account the deterioration of Chile's international terms of trade and the increase of net factor payments abroad, the real gross national income is estimated to have fallen 17.4 per- cent, or almost 19 percent in per capita terms. Open unemployment rose to as high as 20 percent of the labor force of Greater Santiago. 196. Austerity continued into 1976, the recession bottoming out during the first quarter of that year. A partial recovery of the copper price and record copper output, the sustained rapid expansion of non-copper exports, substantial capital repatriation and the growth of suppliers credits and foreign loans to the private sector eased the foreign exchange constraint and permitted a cautious relaxation of austerity measures in the second half of the year. Manufacturing value-added rose 7 percent, with the greatest gains shown by the consumer nondurables and intermediate goods sectors. The production of consumer durable goods, on the other hand, slipped further during the year, possibly reflecting the incipient effects of the tariff reduction program. The weakest sector was construction, where value-added declined another 19 percent as a result of further reductions in public works expenditures and the insolvency of the savings and loan system (SINAP). Inflation for the year totaled 174 percent, half the rate of the previous year. Finally, despite the protracted weakness of the world copper market and the continued net withdrawal of resources by international lenders, Chile was able in 1976 to meet its full debt service obligations without rescheduling for the first time since 1970. At the same time, net inter- national reserves increased US$455 million. Nevertheless, the Government continued to exercise considerable demand restraint in view of the still negative level of net foreign reserves, heavy debt service payments, continuing uncertainties regarding the copper market, and volatile inflationary expecta- tions. 197. Recovery accelerated vigorously in 1977, however, as growing aggregate demand reflected the improvement of real wages and salaries. An excellent harvest raised agricultural value-added 14 percent over the level of 1976, while value-added in manufacturing grew 12 percent, and in commerce 18 percent. On the other hand, construction remained severely depressed with a real growth rate of only 3.5 percent during the year. Overall, the GDP is estimated to have grown 8.6 percent, bringing it back to approximately the 1974 level. In per capita terms, output was now roughly equivalent to the level of 1968, suggesting that the shocks Chile had endured since 1970 had, in a global sense, cost the nation a full decade of economic growth. Inflation - 97 - in 1977 was reduced to 64 percent, and it was halved again in 1978. Also, by 1977 the overall budget of the public sector as a whole was in surplus. The external current account balance deteriorated in the face of a further decline of copper prices and large jump in imports, but this was more than offset by Chile's markedly improved access to foreign private bank loans and suppliers credits. 198. In summary, the severe shock engendered by the 1975 foreign exchange crisis had been weathered. In the meantime, the Government persevered in the institution of its policy reforms, setting in motion a major restructuring of the Chilean economy. The remainder of this chapter will detail further the evolution of the macroeconomic situation since September 1973 and the major policy changes introduced. Later chapters and annexes will examine events at the sectoral level and explore future prospects and policy issues. Among the most apparent immediate concerns are the continuing high level of unemployment and low rate of investment, solutions to both of which are crucial to the success of the Government's development strategy. B. THE FOREIGN SECTOR 199. Between 1973 and 1977 Chile's heavy debt and the precarious state of its foreign reserves represented the primary costraint with which the autho- rities had to contend. In 1978 the nature of the external situation changed dramatically as demonstrated by large net capital inflows and large reserve accumulations. The policy reforms instituted with regard to international trade not only contributed to this changed environment, they have had profound implications for the country's economic future. 1. Foreign Sector Policies 200. In marked contrast to the policies of previous administrations, the Pinochet Government has embarked on a vigorous program of trade liberalization based upon the proposition that essentially unhindered trade flows will lead to a more efficient allocation of Chile's resources and result in faster growth, higher employment, reduced inflation, and more diversified and dynamic exports. Tariffs have been drastically lowered and nontariff trade barriers largely eliminated. In a parallel fashion, the exchange rate has been sharply devalued and unified, its primary role now being that of leading toward the medium- and long-term equilibrium of the balance of payments. Moreover, the Government views foreign investment as a primary means of acquiring the capital and technology essential to development and has substantially relaxed restrictions on its activities in order to attract larger inflows. a. The Exchange Rate 201. On September 30, shortly after the change of government, the peso was devalued from an average of about E085 per U.S. dollar to E 0280 per dollar - 98 - on all trade transactions except the export of copper. 1/ A differential exchange rate was maintained on copper earnings, the rate set initially at E 110 to the dollar. With regard to the import of food and raw materials, which had previously received a preferred rate of E 25 to the dollar, the adjustment amounted to a devaluation of more than 1,000 percent. The Government reinstituted a crawling peg in October, and by December had approximately reestablished the relationship between the exchange rate and the domestic price level prevailing in 1969. Taking into account the rapid worldwide inflation that had occurred in the interim, however, the measures taken during the last quarter of 1973 resulted in a substantial real devaluation of the peso, relative even to the pre-Allende period, as shown in Table III.3. Table 111.3: CHILE - AVERAGE ANNUAL EXCHANGE RATES, 1969 AND 1973-78 (Escudos per US dollar) Nominal Ratio-Domestic Real Exchange Exchange to International Rate (1969 E Year Rate a/ Prices b/ per US$) 1969 9.04 1.00 9.0 1973 (Jan.-Sept.) 37.56 11.08 3.4 1973 (Oct.-Dec.) 304.41 18.64 16.3 1974 831.00 47.71 17.4 1975 4,903 220.51 22.2 1976 13,052 648.85 20.1 1977 21,540 1,075.65 20.0 1978 31,670 1,387.89 22.8 a/ The 1969 rate is a weighted average of legal exchange rates (see Table 1.11). From 1973 on, the average bankers' rate is used. b/ See note to Table II.8. Source: Same as Table II.8 202. The real exchange rate was devalued slowly through 1974 as world inflation continued and the crawling peg moved in line with the domestic 1/ A separate brokers' market was also restored with a rate of E 850=US$1, but transactions there were limited to tourism and minor invisibles. - 99 - price level. 1/ With the worsening balance of payments situation, the devalua- tion of the peso was accelerated in 1975, reaching a nadir in January 1976. A substantial portion of the resource surplus obtained by the 1976 import austerity was used to increase net international reserves, to minus US$100 million. This inflow of foreign exchange during the year raised concerns regarding the growth of the money supply, while at the same time providing the authorities an opportunity to achieve a significant breakthrough in the battle against inflation. Thus, the peso was formally revalued 11 percent in July 1976 and again in March 1977, the crawling peg continuing in each case from the newly appreciated level. As a consequence, the peso appreciated in real terms during 1976 and maintained the same real level through 1977. The real exchange rate was devalued again in 1978 providing added incentive to the growth of non-copper exports. 203. In mid-1976, at the time of the first revaluation, the Government began the month-by-month publication in advance of programmed daily exchange rate adjustments, each month's total devaluation being based on the previous month's rise in the cost of living. Then, in February 1978, the authorities presented the daily rates for the entire year, the programmed nominal devalua- tion being at once a prediction of the full year's inflation and a calculated attempt to influence producer and consumer expectations so as to fulfill the prophecy. This procedure was repeated in early 1979. b. Import Restrictions (i) Tariff Policy 204. At the time of the change of government, the average nominal tariff stood at 94 percent of CIF value, and some 683 of the 5,125 customs categories were taxed 200 percent or more. Nevertheless, given the heavy use of nontariff trade barriers and the fact that two-thirds or more of imports were by mid-1973 under direct control of the public sector, the agencies of which were exempted from the payment of tariff duties, the tariff had become largely irrelevant as a policy tool. 205. Beginning in March of 1974, the Pinochet Government launched a program of tariff reductions whose stages are summarized in Table III.4. In December 1977, the Government initiated a new tariff reduction program intended to achieve a 10 percent across-the-board duty by the middle of 1979. The major exception to these reductions was the automotive industry which continued to be protected with tax rates of 115 percent of CIF import value for passenger cars and 80 percent for trucks. In April of 1979 the Government announced its decision to reduce substantially automotive tariffs over a five- year period. Chile now has the lowest tariff rates of any developing country. 1/ The gap betwen the bankers' rate and brokers' rate was gradually elimi- nated, and in mid-1974 the differential copper rate was discontinued. The bankers' and brokers' rates finally became identical in August 1975, and the brokers' market formally ceased to exist in June 1977. - 100 - Table III4: CHILE - AVERAGE AND MAXIMUM NOMINAL TARIFF LEVELS, 1973-1979 (Percent of CIF value) Average Maximum / Date of Adjustment Tariff Tariff - 1973: As of December 31 94 More than 500 1974: March 1 90 200 March 27 80 160 June 5 67 14o 1975: January 16 52 120 August 13 44 90 1976: February 9 38 70 June 7 33 60 December 22 27 60 1977: January 8 24 50 April 30 22 50 August 29 20 35 December 16 25 1978: March 15 20 June 14 20 December 12 15 1979: June 10 10 a/ Some exceptions were specified to the maximum tariff levels beginning with August 13, 1975. The most important of these is for automobiles which have continued to be taxed at 115 percent but will be reduced drastically by 1983. Source: Central Bank - 101 - (ii) Nontariff Barriers 206. The lowering of tariffs has been accompanied by the steady elimina- tion of nontariff import restrictions. The firm-by-firm budgeting of imports was abolished before the end of 1973. Use of the 10,000 percent prior deposit requirement, which had been the major trade-limiting device employed by the Allende Government, was first reduced by the liberal granting of waivers and then effectively eliminated as automatic exemptions from the requirement were declared for all but a few items. By 1977, only used motor vehicles remained subject to prior deposit. Similarly, the mandatory waiting period for foreign exchange cover was shortened and then discontinued altogether in 1976. Also in 1976, the long-existing list of permitted imports was dropped and a later list of prohibited imports reduced to virtually nil. 1/ c. Export Policy 207. Consistent with its general policy of assigning the role of price determination and resource allocation to the marketplace, the Government has not offered major subsidies or special incentives to exporters. Instead the improved environment for exports relative to earlier periods has come from the rationalization of the exchange rate, the lowering of import restrictions, and the elimination of certain administrative and bureaucratic obstacles to exportation. In March 1974 the large tax drawbacks provided by the Allende Government were reduced to zero. Since the introduction in 1975 of the value-added tax in place of a sales tax, however, refunds have been granted for the VAT taxes paid on inputs destined for export. Also in 1977, regula- tions were effected that enable exporters to obtain rebates of import duties paid on inputs to export products. This privilege was made retroactive to January 1, 1975. 2/ Finally, all export prohibitions and controls have been eliminated, although the government reserves the power to impose restric- tions in the event of domestic shortages. d. Other Trade and Exchange Measures 208. Other measures intended to reduce distortions in the allocation of resources and to liberalize and simplify the management of foreign exchange have included the renewed subjection of public enterprises and agencies to the same import duties and restrictions as the private sector, the public sector's progressive divestment of commercial enterprises, the gradual reduction of the special import preferences applied to particular regions and industries, the raising of quantitative limits on such invisibles as 1/ By April 1979 only three import items were prohibited. 2/ The statute authorizing this rebate was enacted in 1970, but no mechanism had been established for its implementation. - 102 - travel expenses and student remittances, the widening of commercial bank authority to act in the foreign exchange market, and the reappearance of private exchange dealers. The freeing of foreign exchange controls with respect to all current account transactions was symbolized in June 1977 by Chile's formal adherence to Article VIII of the IMF Charter. e. The Treatment of Foreign Capital 209. From its inception, the Pinochet Government has indicated its desire to restore Chile's attractiveness to foreign direct private investment, in explicit recognition of the medium-term need for substantial capital inflows to supplement the domestic savings effort and to help meet the heavy external debt service burden. Thus the Government moved quickly to negotiate outstanding expropriation claims, achieving settlement of virtually all of them by the end of 1974. 1/ 210. In July 1974, a new Foreign Investment Statute, Decree No. 600, was promulgated with the expressed purpose of stimulating the inflow of capital and technology. While the new Statute guaranteed that foreign investors would generally receive the same treatment as national investors without discrimination, a number of important elements, including profit remittances, required transfer of shares and management control over time to domestic investors, sectors open to investment, access to local financing, etc. remained subject to Decision 24 of the Andean Pact of which Chile was still a signatory. 2/ Decree No. 600 gave the Committee on Foreign Invest- ment substantial leeway to negotiate specific tax treatment or other incentives and guarantees on a case-by-case basis. Unlike the prior invest- ment regime, however, application to the Committee was made the only legitimate route for the entry of direct foreign investment. 211. Between October 1974, when it effectively began its work, and August 1978, some 319 projects totaling US$2.5 billion were approved by the Foreign Investment Committee. Only one fifth of this amount had actually entered the country, however. The disappointing results were, in part, attributable to the difficult and uncertain economic situation as well as, perhaps, lingering doubts regarding domestic political stability. Also important, in the authorities' view, were the continuing disincentives created by adherence to Decision 24 and the bureaucratic delay, uncertainty, and inherent arbitrariness created by the somewhat loosely regulated case-by-case contract negotiations conducted by the Foreign Investment Committee. 1/ At the beginning of 1975, compensation obligations represented 14 percent of outstanding public medium- and long-term external debt. 2/ Chile's determination to liberalize trade and its treatment of foreign capital came increasingly into conflict with other member nations of the Andean Pact, and Chile formally withdrew from the Pact in October 1976. - 103 - 212. Thus, a rewritten Decree No. 600 was issued in March 1977. 1/ With Chile's formal withdrawal from the Andean Pact in October 1976, the provisions of Decision 24 no longer applied. Under the new Statute the only limit placed on capital repatriation is that it may not begin within three years of its entry. There is no mandatory fade-out requirement and no limit on the level of profit remittances. The treatment of capital repatriations and profit remittances cannot be less favorable than that applied to the acquisition of exchange cover for general imports. National treatment is guaranteed to foreign investors with the single exception that the State may limit the foreign enterprise's access to domestic credit. Moreover, the foreign investor can elect either to be taxed 49.5 percent of profits, that rate guaranteed for ten years, or to be subjected to the same tax regime applied to domestic investors as it may be modified over time. 2/ Moreover, the indirect taxes and import duties affecting the foreign investment are guaranteed not to change between the effective date of the contract and the time the investment is actually realized. 213. In addition to the above, the Committee itself was streamlined and its procedures simplified. The full Committee is now required to approve only projects in excess df US$5 million, unless they occur in sectors normally reserved to the State, public utilities, or the communications media, or are being undertaken by a foreign public sector institution. Other projects may simply be approved by the Executive Secretary of the Committee with the prior concurrence of the Minister of Economy. 3/ More significantly, the revised Statute does not define the Committee process as the only legitimate route of entry for foreign investments. Thus foreign capital may also be registered under Articles 14 and 16 of the Law of Foreign Exchange, which are regulated and administered by the Central Bank. 4/ 2. Foreign Sector Performance a. Exports (i) Copper 214. A primary rationale offered for many of Chile's economic policies in the decades following the Depression was the need to diversify the economy and 1/ The revision was approved by Decree No. 1748 of March 11, 1977, but the Statute continues to be designated as Decree No. 600. 2/ Those who opt for the guaranteed rate retain a one-time-only right to shift to the general tax code. 3/ Of the projects approved by the end of 1976, a third were valued at less than US$100,000. 4/ Foreign investments related to nuclear energy--e.g., uranium mining--or petroleum are contracted by the Chilean Nuclear Energy Commission and the National Petroleum Enterprise, respectively, but the prior approval of the Committee on Foreign Investments is required. - 104 - reduce its vulnerability to the market fluctuations of a single export commodity. Although these policies did succeed in reducing the relative importance of foreign trade in the national income, they also tended to inhibit the develop- ment of new export potential. Consequently, in the last half of the 1960s and early 1970s copper continued to account for 70-80 percent of foreign exchange earnings, and mining generally for 85-90 percent. Figure III.1 and Table III.5 trace the course of the world copper price since 1971. From its 1971-72 low, the copper price rose steadily in nominal terms through 1973 and the first quarter of 1974. After reaching an average price of US$1.38 per lb in April 1974, the copper price plummeted to an average US$.58 in December, and then fluctuated around a slowly declining trend through 1975 to reach an average of US$.52 in December of that year. The price then recovered through the first semester of 1976, reaching $.75 per lb. in July, before again falling back. In real terms, the average price of copper in 1975 was the lowest in more than two decades. Following the small recovery in 1976, the real price fell still lower in 1977 and 1978. The average real price for the entire five-year period 1974-78 was 40 percent below that of the three years 1971-73. 1/ Table III.5: CHILE - AVERAGE PRICE OF COPPER, a/ 1971-1978 (US cents per lb) Current Constant Year Price 1975 Cents b/ 1971 49.3 101.0 1972 48.6 91.0 1973 80.9 115.4 1974 93.4 96.0 1975 56.1 56.1 1976 63.5 59.9 1977 59.4 48.5 1978 61.9 46.5 a/ Spot price of electrolytic wirebar, London Metal Exchange. b/ Deflation by IBRD index of Chilean import prices. Source: Appendix II, Tables 8.6 and 9.8 215. Mine output during the 1971-73 period was beset by the loss of managerial and technical personnel, labor unrest, transport strikes, short- ages of imported spare parts, and unforeseen technical problems in the open- ing of new capacity. As a consequence, despite the large investment made 1/ Deflation is by the IBRD index of Chilean import prices; Appendix II, Table 9.8. - 105 - FIGURE III.1 CHILE AVERAGE PRICE OF COPPER CUS CENTS PER POUND) 120 UCONSTANT 1975 CENTS* /\ /\ 1. N/\ N N N / CURRENT PRICE N! 90 80 70- 60 so 4071 72 73 74 75 76 X Source: Appendix II, Table 9.8 Deflated by Index of Chilean Import Prices - 106 - under the Frei Chileanization program, which included the opening of the Andina and Exotica mines, production fell far short of targeted levels. Output rose sharply in late 1973 and in 1974, however. In 1975 the Exotica mine was shut down because of high operating costs and in conformance with the agreement of CIPEC member countries to reduce output. Even though Exotica remained closed, output from the Gran Mineria expanded strongly in 1976, total copper production exceeding 1 million mt for the first time in history. Output rose still further in 1977, declining only slightly in 1978. Table III.6: CHILE - COPPER PRODUCTION, 1970-1978 (Thousands of metric tons) Gran Small and Year Mineria Medium Mines Total 1970 540 152 692 1971 571 137 708 1972 593 124 717 1973 615 120 735 1974 763 139 902 1975 682 146 828 1976 847 158 1,005 1977 897 159 1,056 1978 882 167 1,049 Source: Appendix II, Table 8.1 216. The net effect of these price and output changes was a substantial increase of copper revenues in 1973 and 1974, and a precipitous decline in 1975. A partial recovery of revenues occurred in 1976 but then tapered off again in 1977 (Table III.7). In terms of real purchasing power, the copper revenues received in 1973-74 were 26 percent above the 1971-72 average. In 1975, however, real copper revenues declined 50 percent in real terms; the US$826 million loss in current prices was equivalent to about 10 percent of the previous year's GDP; when the rise in import prices is added, the terms of trade effect equalled about 12 percent of GDP 1/. Despite record levels of output, depressed world prices left real copper earnings in 1976-78 well below the level of 1971-72. 1/ Chile's terms of trade loss was the worst among a 120-country sample studied by the World Bank. - 107 - Table III.7: CHILE - COPPER EXPORTS, 1971-1978 (Millions of US dollars) Current Constant Year Prices 1975 Dollars a/ 1971 702 1,439 1972 618 1,157 1973 1,056 1,506 1974 1,716 1,764 1975 890 890 1976 1,246 1,175 1977 1,187 971 1978 b/ 1,202 903 a/ Deflation by IBRD Index of Chilean import prices. b/ Provisional. Source: Appendix II, Tables 3.2 and 9.8 (ii) Other Exports 217. Despite the generally sluggish world economy, non-copper exports grew rapidly after 1973 as a result of the Government's exchange rate policy and the weakness of domestic sales. The response to the devaluation of the peso was immediate as indicated in Table III.8. Non-copper exports doubled in value from 1973 to 1974; industrial exports alone experienced a three-fold increase. From 1974 to 1977 industrial exports doubled again, while agricultural exports almost tripled in value. Nineteen seventy eight was another good year and non-copper exports grew 10 percent in real terms; for the first time in recent history copper receipts were less than half of Chile's merchandise export receipts. By 1978, the share of industrial exports in the total had risen to 31 percent, compared with only 8 percent in 1973. Agricultural exports over the same period rose from 2 percent to 8 percent of the total. Chilean products were shipped to 90 different countries in 1977, double the 1973 number. Several of the major growth exports are shown in Table III.9. - 108 - Table III.8: CHILE - NON-COPPER EXPORTS, 1971-1978 (Millions of US dollars) Other Constant Year Mining Agricultural a/ Industrial Total 1975 Dollars b/ 1971 116 39 140 295 605 1972 105 21 103 229 429 1973 127 25 103 255 364 1974 157 57 308 523 538 1975 185 86 391 662 662 1976 197 119 520 836 789 1977 216 160 628 1,003 820 1978 p/ 221 204 781 1,206 906 % Change 1973-78: (74) (716) (658) (373) (149) a/ Includes primary forest and fisheries products. b/ Deflation by IBRD index of Chilean import prices. _p/ Provisional. Source: Appendix II, Tables 3.2 and 9.8 Table III.9: CHILE - SELECTED NON-COPPER EXPORTS, 1970, 1973 AND 1977 (Millions of US dollars) 1970 1973 1977 p/ Agricultural: Fresh fruit 11.8 14.0 63.6 Beans, onions and garlic 7.0 4.8 30.7 Wool 6.4 0.0 15.0 Manufactures: Fishmeal 15.5 13.6 86.5 Frozen shellfish 6.2 1.8 26.2 Sawn pinewood 3.7 2.5 54.6 Other wood products 5.4 2.1 15.8 Paper and pulp 31.5 29.8 134.4 Chemicals and petrochemicals 7.3 4.6 77.9 Basic metals 23.5 28.3 103.2 p/ Provisional. Source: Appendix II, Table 3.2 - 109 - b. External Debt and Capital Flows (i) Public Medium- and Long-Term Capital 218. Chile's balance of payments crisis and accumulated arrearages had led to the virtual suspension of debt service payments in 1973, and less than a third of the service falling due in that year was actually paid. 1/ As a consequence, more than US$830 million in amortization and interest payments, equivalent to 37 percent of merchandise exports, was due in 1974, a third of which had been carried over from the previous year. In March 1974 members of the Paris Club agreed to reschedule 80 percent of payments falling due in 1973 and 1974 on specified official suppliers' credits and bilateral loans, excluding all obligations that had previously been rescheduled. Thus, the effective debt service ratio for 1974 was reduced to 12.4 percent, slightly higher than the previous year. Although debt service due in 1975 was somewhat less than in 1974, the sharp decline in exports brought the potential debt service ratio to 48 percent, and the Paris Club again agreed to a rescheduling. With fewer credits eligible for rescheduling, however, the effective debt burden in 1975 remained at 32.7 percent. The improving balance of payments situation in 1976 enabled Chile to meet its full debt service obligations without rescheduling for the first time in five years, even though the debt service ratio equalled 36.5 percent of its merchandise export receipts. The renewed depression of the copper price caused this effort to be magnified in 1977 with public debt service rising to 38.9 percent of merchandise exports, but Chile again met its debt obligations without rescheduling. The situation changed substantially in 1978. Net foreign capital inflows reached US$1.3 billion, an increase of a billion dollars compared to 1977. Chile's credit- worthiness was no longer in doubt despite continued high debt service obliga- tions. 219. Table 111.10 reviews the flow of resources between the Chilean public sector and foreign lenders from 1973 to 1977. Commitments and gross disbursements rose sharply in late 1973 and in 1974 as multilateral lending resumed, and suppliers' credits and bilateral loans from the market economies again became available. Lending by socialist countries, on the other hand, was suspended. The increased disbursements were partially offset by higher debt service payments, but the nominal net resource flow in 1974 was still 87 percent above the level of 1972. 2/ 1/ Negotiations in 1972 had already resulted in the rescheduling of service payments due between November 1971 and December 1972. 2/ Deflated by the estimated index of Chilean import prices, however, the real net resource transfer in 1974 was only 3 percent above 1972, the remainder having been consumed by world inflation. - 110 - Table III.10: RESOURCE FLOWS BETWEEN CHILE AND FOREIGN LENDERS, 1973-1977 (Millions of US dollars) 1973 1974 1975 1976 1977 A. Commitments 328.4 748.1 403.5 483.2 960.0 B. Disbursements 315.8 539.5 287.4 432.7 569.8 C. Repayments -119.9 -198.9 -344.9 -548.3 -650.5 D. Net disbursements (B-C) 195.9 340.6 -57.5 -115.6 -80.7 E. Interest -36.7 -79.1 -156.6 -208.9 -201.3 F. Net resource flow (D-E) 159.2 261.6 -214.0 -324.5 -282.0 Source: Appendix II, Table 4.1 220. The, picture changed abruptly in 1975, as foreign lenders were dis- couraged by Chile's deteriorating balance of payments situation, project pipelines were exhausted, and external political attitudes hardened towards the Pinochet Government. New commitments and gross disbursements fell by almost half compared to the previous year. The only positive movement was a small increase in the lending of private banks. At the same time, debt service payments rose 80 percent, as Chile faced the "hump" created by previous reschedulings and compensation payments owed expropriated foreign investors. Consequently, the international lenders withdrew US$214 million in foreign exchange in 1975, contributing significantly to the foreign exchange crisis and the resultant economic contraction. This net withdrawal of resources rose to US$324 million in 1976 and imposed a lingering constraint on the pace and timing of economic recovery. Bilateral lenders accounted for most of the drain (including the service on prior reschedulings). Loans to the public sector from private financial institutions increased, however, with new commitments totaling US$120 million in 1976. This growth accelerated in 1977 reaching US$826 million in new commitments. Private banks accounted for 86 percent of total loan commitments in 1977, as compared to less than 20 percent, on average, over the previous decade. (ii) Private Capital Flows 221. Although net private short-term capital flows were heavily negative in 1974, more than US$112 million of foreign exchange was sold to the Central Bank by private individuals, indicating substantial capital repatriation. This flow increased in subsequent years, along with a large expansion of foreign financial credits to the private sector. Thus private capital move- ments showed positive net flows of US$277 million, US$319 million, and US$381 million in the three years 1975-77, more than offsetting the net drain imposed by lenders to the public sector. By 1978 net private capital flows exceeded US$900 million. - ill - 222. The entry of direct investment capital under the aegis of Decree Law 600 was disappointingly low through 1978, despite the large backlog of projects approved by the Committee on Foreign Investments. Some of the funds entering under Articles 14 and 15 of the Law of Foreign Exchange may also have been used to finance direct investment activities, but the expec- tation is that most of these inflows have been financial in nature and the Central Bank continues to classify them as short-term capital movements. 1/ They have been attracted, in part, by the large interest differential between the international and domestic financial markets. The first major direct investment project to be consumated was the purchase in early 1978 of La Disputada copper mine by Exxon Corporation for US$107 million. Subse- quent decisions to expand the mine's capacity could bring Exxon's eventual investment to more than US$1 billion. 2/ 223. Table III.11 shows the distribution of the direct investments approved by the Committee on Foreign Investments as of August 1978. Some 90 percent of the US$2.5 billion of approved project monies is destined for the mining sector; the Government estimates that about US$0.5 billion had entered the country by the end of 1978. Included in the approved in- vestments are two additional copper mining ventures with projected capital inputs over the next several years totaling US$850 million if the exploratory work underway and world market conditions prove favorable. In addition, the Government entered into an oil exploration agreement with Atlantic-Richfield, and foreign interests acquired shares in several previously nationalized industries, including tire manufacturing and automobile assembly. 1/ The rapid buildup of reserves during 1976 caused the Central Bank to impose a two-year minimum average maturity on Article 14 inflows. 2/ See Chapter IV. - 112 - Table III.11: CHILE - APPROVED FOREIGN DIRECT INVESTMENT PROJECTS BY SECTOR, 1974 - AUGUST 1978 (Millions of US dollars) Sector Value Percent Mining 2,233.1 89.5 Industry 168.3 6.7 Services 64.4 2.7 Energy and Fuel 12.6 .5 Transport 10.2 .4 Agriculture 2.9 .1 Construction 2.8 .1 Total a/ 2,494.3 100.0 a/ Several other projects totaling US$136 million were approved but appear to have been dropped. Source: Committee on Foreign Investments c. Imports 224. From 1973 through 1977 the low copper price, lack of international reserves, net withdrawal of public medium- and long-term capital, and a heavy debt burden restricted the capacity to import and placed a severe upper limit on the level of economic activity. As summarized in Table III.12, imports in nominal terms rose sharply in 1974, but the increase was attribut- able entirely to the inflation to world prices. 1/ The actual cost of petro- leum imports, for example, rose almost five-fold, while the increase in constant 1970 prices was 32 percent. Food imports were reduced in both nominal and real terms--13 percent and 42 percent, respectively--as domestic production rebounded and the adjustment of the exchange rate greatly increased the price of imported foodstuffs. Some growth in real terms occurred in the import of industrial raw materials and intermediate goods, as enterprises acted to replenish depleted inventories, but the demand for capital goods remained weak in the face of high levels of unutilized industrial capacity, the time lag required to recover and assess intervened assets and reorganize technical and managerial staffs, and continuing economic and political uncer- tainties. 1/ The unavailability of an import price index for Chile necessarily makes tentative any discussion of real values. An explanation of the method of estimation used here is found in the note to Table 11.10. - 113 - Table III.12: CHILE - IMPORTS BY TYPE OF GOOD, 1973-1978 (Millions of US dollars) Type of Good 1973 1974 1975 1976 p/ 1977 p/ 1978 pl (Current prices) Food a/ 512 446 361 342 331 458 Consumer goods (Non-food) 139 116 117 101 341 413 Intermediate goods 553 1,173 904 846 1,106 1,331 of which (Fuels and lubricants) (71) (345) (252) (338) (407) () Capital goods 243 281 325 367 466 688 Total 1,447 2,016 1,707 1,656 2,244 2,890 (1970 prices) b/ Food a/ 318 187 191 153 106 174 Consumer goods (Non-food) 97 64 56 48 147 154 Intermediate goods 362 472 378 289 342 394 of which (Fuels and lubricants) (34) (45) (31) (38) (42) (-) Capital goods 168 155 156 173 201 257 Total 945 878 781 663 796 979 a! Includes both intermediate and final consumer goods. b/ For explanation of deflators, see note to Table II.10. p/ Provisional. Source: Central Bank of Chile 225. The strong growth of non-copper exports in 1975 was not sufficient to offset the disastrous decline of copper revenues and sharply increased debt service. There was no alternative to a significant reduction of the import bill, and the decline in imports from 1974 to 1976 totaled 18 percent and 24 percent in nominal and real terms, respectively. The combination of rising economic activity, appreciation of the peso, large pent-up demand for consumer durables, low business inventories, and the reduction of tariffs resulted in the rapid import growth in 1977. The growth of consumer goods imports was particularly rapid, as rising purchasing power and lowered trade barriers brought many foreign goods into the market for the first time. As relatively high real growth continued and as external financing became more available, imports grew at a very rapid 23 percent in real terms in 1978. Food imports led the way with a 64 percent increase. Non-food imports have surpassed the pre-recession real levels. At the same time, the increase in capital goods imports reflects the improving investment opportunities and the reaching of capacity limitations in many export industries. - 114 - d. The Balance of Payments 226. Table III.13 summarizes the international accounts since 1973. The strong growth of both copper and non-copper exports in 1974 resulted in a reduction in the current account deficit by about US$100 million. The continued outflow of private capital, however, kept the overall balance in deficit. 227. Despite the Government's austerity measures and reduced imports in 1975, the drop in copper receipts and substantial increase in interest payments caused the current account deficit to soar to US$491 million, or about 6 percent of that year's severely depressed GDP. Even though the abrupt reversal of capital flows from the public sector was more than compen- sated by the still more dramatic reversal of private capital movements, the overall deficit reached US$274 million, and net international reserves at the end of the year were negative by $551 million. 228. The recovery of export revenues and further decline of imports produced a US$663 million improvement of the resource balance in 1976 and resulted in the first surplus on current account since 1956. The inflow of capital to the private sector also quickened, and net reserves grew by US$455 million. This progress continued into 1977, and, for a brief period during the second quarter, net international reserves became positive for the first time since 1971. Although rapid import growth produced another large current account deficit, equivalent to about 3-1/2 percent of GDP, the deficit was covered by the growing capital account surplus, and reserves for 1977 as a whole showed little change from the previous year. In 1978 the increase in the growth of imports and the increase in net factor payments more than offset the 10 percent real increase in non-copper exports. As a result the current account deficit reached US$730 million the largest deficit in at least a decade. However, this was again more than offset by the very substantial net capital inflows of US$1.3 billion. By year-end international reserves had grown by $617 million. e. Borrowings from the IMF 229. Chile's long history of balance of payments difficulties has made it a frequent and heavy user of IMF credit facilities. The Allende Government made two drawings totaling SDR 79 million from the compensatory finance facility in 1971 and 1972. In January 1974, the Pinochet Government nego- tiated an SDR 79 million standby credit, the twelfth such agreement Chile had reached with the Fund since the latter's inception. Another SDR 79 mil- lion standby was signed in March 1975, but only SDR 20 million were drawn as the greater-than-expected shortfall in copper earnings resulted in rates of credit expansion to the government and reserve losses in excess of the stipulated second tranche targets. With the stabilization measures taking hold, however, the Fund authorized additional credits under the 1975 oil facility, from which Chile drew SDR 79.8 million in November 1975 and SDR 45.4 million in April 1976. Finally, an SDR 79 million compensatory finance facility credit was also approved in 1976. In the light of Chile's improved balance of payments prospects since then and the heavy obligation already incurred to the Fund, no further drawings have been made. By the end of 1978 Chile had repaid virtually all Fund standby credits. - 115 - Table III.13: CHILE - SUMMARY BALANCE OF PAYMENTS AND INTERNATIONAL RESERVES, 1973-1978 (Millions of US dollars) 1973 1974 1975 1976P-/ 1977p-/ 1978P-/ 1. Resource Balance -191 58 -304 446 -87 -324 2. Net Factor Payments -110 -185 -284 -326 -362 -463 3. Net Transfers 13 11 10 28 50 57 4. Current Account Balance -288 -116 -578 148 -399 -730 5. Foreign Direct Investment, net -4 -17 -4 +7 +30 +187 6. Net Disbursements of Public Medium- and Long-Term Loans -8 -89 -180 -114 -138 574 7. Private Medium- and Long-Term Loans, net -1 31 102 166 174 640 8. Other Capital Transactions and Errors and Omissions, net 189 145 385 248 326 -54 9. Change in Reserves -112 -45 -275 455 -7 +617 10. Net Reserves, end of year -231 -276 -551 -96 -103 +514 pl Provisional. Source: Appendix II, Table 3.1a - 116 - C. MACROECONOMIC POLICY 1. Public Finance 230. Upon assuming power in September 1973, the Pinochet Government faced the immediate need to bring public sector spending under control and to increase revenues. It was also determined, as a longer-term objective, to reduce the size of the public sector consistent with the overall strategy of shifting responsibility for most resource allocation decisions to the private market- place. Thus, new tax measures were introduced and rates increased, and massive upward adjustments were applied to the prices charged by public enterprises. The overall deficit of the central government was reduced to about 7 percent of GDP in 1974 but remained a significant source of inflationary pressure until introduction of the 1975 austerity program. Since mid-1975, the central government budget has shown a slight surplus, and operating deficits have been eliminated from all but two of the important public enterprises. By April 1976, general government employment had been cut back some 30 percent from the levels of September 1973. 1/ Meanwhile, the State has returned to its owners, sold, or dissolved all but about 30 of the enterprises formerly under its control. When the divestiture program is complete only some 20-25 enterprises are likely to remain in the public sector. 231. The noteworthy turnaround in the financial situation of the public sector was accompanied by a severe tightening of budgetary and administrative controls over public sector expenditures, including improved accounting and reporting systems. Since 1975, the Minister of Finance has been accorded super-ministerial powers with final authority over virtually all spending and financing decisions throughout the public sector. Important to the exercise of this power was the action taken in June 1975 to limit the Central Bank's lending authority to the commercial banks, the central government, and other financial institutions. This measure barred the state enterprises and other public sector institutions from easy access to credit, in marked contrast to the previous regime under which overdrafts at the Central Bank had become more important than budgetary transfers. 232. The overall budget and its means of financing is now determined by a Monetary Council chaired by the Minister of Finance and composed also of the Minister of Economy, the Minister-Director of the National Planning Office (ODEPLAN), the President of the Central Bank, and a representative of the President of the Republic. Personnel limits as well as peso and foreign currency spending levels are allocated to each ministry and decentral- ized agency. The resource use of the public enterprises is controlled through three administrative levels beginning with CORFO, which remains the holding company for most state enterprises, and passing successively through the 1/ Note that the same limitation of coverage indicated in footnote on page 77 applies here. - 117 - company for most state enterprises, and passing successively through the Ministries of Economy and Finance. 1/ The enterprises are subject to specific limits on personnel and investments as well as access to foreign and domestic credit. New projects may not be initiated until formally approved, and the enterprises must provide the authorities with quarterly budgets, monthly sales and cost information, and statements of sources and uses of funds, project progress reports, and personnel and remuneration levels. a. The Central Government Budget 233. Table III.14 summarizes the operations of the central government since 1973 and illustrates the extraordinary effort undertaken to improve fiscal performance on both the tax and expenditure sides of the budget. The current account deficit, which by itself was equivalent to about 12 percent of the 1973 GDP, was eliminated in 1974 and a surplus achieved for the first time since 1970. The overall deficit was cut by more than half in real terms in 1974. By 1975, an overall surplus had been achieved for only the second time in the past 25 years. 2/ A small overall surplus was sustained through 1977. 1/ A decision to form a new holding company for state enterprises and to return CORFO to its original specialized role as a development banking institution has been pending for some time, but no action has yet been taken. 2/ The government's own presentation of the fiscal accounts continue to show a sizeable deficit as a consequence of the Chilean practice of treating debt amortization payments "above the line" as either current or capital expenditures. This report follows the more conventional practice of including amortization payments below the line as a net financing item. It should also be noted that the statistical deflation of nominal expenditure and revenue flows through this period, as in the case of the prior one, is made tenuous by the lack of specialized price indices in the face of rapidly changing relative prices. Moreover, with inflation rates as high and variable as those experienced in Chile since 1970, the intra-year timing of expenditure flows and revenues becomes crucial to understanding the real magnitudes involved. Month-by-month deflation might generate significantly dif- ferent real changes from those shown above on the basis of annual averages. - 118 - Table III.14: CHILE - CENTRAL GOVERNMENT REVENUE AND EXPENDITURES, 1973-1977 (Millions of pesos at December 1969 prices) a/ 1973 1974 1975 1976 1977 yl Current Revenues b/ 9.9 19.3 18.6 20.0 22.0 Current Expenditures 18.6 d/ 16.9 14.4 15.8 19.0 Current Balance - 8.6 2.4 4.2 4.2 3.0 Capital Expenditures c/ 3.2 8.5 3.9 2.8 2.8 Overall Balance -11.8 -6.1 +0.3 +1.5 +0.2 a/ Nominal data for 1973 are deflated by an average of the official and IBRD adjusted CPIs; deflation thereafter is by the IBRD adjusted CPI. b/ Includes nontax current revenues. c/ Net of capital revenues and excluding debt amortization. d/ Includes expenditures financed directly by the banking system. p/ Provisional. Source: Appendix II, Table 5.2 (i) Expenditures 234. Government spending continued to grow rapidly in nominal terms, rising more than 5-1/2 times from 1973 to 1974. A major element in this increase was the Government's effort to partially restore and maintain employee purchasing power through a series of large wage adjustments. These increases continued to be eroded by inflation, however, and current expenditures in real terms fell 9 percent. 1/ Capital expenditures more than doubled in real terms, however, as the Government tried to compensate for the low investment levels of earlier years and to slow the rise in unemployment. The greatest percentage increase was experienced by interest on the public debt which rose ten-fold in real terms. In total, real expenditures in 1974 were 15 percent above the level of 1973. 1/ Detail can be found in Appendix II, Table 5.2. The 1973 figure for current expenditures includes 7.5 million pesos (at December 1969 prices) which were financed directly by the banking system. - 119 - 235. The strict austerity measures introduced in April 1975 resulted in a 28 percent reduction in the total real spending of the central government. Capital outlays were drastically reduced, net investment falling 54 percent from 1974. With respect to current outlays, personnel expenditures were reduced only marginally, as the reduction of total wage and salary payments was offset by increased social security and family allowance contributions. Current real transfers to other public sector institutions were cut 40 percent reflecting improvement in the financial status of, and the increased fiscal discipline being exerted on, the state enterprises. Interest payments on the public debt, on the other hand, rose about 78 percent in real terms. 236. The austerity program continued into 1976 with an additional 2 percent real increase in central government expenditures, composed of a 10 percent increase in current spending and a 28 percent reduction in invest- ment. Current transfers to the rest of the public sector were reduced another 23 percent, and the only item experiencing a significant increase was transfers to the private sector composed chiefly of employment sub- sidies and welfare payments related to the recession, rebates of the value- added tax to exporters, and subsidies paid under the forestation program. In 1977, total central government expenditures are estimated to have risen about 17 percent in real terms, as the relaxation of the foreign exchange constraint and marked deceleration of inflation allowed large real increases in the wages of public employees and transfers. For the third straight year there was an overall surplus in the central government accounts. (ii) Taxes 237. The reduction of central government expenditures was accompanied by vigorous efforts to increase tax collections. Among the measures taken in late 1973 and during 1974 were the revaluation for tax purposes of agri- cultural and nonagricultural real estate, by factors of 30 and 10, respec- tively; increased tax rates on property, sales, and income; the full indexation of tax arrearages with more severe penalties for evasion; broadened coverage of the tax prepayment system along with higher rates and one-time collection of a tax on corporate net worth. Tax receipts were also increased signifi- cantly as a consequence of the elimination of the black market, the shift of import activity back to the private sector and abolishment of the tariff exemption granted public agencies, and improved tax administration. Most important was the return of copper taxes; in 1973 the fisc had received no receipts from copper. - 120 - 238. The results of this effort are summarized in Table III.15. Tax collections in 1974 rose a remarkable 62 percent in real terms, while GDP increased only 5.6 percent. Excluding direct tax revenues from the copper sector, total collections rose 47 percent, composed of a 51 percent increase in direct taxes and a 45 percent increase in indirect taxes. Table III.15: CHILE - TAX REVENUES, 1973-1977 (Thousands of pesos of December 1969) a/ 1973 1974 1975 1976 1977 p/ Direct Taxes 3,400 6,683 7,023 8,163 7,735 Taxes on copper (-) (1,562) (1,793) (3,046) (2,602) Non-copper taxes (3,400) (5,121) (5,230) (5,117) (5,133) Indirect Taxes 7,082 10,250 10,720 12,422 14,819 Total 10,483 16,933 17,743 20,585 22,553 (Total non-copper taxes) (10,483) (15,371) (15,950) (17,539) (19,951) a/ For explanation of deflator, see Table III.14. p/ Provisional. Source: Appendix II, Table 5.8 239. On December 31, 1974, a major tax reform law was put into effect. Its main features included the institution of a 20 percent value-added tax (VAT) in place of the long-standing cascading sales tax; 1/ the introduction of a tax on undistributed corporate earnings, which previously had escaped taxation; the elimination of taxes on capital gains; the unification of the tax base and rate schedules, thereby abolishing a large number of special rates, exemptions and loopholes; and the extension of indexing to the valuation of all business assets and liabilities. 2/ In addition, the assessed values of agricultural and nonagricultural properties were again raised--this time by factors of 3 and 4, respectively--and income tax rates were also raised 1/ The cascading sales tax had been replaced briefly earlier in the year by a production tax, which was in turn abolished in favor of the value- added tax. 2/ The new system's distributive effects are alluded to later in this chapter and discussed further in an internal working document of the World Bank. - 121 - again, as were a number of other taxes including road tolls and petroleum excises. With the introduction of the austerity program in April 1975, an additional 10 percent surtax was placed on income and property taxes and on the excise taxes applied to luxury goods, and exemptions to the VAT were eliminated on all but a few basic commodities. i/ 240. As a result of these measures and the normal lag of revenues col- lected on the 1974 tax base, real non-copper tax collections increased 3.8 percent in 1975, despite an 11 percent decline in the GDP. 2/ Tax revenues rose from 17.8 percent of GDP in 1974 to 20.4 percent in 1975. Total real tax collections rose 16 percent in 1976, the increase coming as a consequence of improved copper earnings and the growth of VAT and production revenues generated by the rising level of economic activity, along with the indexation of taxes while in the hands of private fiscal agents, and a speedup of pay- ments schedules. On the other hand, direct noncopper tax revenues fell, reflecting the lagged impact of the recession, the lowering of personal and corporate income tax rates and the reduction of the surtaxes imposed in 1975, as the Government acted to reduce gradually the heavy tax burden imposed by the austerity program. Import taxes also fell because of reduced imports and lower tariff rates. 241. The accelerating economic recovery in 1977 boosted tax revenues, excluding copper, by 10 percent in real terms. Non-copper direct taxes rose 14 percent despite further reductions of tax rates and increased personal exemption levels. Indirect taxes grew 19 percent on the strength of the increased volume of transactions, rising imports, and the elimination in January of all remaining exemptions to the VAT. b. The Public Enterprises 242. The financial situation of the major public enterprises deteriorated badly during the 1971-73 period as a consequence of the rapid expansion of their payrolls and the freezing of their prices. The resultant deficits were financed by the Central Bank, either directly or indirectly via transfers from the central government or from the banking system. While the CPI (IBRD adjusted) rose seven-fold from mid-1972 to mid-1973, public enterprise tariffs were held constant or permitted only small increases. Consequently, as shown in Table III.16, the prices charged by the state steel company declined in real terms by 80 percent over the period; electric company rates lost 90 percent of their real value; the rate structures of the coal and telephone companies each lost more than 50 percent; and the real price of petroleum sales fell 79 percent despite rising international oil prices. 1/ The exemption remained until early 1977 for milk, wheat and wheat flour, bread, fresh fruits and vegetables, books and magazines. 2/ The increase shown for copper tax revenues in Table III.15 is misleading on two counts. In the first place, the differential exchange rate applied to copper exports was not eliminated until the middle of 1974. Moreover, copper receipts in dollars actually fell from 1974 to 1975, the increase in real peso terms being the result of exchange rate adjustment. - 122 - Table III.16: CHILE - REAL PRICE INDEX FOR SELECTED PUBLIC ENTERPRISES, 1972-1976 a/ (December 1974 100) CAP ENACAR ENAP ENDESA CHILECTRA CTC Year/Month (Steel) (Coal) (Petroleum) (Elect.) (Elect.) (Telephone) 1972: First semester 99 206 43 128 128 213 Second semester 43 104 22 65 72 194 1973: March 20 48 20 30 31 94 June 23 95 10 15 16 50 September 20 99 9 13 14 106 December 74 66 62 54 54 158 1974: March 70 90 97 72 71 98 June 79 94 105 75 61 90 September 124 85 106 113 112 110 December 100 100 100 100 100 100 1975: March 119 90 107 116 112 91 June 121 95 127 116 79 83 September 105 77 127 135 130 86 December 88 69 108 166 140 97 1976: March 118 78 117 155 131 97 June 113 73 99 163 134 99 September 100 64 88 156 129 91 December 113 78 99 164 181 92 a/ Deflated by IBRD adjusted CPI. Source: Appendix II, Table 5.21 243. Shortly after assuming power, the Pinochet Government acted to adjust public enterprise prices in an effort to eliminate the massive deficits and restore realistic market signals. Petroleum prices were raised eleven-fold in nominal terms, steel and electricity prices six-fold, and telephone rates were more than doubled. Subsequent adjustments have been frequent and generally have at least kept up with the overall rate of inflation. By 1978 petroleum and steel prices were freed, and are now subject to import competition. A major exception is the coal company (ENACAR) where price increases have been restrained by large production surpluses and Government reluctance for social reasons to reduce employment; ENACAR is now paying high severance pay and attempting to retrain redundant workers. Most public enterprises producing goods and services have covered their operating costs since 1974, although central government transfers have continued to be necessary in - 123 - some cases to cover debt service and new investments. 1/ Beginning in 1976, the consolidated operating balance of the public enterprises has shown a surplus equivalent to almost 2 percent of GDP, and the overall balance, including investment, has been approximately zero. 244. Enterprise budgets are now expected to yield a net profit, the proceeds of which are transferred to the Treasury. Conceptually, investment resources are allocated not as a function of each enterprise's retained earnings and borrowing power--i.e. as an internal decision of the individual enterprise--but as a consequence of investment priorities established for the public sector as a whole. This includes the copper corporation (CODELCO), which is required to deliver all foreign exchange proceeds to the Central Bank, receiving back only that amount needed to cover centrally budgeted operating costs, investments, and debt service. 2/ 245. As in the case of the central government, some of the improvement in the financial situation of the enterprises has come through personnel reductions (see Appendix II, Table 5.22). A large part of the improvement, of course, is attributable to the divestiture of many of the enterprises acquired or intervened by the UP Government. Many, if not most of these enterprises, were operating at substantial losses, and a condition of their return to the original owners was that the latter assume all accumulated debts and waive any damage claims against the government. Finally, the enterprises shared in the general austerity and shortage of foreign exchange, and investment levels were deeply cut. In the case of CODELCO, the mission found that it was failing to invest sums equal to depreciation of existing capital stock. 246. Although the Government has moved rapidly to reduce the role of the State in the economy while shifting increasing responsibility to the private sector for directing the allocation of resources, it is necessary to keep in perspective the enormous continuing importance of the remaining state enterprises. Of Chile's 100 largest nonfinancial enterprises, according to book value, the companies in which the State owns 50 percent or more of the shares at the end of 1976 accounted for 79 percent of total assets and 81 percent of net worth. 3/ The State controls all of the top ten enter- prises and 20 of the top 25. By their very size as well as for economic and political reasons, the largest of these enterprises--which include CODELCO, ENDESA, CHILECTRA, CAP, ENAP, and so on--will remain in the public sector within any foreseeable future and thus set a limit to the feasible reduction of the State's direct role in the economy. In short, the State is and will continue to be responsible for a significant fraction of the national 1/ The state nitrate and coal companies (SOQUIMICH and ENACAR) and the national airline (LAN) continued to receive operating subsidies in 1977. The state railroad received budget support to cover pension payments from its retirement fund and external debt service. The port authority (EMPORCHI), shipping company (EMPREMAR), urban bus company (ETC), and LAN also received transfers to cover debt service. 2/ The operations of CODELCO are discussed further in Chapter IV. 3/ Colocadora Nacional de Valores, Informe Economico, No. 18, September 1977. For a complete listing, see Appendix II, Table 8.25. - 124 - patrimony. The proper management and growth of that patrimony will necessarily continue to require that a considerable fraction of the nation's resources be allocated via the decision-making mechanisms of the public sector. 2. Monetary Policy 247. As discussed in Chapters I and II, monetary policy was for decades virtually nonexistent as an independent tool of macroeconomic policy. Central Bank reserve creation and credit expansion were functions largely of the public sector deficit. Moreover, during the 1971-73 period, control over the deficit progressively deteriorated as government agencies and enterprises skirted the budgetary process and borrowed freely from the Central Bank, either directly or through captive commercial banks. In the initial months after the military assumed control of the government, the precarious financial situation of the banks themselves, as well as the administrative difficulties and confusion arising during their transition back to private ownership, provided a weak institutional base for the control of monetary aggregates. Furthermore, inflationary expectations had by 1973 greatly reduced the public's willingness to hold money balances, rendering monetary policy at best a blunt instrument for influencing the level of aggregate demand. 248. The Government thus faced, in effect, the task of reconstructing the financial system, establishing the Central Bank's control over the monetary aggregates, in coordination with the reforms simultaneously occurring in fiscal management and foreign exchange policies, and facilitating the system's performance in allocating financial resources in a manner consistent with the free market orientation of the new economic strategy. Among the measures taken were: (1) The progressive raising and ultimate elimination of the legal ceiling on interest rates; (2) The legalization and exemption from income taxation of monetary correction clauses for all financial obligations with greater than one-year maturities, 1/ later shortened to a daily basis; (3) The nationalization of the Central Bank, establishment of its policy-making authority over all institutions receiving deposits from the public, and prohibition of its lending to entities other than the central government, commercial banks, and other financial institutions; (4) The subjection of finance companies and other private financial institutions to the supervisory authority of the Superintendency of Banks, renamed the Superintendency of Banks and Financial Institutions; 1/ Formally, any compensation for loss of purchasing power was legally treated as interest and thus subject to the ceiling. Exceptions were made only for SINAP, BECH, and the Central Bank, each of which operated under its own special legislation. - 125 - (5) The strengthening of the Finance Minister's control over virtually all important economic policy variables through creation of a Monetary Council with full responsibility for determining policy in the areas of money, credit, interest rates, debt, capital market activity, foreign exchange, tariffs and other trade matters, and veto power over all loans to the central government; (6) The issuance by the Treasury and the Central Bank of indexed securities in an effort to dampen monetary expansion and provide noninflationary financing for the fiscal deficit; 1/ (7) The move toward multipurpose financial institutions, via the relaxation of restrictions on the types of operations that the various heretofore highly specialized financial institu- tions may undertake, in order to increase competition, and take advantage of potential scale economies; 2/ (8) The sale *back to the private sector of most of the banking shares acquired by the State during the Allende Government; 3/ (9) The elimination of quantitative credit limits on commercial bank lending operations; and finally, (10) The progressive elimination of special credit lines from the Central Bank. 249. These structural reforms are intended to establish a competitive financial system in which the allocation of resources is determined by the forces of supply and demand as reflected by the rate of interest. The government retains responsibility for setting and enforcing the overall rules 1/ After 1976, when the peso fiscal deficit was eliminated, this form of financing was discontinued. The restoration of public confidence has also permitted several of the public enterprises to issue their own securities on the open market, thus avoiding further reliance on budgetary transfers or Central Bank credits. Among the enter- prises successfully issuing commercial paper or debentures have been CAP, IANSA and LAN. 2/ Thus commercial banks are now authorized to lend for housing and to open savings and investment departments for other long-term operations and development banks are allowed to finance working capital and mortgages. 3/ The Decree, promulgated in December 1974, prohibited the State from owning commercial bank shares and defined procedures by which existing holdings were to be disposed of by the end of 1977. Subsequent delays, however, and the repossession of one bank already divested because of irregularities in the new management have caused the final date to be extended to 1980. - 126 - of the game and for regulating in a nondiscriminatory fashion the total supply of credit in the interest of macroeconomic growth and stability; most specific quantitative and qualitative controls have been eliminated. The reforms undertaken so far have produced a relatively well developed financial structure, although some serious problems still remain. The difficulty of this transformation was magnified by the severe liquidity constraints placed on both the banks and the productive sectors of the economy by the heavy debts and high inflation rates inherited from the past and the severe austerity program and economic recession through which the economy has had simultaneously to pass. Some pieces of the reform, particularly those having to do with the long end of the financial system--i.e., the capital market--remain to be worked out as the authorities were necessarily preoccupied with the policy demands of the short term. a. Money and Credit 250. The major tools of Chilean monetary policy traditionally were the power to fix the reserve requirement on commercial bank deposits, to set quantitative limits on credit expansion on a bank-by-bank basis, to rediscount commercial bank loans, and to fix interest rates. Years of inflation had virtually destroyed the marketability of government securities, thus precluding the development of open market operations. The remaining tools were largely meaningless so long as the Central Bank was required to finance the deficits of the public sector. 251. As the fiscal deficit has been reduced and the focus of credit has shifted to the private sector, monetary policy has taken on greater signifi- cance. Since 1973, quantitative and selective credit controls were progress- ively relaxed, although the initial maintenance of high reserve requirements kept credit expansion closely tied to the rediscount policy and selective credit lines of the Central Bank. The increasing sales of public debt instru- ments have served to absorb liquidity, but there still is no effective open market operation, in the sense of a secondary market where the Central Bank could purchase and sell securities in sufficient volume to effect desired changes in the money supply. The monetary authorities do not believe that it would be desirable, at the present time, to use a secondary market for this purpose. Moreover, the bulk of these securities were initially bought by the social security institutions or by commercial banks as part of a mandatory - 127 - "technical" reserve requirement, and are thus better viewed as an adjunct to reserve policy. 1/ 252. The freeing of prices and the Government's efforts to maintain employment and restore purchasing power led to a rapid expansion of money and credit during the last quarter of 1973, M1 more than doubling in nominal terms (Table III.17). Velocity evidently declined, however, with the resolu- tion of political uncertainties. Credit to the public sector continued to fuel monetary expansion during 1974 (see Table II1.18), but at a significantly reduced rate. Most notable was the lower credit requirement of the public enterprises, as total banking system credit to the public sector outside the central government contracted for the first time since 1970. On the other hand, growth of credit to the private sector was extremely rapid, and overall the net domestic assets of the banking system grew some 85 percent relative to the stock of money and quasi-money existing at the end of 1973. 2/ 1/ The major public debt instruments in use are: 1. Discountable Treasury Bills (Pagares Descontables de Tesoreria). Negotiable short-term paper of 35-91 day maturities issued daily. Until May 1976, the rate of discount was determined at auction; since then, the daily rate has been determined immediately prior to sale by the Treasurer on the basis of market conditions. 2. Readjustable Savings Certificates (CARs). Nonnegotiable securities issued by Central Bank, indexed, with maturities of more than one year, and a 7 percent rate of interest. 3. Central Bank Bills (Pagares del Banco Central). Thirty-day renewable paper issued by the Central Bank to financial institutions to hold as part of their technical reserves. Interest rate fixed periodically by the Central Bank. 4. Certificates of Financial Savings (CAFs). Three-month bearer paper issued by the Central Bank with a floating interest rate deter- mined at auction. 5. Certificates of Foreign Exchange Cover (CEPACs). Zero-interest bearer paper issued by Central Bank, denominated in U.S. dollars, with two-year maturity, for application only to imports or other foreign exchange transactions. 2/ The exact percentage change is affected by the choice of exchange rate applied to assets and liabilities. Given the rapid inflation and large exchange rate adjustments occurring during the period, the calculation is necessarily somewhat arbitrary and should be taken only as an order of magnitude. Quarterly calculations are offered for subsequent years, thereby reducing the exchange rate problem, but at the cost of introducing some seasonal distortions resulting, for example, from the periodicity of public debt amortization. Finally, while the percent changes relative to the existing base of liquid financial assets appears very large, account should be taken of the extremely small size to which that base had shrunk in real terms. - 128 - Table III.17: CHILE - GROWTH OF MONEY SUPPLY BY QUARTERS, 1973(IV)-1978 (Percent) Current Pesos Pesos of December 1969 Change Change Change Change During From Year During From Year Year/Quarter Quarter Earlier Quarter Earlier 1973 ( IV) 107.8 419.0 34.9 2.8 1974 ( I) 24.1 376.2 -4.4 -15.1 ( II) 23.3 341.7 -18.4 2.4 (III) 35.1 330.1 -3.2 -18.3 ( IV) 42.9 195.4 2.8 -37.9 1975 ( I) 32.9 216.4 -17.4 -32.9 ( II) 23.8 217.7 -26.3 -39.2 (III) 43.4 237.2 10.1 -30.9 ( IV) 51.3 257.2 20.5 -19.1 1976 ( I) 23.9 233.0 -10.3 -12.1 ( II) 21.4 226.6 -12.0 5.8 (III) 28.2 192.0 3.7 -1.3 ( IV) 50.0 189.4 28.8 5.6 1977 ( I) 27.4 197.5 7.2 26.1 ( II) 11.4 173.0 -0.7 42.1 (III) 15.5 145.8 3.6 42.3 ( IV) 30.2 113.5 18.6 30.8 1978 ( I) 22.6 105.4 14.3 39.4 ( II) 1.9 87.9 -4.6 34.0 (III) n.a. n.a. n.a. n.a. ( IV) n.a. 65.0 n.a. 26.6 Source: Appendix II, Table 6.2 Given the very high commercial bank reserve requirements in effect, the expansion had to be funded primarily by the Central Bank, either directly or indirectly through rediscounts, refinancing, and tolerance of reserve deficiencies. 1/ The nominal money supply grew almost three-fold. Never- theless, the expansion of money lagged far behind the rate of inflation as 1/ On January 1, 1974, the reserve requirement on demand deposits was raised to 80 percent of the average daily deposit levels of December 1973, plus a marginal requirement equal to 95 percent of increments from that base. On October 1, 1974, the base reserve requirement was raised to 100 percent of the average daily deposits of September with a marginal requirement of 80 percent. The interest rate charged on reserve deficiencies was also increased sharply--to 25 percent--and collected monthly. However, to soften the contrac- tionary effect, the banks were given until March 1975 to complete a phased elimination of their reserve deficits. (The evolution of reserve requirements over time, by financial institution and type of liability, is given in Appendix II, Table 6.7). Table III .18: CHILE - BANKING SYSTEM CREDIT EXPANSION IN RELATION TO SUPPLY OF MONEY AND QUASI-MONEY AT BEGINNING OF PERIOD, 1973(IV) - 1977 (Percent) P U B L I C S E C T O R Central Public Net Private Govern- Decentral 1 Enter- Domestic Period Sector ment Agencies - prises - CODELCO SINAP Other -/ Total Assets d 1973: 4th Quarter 20.5 16.1 -16.6 23.2 -1.9 _ _ 20.8 55.6 1974: Year 46.o 19.9 - 6.o 4.0 -1.9 e/ f/ 16.1 85.1 1975: 1st Quarter L/ 6.5 23.9 -10.1 6.2 2.5 3.7 1.0 27.5 25.5 2nd " 12.4 -4.8 - 3.5 -2.2 -2.6 4.0 1.8 -7.4 12.8 3rd " 6.9 o.6 - 2.6 -3.6 -1.4 4.4 13.4 10.9 11.9 4th " 14.3 13.3 - 4.9 -3.9 3.5 4.9 2.4 15.3 32.3 1976: 1st " 7.8 7.6 - 3.7 6.o 1.4 4.2 -0.0 15.5 8.4 2nd " 13.9 3.0 1.7 2.7 -3.7 6.5 -3.2 7.0 15.4 H 3rd " 17.2 1.4 - 3.1 1.8 -0.5 9.2 1.0 9.8 1.3 4th " 19.5 8.9 - o.8 -2.5 -2.0 5.7 0.0 9.3 34.5 1977: 1st " 22.3 12.2 - 2.8 -0.2 0.9 12.3 -1.7 20.6 22.1 a/ Includes social security system, and municipalities. b/ Excluding CODELCO. c/ Consists primarily of import credits financed from abroad and interest on foreign currency obligations. d/ Includes also net unclassified assets, interbank float, official capital and surplus, and revaluation accounts. e/ Included in decentralized agencies. f/ Included in public enterprises. g/ In January 1975, the central government assumed substantial outstanding debts of the decentralized agencies and public enterprises to the banking system. Source: Appendix II, Table 6.1 - 130 - the demand for real money balances declined. Inflationary expectations, as evidenced by increasing velocity, seemed to worsen as the year pro- gressed. The stock of quasi-money increased slightly less rapidly than MV reflecting in part the growing relative attractiveness of alternative financial instruments outside the banking system. 253. With declining copper revenues, the expansion of credit to the public sector accelerated in the last quarter of 1974 and the first quarter of 1975, and the nominal money supply rose 43 percent and 33 percent, respectively, in the two periods. 1/ Another growing source of monetary expansion was the substantial Central Bank financing of withdrawals from the Savings and Loan System (SINAP), as depositors became increasingly concerned about its solvency, and the freeing of interest rates and the extended use of indexing made other financial instruments more attractive. 254. The expansion of credit slowed sharply through the first three quarters of 1975 with the virtual elimination of the public sector deficit. An effort was made to slow the net withdrawal of funds from SINAP by freeing it from interest rate controls on non-indexed deposits and credits of less than one-year maturity 2/ and authorizing it to issue indexed notes of greater than one-year maturity. While some new funds were thus attracted to the System, other measures further reduced the attractiveness of its major existing instrument, the Readjustable Mortgage Security (VHR), and the net withdrawals, financed by Central Bank credits, accelerated. 3/ Meanwhile, the growth of bank credit to the private sector was constrained by higher reserve requirements, and quantitative restrictions on the growth of bank loan port- folios. Other measures introduced in an effort to reduce liquidity included: the freeing of interest charged by commercial banks on local currency loans of less than one year; the extension of reserve requirements to all nonbank financial institutions; increasing the minimum holding period of an interest- bearing asset from four to thirty days; authorizing commercial banks to accept term deposits; and raising the maximum size of State Bank term savings accounts eligible for monetary correction as well as the rate of interest paid on such accounts. 1/ The rapid increase in credit shown to the central government is somewhat deceptive, reflecting in part the assumption of debt obligations of the decentralized agencies and public enterprises. 2/ SINAP had been authorized since October 1974 to engage in short-term operations, but interest rates had been fixed too low to be competitive with the private finance companies. 3/ In an attempt to slow the withdrawal of VHRs from the SINAP, existing holdings were partially frozen in June 1975, each depositor being allowed the option of withdrawing a maximum equivalent to US$100 per month per account or of converting the VHRs into negotiable five-year Readjustable Mortgage Bonds (BHRs). This conversion option was terminated in December 1975 and replaced with the option to convert VHRs into a special issue of Central Bank Readjustable Savings Certificates (CARs) having phased maturities of 1 to 15 years. In retrospect, it appears that the un- certainty and further loss of confidence in SINAP and its savings instruments caused by these measures may have served to accelerate the' net outflows from the system. - 131 - 255. Despite these efforts, the nominal money supply rose by more than 250 percent during 1975. Instead of the public sector deficit, the major source of expansion over the course of the year had become foreign exchange operations re- sulting from increased capital repatriation and short-term inflows as well as the growth of non-copper exports and depressed imports, all converted at a sharply higher (in pesos terms) rate of exchange. Nevertheless, M1 again contracted in real terms and had become equivalent to less than 4 percent of the GDP. There was a notable decline in velocity during the second half of the year, as the austerity program was seen to be taking hold and inflation decelerating. 256. An important turning point in monetary policy occurred in 1976. The elimination of the public sector deficit had greatly reduced the latter's credit demands, except for foreign debt service, thereby permitting a significant relaxation of constraints on lending to the private sector. At the same time, the sharp reduction in the rate of inflation was reflected in the decline in inflationary expectations, and the resultant steady increase in the demand for real money balances permitted the authorities to move toward gradual restoration of more normal levels of liquidity in the economy. Consequently, quantitative credit controls were ended in May 1976, and a progressive reduction of reserve requirements was initiated during the second half of the year and continued through 1977. 257. Meanwhile, the major source of reserve money creation had become the rapid buildup of international reserves which grew US$455 million over the course of the year, with surplusses on both current and capital accounts. Concerned with the monetary effects of this rate of reserve growth, and seeing the possibility of striking an important blow against inflationary expectations, the Government twice appreciated the peso--in July 1976 and March 1977--and slowed its crawl. In addition, a two-year minimum maturity was placed on foreign capital entering under Article 14 of the Foreign Exchange Law, and such inflows, when brought through commercial banks, were made subject to the ordinary reserve requirements on foreign currency deposits. These funds con- tinued to flow in in large amounts, however, as the appreciating peso made the large nominal interest rate differential between the domestic and inter- national financial markets even more attractive in real terms. 258. Central Bank rediscount lines were also expanded in 1976. Never- theless, the strong growth of banking system deposits and the reduction in reserve requirements, along with the diminution of public sector demands, resulted in a significant shift of lending activity from the Central Bank to the private commercial banks. 1/ During 1976, the Central Bank accounted for about one-third of total credit expansion as compared to 85 percent in 1975. 1/ Part of the growth of reserves in the banking system, particularly late in the year, resulted from the withdrawal of deposits from the private finance companies where confidence had been shaken by a number of bankruptcies and cases of management irregularities. - 132 - 259. The money supply has been growing rapidly in real terms since the middle of 1976, with the authorities attempting to walk the fine line between providing the liquidity needs of a recovering economy in the throes of a major structural transformation and the re-ignition of inflationary expecta- tions among a populace that closely monitors and has become highly sensitized to changes in financial indicators. Superimposed on this short-term management effort have been a series of measures designed to modify the structure of the financial system itself, making it more capable of responding efficiently to market forces, on the one hand, and more sensitive to the over-all regulatory powers of the monetary authorities, on the other. Inevitably, there have been some conflicts between short-term and long-term objectives. The difficulty is perhaps most dramatically illustrated by the very high interest rates that have prevailed at a time when a major long-term priority is to stimulate investment. b. Interest Rates 260. The maximum legal interest rate during the second half of 1973 was 60 percent per annum, with taxes and other charges bringing the actual nominal cost to the borrower up to about 90 percent. As in previous periods, there- fore, those enterprises with access to regulated credit enjoyed negative real interest rates. The large majority of private firms, however, undoubtedly had to rely on internally generated funds or on inter-enterprise credits transacted through the "informal" financial market, perhaps through the intermediation of private finance companies or other unregulated brokers. With their larger retained earnings and superior access to foreign loans as well as subsidized domestic credit, the system generally favored the larger enterprises. At the same time, the dependence on internally generated funds for both working capital and investment resulted in low dividend payouts and probably acted to inhibit development of the stock market. 261. In March 1974, the maximum legal interest rate was raised to 90 percent, and then raised again in May to 200 percent. In real terms, however, bank lending rates remained negative. Also in May 1974, interest rate ceilings were raised entirely from the loans of nonbank financial institutions, stimulating the entry of many new finance companies into the market and permitting them to attract funds away from both the commercial banks and the savings and loan associations. Finally, interest rates throughout the system were effectively freed from controls in May 1975. 262. Tables 6.9-6.10 in Appendix II and Figure III.2 trace the evolu- tion since 1974 of short-term (thirty-day) interest rates paid to depositors and charged to nonagricultural borrowers by commercial banks, finance companies and savings and loan associations (AAPs). 1/ With the freeing of interest rates, the nominal cost of bank borrowing shot up from 9.6 percent per month in April 1975 to 19.0 percent in May, reaching 21.2 percent in July. Of course, on an annual basis the rate for July, for example, exceeded 900 percent. 1/ Farmers with access to the banking system generally enjoyed somewhat lower interest rates as a result of preferential discount rates at Central Bank. - 133 - At the same time, the monthly rate of inflation declined sharply, so that the tightness of credit and the lag in inflationary expectations resulted in extremely high real rates of interest averaging more than 7 percent per month for thirty-day money during the final six months of the year. Depositors for the same period received an average of just under 2 percent per month in real terms, indicating a gross spread between deposits and loans of 5-1/2 percent. The Central Bank attempted to apply some downward pressure on interest rates by "suggesting" in October 1975 that nominal savings account interest be limited to 8 percent per month. The moral suasion was more rigorously enforced upon commercial banks than other intermediaries and resulted in a sudden flow of deposits from the former to the latter. In December, the suggestion was withdrawn, and the Government has since resisted pressures to intervene directly in the determination of interest rates. 263. Short-term interest rates changed very little in nominal terms during the first semester of 1976, the real borrowing rate averaging 2.9 per- cent per month for commercial banks, 3.4 percent for loans from the savings and loan institutions, and 3.7 percent from the finance companies. Deposit rates had become slightly negative in real terms in the case of commercial banks and slightly positive for the nonbank institutions, indicating a still very substantial gross monthly spread of 3-4 percent. 264. In addition to the accelerated expansion of credit begun during the second half of 1976, a number of measures were taken that were expected indirectly to affect short-term interest rates. In May, the Central Bank began to pay interest on commercial bank reserves. That, along with the subsequent lowering of reserve requirements, was intended to reduce banking costs and permit a decline in the gross spread. The revaluation of the peso in July 1976 also had a major impact on inflationary expectations and increased the demand for money and quasi-money. At the same time, the minimum maturity that could be indexed was lowered from one year to 90 days in order to neutral- ize inflationary expectations, reduce interest rates for that maturity range, and encourage the growth of longer-termed deposits. Also during the second quarter, the AAPs, finance companies and, later, banks were authorized to act as brokers in intermediating commercial paper without incurring a contingent liability or additional reserve obligation. This was intended to increase the flow of credit and improve bank profitability, while at the same time attract- ing activity away from the largely unregulated and financially precarious informal financial sector. Average nominal interest rates on deposits did fall in response to these measures, but by less than the rate of inflation. Still slower was the reduction of the interest rate on bank loans, which averaged more than 5.5 percent per month in real terms in the second semester of 1976. The gross nominal spread rose from 2.5 percent in June to 4.1 percent in December and 4.6 percent during the first two months of 1977. Since February 1977 the gross spread has shown a strong downward trend reach- ing nine-tenths of a percent in December 1978. 265. Somewhat greater success was achieved by the second revaluation in March 1977. Coupled with further reductions of the reserve requirement, increased interest earned on reserves, and a strong growth of bank time deposits, the bank lending rate began to fall more rapidly than the rate of change of the consumer price index. As a result, the real monthly interest - 134 - FIGURE II1.2 SHORT-TERM C THIRTY-DAY ) REAL INTEREST RATES PAID TO DEPOSITORS AND CHARGED TO NONAGRICULTURAL BORROWERS BY COMMERCIAL BANKS t97S-t978 8 ; A INTEREST RATES CHARGED 48 A _/ 1 \ / NTEREST RATES PAIDN _4 l/~~~~ - y 1975 1976 1977 1978 -1 0 1 ~~~~197 197 197 l UM J S D M J S D M J S D M J S D Source: Appendix II, Tables 6.9 and 6.10 - 135 - rate of thirty-day bank credits fell from 8.4 percent in November 1976 to 2.4 percent by September 1977, the gross spread in the latter months having fallen to 1.4 percent. Interest rates rose again sharply during the final quarter of 1977. Short-term real interest rates charged in 1978, while still consid- ered high, were consistently lower than rates recorded for the corresponding months in 1977. In spite of these variations, the average real rate has been slowly falling since the second semester of 1975. The corresponding average monthly rates for 1976 through 1978 are as follows: 4.24, 3.85 and 3.00 per- cent. On an annual basis these rates were 65, 57 and 43 percent, respectively. 266. In view of the extraordinarily high interest rates prevailing in Chile since their freeing in mid-1975, it is not surprising that it has constituted a major national issue. To begin with, there is considerable disagreement and surprisingly little hard information regarding the interest rates actually being paid by the majority of enterprises. The short-term credits for which data are systematically available represent only a fraction of total credit, and, it is further argued, the rates being reported are those charged at the margin and are significantly higher than the terms offered prime custormers. One widely cited study, carried out in late 1976, reported that many large and medium firms were mixing credits from a variety of sources with a weighted average annual real interest rate of 25 percent. 1/ 267. Nevertheless, mission interviews with a large number of enterprises suggest that this study significantly underestimated the costs of borrowing in Chile, even for those enterprises that had a relatively high degree of access to foreign loans. The average annual real cost of short-term, local currency bank credit during the last quarter of 1976 appears to have been around 64 percent, rather than the 55 percent used in the cited study, and lower rates would not have been available from the nonbank institutions. Interest on indexed loans averaged about 12 percent. The cost of foreign credit to the borrower indicated in the study does not apparently include the charge for the required local bank guarantee, which amounted to about 5 percent during the relevant period. Finally, it does not appear that foreign credits, even for the largest enterprises, would have exceeded 40 percent of the total. Application of these corrections generates an estimated average real interest rate of more than 37 percent, and this must be viewed as indicative only for Chile's larger corporations. Smaller enterprises in late 1976 were probably 1/ The calculation was made as follows: One-third of total credit was estimated to come from the short-term financial market at an average annual real interest of 55 percent; another 16 percent from official lending agencies and development banks, or credit lines discountable at the Central Bank, with indexed interest rates averaging 11 percent; and finally, 52 percent from foreign loans at an average interest rate of 10 percent. - 136 - paying something between 50 and 80 percent per year in real terms for their financing. 1/ 268. Throughout the period studied, real short-term interest rates have very substantially exceeded the rates attached to indexed long-term securities. A number of factors have contributed to this phenomenon. One has been the strength and intransigence of inflationary expectations which have persistently lagged behind the declines in the actual rate of price increase. Another has been the small demand for long-term financing because of the large unutilized capacity existing in many sectors of the economy; the uncertainties presented by the drastically altered international trade regime; and the severe short- term financial bind created by the economic recession, the prior buildup of inventories in 1974, the heavy debts inherited from the past, and the sudden appearance of positive real interest rates. Finally, one cannot entirely rule out the possibility of at least tacit collusion among the relatively limited number of financial institutions. 269. The high average real interest rate calculated above is, in large part, the result of the concentration of operations at the short end of the market. Real interest charged on indexed long-term transactions does not appear grossly out of line with the likely opportunity cost of capital in Chile presently. The point is, of course, somewhat circular, inasmuch as the unusually high short-term interest rate has tended to attract loanable funds to that end of the market. Through 1976, however, the high interest rate probably did not represent an important impediment to long-term investment. More significant, in the mission's judgment, were the general uncertainties created by the difficult macroeconomic situation through which Chile was passing and the unknown microeconomic implications of the truly major policy reforms which had been invoked. 2/ 270. Nevertheless, with economic recovery now well underway, the per- sistence of such high short-term interest rates inhibits the development of a capital market and makes it difficult to achieve the level of investment required to complete the structural transition intended by the Government's economic program and to set the basis for accelerated long-term growth. Moreover, similar to what occurred in the past, so constricted a financial system gives clear financial advantage to those enterprises with access to foreign funds, those which can draw upon large retained earnings--either their own or from other members of the conglomerate family--and those with corporate ties to banks, development companies, and other financial intermediaries. 1/ The very large gap between foreign and domestic interest rates was main- tained by a number of factors including the two-year minimum maturity required of financial inflows, the limit of 100 percent of capital and reserves placed on commercial bank guarantee authority, the credit ceilings imposed by foreign lenders, and the imperfect information existing on both sides of the market. Nevertheless, very substantial funds did flow in in response to the interest rate differential. So attractive was the arbitrage opportunity that several enterprises confided to the mission that they were willing to import goods for resale at little or no (even negative) profit in order to acquire the accompanying trade credits that could be turned over in the domestic money market. 2/ Indeed, the immediate reason for authorizing the development banks to enter short-term operations was reportedly the difficulty they were having in placing long-term funds. - 137 - A number of important enterprises in Chile combine all of these advantages and thus enjoy a significant competitive edge not necessarily related to productive efficiency 1/. 271. The further reduction of the interest rate and the development of the domestic capital market are thus urgent policy objectives. Progress is made difficult, however, by the low absolute base of domestic savings (Table III.2) and loanable funds from which the economy is only just emerging. The high burden of foreign debt and low reserves will continue to weigh heavily for several more years, and the problem has obviously not been lightened by the large net withdrawal of resources in recent years by the bilateral and multilateral lending institutions. c. Selective Credit 272. The heavy use of selective credit represented one of the few economic policy elements which would appear to be inconsistent with the Government's general market-oriented approach to resource allocation. As noted above, high reserve requirements and the lack of a base for open market operations left the rediscount window as the major Central Bank vehicle for affecting the flow of credit to the private sector. 2/ Although the rate of interest on redis- counts has been progressively raised, these credits continued to be subsidized to some degree through most of the period studied. 273. Rediscounting facilities during 1976 and 1977 were available for industrial investment; agricultural investment, rehabilitation, and working capital; assistance to small potato farmers and wheat growers hurt by the 1975 drought; special credits to small farmers (those with holdings below 12 basic irrigated hectares); reforestation; housing; exports; and some transitory credi-ts to public enterprises. In some of these programs, the Central Bank 1/ New regulations placed on the operations of finance companies in February 1977 to strengthen their operations and restore public confidence also have the unfortunate side effect of inhibiting the access to credit of small and medium firms. Under the regulations only the paper of state enterprises or other enterprises with capital and reserves equal to or exceeding 60,000 development units (about US$1 million) may be inter- mediated without a commercial bank guarantee. More recently, the previous requirement that development banks maintain at least 10 percent of their portfolios in credits to small enterprises was removed. 2/ Formally, there are three mechanisms through which the Central Bank funnels credit into the banking system: (1) rediscounting, which involves the actual transfer of a credit document from the commercial bank to the Central Bank; (2) refinancing, which is, in effect, a Central Bank loan to the commercial bank to cover the reserve deficiencies created by specified types of credits; and (3) lines of credit, authorizations granted by the Central Bank to commercial banks or public sector institutions to use funds for a specified purpose, generally up to a predetermined amount. All such operations have been referred to here simply as rediscounts. - 138 - acted as wholesaler of credits or credit lines provided by (or guaranteed by) foreign official lenders. By 1978 rediscounting facilities were available only for reforestation and housing. 274. Until 1978 when the practice was ended, the rediscounts on investment credits were indexed and granted initially for a period of 180 days but could be renewed repeatedly, at the option of the primary lender, for up to five years. The rediscount rate was determined through a monthly bidding process among the eligible intermediaries for the global amounts the Central Bank made available. 1/ Short-term credits for agriculture were divided into two rediscounting facilities, one offering 50 percent refinancing of production credits to all farmers, and the other providing 100 percent refinancing only for farmers whose holdings did not exceed 12 basic irrigated hectares. The rediscount rate charged on both facilities in 1977 was a highly subsidized 5.5 percent on the indexed principal. 2/ D. EMPLOYMENT 3/ 1. Aggregate Experience 275. As shown in Table III.19 total employment in Greater Santiago declined slightly over the course of 1974, the gains in output coming largely as a consequence of improved productivity. The normal growth of the labor 1/ The only limitation was that the monthly amount offered may not exceed one percent of the prior month's total private money supply (M ). The bid interest rate held only for the initial 180-day period. The rediscount rate for subsequent renewal periods was determined as the average rate in the auction held one month prior to each renewal. 2/ At the end of 1977, the Government announced that no special rediscount facility would be offered for agriculture generally during the next crop year. The reduction in reserve requirements is expected to enable the commercial banks, including the State Bank, to meet the ordinary needs of the sector out of their own resources. Farmers would continue to be eligible for credit lines for exports and for capital goods imports. 3/ The discussion of employment depends on the quarterly labor force surveys of the Greater Santiago metropolitan area carried out by the University of Chile (Tables 1.15-1.20 in Appendix II). Because of an apparent but unexplained discontinuity in the data between the surveys of June and December 1977--there was no September survey in that year--no simple comparison can be made of the results reported prior to and subsequent to that gap. The major problems concern a sudden jump in the reported population of the survey area and a sharp increase in the calculated rate of labor force participation. Other discontinuities are evident in the sectoral and occupational distribution of employment. These problems, along with certain reservations regarding a similar labor force survey conducted by INE, are discussed in the appended Note on Chilean Economic Statistics. The evolution of employment is also described in greater detail in an internal working document of the World Bank. - 139 - Table III.19: CHILE - QUARTERLY CHANGES IN EMPLOYMENT LABOR FORCE AND THE RATE OF UNEMPLOYMENT IN GREATER SANTIAGO, 1973(IV)-1978 a/ (Percent) Change in Change in Unemployment as Employment Labor Force percent of Labor Force 1974 ( I) -2.4 - 9.2 ( II) -0.8 0.4 10.3 (III) 2.5 1.4 9.4 ( IV) -0.2 0.2 9.7 1975 ( I) -3.8 0.2 13.3 ( II) -3.5 -0.3 16.1 (III) -0.9 -0.3 16.6 ( IV) 2.1 4.7 18.7 1976 ( I) - 1.4 19.8 ( II) 5.0 2.7 18.0 (III) -0.3 -3.1 15.7 ( IV) 4.5 2.0 13.6 1977 ( I) 1.2 1.4 13.9 ( II) 3.4 2.4 13.0 (III) 0.4 0.2 12.8 ( IV) -0.1 0.3 13.2 1978 ( I) 1.3 3.1 14.7 ( II) 3.0 0.7 12.8 (III) 1.6 2.8 13.7 a/ Survey taken during last month in quarter. Source: Appendix II, Table 1.15 force thus brought the rate of unemployment up to a 9-10 percent range for the entire year. The sharp contraction of economic activity in 1975 inevitably affected the labor market. Nevertheless, the decline in average annual employ- ment, 5.4 percent, was less than half the rate of decline of output. 1/ The peak-to-trough decline in total employment, from December 1974 to September 1975, measured 8.1 percent and was accompanied by substantial withdrawals from the labor force as inferred by the fall in the participation rate. 276. Although absolute employment began to recover during the fourth quarter of 1975, the participation rate also rebounded. Consequently, un- employment continued to mount, reaching a high of 19.8 percent of the Santiago labor force in March 1976. An increase in the participation rate would normally be expected to accompany economic recovery, but the size of the reaction shown in the surveys seems greater than justified by the modest improvement in employment that occurred. A disaggregation of the data by sex shows that the male participation rate fell and remained depressed until the recovery of employment had already been underway for six months. The female participation rate, on the other hand, held fairly steady through 1975 1/ Comprising the averages of the four quarterly surveys in each year. It is also likely that the rate of output decline in Greater Santiago exceeded the nationwide drop of 11.3 percent. - 140 - and then increased sharply during the first three quarters of 1976. 1/ Rather than a positive sign, therefore, the jump in labor force participation probably reflected the entry of secondary family members, primarily women, to seek employment in order to replace the earnings lost by the unemployed principal breadwinner. In the twelve months following the employment trough of September 1975, male employment rose only 6.7 percent as compared to a 24.4 percent growth in the number of women employed. The rapid expansion of the female labor force also raised the female unemployment rate above that for males, reversing the historical tendency. 277. With the exception of a slight dip in September 1976, employment grew steadily after September 1975 until the fourth quarter of 1977. With the labor force also growing, the rate of unemployment was reduced to 13 percent by June 1977 and has fluctuated around that level in the surveys published since. Although average total employment in 1977 was 8.5 percent, or more than 92,000 jobs, higher than the similar figure for 1976, the unemployment rate at the end of 1977 was only marginally better than a year earlier. In 1978 average total employment increased again, this time by 5 percent, but the unemployment rate grew 0.7 percentage points, reaching 13.9 percent by year's end. The unusual nature of the period being studied makes it impossible to predict what the "normal" participation rate will prove to be. Moreover, the cyclical flows of labor into Greater Santiago from the countryside and from smaller towns and cities make the data difficult to interpret. Nevertheless, the present participation rate is still well below those recorded in the late 1960s. It is therefore reasonable to expect that further expansion of employment opportunities will be accompanied by increased labor force participation, thus slowing reductions in the unemployment rate in the medium term. 2/ 2. Major Sectors and Occupational Categories 3/ 278. As in the case of output, the evolution of employment has varied widely among economic sectors and job categories. Consistent with past history, construction has suffered the highest rates of unemployment, reaching almost 40 percent of the experienced labor force at its peak in March 1976. After rising in 1974, absolute employment in the sector fell 43 percent 1/ Disaggregations by sex are taken from the INE survey. 2/ The above discussion has not made reference to a group of persons identified in the University of Chile survey as not working or actively seeking work but desiring employment (see Appendix II, Table 1.15). In some months of the survey this group has outnumbered those conventionally defined as unemployed. These data are difficult to interpret, however, since no indication is given of what conditions would have to be met before such persons would in fact be available for work. Furthermore, individual responses are likely to be very sensitive to the manner in which the question is posed. While the large numbers of persons so categorized suggest the considerable scope that exists for growth of the labor force participation rate, the numbers are not likely to be so large or to suffer the extreme short-run volatility indicated in the survey. 3/ Employment changes in agriculture and mining are not discussed here, because they are not statistically significant in Greater Santiago, and nationwide data are not available. - 141 - during 1975. While employment in the sector has grown significantly since, it remains well below the record levels of 1974. Meanwhile, new entrants to the sectoral labor force have kept the unemployment rate fluctuating between one-fourth and one-third of experienced workers available for work. 279. Because of its relative importance in the Santiago labor market and its sensitivity to the level of aggregate economic activity, manufacturing accounted for the largest absolute peak-to-trough decline in employment, laying off a net 76,000 workers between December 1973 and September 1975. The sectoral unemployment rate peaked at 18.1 percent in March 1976. Since then, improvement has been relatively slow. By December 1977, 61,000 of the above-mentioned 76,000 jobs had been regained, and the unemployment rate for experienced workers was just above 12 percent. 280. The combined personal and community services sectors suffered a peak- to-trough loss of 39,000 jobs during the recession but have more than offset this in absolute terms, gaining 78,000 jobs through December 1977. Neverthe- less, new entrants to the labor force have held the unemployment rate of service workers substantially above the pre-recession level. Employment in the government and finance sector suffered the least in both absolute and relative terms and now stands at an all-time high level despite Government efforts to pare down the state bureaucracy. 281. Manual workers have felt the incidence of unemployment more severely than any other category of worker classified by job status. The unemployment rate among manual workers, which has typically been more than twice the rate suffered by white-collar employees, reached a peak of over 23 percent in June 1976. In absolute terms, blue-collar employment fell 21 percent, or 70,000 jobs, from March 1974 to its nadir in September 1975. It has since recovered fairly vigorously, however, and now exceeds the former record employment level of 1974. With new entrants swelling the labor force to take some of those jobs, however, the blue-collar unemployment rate is still above 15 percent. 282. The deterioration in wage and salaried employment was not accom- panied at first by the increase in the number of the self-employed that might have been expected to absorb some portion of the displaced workers. Instead the number of persons reported as self-employed was in a fairly steady down- trend from December 1973 through the first quarter of 1977; since then it has resumed positive growth. 1/ 1/ There may, in fact, have been an increase in the importance of self- employment during the economic crisis despite the failure of the statistics to record it. For labor force reporting purpose, some indi- viduals who have lost their jobs may be considered by their family members, as well as by themselves, to be unemployed, even though they have solicited and performed some remunerated work in a self-employed capacity. Since they are not employed in their customary status, they view and report themselves as unemployed. We would be inclined to believe that some greater measure of such irregular self-employment has escaped the survey enumerators and that, as a result, the number of self- employed workers has been understated. If so, the rate of unemployment, as defined for the purposes of the survey, has been overstated. - 142 - 3. Government Measures to Deal with Unemployment 283. The Government responded to the deepening employment crisis with a series of measures, mostly of a temporary nature, designed either to mitigate the effects of unemployment or to stimulate increases in employment. Among the principal measures adopted have been the Minimum Employment Program (Programa de Empleo Minimo - PEM), a program of wage subsidies to stimulate employment, reform of unemployment insurance, and an expanded manpower and training program. a. The Minimum Employment Program 284. PEM is designed to provide temporary jobs for unemployed heads of households, with preference given to heads of large families. The program, financed by the central government, is administered by local municipal governments which, in order to qualify for PEM financing, must plan and propose public or other work projects in which eligible persons would be employed. In addition to serving as an employer of last resort, PEM has also served as a vehicle for upgrading skills of the unemployed to improve their future absorption into regular jobs. The rate of remuneration under the program has amounted to approximately 75 percent of the monthly ingreso minimo, but a PEM participant is not eligible for many of the other social benefits to which an employed worker or an unemployed worker covered by unemployment insurance is commonly entitled, such as family and maternity allowances. However, some of the participants receive supplementary food rations financed by AID. 1/ 285. PEM was initiated in March 1975 and by year-end employed approxi- mately 125,000 workers. 2/ By the end of 1976, participation had reached almost a quarter million, or almost 7 percent of the labor force. Despite the continuing high level of unemployment, PEM enrollments declined to about 118,000 workers in December 1978. The overwhelming proportion of participants are men; only 15,000 women were reported enrolled early in 1977. 3/ The distribution of PEM slots has tended to favor the nonmetropolitan regions of the country. While Santiago accounted for around 39 percent of the national labor force, for example, it received only one-fourth of the PEM positions created in 1976. 286. The total cost of the program, including wages paid and the expense of non-labor inputs but excluding the cost of the food distribution, rose from US$34.8 million in 1975 to an estimated US$84 million in 1977. The 1976 level of expenditures--US$79.4 million--represented about 51 percent of municipal budgets. The authorities have indicated that the PEM will be continued so long as unemployment rates remain high, and may be extended indefinitely in areas of chronic labor surplus. 1/ Some 250,000 rations were expected to be delivered monthly to 50,000 workers during 1977. 2/ PEM enrollees are counted as employed in the labor force surveys. 3/ Monthly enrollment levels, benefit levels, and total expenditures are presented in Appendix II, Table 1.21. - 143 - 287. A limited amount of training, including the provision of basic educational skills, the upgrading of artisan and agricultural skills, and creation of forestry skills, has been included in the program in some locali- ties. Training has also been offered in tailoring, pipefitting, electricity, painting, carpentry, and other skilled trades. Some 28,000 workers are reported to have received training under the program during 1977, and an addi- tional 40,000 were planned for 1978. A new program has also been introduced in 1978 to provide credit to graduates of PEM training for the basic tools required to exercise their acquired crafts. b. Wage Subsidies 288. The wage subsidy program was adopted in 1975 to provide a stimulus to the employment of labor. On May 28, 1977, the Law was extended for an additional year with minor modifications. Under the program, a subsidy is paid equal to one-half of the ingreso minimo for each worker hired over and above the number employed as of the end of a base month (currently March 31, 1977). 1/ All employers are eligible to participate in the program with the exception of the public sector or firms in which public ownership exceeds 30 percent. The subsidy is roughy equivalent to the payroll tax on a worker hired at the minimum income level and is viewed as a means of offsetting the heavy payroll tax burden and thereby encouraging more labor-intensive techniques of produc- tion. While the Law is viewed as a temporary measure and has been extended on an annual basis, a number of officials indicated the desirability of continuing it until the social security reform has been completed and payroll taxes have been reduced significantly below current levels. 2/ According to ODEPLAN, an average of 23,000 workers per month were being subsidized at the end of 1976. The number had risen to 37,400 by June 1977, and to 42,000 in December. More than 40 percent of the subsidized positions were in the Santiago metropolitan area, and almost 90 percent of the total were blue-collar jobs. c. Unemployment Insurance 289. In 1974, the Government undertook a sweeping reform of the unemploy- ment insurance program, including the manual work force within a true insurance scheme for the first time. 2/ While the reform constitutes a major improve- ment in the protection manual workers enjoy against losses of income through unemployment, the number of workers who qualified for benefits represented as few as one-seventh or one-eighth of those reported as unemployed in 1976. d. Special Training Program 290. Finally, as of January 1977, a new statute took effect under which private employers are eligible for income tax credits of up to one percent of the enterprises' taxable payrolls (for social security purposes) for the costs 1/ The initial reference month was March 1975. For new firms established subsequent to the reference date, the subsidy is paid for additional workers hired after the firm has been in existence for six months. 2/ Details of the unemployment reform and the proposed social security reform are available in an internal Bank working document. - 144 - of providing special training programs to their workers. 1/ The programs may be offered by the enterprise itself or by contracted third parties. In either event, the program must be approved by the National Training and Employment Service (SENCE) of the Ministry of Labor, which is responsible for administra- tion of the Statute. For purposes of the Statute, the word "worker" includes persons who work in their own enterprises, thus opening the program to small- scale entrepreneurs and artisans. In addition, SENCE provides training scholarships for unemployed workers, both experienced and seeking jobs for the first time. During 1977, more than 300 enterprises took advantage of the tax credit to provide training to some 55,000 of their workers. The vast majority of these were located in the Santiago metropolitan area. An addi- tional 40,000 persons received training under SENCE scholarships. Of these, 24,000 were from the agricultural, forestry, and fishery sectors, and another 12,000 came from the Minimum Employment Program. 291. Postscript: In April 1978, President Pinochet instructed the National Planning Office to prepare a package of legal actions to eliminate rigidities in the labor market and to promote employment. Among the measures reportedly under study are: the elimination or steep reduction of the payroll tax for social security, substituting instead revenues derived from general taxation; permitting the gradual reduction in real terms of the minimum wage and its elimination for persons under age 23 or over age 65; and lowering the prospective difficulties and costs of dismissing workers hired in the future while retaining the existing rules and acquired rights of the present work force. E. PRICES 292. Feedback from the massive price corrections of late 1973; sharply higher prices for oil, wheat, fertilizers and other major imports; the con- tinued government deficit; and powerful inflationary expectations reflected in the extraordinarily high velocity of money combined to disappoint hopes for a rapid dampening of inflation in 1974. By year end, the consumer price index (CPI) had risen 376 percent. After a significant decline in monthly inflation rates during the last two months of 1974 (Table III.20), the CPI began again to accelerate through the first quarter of 1975, contributing to the perceived urgency of the austerity program. As a consequence of the latter, the average monthly inflation rate was cut by more than half during the second semester of the year, despite substantial real devaluation of the peso. Nevertheless, the price rise for the year still totaled 341 percent. 1/ The Statute for Training and Employment was first passed in May 1976, but subsequent modifications delayed its entry into effect until 1977. - 145 - Table III.20: CHILE - MONTHLY CHANGES IN OFFICIAL CONSUMER PRICE INDEX, 1974-78 (Percent) 1974 1975 1976 1977 1978 January 14.1 13.9 10.5 5.9 1.8 February 24.5 16.5 10.1 5.8 2.4 March 14.2 21.2 13.5 6.1 2.9 April 15.3 20.8 11.9 4.7 2.6 May 8.7 16.0 9.8 3.8 2.1 June 20.8 19.8 12.3 3.3 2.0 July 11.5 9.3 8.9 3.9 2.5 August 10.9 8.9 5.5 3.4 2.8 September 12.8 9.2 7.6 3.7 2.9 October 18.9 8.4 6.7 4.2 1.9 November 9.7 8.2 3.8 2.2 1.3 December 6.5 7.1 5.1 3.1 1.5 Source: Appendix II, Table 9.3c 293. Inflation during the first quarter of 1976, although down consider- ably from the same period the year before, remained stubbornly at a level above that of the second semester of 1975 despite the painful economic con- traction that had been suffered. It was in that context that the Government announced in June an 11 percent revaluation of the peso relative to the dollar. With international reserves growing rapidly during the first half of the year, the authorities were willing to risk some deterioration of the balance of payments through the rest of 1976 in the hope of achieving a significant downward shift of inflationary expectations. The increased value of the peso would lower the cost of imported goods, affecting the CPI directly and indirectly through the imposition of greater competitive pressures on domestic producers. The encouragement of imports was also expected to dampen the growth of the money supply. 1/ As a result, the monthly inflation rate during the last half of 1976 averaged 6.3 percent as compared to 11.3 percent during the first half. Inflation for the entire year totaled 174 percent, almost half the rate of the previous year. 294. The peso was again revalued in March 1977, and, with the velocity of money finally falling, inflation for the year was reduced to 63 percent. This progress continued into 1978; consumer prices during the first four months rose only 10 percent, compared to 24.5 percent during the same months of 1977, and inflation for the entire year totaling 30 percent. 1/ International reserves continued to grow, however. - 146 - F. WORKER COMPENSATION 1. Wages, Salaries and Cash Benefits 295. As seen in earlier chapters, the course of average worker compen- sation has frequently moved independently of government policy initiatives. This section will briefly outline wage policy since September 1973, reflected through legally mandated wage adjustments, and review the available data regarding the evolution of actual average wages and salaries. For a more detailed discussion, see note, page 53. a. September 1973-1974 296. Chapter II showed that the very large gains in real wages and salaries achieved during 1971, as a key element of the Allende Government's income redistribution program, were not sustained in the accelerating inflation that followed. By September 1973, real wage and salary levels had fallen well below the pre-Allende levels. Among the first policy decisions faced by the Pinochet Government concerned the wage and salary adjustment that had been scheduled for October. Its initial inclination was apparently to call for a temporary freeze until an overall stabilization program could be fashioned. The unexpectedly large price increases that followed the removal of controls, however, forced earlier action. A minimum payment for all workers of E°36,000 was decreed for the last three months of 1973 (i.e., an average of E012,000 per month), and family allowances were equalized for blue-collar and white-collar workers and raised to E 900 per dependent per month. 1/ In addition, a new benefit, a monthly transportation allowance of E 720 per worker, was introduced; a bonus equivalent to the wages earned during the previous April was to be paid each worker in November and December; and a Christmas bonus of up to E°010,000 was made payable in December. 297. In January 1974, the white-collar and blue-collar minima were offi- cially replaced by a single minimum monthly pay rate, the ingreso minimo (minimum income), and its level was raised 50 percent above the minimum pay rate established during the previous quarter. The family allowance, also equalized for all workers, was adjusted an additional 100 percent. At the same time, the Government announced its intention to maintain worker remunera- tion levels generally in 1974 at the average real level of 1973. Toward that end, all wages, salaries, and cash fringe benefits were adjusted upward to five times the nominal levels of January 1973. Further across-the-board adjustments were declared in May, July, October, and December. Higher proportional adjustments were generally granted lower paid workers. Irregular 1/ The prescribed monthly minimum payment was approximately 3.9 and 3.7 times the nominal legal compensation rates for blue-collar and white- collar workers, respectively, established by the previous adjustment in March 1973. The new family allowance represented almost a four-fold increase for blue-collar workers and a doubling of the prevailing allow- ance for white-collar workers (see Appendix II, Tables 9.16 and 9.18). - 147 - bonuses and advances were also decreed during most months, so that either a general wage adjustment, bonus or advance, was declared in every month of 1974 except August. 298. These actions raised the legally mandated purchasing power of a blue-collar worker earning the minimum wage and receiving family allowances for 3.5 dependents to a level approximating that averaged by a similar worker during 1971 (Table III.21). 1/ The equalization of minimum pay rates and family allowances was of considerably less benefit to white-collar workers, however, and although the adjustment and bonuses significantly improved their situations relative to the first half of 1973, the legal real receipts of the lowest paid workers in this category were still some 25-30 percent below the levels of 1970-72. 1/ For explanation of the range of real receipts shown, see Chapter II. The caveats expressed there regarding the reliability of wage and price data apply throughout. (See also the Note on Chilean Economic Statistics, Appendix I.) - 148 - Table III.21: CHILE - INDEX OF REAL RECEIPTS OF MINIMUM-INCOME BLUE-COLLAR AND WHITE-COLLAR WORKERS, 1970-1977 /a (Average 1970 = 100) Year/Quarter Blue-Collar White-Collar 1970 (average) 100 100 1971 (average) 137-141 108-110 1972 (average) 115-130 80-91 1973 (I-III) 58-91 38-59 IV 155-137 78-70 1974 I 145-137 74-70 II 143-135 72-68 III 147-139 75-70 IV 144-136 73-69 1975 I 124-118 63-60 II 117-110 59-56 III 126-119 64-60 IV 126-119 64-60 1976 I 123-116 62-59 II 129-122 65-62 III 135-127 68-64 IV 157-148 79-75 1977 I 154-146 78-74 II 148-140 75-71 III 158-149 80-76 IV 173-163 87-83 /a Refers to worker earning minimum wage, family allowance for 3.5 depen- dents, transportation allowance, and other cash bonuses decreed during period. Source: Appendix II, Tables 9.17a, 9.17b, 9.19a and 9.19b 299. Table III.22 shows the progression of average real wages and salaries as reported in INE's quarterly surveys. As before, there was some divergence from official policy directions. While significant improvement is evident relative to the lows reached in 1973, average real wages and salaries in 1974 remained some 25-30 percent below the levels of 1970. White-collar workers, on average, made larger real gains and suffered less income variance than did manual workers despite the opposite tendencies suggested by the official wage and salary adjustments. On the surface, it would appear from the differences between average and minimum wages and salaries that there occurred a signifi- cant narrowing of pay differentials among blue-collar workers, at the same time that scales were stretching out in the case of white-collar workers. - 149 - The latter result may simply reflect a relative concentration of growing unemployment at the lower-skilled end of the white-collar ranks. A possible explanation of slower average wage growth in the skilled trades may have been the curbing of union collective bargaining power which, combined with large minimum wage adjustments, produced a significant compression of blue-collar wage differentials. Table III.22: CHILE - INDEX OF AVERAGE REAL WAGES AND SALARIES, 1970-78 (Average 1970 = 100) Year/Month Wages Salaries 1970 (average) 100 100 1971 (average) 118-119 119-120 1972 (average) 100-113 94-106 1973 (January-July) 61-94 52-80 (October) 52-40 39-30 1974 January 86-81 77-73 April 67-64 64-60 July 80-75 77-72 October 71-67 73-69 1975 January 73-69 79-75 April 67-63 69-65 July 69-65 76-71 October 71-67 73-69 1976 January 73-69 75-71 April 73-69 74-70 July 78-74 77-73 October 85-80 82-78 1977 January 92-87 92-87 April 95-90 95-90 July 103-97 106-100 October 96-91 97-91 1978 January 106-100 107-101 April 109-103 110-104 July 116-110 115-109 October 113-107 110-104 Source: Appendix II, Table 9.21 b. The 1975 Recession 300. The October 1974 pay increase introduced automatic wage indexing by which adjustments would be made quarterly by the full amount of the change in the CPI during the second, third and fourth months prior to the adjustment. 1/ 1/ In other words, the adjustment decreed in March 1975 was equal to the inflation of the preceding November through January, and so on. As a means of transition to the new system, the October 1974 adjustment was based upon the inflation of July and August, and the December adjustment was similarly based on September and October price changes. - 150 - With inflation accelerating in early 1975, however, the adjustment formula failed to prevent further erosion of real compensation levels. Consequently, despite additional bonuses, the June 1975 adjustment left the real receipts of the minimum income worker some 8 percent below the level of June 1974. Voluntary or negotiated pay adjustments apparently exceeded the mandatory adjustments in the case of white-collar workers, inasmuch as average real salaries through the July sampling were some 3 percent higher than during the same period in 1974. Average real wages, on the other hand, had fallen 10 percent. 301. As part of its austerity program, the Government modified the wage adjustment formula, beginning with the September 1975 adjustment. The new mechanism was to compensate for the three months ending in the month of adjust- ment. Thus, the September increase was to equal the sum of price changes occurring in July, August, and September. With the inflation rate for September, of course, not yet known, it was estimated in advance at one-half the August rate, with any shortfall to be made up at the time of the next quarterly adjustment. The new formula shortened the lag of wage adjustments behind price changes and thus offered greater protection against the erosion of subsequent wage hikes, but its immediate impact was a substantial reduction of the real increment being mandated. The sharp decline that occurred in monthly inflation rates during the second half of the year resulted in a September wage adjustment of 24 percent under the new formula, when adherence to the old formula would have required a 52 percent increment. 1/ 302. Inasmuch as actual inflation since the June adjustment totaled almost 43 percent, September's legal increment left real wages conforming to the formula about 13 percent below the June level. This plateau was maintained by the December adjustment, part of which was to compensate for the underesti- mation of September's inflation included in the prior adjustment. Thus, for the year 1975 as a whole, although larger proportional adjustments and bonuses were granted to the lowest-paid members of the labor force, average monthly real minimum receipts fell about 13 percent relative to 1974. Nevertheless, there is again evidence that actual wage and salary adjustments exceeded legal increases. The indices of average wages and salaries in October 1975 were both at the identical levels of those a year earlier. The respective averages of the four quarterly observations for the entire year show white-collar salaries slightly above 1974, while blue-collar wages slipped 8 percent. c. Recovery 303. Wage policy in 1976 remained essentially unchanged from that of the previous year. The formula for adjusting wages was applied in the same fashion on a trimestral basis. For the first time since the end of 1973, however, there occurred a significant and sustained improvement in real 1/ The relevant 1975 monthly inflation rates were as follows: May - 16.0; June - 19.8; July - 9.3; August - 8.9. Under the original formula, the adjustment would have compensated for the cumulative inflation of May through July. - 151 - remunerations, as a consequence of the deceleration of the rate of inflation. Thus adjustments based on prior months' price rises were less than fully eroded before being lifted again by the next adjustment. For the year as a whole, combined wages and salaries showed an increase on the order of 7 percent. 1/ Nevertheless, at the end of 1976 average real wages and salaries remained some 15-20 percent below the average level of 1970. 304. As inflation continued to wind down, the Government decided to lengthen gradually the intervals between wage adjustments. Thus, only three adjustments were decreed in 1977, in the months of March, July and December. Otherwise, the formula based on previous inflation rates remained the same. The rapid deceleration of the rate of price rises in 1977 resulted in important further gains in real compensation. Average real wages and salaries for the year were about 25 percent above the average level of 1976, remaining only slightly below the level of 1970. 2/ During 1978 wages and salaries grew by 7 percent in real terms and exceeded the average level of 1970. 2. Social Security 305. The social security system, which covers about 70 percent of the Chilean labor force, and its proposed reform are discussed in detail in an internal working document of the World Bank. Suffice it to note here that the system has evolved in an extremely fragmented fashion, with 35 different social security institutions administering more than 200 different funds. Coverage, benefits, and contribution levels have varied considerably from one fund to another. 306. In general, the benefits include: an extensive system of socialized medicine administered by the National Health Service (SNS); social assistance transfer payments, mainly in the form of family allowances; several forms of protection against risk of temporary or permanent interruptions of income, such as unemployment, illness, maternity, and work-connected injuries; and pensions for permanent interruptions of income due to old age or physical disability. Under the present Government, unemployment insurance has been extended to manual workers and other formerly excluded white-collar employees, and old-age pensions have been introduced for individuals not previously eligible under the provisions of any existing pension fund. Recent changes in the benefit structure have included unification of the family allowance provisions of the different funds into a single mechanism with uniform benefits for all covered workers. 1/ This estimate, based on the four survey results, probably understates the actual extent of improvement, inasmuch as purchasing power was better maintained during the intervening months than was true in 1975. An alter- nate estimate of the gain in 1976 over 1975, based on UC's interpolated wage and salary index, shows an increase of 11.6 percent (Comentarios sobre la situacion economica, 2 Semestre, 1976). 2/ For reasons similar to those of the previous note, UC calculates the 1977 average to have been 30 percent above that of 1976 (Comentarios..., 20 Semestre, 1977). - 152 - 307. Provision of so wide a range of contingencies and income supplements has been costly, rising from 14 percent of national income in 1959, to 24 per- cent in 1971, before tapering off to about 17 percent in 1975, the last year for which data are available. Inevitably, the expansion of benefits and the extension of coverage to the lower-income, higher-risk members of the labor force caused the system to depart from its initial principle of full funding, and benefits are paid primarily out of the current employer and employee contributions and transfers from the public treasury. Social concerns, mani- fested in the form of loans at very negative real interest rates, historic- ally contributed to the erosion of the system's real asset base, thus further increasing dependence on current payroll taxes and government subsidies. 308. The social security system has long been recognized to suffer serious deficiencies, and its reform has been studied and restudied repeatedly for at least twenty years. Vested interests have made serious reform difficult, however, even by governments which, in principle, have favored it. The current authorities are committed to a fundamental restructuring and reform of the social security system. While some modifications have already been introduced, such as raising and standardizing the retirement age to 65 for men and 60 for women, the future form of the system is still the subject of intense discussion within the government and the private sector at large. 309. Over the years, there has been a gradual but steady lowering of the minimum age and length-of-service requirements to qualify for a social security pension. At the same time, pensions are indexed, and a pensioner may continue working in another job without penalty. 1/ Partly in response to these privi- leges, the ratio of pensioners to active contributors to the system rose from 10 percent in 1955 to 31 percent by 1975. (Over the same period, the ratio of the total population over age 65 to the 15-65 age group rose only from 7.3 percent to 8.6 percent.) Early retirement has thus been one reason behind the observed secular decline in the labor force participation rate. 310. Also contributing to the desire of converting as early as possible from contributor to beneficiary status is the low perceived value of benefits relative to the payroll levies made on the workers' behalf. Even with benefit improvements mandated over time and their financing with state subsidies, there has been a substantial loss, in an actuarial sense, in the value of funds collected for pensions and other purposes. The expected value of future benefits has been reduced further by the uncertainties induced by administra- tive inefficiency. Applications for benefits are subject to long processing delays, and considerable effort must be expended to push them through the administrative apparatus. 1/ Some public sector retirees have the right to pensiones perseguidoras which are indexed according to the salaries of active workers in their former jobs. Theoretically, therefore, they are not only protected against price increases but also share the productivity gains of the active labor force. - 153 - 311. The low evaluation of the system's benefits in comparison with its cost has at least two important consequences. The first and most obvious is that it encourages the evasion of payroll taxes. Both employers and workers gain by understating earnings and sharing the saved taxes. 1/ Thus wages and salaries are commonly converted into "bonuses" or fringe benefits which are subject to lower rates of social security taxation. A second consequence of the disparity between cost and perceived value is that the funds paid in become equivalent to a tax on labor services, and the resultant increase in the cost of labor thus encourages the substitution of other inputs. 2/ 312. Although the social security payroll tax has been progressively lowered over the past two years, the rate to private sector employers still averaged about 40 percent of the taxable payroll in 1977, with an additional 9 percent paid by the employee. This is one of the highest payroll tax rates in the world and, as the authorities themselves point out, represents an important continuing inhibition on the growth to employment. G. THE DISTRIBUTION OF INCOME 313. The freeing of prices and interest rates, devaluation of the exchange rate, lowering of tariffs, and other major reforms introduced by the Pinochet Government have important implications for the distribution of income. At the same time, much attention has been given to the distribution of the burden of the severe austerity experienced in 1975 and 1976. Unfortunately, the scant data base and the complexity of the policy interactions involved make it almost 1/ Evasion is also encouraged by the fact that actual benefits are unrelated to the level of earnings reported over most of the working lifetime of a contributor. Pensions paid by EMPART, the major fund serving private sector, white-collar workers, depend only on the salary of the last five years before retirement. For public sector workers, only the last three years matter. Some earnings must be regularly reported, however, and the taxes paid thereon, in order to keep certain benefits, such as health care and unemployment insurance, up-to-date. 2/ If the present value of the anticipated benefits were perceived as equal to the cost, incidence of the employers' payments to the fund could eventually be shifted back to labor, and the total cost of labor to the employer would be no higher than in the absence of social security. Where benefits are valued less than their cost, however, the difference cannot be shifted back to labor and thus becomes, in effect, a tax on labor services. (Evidence that this phenomenon has historically occurred in Chile may be found in: Peter Gregory, Industrial Wages in Chile, Cornell University, Ithaca, New York, 1967.) Moreover, where the back- ward shift is also impeded by minimum wage legislation, it is the lowest paid workers who are most likely to see reduced job opportunities in the covered sectors resulting from the payroll tax. Workers thus displaced must compete for jobs putting downward pressure on wages in the non- covered sectors. - 154 - impossible to reach any conclusions with confidence. 1/ Thus, only a few general observations are offered here. 2/ 1. The Costs of Austerity 314. As noted above, per capita GNP fell 19 percent in 1975, and unemploy- ment reached almost 20 percent of the labor force of Greater Santiago. It is difficult to imagine many winners in such a situation. Clearly, the greatest hardships were borne by the unemployed who were already concentrated among the lowest income strata. Although some new government programs were undertaken to assist them, the resources available did not begin to match the magnitude of the problem. Total employment fell 5 percent, but for workers who retained their jobs, real wages and the total wage bill declined by relatively less than the national income. Thus, labor's share increased, albeit of a significantly reduced pie. The relative improvement of agricultural prices and the continuous growth of output suggests a substantial shift of income during this period toward the agrarian sector, but there are no firm data to indicate how it was distributed within the sector. The squeeze placed on middle- and upper-income groups generally is illustrated by the real increase in taxes on income and property that occurred despite the fall in output. In relative terms, it is perhaps these groups whose net incomes suffered the most from the austerity program per se , but, of course, their living standards were better protected by the ability to draw upon previous accumulations of wealth. 315. Given the magnitude of the crisis faced and the resource constraints that strapped the system, one views the Chilean situation in 1975 with a pro- found sense of helplessness. There were, perhaps, additional measures that might have been taken to shift more resources toward reduction of the worst suffering, but it is difficult to visualize a major change in the picture without considerably more outside assistance than the international community was evidently prepared to offer. 2. The Impact of the Basic Reforms a. Price Policies 316. For at least four decades, the Chilean economy was increasingly overlaid with special subsidies, tax exemptions, price controls, etc., intended to benefit one group or another. Subsidies frequently were created to offset the damage done to production incentives by price controls. The Frei and Allende Governments progressively widened access to preferential treatment to lower-income groups previously left out, while perhaps reducing the advan- tages available, either legally or extralegally, to at least some of the better-off groups. 317. Price controls to prevent rising wages and salaries from being passed forward to the consumer were a key element in the Allende Government's strategy for shifting the profits of industrialists to the workers and holding down the cost of wage goods to the lower-income groups. Although the prices of wage 1/ The last empirical study of income distribution in Chile was carried out in 1968. 2/ A more extensive discussion of this topic can be found in a Bank internal working paper. - 155 - goods were legally controlled at levels well below their market value, an increasing proportion of their output found its way to the black market. Given the rapid shifts taking place in relative prices as well as the varying proportions in which different goods traded at official and black market prices, it is virtually impossible to untangle the net redistributive consequences. Indeed, the experience of individuals both as buyers and sellers of goods and services varied so widely that no sectoral, functional or income category can be treated uniformly as net gainers or losers in the competition for income shares. To the extent that an individual had access to wage goods, credit, imports, etc., at controlled prices, and was able to sell his own product on the free market, he realized significant gains in real income. In the contrary case, the opposite was true. 318. Immediately following its coming to power the Pinochet Administration began to eliminate the complicated and the contradictory system of administered prices and subsidies that had grown up over the previous four decades. The same difficulties which inhibit the analysis of the net distributive effects of their existence make it impossible to be certain about the total impact of their removal. Once again, each individual was affected differently depending on the access he or she previously enjoyed to goods and services at subsidized prices, as well as on the weight of each item in the family's budget. 319. The complexity of discerning the total impact may be illustrated by the difficulty involved even with individual items. The removal in 1977, after more than 40 years, of the price controls on bread affected all Chileans in some degree. Inasmuch as bread accounts for a larger proportion of low- income family budgets than of higher-income budgets, the elimination of the subsidy at that moment clearly fell relatively more heavily on the poor. During the 1971-73 period, however, bread had become increasingly scarce at official prices, as sales shifted to the black market. Some consumers, principally in the industrial neighborhoods around Santiago, received direct distributions from government agencies and thus continued to enjoy the subsidy. Other families with means were able to acquire bread and other commodities in the black market, thereby foregoing the subsidy; while a third large group, probably including middle class, the poorer, least-organized members of society, and the populations of outlying cities and towns where the govern- ment's administrative control was weakest, made do with a substantially reduced bread ration or none at all. Relative to that situation, then, it is not possible to make confident assertions regarding the impact of the bread subsidy and its removal on any of the conventional population aggregates. 320. Similarly the dramatic increase that occurred in the real prices of agricultural goods, coupled with the recovery of output, indicates a con- siderable shift of income shares in favor of the farm sector. At the same time, however, farm input prices, including credit, were also freed and have risen greatly. Consequently, the net result varies among individual farmers depending on their respective prior access to controlled-price purchases and black market sales. Before 1965, it was clearly the larger farmers who benefitted most from the administered price and subsidy system. Access to subsidies was opened to the land reform beneficiaries during the 1965-1973 period, and they have undoubtedly been hurt by their elimination. Most minifundistas and tenant farmers, on the other hand, remained at the end of the subsidy line historically and have probably benefitted from the recently improved prices of the goods they market. - 156 - 321. Another impact of the freeing of prices was the sharp explosion of wholesale relative to consumer prices, suggesting a substantial squeeze on the earnings of retail merchants. The freeing of interest rates has been highly beneficial to a small number of Chileans with accumulated savings or with foreign borrowing capacity, who have been able to lend their funds out at the extraordinary short-term interest rates prevailing since 1975. This redistribution has occurred largely within the middle- and upper-income groups, however, and can probably best be characterized as a shift of income from the industrial and commercial sectors to the financial sector. On the other hand, individual interests frequently overlap these sectors. Some merchants and industrialists also evidently realized capital gains on inven- tories, particularly of imported goods, accumulated during 1974 even though these were ultimately carried at very high interest cost. Large capital gains have also accrued to individuals who acquired stock shares and real estate at the panic prices many such properties were offered at during the early 1970s. One clear group of early gainers were those predominantly middle- and upper- income individuals holding accounts in the savings and loan system (SINAP). 1/ 322. Finally, while the freeing of the prices of bread, milk and other "basic" commodities may on balance have been regressive from a distributive standpoint, the many other subsidies and controls that have been removed had clearly been benefitting primarily the middle- and upper-income groups. It was the latter who were the principal users of subsidized electric power, gasoline, credit, or capital goods. Indeed, to the extent that such subsidies encouraged the substitution of capital for labor, the resultant loss of jobs and absolute income was concentrated among lower-income groups. b. Compensation Policies 323. Detailed breakdowns are not available of changes in the earnings distribution within the wage and salary categories. Consequently, only some tentative inferences are possible. Pay differentials among white-collar workers appear to have narrowed since September 1973, the receipts of a minimum-income worker growing proportionally more than average salaries. The compression of the salary structure occurred entirely in the last quarter of 1973 and early 1974; it has since been widening slowly as average salaries have recovered more rapidly than the minimum. Despite the moratorium on union wage bargaining, employers apparently granted salary increases greater than authorized by the quarterly legal adjustments. Similarly, the equaliza- tion of the minimum pay rate and family allowances of manual and white-collar workers very significantly raised the incomes of the former and greatly compressed the distribution of wages among blue-collar workers generally. Although average wages have grown somewhat more rapidly than the minimum since then, the narrowing of wage differentials relative to September 1973, and even to 1970, remains great. The fact that unemployment has probably been concentrated at the low-skill levels enforces the conclusion that blue-collar 1/ The formula used to compute the readjustment of savings for inflation for 1973 through July 1974 was erroneously based on the arithmetic average rate of inflation rather than on the geometric rate and consequently yielded an adjustment well above the rate of inflation. The adjustment formula has since been corrected. - 157 - differentials (among those with jobs) have very significantly narrowed. Thus, a greater degree of equality has probably been realized in recent years within the manual work force. But since the skilled manual workers only earned about twice as much as unskilled workers in the late 1960s, the gains of the unskilled would seem to have come, in part at least, at the expense of those who are only a little better off in the socioeconomic scale of the society as a whole. Whether the squeeze that has occurred in occupational wage differen- tials will be permanent cannot be determined. It is likely that as the economy revives, an expanding demand for relatively scarce skilled workers will tend to pull their wages up faster than those of the unskilled, thus at least partially restoring the earlier earnings differentials. 324. The unification of the minimum wage and family allowance systems and the introduction of a transportation allowance by the Pinochet Government also resulted in a substantial improvement of low-paid blue-collar workers relative to those at the bottom of the white-collar pay schedule. By the first quarter of 1977, the real minimum receipts of a manual worker were some 50 percent above the average legal minimum prevailing in 1970. Although equal now in absolute terms to the blue-collar minimum, the real minimum legal receipts of a white-collar worker remained 20 percent below the level provided him in 1970. Meanwhile, average salaries, which had been more depressed than wages during the previous period, recovered more rapidly after September 1973 and by the end of 1975 had roughly re-established the differentials existing in 1970. These data may understate the actual widening of pay rate differentials, however, to the extent that the statistical increase of average blue-collar salaries may simply reflect the higher concentration of unemployment among the low-pay members of the blue-collar labor force. In any event, while employed blue-collar recipients of the minimum income have improved their positions relative to white-collar workers, blue-collar workers as a class do not appear to have done so. Average remunerations paid blue-collar and white-collar workers have grown apace since 1975. 325. Finally, one cannot ignore the possible impact that the rapid improve- ment in the real minimum wage that began in 1970 has had on the employment of low-skilled workers. Although the serious deterioration in the employment picture in recent years is attributable primarily to the economic depression, the legal support given to minimum wages and benefits may also have played an inhibiting role in the case of unskilled, blue-collar employment. 326. In summary, it is difficult to draw clear-cut conclusions about the redistributive impact of wage policies within the working class. The only statement that can be made with any degree of confidence is that employed, manual, minimum-wage recipients have improved their position relative to any other broad grouping of wage or salary earners. To be weighed against that, however, is some unknown loss of employment opportunities at the minimum-wage and a subsequent diversion of workers into either unemployment or less remunerative jobs. 327. Just as minimum wage policies alone are likely to be an imperfect instrument for achieving lasting shifts in income within the wage and salary group, wage policy is not likely to be particularly effective over the long run as an instrument for effecting important shifts among the factors of - 158 - production, in the absence of other measures taken simultaneously. 1/ As seen in Chapter II, the rapid increases in real compensations effected in 1971 caused a sharp increase in the functional share of national income accruing to wages and salaries from an average of just under 50 percent in the late 1960s to 62 percent in 1971. The subsequent decline in the labor share was just as sudden, however, as the price control mechanism broke down and increases in remunerations fell behind the rapid rise in prices. The labor share is esti- mated to have fallen to 46 percent in 1973, and to 43 percent in 1974. 2/ The changes in real wages, employment, and GDP in 1975 would seem to indicate a rise in the relative share of labor in 1975 as compared to 1974. The situation deteriorated in absolute terms, both real wages and employment fall- ing, but the contraction of total output exceeded by a considerable margin 1/ Several important caveats are required when discussing the wage share data from the national income accounts. The first is the already noted unre- liability of the national income accounts themselves under the weight of all the enormous statistical problems of the past decade. Second, the division of income into labor and non-labor incomes is misleading, inas- much as the latter includes the earnings of all self-employed persons in unincorporated enterprises. Many, if not most, such persons in Chile are better identified both economically and socially with the working classes. The labor share of national income, moreover, cannot be treated as synonymous to the share of the "poor," inasmuch as it includes rela- tively high income workers, both blue-collar and white-collar, and exludes the earnings of many of the very poor, ranging from self-employed street vendors to minifundistas. Finally, the shares are calculated before taxes and include the employers' payments to the social security funds. 2/ It may be noted that the trend portrayed in the national income accounts is at variance with the wage trends outlined in this report. In 1972, the sharp decline shown above for real wages, in the face of a virtually constant national product, should have produced a decline in the income share going to remunerations; the small increase in employment in 1972 would not have sufficed to offset the drop in real wages. Yet the national income accounts show the share to be rising. With the large recovery in real wages indicated for 1974 (when deflated by the IBRD adjusted CPI), constant employment, and a 5.7 percent increase in GDP, the wage share would have been expected to rise. Instead, the national income accounts record a fall. The problem may arise in part from an underestimation of inflation during 1972-73. It will be recalled that the official CPI reports most of the inflation, and hence the deterioration of real wages, to have occurred after the freeing of prices in the last quarter of 1973. Part of the difficulty could also lie with the IBRD deflator which may understate the effectiveness of price controls, at least for many workers, through 1972 and early 1973. Thus, the course of the wage share reported by ODEPLAN is more consistent with the real wage series derived by deflating by the UC price index. Nevertheless, it is likely that the wage and salary share of national income was, in fact, declining by 1972, with a downward path somewhat less abrupt than calculated by ODEPLAN. - 159 - the decline in the wage bill. Both real wages and employment rose faster than GDP in 1976 and 1977 and may have increased the labor share of national income to about the proportion which prevailed during the late 1960s. 1/ 328. Finally, the social security system has long been marked by the discriminatory treatment of manual workers who constitute the lowest paid group covered by the system. Both the range of benefits provided as well as the level of benefits were traditionally far less generous for this group, despite the efforts of successive governments to reduce or eliminate the inequity. At the same time, the payroll tax method of financing the system tends to be regressive, assuming that the employer share is shifted either backward to labor or forward to the consumer. Major beneficiaries were those members of the various institutions who were able to borrow from the funds at terms that were heavily subsidized by remaining members and by taxpayers generally. Nevertheless, an analysis of the distribution of the benefits and costs of social security in 1969--specifically, the pension, family allowance, health and housing provisions of the three major institutions--suggests that the net result was slightly more progressive than the pre-tax distribution of the economy as a whole. 2/ In net terms, the lower-income groups received a greater share of total benefits than they paid of total costs, the reverse was true for the highest income groups, and the middle brackets approximately broke even. 329. Given the obvious regressiveness of the inter-institution benefit structure, the slight progressiveness that occurs for the social security system as a whole apparently results from redistribution within the respective insti- tutions. Obscured by this analysis, however, is the redistribution that occurs between the covered and noncovered populations by reducing employment oppor- tunities in covered occupations and thus creating unemployment and downward pressure on the wages of the excluded workers. In addition, the substantial transfers made to the social security institutions by the government must be financed through some combination of taxation, inflation, and the reduction in the quantity or quality of other government programs and services. In each case, unaffiliated workers and their families bear part of the burden without compensating benefits. Since the unaffiliated are predominantly low-pay, self- employed workers (peasant farmers, street vendors, etc.) and blue-collar workers in small enterprises, these indirect effects are undoubtedly highly regressive. 1/ These estimates are very tentative and are based on wage movements in a limited sector of the economy. These movements have been paralleled by wages in other sectors and among the low-income, self-employed in the recent past, but it is risky to assume that this is always the case. Similarly, the estimates of employment changes emerge from the UC survey of Greater Santiago and may not be representative of what has occurred in other areas of the country. Finally, since intertemporal comparisons of the share of national income flowing to wage earners are affected by structural changes in the status of the labor force, it is hazardous to assume a past ratio of remunerations to national income as being in some sense "normal." 2/ Alejandro Foxley, Eduardo Aninat, and Jose Arellano, "What Does Social Security Do to Incomes?" World Employment Working Paper (WEP 2-23/WP42, I.L.O., Geneva, July 1976. The study is described in Vol. II, Annex III. - 160 - 330. Reforms introduced since 1973, including the equalization of family allowances, have reduced considerably some of the discriminatory features of the past. Other recent measures have included the introduction of unemployment insurance for manual workers and the maintenance of other benefits (e.g., family allowances, access to health services, etc.) during the period of insured unemployment; the provision of old-age pensions to persons not covered by any of the existing social security schemes; and the recent extension to self-employed workers of insurance against occupational accidents and disease. As a consequence of these changes, the lowest wage-earning groups have gained both relatively and absolutely. The real value of the family allowance to blue-collar workers in 1976 averaged about 15 percent above the 1970 level. The losers in both a relative and an absolute sense have been the white-collar workers who have seen the value of their family allowances shrink by half rela- tive to 1970 levels. In addition, it is largely this latter group that has lost access to the large subsidies previously afforded those individuals able to secure loans from their institutions at negative real interest rates. There have been no compensating increases in benefits or coverages for white- collar workers. c. Tax Policy 331. Any discussion of Chilean tax policy must discriminate between the collection policies and policies designed to finance public outlays. While only the former are discussed here, the latter policies of the Government have probably had a distinct effect on "tax" incidence, since the Pinochet Govern- ment has virtually ended the heretofore regressive inflation "tax" stemming from deficit financing. That said, the primary objectives of recent tax reform measures have been to minimize the distortions in resource allocation introduced by tax considerations, to eliminate the horizontal inequities intro- duced by the large number of special exemptions and preferences, to improve the administration of tax collection, and to protect the tax base from erosion by inflation. Tax treatment was historically differentiated not only by functional income sources (i.e., labor, capital, professional, etc.), but also by sector and subsector (i.e., small industry), and by form of business organization (pro- prietorship, cooperative, corporation, etc.), giving rise to considerable inequities in the tax burdens of persons with the same total income. Moreover, only certain incomes were subject to withholding or estimated tax submissions through the course of the tax year. Those not so subject, of course, benefitted from the constant erosion of the tax liability's real value as the price level rose, as well as by the greater opportunities for evasion. As a consequence of the 1975 reform, the tax treatment of different incomes has been made more uniform; the coverage of the tax prepayment system has been widened; a large number of exemptions have been eliminated; and the tax base has been broadened to include undistributed corporate profits, previously left untaxed. In addition, the property tax was massively adjusted for past erosion due to inflation, and since mid-1975 the revaluation has been made automatic in accordance with changes in the CPI. Similarly, the values of automotive vehicles were updated for purposes of the annual license fees. 332. The net effect of these modifications has undoubtedly been an improvement in the horizontal equity of the tax system--i.e., equal treatment of equal incomes--and probably an increase in the direct tax system's overall - 161 - progressivity as well. The latter follows from the fact that the higher income groups most benefitted in the past from special tax regimes, payment lags in the face of inflation, and the exclusion of undistributed corporate profits. Several other modifications of the income tax provide offsetting benefits to the higher-income groups. In particular, the tax rate on corporate and other business incomes has been reduced, and the former taxes on capital gains and net wealth were eliminated. Moreover, monetary correction was extended to all business assets and liabilities in contrast to the former tax law which only permitted the full revaluation of fixed assets. 333. M4easures reducing business income taxes are regressive only to the extent that these taxes are not shifted forward to the consumer in the form of higher prices. If, however, as is widely believed, the ultimate incidence rests on consumers rather than on the owners of capital, the distributive effects of these tax changes are less certain. The elimination of the tax on capital gains, on the other hand, clearly reduces the progressiveness of the tax structure. Nevertheless, this tax has always been difficult to assess and collect in Chile and because of heavy evasion was never a significant contri- butor to total tax revenues. Thus, in the absence of administrative measures to improve the reporting and auditing of capital gains incomes, the elimination of this tax has little practical impact on the distribution of the tax burden. Less easily defended, in the mission's judgment, was the elimination of the wealth tax which, in addition to offering a useful tool for income redistribu- tion, provided a means for capturing income accumulations that may continue to escape taxation at other levels. The Government considers these measures desirable for improving the incentives to save and invest. The long-term impact on income distribution will depend on the extent to which economic growth is thereby encouraged and the manner in which its fruits are distributed through the product and factor markets. 334. The most important reforms in the system of indirect taxation since 1973 were the substitution of a value-added tax (VAT) for the previous cas- cading sales tax, 1/ and the dramatic reduction of import duties in an effort both to lower and to equalize the levels of effective protection provided domestic producers. At the same time, a large number of special exemptions from both taxes available to particular producers or consumers depending on sector, region, etc., have been eliminated. Finally, the tax on credit trans- actions was greatly reduced. The principal objective of all these changes was to eliminate distortions in resource allocation induced by the previous tax system, thus promoting greater efficiency and more rapid economic growth. 335. Many elements of the former system of indirect taxes, such as the preferential treatment accorded capital goods, served to worsen the distri- bution of income. The complexity of the system encouraged both evasion and corruption as well as very high administrative costs, all of which must have had significantly regressive distributive implications. The strong financial incentives that the cascading sales tax offered to the vertical integration 1/ In addition to the VAT, a number of goods defined as luxuries continue to carry complementary excise taxes. This tax, generally 20 percent, is presently applied inter alia to jewels, furs, air conditioners, cameras, phonographs, etc., and thus falls predominately on high- and medium- income consumers. - 162 - of enterprises, combined with the high levels of effective protection provided by the tariff system, created extensive opportunities to earn monopoly rents that in practice accrued to the most powerful and best organized groups in the society. Looking to the future, the reforms that have been effected will make domestic markets more competitive and force producers to become more efficient. The beneficiaries will be consumers generally. 336. While, when the elimination of the inflation "tax" is remembered, the financing of governmental outlays is obviously now more progressive, the immediate impact on income distribution of the reforms of the tax collection system appears to have been regressive in spite of their important economic benefits. This conclusion, necessarily tentative, is based on the observation that many of the exemptions and preferential rates granted under the old sales tax and customs duty systems were aimed at the goods consumed in larger propor- tions by the lower income groups: e.g., food and clothing. In recognition of this objective, the VAT introduced in March 1975 continued to exempt bread, wheat, flour, milk and other basic food items, and school supplies. This exemption was rescinded in 1977, however, on the grounds that such exceptions to general coverage created problems of definition and inevitably complicated the problems of tax administration, as well as impeding the efficient alloca- tion of resources. A special wage adjustment inversely related to income was decreed to compensate low-income families for this increase in taxes. Although the improved pay may have effectively offset the regressive impact on low- income employed workers, the extension of the VAT added to the already severe economic problems of the large number of unemployed. Whatever favorable consequences it offered from a longer-term perspective, this measure might better have been delayed pending more propitious general economic conditions. 337. At the same time that the 1975 reform enhanced the horizontal equity and increased the neutrality of the tax system with respect to the allocation of resources, it also greatly increased the effective tax burden on the economy as a whole. At the time of enactment of the major tax reform legislation in March 1975, this increased tax burden was an intended part of the stabilization program. As the need for austerity diminished, and the Government gradually shifted policy emphasis toward the stimulation of economic recovery, it began to lower tax rates. The reductions thus far have concentrated on corporate and personal income tax rates in an effort to stimulate investment spending and to increase the demand for goods. The value-added tax, on the other hand, has been maintained at the rate of 20 percent--the highest in the hemisphere-- and its coverage extended as described above. As a consequence, the tax structure has been shifting toward increasing reliance on indirect taxation. The role of property taxes has faded steadily since the mid-1960s, with the exception of large jumps in 1971 and 1974. Although taxes on real estate have risen significantly since 1973, this growth has been offset by the elimination of the wealth tax. 338. To some extent, however, this observation is deceptive. The major relative growth of indirect revenues over the past three years has occurred in import duties, partly because of the repeal of the tax-exempt status formerly enjoyed by the public enterprises. It thus represents a transfer within the public sector rather than an increased burden on the private - 163 - sector. 1/ Moreover, these revenues have grown as a consequence of trade liberalization, including greatly reduced tariff rates. They thus reflect an increased availability of goods at competitive prices in the local markets. Therefore, the net distributive impact depends inter alia on the distribution among Chilean consumers of the real income gains generated by this increased competition and the impact on the monopoly rents previously earned by Chilean producers. d. Social Expenditures 339. A large fraction of the growth of public expenditures over the past four decades was devoted to programs having explicitly distributive objectives. While primarily intended to improve the living standards and economic oppor- tunities of the lower-income groups, the implicit subsidies provided by these programs were, for the most part, made freely available to all. The present policy is that the prices of goods and services in general should be deter- mined in the marketplace by the forces of supply and demand. The Government explicitly recognizes, however, that the subsidization (or taxation) of some goods and services is justified on economic or social grounds, including purely distributive objectives. In these cases, however, the Government is seeking mechanisms to limit the subsidization of social services to persons who demonstrably need them, and to increasingly require that those with the ability to pay, do so. This policy, which is expected to reduce the pressure on the government budget, improve the efficiency of resource allocation, and increase the resources available to meet the problems of the truly poor, is being progressively applied to such long-subsidized activities as public higher and secondary education, public medical services, school lunch and milk distri- bution programs, and housing. 2/ 340. The principle of the new approach is sound. A large proportion of past subsidy programs, financed to a considerable extent by inflation, went to the benefit of the middle-income groups while dealing very inefficiently with the relief of poverty. Whether the present attack on poverty will succeed, however, remains to be demonstrated. If successfully implemented, the reforms could result in a significant shift in income distribution in favor of the urban, lower income groups. The proposed redistribution of resources, however, would be made difficult under the best of conditions by the established expectations of the traditional client groups. The objective has been made even more difficult in recent years by the austerity program and the Government's parallel determination to reduce the overall size of the public sector. Although expenditures for social programs have fallen propor- tionately less than the budget as a whole since 1973, and as a proportion of total central government expenditures are equivalent to the high level of 1/ On the other hand, this increased cost to the public enterprises is presumably passed on to the consumer in the form of higher charges for the goods and services produced by these enterprises--electricity, gasoline, steel, etc. 2/ These programs, along with the highly innovative work being done in the field of nutrition, are described at length in Vol. II, Annex III. - 164 - 1972, in real absolute terms they are significantly below the levels of 1971-1973 (Table III.23). Consequently, funding and personnel levels for a number of priority programs--e.g. public health service and the the school lunch program--are far short of what is needed to meet the needs of the truly poor. Moreover, the problem of rural poverty has barely been addressed. 341. The authorities recognize that the resources devoted to these programs must be expanded if their stated goals are to be attained. As the general economic recovery continues and growth resumes, those resources will become available and the Government will have an opportunity to demonstrate that efficient resource allocation and accelerated growth can be made consis- tent with a more equitable income distribution and the elimination of absolute poverty. An operational problem that remains to be solved concerns the proper identification of the target population. Countries have found the means test notoriously difficult to apply fairly, and care must be taken that the tight- ening of eligibility criteria not become a vehicle for increased bureaucracy, arbitrary administration, and undue invasion of personal privacy. H. SUMMARY OBSERVATIONS 342. Under extraordinarily unfavorable circumstances the Chilean authori- ties have engineered an economic turnaround without precedent in the history of Chile. When the military took power in September 1973, inflation had reached an annualized rate of around 1,000 percent, net international reserves were negative, the foreign debt in arrears, and production was declining for the second consecutive year. The deficit of the central government alone exceeded 20 percent of the GDP, the money supply was out of control, the financial system in shambles, and the exchange rate grossly overvalued. High copper prices and increased resource flows from foreign lenders helped to sustain a mild recovery in 1974, but both sources of support collapsed in 1975 with a combined resource loss to the economy equivalent to about 12.5 percent of the 1974 GDP. Since that time, the copper price has remained at its lowest level, in real terms, in more than two decades, while foreign official lenders have been substantial net extractors of resources from the economy. 343. Confronted with these facts, the Government in 1975 introduced a harsh austerity program amid other long-term policy reforms which together have made it possible to reduce significantly the economy's dependence on copper through the expansion of other exports; to meet fully the nation's heavy foreign debt service obligations, while simultaneously replenishing international reserves; to bring inflation back down to Chile's long-term average; to restore a system of rational price relationships; and establish the basis for a pattern of future growth consistent with Chile's international comparative advantage. The only significant source of external official support for this achievement has been the International Monetary Fund. 344. It would be hard to overstate the enormous material sacrifice endured by the Chilean people through this period. The loss of real income and employ- ment brought severe and widespread hardship, particularly for the urban un- employed who lacked a cushion of accumulated savings to fall back on. Arguably, Table III.23 CHILE - CENTRAL GOVERNMENT EXPENDITURES FOR SOCIAL PROGRAMS, 1965-1977 (Millions of 1976 US dollars) 1965-69 1976 1977 Sector Average 1970 1971 1972 1973 1974 1975 (Estimate)(Budget) Health 139.4 154.2 211.6 247.8 237.2 190.7 133.4 135.4 153.2 Education 281.9 362.0 473.2 524.2 354.9 381.3 289.1 320.7 371.0 Housing 133.7 108.6 229.0 228.3 229.9 172.8 70.0 72.7 90.4 Child assistance 0.3 - 0.7 0.6 0.8 0.7 4.1 3.4 8.7 8.5 Social assistance and labor 6.9 7.8 8.4 10.6 5.3 5.1 5.1 8.2 12.8 Social subsidies 0.8 a/ 1.9 1.5 o.8 0.3 2.0 8.9 6.4 7.5 Minimumi employment program - - _ _ _ _ 34.8 79.4 112.9 Total 562.8 635.2 924.2 1,012.6 828.5 756.1 544.7 631.5 756.0 Percent of total expenditure H (excl. debt service) 32.2 28.9 33.5 34.3 21.6 27.6 29.4 33.5 34.5 a/ Included only in 1968 and 1969, with expenditures of US$640,000 and US$689,000, respectively. b/ Included only in 1968 and 1969, with expenditures of US$2.3 million and 1.5 million, respectively. Source: Appendix II, Table 5.6 - 166 - better economic management in late 1973 and in 1974, including a more gradual relaxation of price controls in an effort to influence expectations, and a more cautious restimulation of the economy in view of the precarious debt and reserve situation, might have reduced somewhat the system's vulnerability to the balance of payments crisis of 1975. It might also have been possible, through the selective use of price controls, import controls, etc., to alle- viate some of the impact of the crisis on production and employment and to divert some additional resources to the relief of the greatest hardships. Finally, it may be asserted that the Government could have acted sooner and more aggressively to restimulate the economy in 1976 in view of the buildup of international reserves that occurred during the year as well as the evidence of declining inflationary expectations. 345. In evaluating such criticisms, however, it should first be recognized that one is arguing essentially over degree and timing. Given the disastrous decline in the capacity to import and the hostility of foreign official lenders, a major recession could not have been avoided. 1/ Moreover, economic expecta- tions were highly volatile in the face of the extreme uncertainties that character- ized this period, and assumptions about the likely responses to alternative policy measures are necessarily speculative and matters of intuitive judgment. Finally, in the Government's view, Chilean history of the past four decades had demonstrated that the successful implantation of its long-term policy reforms depended heavily on its giving clear, consistent, and unwavering policy signals from the outset. The potential long-term cost of deviation were viewed as too great relative to the possible short-term gains, if any. 346. The mission further notes that some observers have erroneously, in our judgment, attributed the social costs of the 1975-76 recession to the rapid implementation of the trade liberalization policy. This analysis is hard to support in view of the drastic decline in imports, as well as domestic sales, in those years. The primary responsibility lies instead with the severe foreign exchange constraint which forced the decline in imports. On the other hand, increased competition from imports does now constrain the pace of recovery of output and employment in certain sectors of the economy, as the system attempts to adjust to the new economic strategy. Some of the sectoral implications are examined in the following chapter. 1/ Even a moratorium on external debt payments would have been of limited short-run usefulness, since it probably would have blocked the recovery of private capital flows. - 167 - CHAPTER IV THE MAJOR SECTORS A. INTRODUCTION 347. As described in Chapter I, the exchange rate, tariff and price control policies enforced in the four decades following the world depression of the 1930s exerted a significant bias in favor of domestic manufacturing, while discriminating against investments in mining and agriculture. These same policies concommitantly stimulated the growth of a powerful and sophisti- cated urban middle class, including organized labor and a large government bureaucracy, which generated heavy demands for public services. The reversal of these policies since September 1973 is inevitably having a profound impact on the distribution of production and employment both among and within sectors. 348. Specific sectoral data problems are alluded to in the sections that follow. 1/ With regard to the recession, it was noted in Chapter III that the reduction of imports required by the austerity program served to delay the competitive repercussions of trade liberalization. At the same time, however, the fall in domestic demand exacerbated the already difficult finan- cial situation of many enterprises and heightened business uncertainties, thus delaying the investments necessary to meet the anticipated onrush of international competition and to exploit the export opportunities being opened. 349. Several product groups, such as fresh fruits and forest-based industries, are already clearly identified as offering potential for rapid growth under the new economic strategy, and the requisite investments are going forward; others, such as sophisticated electronics goods, can be expected to disappear from domestic production. The greatest problems for public policy and private investment decision are found in the vast gray area where the tariff protection, credit subsidies, etc. of the past permitted many otherwise potentially competitive industries to develop and thrive with- out great concern for productive or administrative efficiency. Now, after years of inadequate investment and technological progress, many of these industries will be able to survive only if the necessary steps toward modernization are taken in time. 350. With few exceptions the Government is allowing private investment decisions to be guided by the unimpeded signals of the marketplace, eschewing the use of subsidies or other incentives, either general or specific. This, coupled with the Government's determination to reduce the size of the public sector, means the success of the economic strategy rests heavily on the largely untested entrepreneurship of Chile's private sector. 1/ See also the Note on Chilean Economic Statistics, Appendix I. - 168 - 351. Table IV.1 reviews the changing distribution of real GDP among sectors since 1965. While other factors, both economic and political have been superimposed on the behavior of the various sectors, the structure of production shows signs of responding since 1973 to the trade liberalization. Evidence of some of the shifts occurring within sectors is presented in the sections that follow. Table IV.1: CHILE - DISTRIBUTION OF GDP BY SECTORS, 1965-1977 (Percent) Sectors 1965 1970 1973 1974 1977 (Constant Prices of 1965) Agriculture a/ 9.5 9.0 6.9 8.4 10.1 Mining 9.4 9.0 6.6 10.7 11.8 Manufacturing 24.4 24.0 26.1 23.7 20.6 Construction 5.3 4.6 3.6 4.5 2.6 Commerce 20.0 20.6 20.7 20.3 20.4 Other 31.4 31.9 36.0 32.5 34.4 Total GDP 100.0 100.0 100.0 100.0 100.0 a/ Includes forestry and fishing. Source: Appendix II, Table 2.2 B. AGRICULTURE 1/ 1. Geographical and Historical Overview 352. With a north-south dimension of almost 4,300 km, and extremes of altitude along its narrow width ranging to almost 7,000 m above sea level, Chile shows wide variations of climate and soils. Annual mean temperatures and rainfall run from 19.50 C and less than one mm at Arica in the northern desert to less than 70 C and almost 5,000 mm in the far south. Of its total land area of 75.7 million ha, 2/ about one-fourth is considered suitable for cultivation, livestock or forestry. Some 4.6 million ha are classified as arable, and about 1.2 million ha are presently irrigated. 3/ The arable land 1/ A fuller discussion of the evolution of the agricultural sector is available in an internal Bank working document. 2/ Excluding territory claimed by Chile in Antartica. 3/ An additional 0.7 million ha are served by canals, but irrigation is only intermittant because of the scarcity of water. - 169 - is concentrated in Central Chile, bordered by the Provinces of Aconcagua on the north and Llanquihue in the south. The soils and climate of the Central Valley, which runs north and south from Santiago, have often been compared in their richness with those of California. 353. Approximately 1.6 million ha were under crops in 1974, distributed as follows (thousand ha): 1/ 14 Major Field Crops 1,300 Wheat (630) Other grains (300) Beans ( 95) Potatoes ( 85) Oilseeds ( 65) Sugar beet ( 55) Other (70) Orchard Crops 60 Wine Grapes 110 Other 190 Wheat, although evidencing a slow secular decline over the past couple of decades, remains by far the major field crop in terms of area planted, gross value of output, and number of farmers. The gross value of total farm pro- production, including animal products, is distributed roughly as follows (percent): 2/ Field Crops 24 Wheat ( 9) Other (15) Orchard Crops 10 Wine Grapes 13 Garden Fruits and Vegetables 10 Livestock Products 43 Beef (18) Milk ( 8) Other (17) 354. While contributing only about 10 percent of GDP, agriculture still occupies about one-fifth of the national labor force. Census data show an absolute decline of about 100,000 persons in the economically active agri- cultural population between 1960 and 1970. 355. During the Nineteenth Century, Chile was an important net exporter of wheat and other agricultural products. In this century, however, production has failed to keep pace with the growth of demand, and as of 1977 Chile had been a net importer of agricultural products in all years since the Great Depression. As a consequence, food and raw material imports represented a heavy charge 1/ For detail, see Tables 7.2, 7.5 and 7.6 in Appendix II. 2/ See Appendix II, Table 7.1 - 170 - against the balance of payments, and the inelastic supply of foodstuffs pro- vided one source of constant inflationary pressure. 356. Historically, farmland in Chile represented an attractive economic investment quite apart from its latent agricultural potential. In the context of chronic high inflation rates, land offered a low-risk store of value with which few other assets could compete. 1/ In addition, while the market price of agricultural land outpaced the general cost-of-living, assessed values for tax purposes declined in real terms. An effective average tax rate of about one-half of one percent of the land's commercial value provided little stimulus to its productive exploitation. Such favorable treatment did, however, attract a substantial demand for agricultural land by urban-based businessmen, profes- sionals, and corporations seeking a safe, remunerative outlet for their surplus funds. Furthermore, land ownership per se provided the collateral required for heavily subsidized agricultural credits and, hence, access to other inputs, consumption goods, or opportunities for financial gain. 357. At the same time, efforts to enhance productivity were discouraged by price controls and discriminatory exchange rate and tariff treatment in- tended to subsidize the cost of food to the growing urban work force. Various governments attempted to stimulate agricultural output by offsetting these disincentives with subsidies for credit and fertilizer purchases, tariff exemptions for imported farm machinery, etc. Such policies achieved some success in inducing the application of modern inputs, but at least until 1965 the benefits accrued mostly to the larger landowners. The smaller farm owners and tenants generally lacked access to the subsidies, particularly credit, at the same time that their earnings were depressed by the controlled prices at which they sold their products. Moreover, the subsidization of other inputs, coupled with well-intentioned increases in the agricultural minimum wage and other protective labor legislation, had the perverse effect of encouraging the substitution of capital for labor to the detriment of rural employment. 358. The first comprehensive land reform law was enacted by the Alessandri Administration in 1962. Large-scale expropriation and redistri- bution did not begin, however, until inauguration of the Frei Government in 1965. The process was greatly facilitated by a 1967 Constitutional amendment and new agrarian reform law which both broadened the State's expropriatory powers and reduced its cost. Thus, during the 1965-70 period, a total of 1,410 estates, covering 4.1 million ha, or 20 percent of Chile's agricultural 1/ There were no financial assets offering monetary correction prior to 1960. Foreign exchange was a widely used inflation hedge but was made risky by virtue of legal restrictions placed on it. The thin market for, and low dividend return on, stock shares ruled them out as a prudent investment for risk avoiders. Commodity stockpiling was another absorber of investible funds but was subject to the vagaries of international markets and foreign exchange policies. - 171 - land, were expropriated. 1/ The pace of land reform accelerated again during the Allende Government. With tensions rising in the rural sector, expropria- tions frequently spilled over the legal boundaries defined by the 1967 Law. In many cases, land seizures by the workers themselves provoked expropriation on the grounds that such was necessary to restore and maintain order. 2/ A total of 4,399 estates, covering 5.9 million ha, were expropriated from 1971 through 1973, or about triple the annual rate of takeover of the previous period. Some 296 peasant cooperatives and 76 state farms were organized on the expropriated lands. An estimated 50,000 families were affected. 359. Thus, a total of almost 10 million ha of agricultural land was expropriated between 1965 and 1973. The magnitude of the restructuring of land ownership may be appreciated in the following percentages of land availabilities affected: Expropriated Land as Percent of Total Arable land 48 Irrigated 61 Dry 44 Nonarable land 49 Total Agricultural Land 49 In short, a decade of reform had transferred almost half of Chile's arable land and more than 60 percent of irrigated land to the State for distri- bution to heretofore landless workers. Preference in settling the land was given to the permanent work force of the former estate. Largely unaffected were the traditional minifundistas. 360. The Frei and Allende Governments also greatly expanded the flow of credit and other assistance to small farmers, especially land reform beneficiaries. The overall policy approaches adopted by the two governments, however, were fundamentally different in ways which crucially affected sector performance. Specifically, the Frei Government took simultaneous steps to improve the relative prices of agricultural goods, while also providing assurances to existing landowners that efficiently operated farms of up to 1/ The enumeration of expropriations by presidential periods varies somewhat from one source to another, largely as a consequence of differences in the beginning and termination dates used and the attribution of land acquisitions in process. The data used here are taken from AID, Chile's Agrarian Reform (mimeo.), Santiago, 1977. 2/ There were 1,278 reported land seizures in 1971, compared with 192 in 1970 and 148 in 1969. - 172 - 80 basic irrigated hectares (BIH) were secure from expropriation. 1/ Owners of larger units were entitled to retain a "legal reserve" of up to 80 BIH, again contingent upon its efficient exploitation. In contrast, the Allende Government's price control policy severely depressed the real prices of farm products, and investment incentives were increasingly undermined by illegal land seizures and the expropriation of farm and legal reserves below the 80-BIH size limit. 2/ 361. Different approaches were also taken to the organization of the reformed sector. Under Frei, expropriations were carried out on a farm-by- farm basis, and land recipients were organized into cooperative settlements or asentamientos conforming generally to the borders of the original estate. The asentamiento was conceived to be a transitional stage of organization by means of which the beneficiaries (asentados), in partnership with CORA, would accumulate capital, and acquire technical skills and managerial experience. After three years, extendable to five with the approval of the President of the Republic, land titles would be assigned on either an indi- vidual, cooperative, or mixed ownership basis to be determined by a vote of the asentados. Between 1965 and 1970, more than 900 asentamientos, containing an estimated 20-30,000 families, were formed. Of these, 109 asentamientos completed the transition period before the end of the Frei Administration, 95 opting for cooperative titling and 14 for mixed ownership. 362. The Allende Government, on the other hand, administered the expro- priation and settlement process on an area-wide basis in order to achieve greater control over sectoral planning and to take advantage of presumed scale economies. Regional cooperative organizations were formed to exercise administrative and financial control over the asentamientos, and large-scale operations (in terms of capital requirements), such as livestock, forestry and vineyards, were organized as state farms. Although a total of 4,399 farms were expropriated from 1971 through 1973, encompassing an estimated 50,000 beneficiary families, no land titles were awarded by CORA during these years. 363. The impact of these differences is reflected in the summary of plantings and production in Table IV.2. With improved price incentives, the threat of expropriation in the event of poor exploitation, but secure property 1/ The BIH is legally defined by the 1967 Land Reform Law as a unit of land equivalent to one hectare of first quality, irrigated land in the Maipo Valley (central Chile). One innovation of the 1967 Law was to add size per se to the list of expropriation criteria. As part of its preparatory work, the Agrarian Reform Corporation (CORA) carried out a nationwide survey in 1965, assigning BIH conversion coefficients to each zone and sub-zone on the basis of climate, roads, and distances to markets, as well as the inherent productivity of the soil. 2/ Although the Law remained unchanged, Government officials indicated their intention to eventually reduce the limit to 40 BIH, or even 20 BIH. The question of expropriable farm size, along with other elements of land reform policy, were matters of open dispute within the Unidad Popular coalition, and the inability to resolve them contributed to the uncertainty. - 173 - rights (at least up to 80 BIH) in the case of efficient operation, the pro- duction of field crops grew at an average annual rate of 5.0 percent from 1965 to 1970, as compared to 2.3 percent per year over the previous decade. Table IV.2: CHILE - AGRICULTURE: AREA PLANTED AND PRODUCTION, CROP YEARS 1965/66-1972/73 (1964/65=100) 1965/66-1968/69 ______ Average 1969/70 1970/71 1971/72 1972/73 Area Planted (field crops) 100 100 101 103 82 Field Crop Production 115 128 134 121 87 Livestock Production 122 131 128 126 125 Source: Appendix II, Tables 7.2a, 7.3a, and 7.8 Livestock output rose to 5.5 percent annually from a historical growth rate of less than 2 percent. 1/ The 1970/71 crop year saw a record harvest, and, despite the acceleration of the land reform, plantings were increased--though offset by declining yields--in 1971/72. 2/ By the following crop year, however, deteriorating prices, growing political turmoil, land invasions, and the disrup- tion of transport channels had led to a 21 percent reduction of the area planted to field crops and a 28 percent decline in output. Wheat production alone fell 37 percent to half the level of 1970/71. Livestock production stagnated over the period, falling by 1972/73 about 5 percent below 1969/70. 364. Chile's average balance of trade in agricultural products and processed foods deteriorated from 1965 to 1967, but then improved through 1970 (Table IV.3). In 1970, the import of agricultural commodities and processed foods was approximately equal in real terms to the 1960-64 average, while real exports of those goods had risen more than 40 percent. The real deficit had been reduced to the lowest level in more than a decade. The rapid expansion of aggregate demand, redistribution of income, and lower real food prices achieved in 1971, however, resulted in a sharp increase in the demand for food which could only be partly met out of the bumper 1970/71 harvest. Food and agricultural imports consequently jumped 38 percent in real 1/ The 1965-70 performance is made more remarkable by the fact that two of the years were affected by Chile's worst drought in a century. 2/ In Chile, annual crops are generally planted during the last quarter of the calendar year with harvest occurring in the first semester of the following year. - 174 - terms. Demand continued to increase in 1972, and, with production now falling, world commodity prices rising, and the multiple exchange rate system grossly subsidizing food and agricultural imports, the latter grew an additional 60 percent in real terms and 71 percent in nominal terms. By 1973, the deficit from agriculture and processed food trade absorbed 36.5 percent of total merchandise export earnings as compared to 7.6 percent in 1970. 1/ Table IV.3: CHILE - EXPORTS AND IMPORTS OF AGRICULTURAL PRODUCTS AND PROCESSED FOODS AS PROPORTION OF MERCHANDISE EXPORTS, 1965 AND 1970-73 a/ (Percent) Exports FOB Imports CIF Balance 1965 6.0 -20.4 -14.4 1970 5.6 -13.2 - 7.6 1971 8.0 -20.0 -12.0 1972 6.0 -40.3 -34.4 1973 3.6 -40.1 -36.5 a/ Includes fisheries products but excludes forest products. Source: Appendix II, Tables 7.13 and 7.14 2. Agricultural Policies since September 1973 365. Agriculture's poor performance in the post-Depression decades cannot be attributed to indifference on the part of the public authorities. During this period, a large and complex bureaucracy was created to administer the various overlapping programs of price controls, subsidies, credit, tariff preferences, marketing, technical assistance, research, irrigation, roads, rural education and health, colonization, and land redistribution. By November 1970, 27 independent agencies formally constituted the Public Agri- cultural Sector. During the Allende Government, the payroll of the Ministry of Agriculture alone grew from fewer than 11,000 employees to more than 27,000. 366. This accumulation of administrative controls and state responsi- bilities has been almost totally reversed since September 1973. Consistent with the Government's general economic strategy, prices have been freed, most subsidies and preferences (tax, exchange rate, etc.) eliminated, tariffs re- duced, and responsibility for many formerly public sector activities, such as warehousing, marketing, agro-industry, and technical assistance, have been progressively shifted to the private sector. Expropriations were immediately halted, land deemed to have been taken illegally has been restored to its original owners, and the government concentrated on assigning titles to approximately 45,000 land reform beneficiaries. 1/ Merchandise exports in 1973 were 18 percent higher than in 1970. - 175 - 367. The combined impacts of land redistribution, exchange rate ration- alization, and the elimination of long-standing incentive-stifling government controls lays the basis for a more efficient exploitation of Chile's substantial agricultural potential. Nevertheless, as in other sectors, there are signifi- cant problems of structural adaptation to the new economic strategy, complicated, too, by the short-run difficulties through which the economy has recently passed. a. Price Policy 368. Agricultural prices have been progressively freed since 1973, while unification and devaluation of the exchange rate, the reduction of tariffs, and the elimination of export controls have brought domestic prices increasingly into line with international prices. By 1977, only three commodities--wheat, sugar beets and rapeseeds--remained subject to formal market intervention. Price determination for all other agricultural commodities is left to the free market with no restrictions on imports or exports. In the case of the three items mentioned, intervention took the form of a price band of plus-or-minus 10 percent around a target price fixed in U.S. dollars. The market price is allowed to fluctuate freely within the band. The floor price is protected by adjustable customs duties and guaranteed government purchases, while the ceiling is to be enforced, if necessary, by export controls and direct price administration. The bands are to be widened over time, and eventually elimi- nated, in accordance with a preannounced schedule, and a futures market is being encouraged to stabilize expectations. Input prices have also been freed, and most subsidies, including tax, tariff, and exchange rate preferences, eliminated. Responsibility for the marketing and distribution of agricultural inputs has gradually been shifted from state institutions, particularly the State Bank (BECH), to the private sector. 369. The lack of consistent time series data on farm input prices restricts the analysis of the profitability of farm operations in recent years. The impact has undoubtedly varied widely depending on the degree of access each farmer formerly enjoyed to subsidized inputs and credit and the degree of control the State could exercise over his sales. An idea of overall trends may by gleaned from Table IV.4, which traces the purchasing power of the wholesale price of domestic agricultural goods in the aggregate, real producer prices, and the relative price to the producer of farm output and selected fertilizers. The deflated index of crop prices received by the producer rose about 4 percent from 1965 to 1970, continued to rise in 1971, but then fell sharply over the next two years as price adjustments lagged behind the general inflation and import prices were subsidized by the exchange rate regime. 1/ The freeing of prices and adjustment of the exchange rate after 1973 has resulted in a sharp improvement in the farm sector's general purchasing power. The agricultural wholesale price 1/ The actual deterioration of agriculture's terms of trade is probably exaggerated in these figures, however, as some unknown proportion of farm output was sold in the black market during 1972/73 at substantially higher prices and some farmers were able to satisfy some fraction of their consumption demand at official prices. - 176 - index followed a parallel course with the suggestion, in comparison with the producer price index, of some widening of commercial margins over the late '60s, a sharp narrowing in 1971, and a return to 1965 margins by 1974 before contrac- ing again in 1976. 1/ Table IV.4: CHILE - INDICATORS OF AGRICULTURE'S TERMS OF TRADE, 1965-1977 (1965 = 100) 1965 1970 1971 1972 1973 1974 1975 1976 1977 1. Wholesale agricultural prices deflated by CPI a/ 100 109 101 86 84 142 199 221 206 2. Crop prices to producer deflated by CPI a/ 100 104 108 83 88 142 198 250 210 3. Fertilizer prices deflated by producer price index (line 2) a. Sodium crystal 100 118 84 53 196 234 128 79 88 b. Potassium 14% 100 139 99 62 210 254 169 110 110 c. Urea b/ - 83 62 - 88 194 162 75 76 a! IBRD adjusted. D/ 1967 = 100. Source: Internal Bank working document, Annex I, Tables 13 and 14 370. After rising across the second half of the 1960s, fertilizer prices fell relative to depressed farm output prices in 1971 and 1972 as a result of direct subsidization and a preferential exchange rate which steadily appre- ciated in real terms. The freeing of prices, elimination of subsidies, and devaluation of the peso in late 1973 coincided with an abrupt increase in the world price of fertilizers and dramatically raised their cost to Chilean 1/ No firm conclusions regarding wholesale margins are possible from these data, however, because of the different composition of the two price indices. The evolution of producer prices of major farm commodities is given in Appendix II, Tables 7.15 - 7.17a. - 177 - farmers. 1/ This price increase, combined with the tightness of credit, resulted in a sharp decline in fertilizer consumption in 1974 and 1975. 2/ The relative price of fertilizers fell in 1976, however, providing renewed stimulus to their application. b. Credit Policy 371. As shown in Chapter I, real credit to the private sector, including agriculture, grew little through the 1950s and early 1960s, as monetary expan- sion was fueled primarily by Central Bank financing of the public sector deficit. Credit to agriculture was provided largely by the commercial banking system, with the State Bank (BECH) the major lender. Interest rates were negative in real terms, and access depended heavily on the size of the borrower's assets. The operations of the private commercial banks fell in real terms from 1965 to 1970. 3/ Overall real credits to agriculture doubled, however, the growth led by the lending of BECH and CORA to the reformed sector. Credit ex- panded further in 1971 but then began to decline rapidly in real terms through 1975, eroded first by accelerating inflation and then by the austerity measures introduced in the later year. By 1975, real agricultural credit had fallen 38 percent relative to 1970 and 49 percent relative to 1971. Although credit to agriculture increased strongly in 1976, it remained below the real levels of the late 1960s. 372. Since 1973, major responsibility for agricultural credit has been shifting back toward the private commercial banks, the latter's real operations growing almost six-fold from 1973 to 1976, and their relative share rising from 4.5 percent to 20.7 percent of total institutional lending to the sector (Table IV.5). Much of this credit expansion was financed through the redis- count window of the Central Bank, whose selective credit programs gave strong preference to agriculture throughout this period. During the 1976/77 crop year, 100 percent rediscounting was available on credits for specified crops, fertil- izer purchases, the refinancing of the previous season's loans to wheat farmers, and investment loans of up to five-year maturities. 1/ The world price of a metric ton of urea, for example, rose from an average US$59 in 1972 to US$95 in 1973 and US$316 in 1974. 2/ The problem was prolonged by the pricing policy of the State Bank (BECH), which having imported large quantities of fertilizer in late 1974, at the height of the market, attempted to minimize its losses by holding the domestic price up even after the world market situation had substan- tially eased. (Data on fertilizer use are provided in Appendix II, Table 7.9.) 3/ See Appendix II, Table 7.12. - 178 - Table IV.5: CHILE - AGRICULTURAL CREDIT AND DISTRIBUTION BY TYPE AND LENDING INSTITUTION, 1970-1976 1970 1973 1974 1975 1976 Total Ag. Credit ('000 pesos of Dec. 1969) 1,751.1 1,260.0 1,148.6 1,086.0 1,570.4 Production credit 1,519.4 1,122.0 996.2 905.1 1,174.4 Investment credit 231.7 138.0 152.3 180.5 396.0 Distribution by Lending Institution (Percent) State Bank (BECH) 51.7 85.7 66.1 69.9 59.5 Private commercial banks 13.7 4.5 5.2 8.9 20.7 Central Bank 7.6 0.2 - - - CORA 14.4 3.0 0.9 - - INDAP 3.0 5.4 9.7 8.6 6.4 CORFO 4.5 0.3 7.0 4.7 4.4 IANSA/COMARSA 4.5 0.8 11.1 5.5 3.0 IFICOOP 0.6 0.2 0.0 2.4 6.0 Total 100.0 100.0 100.0 100.0 100.0 Source: Appendix II, Table 7.12 373. The interest rate to the farmer was market-determined, but averaged somewhat below the 4-8 percent per month of prevailing real short-term interest rates during this period, in reflection of the Central Bank's preferential discount terms. Such high borrowing costs were a great shock to farmers accustomed to heavily subsidized credit and undoubtedly retarded investment activity in agriculture. It may be noted, however, that such interest rates were not unknown to the large majority of small farmers, who, lacking access to the institutional lenders, had historically relied on local moneylenders, storekeepers, itinerant traders, etc. for financing. 1/ 1/ A survey of 200 farmers in central Chile in the 1960s reported interest rates from such noninstitutional sources ranging from 18 to 360 percent in real terms, not including such common cost-increasing devices as interest prepayment, undervaluation of repayments in kind, mandatory labor services, and the monopolistic pricing of the purchases being financed. (Charles T. Nisbet, "Interest Rates and Imperfect Competition in the Informal Credit Market of Rural Chile," Economic Development and Cultural Change, Vol. 16, No. 1, October 1967). On the other hand, no information is currently available regarding how lending rates in the informal market have been affected by the increased costs of formal credit. - 179 - 374. Rediscount policies were modified for the 1977/78 crop year. Crop restrictions were removed, and a general rediscount line was opened for all farmers equivalent to 50 percent of the initial loan. The rediscount rate was set at 6 percent per annum fully indexed to the CPI, and the interest rate to the final borrower was not to exceed 16 percent on the indexed principal. (The rediscount rate charged by the Central Bank on nonagricultural credits was 12 percent). An additional credit line provided 100 percent rediscounting of production credits to small farmers, defined as landowners of less than 12 BIH. These loans were discountable at an indexed rate of 5.5 percent, and the real interest rate ceiling to the borrower was 9 percent. 375. No special rediscount facilities were to be provided for the 1978/79 crop year. The substantial reduction that had occurred in the required reserve ratios of the commercial banks was expected, along with the monies made available by INDAP, CORFO, IFICOOP, etc., to enable them to meet the credit demands of the sector out of their own resources. c. Technical Assistance 376. Even though Chile long enjoyed one of the best financed and staffed extension programs among the developing countries, it was frequently criticized for the poor quality of its services to farmers. Typically, 90 percent or more of government agricultural technicians and professionals were to be found in Santiago or other provincial capitals, rather than among the farmers. The Agriculture and Livestock Service (SAG), the Agrarian Reform Training and Research Institute (ICIRA), and the Agricultural Development Institute (INDAP), are the chief public sector institutions providing technical and extension services to agriculture. The first two agencies combined currently employ about 450 technicians, who are working almost exclusively in the reformed sector. The assistance being provided is mostly nontechnical--e.g. the preparation of credit applications and related farm plans, and the forma- tion of cooperatives. The mission was advised by the agencies themselves that they are inadequately staffed to provide assistance in cultural practices-- tillage, planting, irrigation, etc. 377. The Government has recently instituted a program whereby the bulk of technical assistance services to agriculture is to be provided by private consul- tants with a portion of the fees directly subsidized by the State. Under the new system, individual farmers contract for a package of technical services, including farm planning, operational assistance, and post-harvest evaluation. Farmers owning between 5 and 15 BIH are eligible to receive a government pay- ment order covering 70 percent of the cost of the package, estimated to total about US$180. Farmers with holdings of less than 5 BIH may also participate in the subsidy program if their cash flows permit payment for private technical assistance services. Otherwise they will continue to be served via the supervised credit operations of the Agricultural Development Institute (INDAP). The Government expected to incorporate some 10,000 farmers into the program during its initial year of operation with between 30,000 and 40,000 participating over its anticipated five-year life. d. Irrigation and Water Use 378. Approximately 1.8 million ha, or 39 percent of arable land, is served by irrigation canals. About 1.2 million ha of this land can depend on - i8o - an adequate water supply, with some 85 percent security, throughout the irriga- tion season. For the rest of the system, irrigation is intermittant because of water scarcity. 379. Historically, government emphasis has been placed on construction of major works, with little attention paid to related on-farm development, regulation of water flows, rational water pricing and ultimate utilization of scarce water resources. As a result, capital has been wasted by unnecessary parallel canal building by individual farmers; lands are subject to frequent flood damage and canals to the accumulation of silt, gravel and rocks; and existing water supplies are wasted by, for example, limiting irrigation to daytime hours while providing no storage facilities to capture evening and weekend flows. 1/ 380. Among the factors contributing to poor water use have been the chronic lack of coordination among the many public sector agencies responsible for its various aspects; the failure to institute a rational water pricing system; and more recently, the process of land reform and parcelization which fragmented the ownership of existing works and weakened the already imperfect mechanisms existing for on-farm distribution and control. Around 60 percent of irrigated land is now in the reformed sector, and many of the beneficiaries presently lack the technical knowledge and experience to manage these water resources efficiently and the capital to carry out the necessary on-farm development. 381. Successive governments tried unsuccessfully to establish a coordina- ting mechanism for irrigation-related activities and policies. In 1975, the present Government created the National Irrigation Commission (CNR) to under- take project planning on the national and regional levels and to direct the activities of the various state agencies involved one way or another in the design, construction, and use of irrigation works. It remains to be seen whether this latest organizational innovation will succeed where its prede- cessors have failed. The mission noted that the emphasis of sector officials continues to be on the construction of major works to bring new lands under irrigation, rather than on the measures needed to improve the efficiency of water use in the existing system. e. Consolidation of the Land Reform 382. No further expropriations have occurred since September 1973, and expropriations which were in process at the time of the change of regime were cancelled. The Government has focussed its efforts instead on assigning titles to reform beneficiaries and to completing the litigation of alleged irregularities in the expropriations carried out during the two previous 1/ An IBRD/FAO study in 1952 estimated that the elimination of such waste would make possible at least a 20 percent expansion of land under irrigation with the water supplies and major infrastructure then exist- ing. Water use does not appear to have improved markedly in the interim. - 181 - administrations. 1/ The legal authority for land expropriation provided by the 1967 Agrarian Reform Law was formally repealed in June 1978 by Decree Law No. 2247. This action, in effect, removed the 80 BIH upper limit on land - holdings as well as the ban on corporate land ownership, thus leaving the disciplining of inefficient land use to the marketplace. That discipline was strengthened by the massive readjustment of land valuations for tax assessment purposes that occurred in late 1973 and in 1974. Since that time, assessed values have been indexed to the CPI. 383. CORA, with the help of local consulting firms, began in 1974 to divide up the asentamientos and remaining eligible, unassigned land for dis- tribution as individual, family-sized parcels. Parcel size was determined by the requirement that each farm be able to earn a net return of US$1,200 (later raised to $1,500) before amortization of land. This was known as one Agricultural Family Unit (UAF). Titling was preceded by detailed soil surveys, preparation of cadastral maps, and the selection of beneficiaries. By March 1978, CORA had distributed 34,726 individual farm titles, and another 2,170 farm units had been approved for distribution. CORA had also received requests from 196 of the 207 cooperatives that had previously been titled to re-divide the land on an individual farm basis. Another 8-9,000 family farms will be created by this process. 384. In contrast to the Frei and Allende Governments, the current administration has favored individually-owned family farms, a model which appears to be preferred also by the majority of land recipients. Preference in titling is given to asentados on the estates being divided, who had in turn been drawn largely from the permanent workers of the former landlord. 2/ 1/ As explained above, the 1967 Law had provided security against expropriation to efficiently operated farms of 80 BIH or less. Also specifically designated as non-expropriable were nonprofit experi- mental farms, vertically integrated vineyards, and natural forests or plantations with no suitable alternative land uses. 2/ A recent survey of 181 former asentamientos found that 82 percent of the 3,178 families receiving titles were from the estates being parceled. On the other hand, the number of asentados (4,123) exceeded the number of parcels distributed, and 1,509 families from the estates did not receive land there, either because they were disqualified by the criteria being applied, or because sufficient land was not available. Of those not receiving land in their own former asentamiento and for whom information is available, 117 families were assigned land from another estate. Most of the rest remained in the area as wage labor. A breakdown of the 18 per- cent of families from outside the sampled estates who received titles there shows that 67 percent had been asentados elsewhere, 15 percent had held administrative positions on the estate, and 12 percent were sharecroppers or farm laborers. (ICIRA, Analisis de la situacion de los Asignatario de Tierras a diciembre de 1976 (20 diagnostico), Santiago, November 1977. The ICIRA sample is described in Appendix II, Table 7.18. - 182 - The land is priced slightly below the present market value with a 30-year mortgage at 6 percent interest (fully indexed) and two years of grace. 1/ 385. In the course of land division and distribution, the cooperative responsible for the asentamiento being parceled 2/ is required to settle its outstanding debts to CORA for credit, machinery, and other inputs. In the absence of cash to settle these obligations, CORA has been repossessing the cooperatively-owned physical assets--machinery, livestock, fertilizer inventories, etc.--giving title recipients a first option on their subse- quent purchase. Although CORA has offered special credit for this purpose the new landowners have, in many cases, not taken advantage of it, and the assets have been sold at public auction. Cooperative debts remaining after this liquidation process become the pro-rated liability of the individual titleholders. 386. At the same time that more than 3 million ha of reformed sector land had been divided and assigned to individual peasant families by early 1978, 2.8 million ha, or 28 percent of the total expropriated, was restored to its original owners. Former landowners alleging irregularities in the expropriation of their lands were allowed until July 1974 to present their claims. The claims were generally based on the contention that the farm was below the 80-BIH size standard established by law, or that the owner had not been allowed to retain the reserve to which he was entitled. By February 1978 almost all claims had been adjudicated, and 1,519 farms were restored intact to their original owners, along with the partial return of 2,158 farms. In many cases, landowners agreed to accept the return of a part of their former holdings as full compensation for expropriation of the entire fundo. The average size of the farms returned in their entirety approximates 85 BIH, while the partial farms returned have averaged 50 BIH. 3/ 1/ Annual mortgage payments for persons receiving titles before the end of 1975 were expressed in terms of fixed quantities of wheat or corn with no interest specified. Beginning in 1976, the liability is expressed in cash with the terms described above. Earlier land recipients have the once-only option of switching from the original to the new system. 2/ The asentamientos organized under the Frei Government were administered by a transitional partnership between CORA and the peasant cooperative, known as an Agricultural Society of Agrarian Reform (SARA). These continued to operate at the estate level during the Allende Government, which also created regional cooperative organizations, known as Agrarian Reform Centers (CERAs), as well as state farms referred to as Centers of Production (CEPROs). 3/ Returned properties include some forest lands and vineyards which were legally exempted from expropriation regardless of size. - 183 - 387. As of February 1978, CORA still retained 2.5 million ha of land, principally grazing and forest land of doubtful agricultural quality. 1/ Disposition of these lands was a subject of considerable debate, inasmuch as the investments necessary to make them productive were argued to exceed the resources of small farmers and involve important economies of scale. In June 1978, the Government decreed that in disposing of these properties CORA would give preference to the asentados living on them to buy either as individuals or in voluntary associations. The price was to be set by CORA at not less than the tax assessment value, and the terms of sale were 10 percent down, the balance over 15 years with 2 years of grace, and interest at 6 per- cent per year indexed. It was not clear how many asentados would be able to organize and amass the resources necessary to meet the terms of purchase, and properties not taken by them were eventually to be auctioned off to the private sector. 388. Table IV.6 reviews the disposition of expropriated land through February 1978. While less than a third of the total land expropriated, measured in physical hectares, had been distributed to reformed sector farmers, this land was of relatively high agricultural quality and represented more than half of the expropriated land in terms of BIH. 2/ By the same criterion, the land returned to original owners appears to have been of somewhat lesser quality, and the land still held by CORA dis- tinctly less suitable for agriculture (at least of an intensive sort). 389. To summarize, the Government's program for completion of the land re- form was to have been essentially accomplished before the end of 1978. By that time approximately 45,000 farm titles should have been assigned to land cover- ing more than 3 million ha. Thus, the responsibility of cultivating some of Chile's best agricultural lands has been placed in the hands of new small farmers who, if successful, could help to ameliorate the gross disparities of wealth, income, and political power that historically characterized the rural sector, as well as contribute to the growth and stability of the nation's economy. Given the heavy debts inherited from the past, however, including their own technological backwardness and lack of entrepreneurial experience, and the additional difficulties imposed by the economy-wide austerity of 1975-76, the success of the reformed sector will not be easily achieved. 1/ Another 866,000 ha, designated as CORA reserves, consists of hills, schools, churches, farmhouses, and other undistributed portions and improvements of expropriated estates. These are being gradually auctioned off with preference usually given to former owners or to contiguous reform sector titleholders. Some 670,000 ha had been transferred to other public sector institutions, including the Armed Forces and the State Forestry Corporation (CONAF). 2/ The BIH indicator probably overstates somewhat the quality of reformed sector land inasmuch as the BIH/physical hectare coefficient was assigned to an entire fundo. Thus, when the original owner presumably retained the best land within the fundo for his 80 BIH reserve, the asentamiento was accordingly left with a BIH of lower average quality. - 184 - Table IV.6: CHILE - DISPOSITION OF EXPROPRIATED LAND (THORUGH FEBRUARY 1978) Basic Physical Irrigated Hectares Hectares Disposition ('000) Percent ('000) Precent Total expropriated 9,965.9 100.0 895.7 100.0 Assigned to reform sector farmers 3,097.8 31.1 458.0 51.1 Returned to original owner 2,833.0 28.4 237.5 26.5 Transferred to other public sector institutions 671.3 6.7 20.2 2.3 Still held by CORA 3,363.8 33.8 180.0 20.1 CORA reserve ( 865.8) ( 8.7) ( 36.2) ( 4.0) Forest and dry lands (2,498.0) (25.1) (143.8) (16.1) Source: CORA; mission estimates 3. Agricultural Performance since 1973 a. Output 390. In response to improved price incentives and security of property, agriculture was the one sector to exhibit continuous growth between 1973 and 1977. Sectoral value-added is estimated to have increased at an average annual real rate of 9 percent from the depressed level of 1973, and in 1977 stood about 16 percent above 1971. The planting of wheat and Qther grains and field crops expanded rapidly with the improved price incentives that followed the 1973 change of government. Available data suggest that aggregate field crop output grew at an average annual rate of about 15 percent from 1972/73 to 1976/77 (see Table IV.7). In the latter year pro- duction stood about 13 percent above the previous record level of 1970/71. - 185 - Table IV.7: CHILE - AREA PLANTED AND PRODUCTION, CROP YEARS 1972/73-1977/78 (1964/65=1OO) 1972/73 1973/74 1974/75 1975/76 1976/78 1977/78 Area Planted 82 93 99 104 103 95 (Field crops) Field Crop Production 87 108 117 123 152 n.a. Livestock Production 125 135 130 125 n.a. n.a. Sources: Appendix II, Tables 7.2a, 7.3a, and 7.8 391. Since the 1975/76 crop year, however, plantings of wheat, oats, rapeseeds, and sugar beets have been reduced significantly as falling world prices were brought increasingly to bear on the domestic market. Sugar beet production alone is estimated to have declined 62 percent as a result of re- duced plantings in 1977/78, and the weighted output index for the 14 major crops was down 30 percent. Weather was an important factor in parts of the country, but the major reason for the declines appears to be the uncertainties created by falling world prices, the high cost of credit, and the withdrawal of government purchase guarantees. To some extent, these declines have been offset by a significant shift in land use away from the traditional field crops in favor of more land- and labor-intensive orchard and garden crops in response, at least in part, to the improved export opportunities awakened by trade liberalization and exchange rate adjustment. There is no systematic collection of production or marketing data with regard to these commodities, however, so the net result on agricultural production is unknown. 1/ b. Foreign Trade 392. The liberalization of trade since 1973 is described in Chapter III. The combined effect of the devaluation of the peso, the freeing of agricul- tural prices, the domestic austerity program, and the reestablishment of political stability and security of property in the countryside has been a seven-fold expansion of food and agricultural exports from 1973 to 1977 1/ Planting and production estimates over the past decade have been based largely on the 1965 agricultural census. In view of the enormous changes that have occurred since 1965 in the delimitation, ownership, and use of agricultural land, information from samples blown up on the basis of that census are of doubtful reliability. An agricultural census was carried out during 1976 and is being processed. Until its results are available, one can only speculate regarding the net impact that agrarian reform and the new economic strategy have had and are having on the distribution and utilization of Chile's agricultural resources. - 186 - (Table IV.8). Over the same period, imports were reduced by 35 percent, in nominal terms, and the deficit cut from the US$478 million, or 36.5 percent of total merchandise exports, suffered in 1973, to less than US$5 million, 0.2 percent of merchandise exports, in 1977. The deficit grew in 1978, as the poor domestic harvest necessitated a substantial increase in grain imports, but it was not expected to exceed 2 percent of merchandise exports. Table IV.8: TRADE IN AGRICULTURAL PRODUCTS AND PROCESSED FOODS AS PROPORTION OF MERCHANDISE EXPORTS, 1973-1977 (Percent) Year Exports FOB Imports CIF Balance 1973 3.6 -40.1 -36.5 1974 5.0 -20.0 -15.0 1975 12.3 -23.5 -11.3 1976 11.3 -16.0 - 4.6 1977 p/ 15.4 -15.7 - 0.2 p/ Preliminary. Source: Appendix II, Tables 7.13 and 7.14 c. Economic Status of Small Farmers 393. There is little information regarding how well the 45,000 reformed sector farmers and the approximately 182,000 traditional minifundistas, who represent roughly 12 percent and 42 percent, respectively, of the farm population, have fared amid the general sectoral growth. 1/ The following observations are drawn from the limited survey data available. 2/ 1/ The seeming inconsistency between the number of families and population percentage figures cited is explained by the larger average family sizes found in the reformed sector. 2/ Data on the reformed sector are taken from ICIRA, oP. cit.; observations regarding the traditional minifundistas are based largely on American Technical Assistance Corporation (ATAC), Survey of Small Farmers in the Central Irrigated Agricultural Region of Chile: Agricultural Year 1974/75, Santiago, April 1976. Both surveys are described in greater detail in an internal working document of the World Bank. -187 - (i) The Reformed Sector 394. The survey of reformed sector farmers drawn upon here was carried out in December 1976. The tendencies reported were, of course, heavily influenced by general macroeconomic policies and the overall state of the economy. No data are provided in the study regarding volume or value of output. Although the great majority (86 percent) of sampled beneficiaries professed to being better-off since receiving their titles, the reasons given were predominantly subjective (e.g. greater independence) rather than economic. Evidence was given, however, of increasing intensity of land use among individual farm operators, a shift toward garden crops in particular and away from wheat and pasture. Moreover, of the sampled farmers who had possession of their land through at least one harvest, two-thirds had marketed more than half of their product, indicating a strong commercial, as opposed to subsistence, orientation. 395. Not all parcels in the sampled estates, however, were still being worked by the original title assignees. The survey estimated that during the 1976/77 crop year, 83 percent of parcels were being farmed by the original assignee, 7 percent had been let to sharecroppers, 1 percent rented, 4 percent sold, 2 percent abandoned and 3 percent not yet assigned. The high proportion of sharecropping contracts was particularly striking inasmuch as such arrangements were still illegal at the time of the survey. Since their authorization by CORA in May 1977, the use of third-party arrangements has probably increased. 1/ The primary reason given by assignees for selling or letting their land was economic difficulty. 396. A high proportion of sampled farmers reported the use of ferti- lizers, pesticides, and commercial seeds during the 1976/77 crop year. 2/ Interestingly, in most cases the inputs were bought individually; in fewer than a third of the cases were cooperatives or other farmer organizations used as intermediaries. The level of employment has apparently increased over time. Although the labor was supplied primarily by the titleholders' own families, more parcels were found to be employing outside wage labor, as well, compared to a similar survey conducted two years earlier. The apparent tendency toward 1/ As a countermeasure to land sales, the Government promulgated Decree Law No. 1,600 in November 1976, requiring that any reformed sector land transfer occurring within three years of assignment be approved by CORA. Buyers from outside the reformed sector must make immediate cash payment for the full debt owed to CORA, while insiders may assume the original mortgage with the amortization period halved. In the judgment of the surveyors and many observers, sharecropping contracts were frequently being used to mask a de facto sale of land to non-reformed sector buyers, enabling the later to assume the subsidized CORA mortgage. The Government has indicated that such agreements are legally unenforce- able and that their perpetrators would be severely penalized. 2/ Among grain producers, for example, 82 percent of individual farmers applied fertilizer; 76 percent used pesticides; and commercial (presumably improved) seeds were used by 62 percent. - 188 - greater labor intensity, as well as land intensity, in production is consistent with the above-noted shift in land use, but results also from the reduced stock of capital available to the new titleholders as compared to the earlier asentamientos (see below). It might also be noted that the survey found a considerably higher average number of persons over age 15 resident on each parcel (4.3) than reported as permanently employed (2.2). This suggests the continued existence of a significant degree of underemployment during much of the year, even though the number of titled families is well below the number of asentados originally attached to the estate. 397. As previously noted, the parcelization process has involved the dissolution of the SARAs and the liquidation of their respective debts to CORA, BECH and other agencies. The satisfaction of these obligations has frequently required sale of all or part of the cooperatives' assets. These assets have in some instances been bought by reform beneficiaries themselves. Thus 20 percent of sampled beneficiaries were found to possess some farm machinery, and half (including the former) had animal-powered equipment. At the other extreme, however, 20 percent had virtually no physical equipment at all. Moreover, a breakdown of farmers by the number of crop years they have held their parcels suggests a reduction over time of the use of machinery and an increased use of animal-powered equipment. 1/ The experience of individually-owned animals is similar to that of machinery. Individual holdings of production animals increased with the distribution of SARA assets but diminished after the first year on the land. Lack of money was the major reason cited for reducing stock. The average holdings of work animals has continued to grow over time, however, providing further evidence of the apparent substitution of animal power for mechanical power. 398. Despite the general tightness of credit in the economy, more than 90 percent of the survey respondents claimed to have obtained all the credit they had sought during the 1976/77 crop year. 2/ Only 3 percent of those who applied for credit received none. It is not clear how this response should be inter- preted, however, inasmuch as the major overall problem citied by reform bene- ficiaries later in the survey was lack of money. This was also the primary reason given for the reduction of livestock. The most likely explanation is 1/ Although the overall level of mechanization among title recipients may have declined, it is greater than implied by the data on individual ownership: while only 20 percent of individual operators owned their own machinery, 52 percent still had access to cooperatively-owned machinery, and (an overlapping) 53 percent contracted machinery from outside. 2/ Some 31 percent of the sample responded that they had not sought credit, in the majority of cases because they did not need it. Only 14 percent cited the high cost of borrowing as a reason for not seeking credit. In a survey of small farmers of the Central Valley carried out in May 1975, a similar proportion of reformed sector respondents had received credit during the crop year just ending, but only 61 percent affirmed that the amount received was sufficient (ATAC, op. cit.). - 189 - that virtually all credit was for short-term purposes--operations and family support--and the shortage referred to was of long-term investment credit 1/ 399. Only one-third of titleholders in the survey reported having received technical assistance during the crop year. Moreover, this response appears to represent an overestimate in view of the confusion of many of the persons interviewed regarding what constitutes technical assistance. Further, of those who responded affirmatively, more than 40 percent had received four or fewer visits, a level of frequency not considered likely to have a lasting impact. The farmers best served were those specializing in industrial crops--sugar beets and oilseeds--indicating the important role played by agro-industries in this respect. 400. Finally, the low degree of farmer organization was evidenced by the predominance of individual on-farm sales to itinerant merchants among the alternative modes of product commercialization. In more than 80 percent of the cases, marketing was done individually. Off-farm sales or sales through cooperatives, modes in which the farmer might enjoy a more favorable competitive position, were important only in the marketing of fruit. Agro- industries dominated the purchase of grains and industrial crops. (ii) Minifundistas 2/ 401. With the agrarian reform giving preference in land distribution to the permanent labor force of the expropriated estates, the structural changes that occurred have had little impact on the traditional minifundistas. The credit and technical assistance efforts that accompanied the reform program were also directed largely to the reformed sector itself. That differential treatment has apparently continued. A study carried out in the Central Valley at the end of the 1974/75 crop year found that only 27 percent of the minifundistas sampled had received credit during the season as compared to 89 percent of reformed sector farmers. The comparable ratios for technical assistance were 22 percent and 72 percent. 3/ 1/ Another explanation may be the reformed sector farmers' lack of experience with institutional credit and a resultant ignorance or reluctance to apply for it. The general level of sophistication in this regard is illustrated by the fact that one-third of the sampled farmers had no idea of the terms of their mortgage obligation to CORA, and another third had only a partial knowledge. Almost three-fourths of the titleholders did not know when the first payment was due. 2/ The definition of minifundia varies from one source and place to another. In general, it is a small plot of relatively poor quality land which, at prevailing levels of technology, land-use patterns, availability of infrastructure, etc. provides a family little more than subsistance income. Many minifundistas, therefore, rent or sharecrop land in addition to their own, and/or supplement their incomes working as either rural or urban wage laborers or via small-scale mining, fishing, and other artisan activities. Many probably do not regard farming as their primary occupation. 3/ ATAC, op. cit. - 190 - 402. Even though the minifundistas, by the survey's definition, operated on less than 5 BIH, land per se for most of them was not identified as the primary constraint on output. Large proportions of their arable holdings were found to be uncultivated, particularly in the Central-South region, for lack of credit and appropriate technology. Lack of credit and technical assistance also limited the shift of land use toward more intensive cultivation. Although minifundista incomes generally were below those of reformed sector farmers, 1/ they tended to be better educated and possess more physical capital, along with greater managerial experience. They also evidenced a remarkably high degree of commercialization, selling, on average, 82 percent of their output. The study cited, however, was carried out in the relatively rich Central Valley, near the domestic market center as well as to contact points with inter- national commerce. A nationwide study of minifundia would undoubtedly dis- close a greater incidence of subsistence farming. In any event, existing land holdings offer most minifundistas only limited long-term income-earning possi- bilities, and eventually their futures must lie outside agriculture. 4. Summary and Mission Observations 403. For much of the present century, the growth of Chilean agriculture was retarded by an institutional and policy framework that encouraged the ownership of land as a low-risk hedge against inflation and an entree to both social status and other opportunities for financial gain--e.g. subsi- dized credit--while at the same time discouraging its productive exploitation. Between 1965 and 1973, half of the nation's agricultural land was expropriated by the State for redistribution primarily to those who previously had worked it as hired labor. Upon assuming power, the present Government halted the expropriation process and began the task of distributing individual land titles to reform beneficiaries. At the completion of that process in 1978, about one-third of the total land expropriated (half, if measured in qualita- tive BIH units) was to have been distributed. In this fashion, some 45,000 former farm workers will have taken ownership, via the reform process, of a substantial proportion of Chile's best agricultural land. At the same time, many of the long-existing constraints on agricultural incentives have been eliminated. The freeing of prices and devaluation of the peso have resulted in sharp improvement in the sector's terms of trade and contributed to a strong growth of agricultural exports. The motivation to use land resources productively has been further strengthened by the substantial increase in the level of land taxation and its systematic adjustment for inflation. 404. The mission believes that these changes in structure and policy have laid the basis for a more rapid and efficient long-term growth of agricultural output and income, enabling Chilean agriculture to become in the near future a net earner of foreign exchange after decades of rising deficits. Adjustment to these changes and exploitation of the investment possibilities opened up have been complicated, however, by the period of severe austerity 1/ The minifundistas surveyed, moreover, earned, on average, 19 percent of their incomes from off-farm sources. - 191 - through which the economy as a whole has simultaneously had to pass and by the uncertainties engendered by the removal of price supports. Commercial farmers have generally responded well to the improved incentives and should be able to take good advantage of future growth opportunities as export possibilities expand, the domestic market recovers, and credit and other inputs become more abundantly available. Moreover, a solid institutional structure exists to service their needs for credit and technical services. The prospects for the small farmer, however, both inside and outside the reformed sector, are less secure. 405. The few surveys that have been done indicate a healthy tendency toward the more intensive use of both land and labor in the reformed sector. Moreover, reform beneficiaries have demonstrated a high propensity to use modern inputs, despite the removal of subsidies, and a high level of com- mercialization. On the other hand, output is constrained by serious under- capitalization, medium- and long-term financing is extremely scarce, the institutional supports previously provided both by cooperatives and by government agencies have been weakened, and a rising proportion of the titled parcels are reportedly being sold or otherwise transferred to persons from outside the reformed sector. 406. Many Chileans favor the removal of all restrictions on the transfer of reformed sector land. Action has already been taken to eliminate the 80-BIH standard for maximum landholdings as well as the prohibition on corporate land ownership. The arguments favoring the annulment of these impediments to land concentration are based primarily on the assumption that agriculture offers significant economies of scale in the use of machinery and the application of modern technology. In Chile, however, the scarce resource is land, and the productive employment of labor has long been a paramount social problem. Moreover, the high yields possible from labor-intensive agriculture have been amply demonstrated elsewhere, particularly with re- spect to those crops for which Chile enjoys an apparent comparative advantage. 407. Given the current low state of technology in the reformed sector, the lack of entrepreneurial experience and poor education of most bene- ficiaries, and the small farmers' difficult access to credit and modern inputs, it is likely that reopening the sector to large-scale, corporate farming might at this time result in short-term gains in output. These gains might be extremely costly, however, in terms of long-term efficiency as well as social destabilization. Eventually the relative efficiencies in Chile of small-scale and large-scale farming can be put to the test of the marketplace. Until the reform sector farmer has been given an adequate opportunity to establish himself, however, such a step would, in the mission's judgment, be premature. 1/ 408. To complete the transition process successfully, the new title- holders will need improved access to credit, particularly investment credit, and to technical assistance. Credit and technical assistance effectively 1/ The demand for reformed sector land is apparent. One out of every four beneficiaries in the ICIRA sample (op. cit.) reported he had received offers from merchants and other farmers. - 192 - delivered would also make possible a significant increase in minifundia output despite the small size and poor quality of their holdings. An effort is also needed to strengthen institutional mechanisms for marketing, water management, and other cooperative functions. While progressively freeing the agricultural economy, the Government has reiterated its continuing obligation to facilitate the development of the reformed sector. It also recognizes as a continuing government responsibility, and has given high national priority to, a concerted attack on extreme poverty in the rural areas as well as other sectors of the economy. However, because of the priority attention understandably given over the past four years to short-run policy problems, the desire to complete the restructuring of the sector so that property rights could be stabilized, and the frequent turnover of policy- level personnel in the Ministry of Agriculture, a coherent strategy for achieving the above objectives has been slow to develop. 409. Neither the small-farm subsector nor agriculture as a whole could have been exempted, of course, from the overriding constraints placed upon the economy by its balance of payments situation and the requirements of economic stability. As these constraints have eased over the past year, credit availabilities have been increasing. Nevertheless, so long as tradi- tional lending criteria are applied, the market alone is unlikely to meet the requirements of the small-farm sector, particularly the need for investment financing. Lack of adequate credit limits the small farmer's ability to bring all his land under cultivation and to make the desired shift to more intensive land use. With the exception of the State Bank, the commercial banking system thus far lacks the infrastructure (branch offices, etc.), the experience and expertise to operate effectively in this field. Small farmers often lack the collateral normally demanded by commercial bankers. 1/ Still to be overcome is the lack of borrowing experience and ignorance of financial management suffered by the farmers themselves. 2/ 410. The World Bank is collaborating with the Government in seeking to facilitate the flow of credit to small-farm agriculture. In addition to improv- ing and expanding these programs, the mission also recommends a once-and-for-all forgiveness of the still outstanding debts to the Government of the liquidated SARA's and those to be liquidated. 3/ The large-scale debt delinquencies, incurred under and tolerated by previous governments, undoubtedly resulted 1/ Until the end of 1978, when it ceased to exist, CORA acted as guarantor of mainly short-term loans to the reformed sector. There is no further need for a guarantor since land values have increased substantially, allowing farmers to use their new found equity as collateral for bank loans. 2/ Outstanding CORA mortgages have been cancelled, clear title passed to reformed sector farmers and the debt converted into a general obligation owed to the Treasury. Reformed sector farmers are thus able to mortgage their lands to the commercial banks as loan collateral. 3/ For the sake of equity, payments already made on these debts by land reform beneficiaries may be credited toward amortization of the mortgages on their land. - 193 - in gross misallocations of resources, and it is important to establish respect for the debt contract. Nevertheless, given the very difficult economic and political context of recent years, and the responsibility of CORA and other public sector agencies for much of the mismanagement that occurred at the SARA level, it seems unduly harsh to pass the resultant debts on to the individual asentados. Given, moreover, the large social interest in the success of the reformed sector farmers, there would seem to be a strong case for wiping the slate clean and allowing them to go for- ward on the basis of their own individual talents and efforts. 411. Especially urgent is the need for technical assistance. The mission is not familiar with other countries where a program similar to the Government's effort to privatize agricultural extension services has been tried. While the subsidies proposed for the family farmer may be generous, many land reform beneficiaries will need to be educated from the beginning regarding its utility to them. It is illustrative in this regard that more than 40 percent of the land recipients surveyed by ICIRA said they had not sought technical assistance because they saw no need for it. 1/ A significant effort must also be made to disseminate the results of research and field trials in the use of new seeds, fertilizers, etc., if the consultants them- selves are to be properly equipped to induce improvements in on-farm produc- tivity. Given these continuing requirements for technical services from the public sector, the necessarily experimental nature of the new subsidy program, and the large turnover of personnel that has occurred in the agricultural agencies during the past several years, an assessment is urgently needed of the organization and staffing requirements of SAG, ICIRA, and INDAP to avoid past inefficiencies and to assure that the extension work vital to the success of the present sector strategy will be performed. 412. One area in which technical assistance historically has been seriously deficient is that of water resource management. With some 60 percent of irrigated land now in the reformed sector, the need for such on- farm assistance has become critical. The mission found the responsible agencies to be inadequately staffed to perform this function. Moreover, although some progress has been made to improve coordination among the several agencies involved in the design, construction, and utilization of irrigation systems, the emphasis of sector officials continues to be on the building of facilities for the irrigation of new lands. Bringing additional lands under irrigation, if properly carried out, can increase output in the long term, but has little or no effect on near-term output. With the excep- tion of four projects that have been studied for years, major design and construction components required for these new lands will involve a lengthy gestation period. Meanwhile, the rationalization and upgrading of existing irrigation facilities can take place more rapidly and at lower capital cost, and can contribute significantly to near-term output. This effort is partic- ularly needed in the reformed sector where the re-division of the land into individual farm units has created the necessity of adapting previously in- 1/ In the earlier survey of smallholders in the Central Valley, including both reform beneficiaries and traditional minifundistas, only half indicated they wanted technical assistance, even though 72 percent reported they were currently receiving it (ATAC, op. cit.). - 194 - stalled infrastructure. Finally, the mission urges the speedy rationalization of water pricing. Despite the existing legal mandate and the Government's efforts to achieve rational pricing in other areas of the economy, water-use charges remain too low to motivate efficient water use. C. THE FOREST SECTOR 1/ 1. Forest Resources 413. Chile's extensive forest resources are concentrated in the South- Central section of the country, extending from the Province of Santiago to Llanquihue. Although there are some 6 million ha of high-valued native forests, difficult location and uneconomic past exploitation limit their near-term potential. Instead, the sector's economic prospects in this century depend primarily on the rapidly expanding plantations of long-fiber radiata pine. 414. In 1974, Chile began an ambitious forestation program based largely on radiata pine. The total area under plantation of all kinds increased from an estimated 345,700 ha in 1971 to around 580,000 ha by the end of 1976, and is expected to approximate one million ha by the mid-1980s. The annual rate of planting has risen more than four-fold since 1970 (Table IV.9). Primary responsibility for planning and administering the public sector's forestry activities is the National Forestry Corporation (CONAF), created in 1972. Until mid-1978, CONAF was itself directly engaged in large-scale planting activity; that role is now to be assumed entirely by the private sector. Table IV.9: CHILE - AREA PLANTED ANNUALLY, 1970-1976 (Thousand hectares) 1970 1971 1972 1973 1974 1975 1976 Private 16.5 11.4 6.3 2.9 21.1 38.5 53.6 CONAF 6.9 16.6 24.8 27.4 35.2 44.1 54.1 Total area planted 23.4 28.0 31.0 30.3 56.2 82.6 107.7 Replanted - 5.1 7.8 6.8 11.2 12.0 20.0 Total 23.4 33.1 38.8 37.1 67.4 94.6 127.7 Source: CONAF 1/ The present status and future prospects of the forest sector are treated in greater detail in an internal working document of the World Bank. - 195 - 415. Forestation is one of the few economic activities still receiving state subsidies in marked contrast to the Government's general policy of leaving resource allocation decisions to the free market. Under the 1974 Forestry Law, the State provides a one-time reimbursement for 75 percent of the direct costs of planting new land, excluding the cost of the land itself. This subsidy is payable only for afforestation of lands otherwise unsuitable for agriculture, and only new plantations, rather than plantations re-established after cutting, are eligible. Chile's integrated pulp and paper companies have thus far accounted for most of the private plantings. Most of the plantation area is situated in the IVth and Vth Regions, encom- passing all the Provinces from O'Higgins and Colchagua south to Chiloe and centered in the hinterlands of Concepcion. 416. The relatively low cost of forest land and of labor give Chile a marked cost advantage in the establishment of plantations. It was estimated in 1976 that the cost of developing a hectare of radiata pine in Chile, including land preparation, planting and maintenance, averaged about US$120 (before subsidy), as compared to similar costs of US$600-800 per ha in Argentina and Brazil. Growth rates of radiata pine in Chile are also excellent:3 the average annual increment for the country as a whole is about 20 m of wood pe5 ha. On a 20-year rotation, this implies an average yield of roughly 400 m per ha, equal to average yields reported in New Zealand and substantially above those in Argentina, Brazil, or North America for similar rotation periods. Moreover, the Chilean yields are recorded for unmanaged stands of pine and could be improved by more intensive manage- ment techniques. 417. Despite the high priority accorded to forest sector development, no reliable, up-to-date information exists regarding the volume, quality and age-class distribution of the wood currently available in the plantations. Regional inventories have been carried out intermittantly since 1962, but no mechanism exists for consolidating these data or for regularly updating them. The projections utilized in this report start from a 1976 base which itself had to be derived from inventory data for different provinces and different years, each projected forward to 1976 and then consolidated. 418. While these projections are therefore subject to a considerable margin of error, their implications are clear and sirnificant. It is conserva- tively estimated that slightly less than 6 million m of pine wood were avail- able in 1976. Because of the low planting rates of the 1960s, however, wood availability will be seriously constrained and may decline through the early 1980s. As the stands planted in the 1970s come to maturity, beginning in the late 1980s, the supply of pine wood will recover and then increase very rapidly. By the late 1990s, potential wood supplies are likely to be 3-1/2 to 4-1/2 times the present level (Table IV. 10). 419. This projection is believed to be conservative, assuming a rate of net planting in the next few years (70,000 ha) below that achieved since - 196 - 1974, and no increase in plantation yield. At the same time, the growth of wood availability is likely to be somewhat smoother than suggested in Table IV.10, inasmuch as recent wood use has been below the indicated 1976 potential, thus pushing availabilities forward in time. Similarly, a program of thinning existing stands would make available additional volumes of small- sized material, thereby easing the resource constraint through the early 1980s. Table IV.10: CHILE - PROJECTED AVAILABILITY OF PINUS RADIATA, a/ 1976-2000 1996- 1976 1981 1986 1991 2000 Low Projection: b/ Plantation area 412.0 683.8 975.4 1,252.6 1,385.0 (1,000 ha) Annual Wood Availability 5.9 4.3 5.4 17.0 27.6 (million cubic meters) High Projection: c/ Plantation area 440.6 662.1 948.3 1,167.5 1,247.0 (1,000 ha) Annual Wood Availability 9.9 4.8 10.1 21.2 27.6 (million cubic meters) a/ Includes only plantations of Pinus radiata and excludes roads, ravines, and other plantation areas which are unsuitable for planting. The projection of available wood supply assumes an average yield of 400 m3/ha. b/ Assumes all stands in the 15-20 year age class and older at the beginning of a 5-year period are cut during the ensuing five years. c/ Same assumption as b/ with additional assumption that 40 percent of the stands in the 10-15 years age class at the beginning of a 5-year period are cut. 2. Forest Industries 420. Sawmilling and pulp and paper are the major wood-using industries in Chile, absorbing about 50 percent and 40 percent, respectively, of pine roundwood. The production of wood panels -- fiberboard, particle board, plywood and veneers -- is also growing but presently accounts for only about 2 percent of wood consumption. - 197 - 421. There are more than 1,000 sawmills, but most are small and poorly equipped, and many operate only part of the year. Of the 300-400 sawmills operating in the native forests, less than a dozen are industrial-sized units producing more than 40 m per day. Similarly, only about 15 of the 600-700 pine mills are of industrial size. The industry generally is in- efficient, with log recovery estimated at no more than 50 percent. 1/ 422. Even though much of the existing capital stock in sawmills is rundown and/or obsolete, capacity has not been a constraint on output. 2/ Production was stagnant over the second half of the 1960s but has grown at a average annual rate of about 5.3 percent since 1970, following the swings in the national economy but with the additional impetus since 1973 of rapid export growth. At the same time, wood use has shifted markedly away from native varieties and toward radiata pine, reflecting changing raw materials supplies. 3/ The mission estimates that current mill capacity is consistent with the wood availability projected over the next decade, although investments are needed in modernizing existing facilities to reduce the excessive waste of raw material and to improve product quality. Depending on world demand patterns, major investments in new milling capacity will be required by the late 1980s. 423. Most of the pulp produced in Chile is chemical pulp from long- fibered softwood, for which radiata pine provides about 95 percent of the raw material. The industry also produces various grades of paper and paperboard, including writing and printing paper, newsprint, kraft paper, liner board, cardboard, box board and computer punch cards. The sector is dominated by four large, integrated companies whose operations extend from plantation management to the production of pulp and, in two cases, paper. 424. Some 450,000 mt of pulp were produced in 1976, a level equivalent to about 80 percent of estimated industrial capacity. Output had more than doubled over the preceding decade, the major impetus coming from exports (Table IV.11). Pulp exports rose almost seven-fold from 1965 through 1969. After a period of stagnation from 1970 through 1973, real export growth resumed vigorously, the volume expanding almost 2 1/2 times from 1973 to 1976. By the latter year, exports accounted for more than half of total pulp production. 1/ Some of the larger mills use the wood residue -- cutoffs, sawdust, etc.-- as fuel for their boilers. In addition 65,000 mt of sawdust is being burned annually in special furnaces for industrial purposes and the heating of buildings. Wood chips are also sold to pulp manjfacturers. 2/ ODEPA estimated installed capacity in 1974 ai 3.3 million m , as compared to production of only 1.5 million m 3/ See Appendix II, Table 7.29. - 198 - Table IV.11: CHILE - INDICES OF PHYSICAL PRODUCTION AND EXPORTS OF WOOD PULP, 1965-1976 (1970 = 100) Volume of Export Export Share Year Production Exports Value of Output (X) 1965 61 17 49 19.1 1970 100 100 100 32.3 1973 108 92 127 27.8 1976 p/ 138 224 538 52.4 p/ Preliminary. Source: Appendix II, Tables 7.30 and 7.32 425. Table IV.12 traces the output and export of paper and paperboard products. In contrast with pulp, most of the growth of paper output in the late 1960s was directed to the domestic market. Most of this expansion was concentrated among the cheaper grades of paper and paperboard. Table IV.12: CHILE - INDICES OF PHYSICAL PRODUCTION AND EXPORT OF PAPER AND PAPERBOARD, 1965-1976 (1970 = 100) Volume of Export Export Share Year Production Exports Value of Output (%) 1965 71 64 82 30.8 1970 100 100 100 36.8 1973 96 45 56 17.3 1976 p/ 104 110 345 38.7 p/ Preliminary. Source: Appendix II, Tables 7.31 and 7.32 - 199 - Domestic paper consumption continued to grow through 1972 and remained high in 1973, the decline in production resulting entirely from the halving of exports. While domestic paper use has since fallen back to the level of the late 1960s, exports have provided the vehicle for increased production. By 1976, almost 40 percent of paper output was exported, newsprint accounting for about 80 percent of the total. 426. According to estimates provided the mission, Chile's present capacity permits the output of some 620,000 mt of pulp and 310,000 mt of paper and paperboard per year, with the industry as a whole currently operating at between 80 and 90 percent of capacity. Present investment plans appear consistent with the constrained wood availabilities projected through the mid-1980s, but major new investments will be necessary if the forest resources coming on stream by the latter part of that decade are to be fully exploited. 3. Forest Product Exports 427. Although the domestic market may be expected to recover and expand, the success'of the massive forestation program launched in 1974 clearly depends on exports. The recent growth of wood-based exports is summarized in Table IV.13. Increased industrial capacity and an improved and stable real exchange rate resulted in a four-fold expansion of forest exports over the decade of the '60s, reaching a theretofore record high of US$42 million in 1970 and 1971. By that time, sawnwood and pulp and paper accounted for about one-third of manufactured exports and about 4 percent of total exports. Table IV.13: CHILE - FOREST PRODUCT EXPORTS, 1970-1977 (Millions of US dollars) 1970 1971 1972 1973 1974 1975 1976 1977 Sawnwood and panels 8.9 7.0 3.0 4.6 13.1 25.2 29.3 70.4 Pulp 16.4 17.0 17.4 20.8 78.0 57.9 88.3 85.5 Paper 9.6 8.4 5.0 5.4 25.2 25.8 33.1 33.6 Cardboard 5.4 5.3 4.4 3.6 7.1 7.0 8.9 9.8 Other 1.4 4.8 1.8 2.0 3.6 7.7 3.7 3.9 Total 41.7 42.5 31.6 36.4 127.0 125.6 163.3 203.2 Source: Appendix II, Table 7.32 - 200 - 428. After being constrained in 1972 and 1973 by the increasing over- valuation of the escudo and domestic transport bottlenecks, export growth has been very rapid. Sawnwood and wood panel exports exceeded US$70 million in 1977, more than 15 times the level of 1973. The most vigorous export growth has occurred in the products of radiata pine, which now account for 78 percent of total sawnwood and panel exports, as compared with 42 percent in 1970. The exports of pine sawnwood and panels in 1977 were 22 times the level achieved in 1973. Argentina has traditionally been the major importer of Chilean sawnwood, but there has been considerable growth in the past three years in the amounts shipped to Venezuela, Europe and Arab countries. At the same time, the combination of high world prices, depressed domestic demand, and the improved exchange rate policy resulted in an almost four-fold increase of pulp and paper exports from 1973 to 1974. In 1977, Chilean pulp and paper exports totaled US$129 million, compared to $30 million in 1970. Shipments have gone primarily to other Latin American countries, the major buyers being Argentina, Brazil and Peru. 429. Export expansion for the next 5-10 years will be constrained by the availability of wood, the expected growth of domestic demand, the need for rehabilitation and modernization of existing sawmills, and capacity limitation on the production of pulp and paper. The longer-term world market prospects for softwood products have not been well studied but a few general observa- tions can be made. 430. To Chile's disadvantage, major plantation programs are currently being carried out in several other countries which either compete with or have been important customers of Chile. Among the latter, Brazil is expected to be a large exporter of wood products by the end of the century, and Argentina will be approximately self-sufficient. As potential competitors, New Zealand and Australia enjoy significant locational advantages with respect to the growing Asian market, while Brazil is better located to serve Europe. 1/ Adding to real locational disadvantages for Chile is the practice of other countries of subsidizing at least the higher value-added levels of wood product exports. 431. On the other hand, relatively cheap land and labor and rapid tree growth provide Chile with an important competitive advantage in the production of the raw material. Moreover, increasing supply coristraints are expected by the late 1980s to reduce North America's share of world softwood exports, thus accelerating the growth opportunities for other potential suppliers. Chile's higher ocean transport costs are also partially offset by the nearness of the forests to the sea and the resultant lower cost of overland transport. The key question thus appears to be whether the requisite industrial and infrastructural investments and improved forest management techniques will be forthcoming to hold production costs low enough to maintain Chile's competitiveness despite higher freight costs. If the response is positive, forest-based products will be making a major contribution to export revenues well before the end of the century. On the basis of very simplistic assumptions, 2/ and the projections made here of wood availabilities, 1/ Large exportable surpluses may also become available to the Asian market from the USSR. 2/ See Appendix II, Table 7.33. - 201 - Chile's forest exports could range conservatively between US$665 million and $1,020 million (at 1976 prices) by 1996. 432. With regard to specific products, market prospects appear to favor the two ends of the value-added spectrum--i.e. sawlogs and pulp and paper. Demand, for sawnwood is expected to grow less than 2 percent per year, limited in part by protective restrictions in the developed countries. The annual growth of demand for pulp and paper is projected at about 4-5 percent with a relative undersupply of soft pulpwoods anticipated if the present proportions of hard to soft woods were maintained in pulp making. 1/ Moreover, while major importers have historically preferred to import wood chips for their own pulp mills, this tendency is likely to change under the combined pressures of antipollution legislation and the significantly lower costs of transporting pulp as compared to chips. 433. Using average labor-output coefficients supplied by CONAF, the mission made a rough projection of labor demand in the plantation sector. 2/ Based on these figures, employment on the p'lantations would be expected to peak at around 60,000 persons in 1981, after which the rate of establishment of new plantations is assumed to taper off. However, the fall in the demand for seasonal labor related to the planting program is partly offset over time by the creation of permanent jobs in established plantation operations. 4. Mission Observations 434. Having provided the initial impetus, via direct planting and subsidies, toward a major expansion of Chile's forest resources, the Govern- ment now intends that the entrepreneurial responsibility be carried forward by the private sector. Given the enormous contribution that forestry and forest-based industries can make to the economy, however, and the magnitude of the public and private investments that will have to be made if that potential is to be realized, there is an urgent need for a comprehensive inventory of existing forest resources and a carefully studied sectoral development program. Moreover, in view of the sizeable externalities involved, as well as the importance of sustaining Chile's comparative advantage in the sector, a vigorous program is called for in the development, dissemination, and supervision of proper forest management techniques. The latter is particularly important in view of the risks inevitably attached to monocultural plantation development. Although no serious problems of disease or pest infestation have been reported in Chile's pine forests, vigilance must continuously be exercised against the threat of epidemic. 1/ Recent technological changes have increased the range of use of short- fiber hardwoods in pulp making, and further relative price movements could spur additional innovations in this direction. 2/ The details of assumptions and results are contained in an internal Bank working document. - 202 - D. FISHERIES 435. Chile's fishing industry is the second largest, in terms of total catch, in Latin America. Nevertheless, despite more than 4,000 km of coast- line, Chile's long-standing assertion of a 200-mile limit, and generous government incentives, fishing makes only a modest contribution to the national economy. Fishing per se and the processing of the catch contribute an estimated 3 percent of GDP and provide employment to about 30,000 persons, or less than one percent of the labor force. 436. A major expansion of the fisheries sector occurred over the first half of the 1960s, given impetus by substantial tax incentives. Under Decree Law No. 266 of April 1960 and its extensions, fisheries were exempted from most transfer taxes, and import and value-added taxes on its inputs; pay preferential port charges; and are forgiven 90 percent of the tax on real property and 90 percent of taxes on that part of their incomes distributed to their workers. 1/ Moreover, other industries may defer payment of the global complementary tax on their profits by investing them in fisheries activities. In order to qualify for the above benefits, a firm must pledge to reinvest at least 15 percent of its profits in the fisheries sector for a period of 10 years. 437. Growth continued but at a lower rate over the second half of the decade, and the total catch reached a high of almost 1.5 million mt in 1971 (Table IV.14). After a steep decline in 1972 and 1973, total catch recovered to a level of 1.3 million mt through 1976. 2/ The major fish species, by volume of catch, are the anchoveta, jack mackerel, and sardine. Harvests of the latter two species have grown fairly steadily over the period, while supplies of the anchoveta are much less stable and the catch is currently less than half the levels achieved in the late 1960s. 31 Most of the variation in tonnage through 1973 is explained by the disappearance of the anchoveta, while the growth since 1973 is distributed across a broad range of fish species. 1/ The benefits conceded by Decree Law No. 266 were originally to expire at the end of 1973. They have been regularly extended, however, most recently in January 1978. 2/ Comparable figures for other countries show a 1976 catch of (million mt): Argentina 0.3 Japan 10.6 USSR 10.1 Brazil 0.9 Mexico 0.6 Canada 1.1 Peru 4.3 Ecuador 0.2 USA 3.0 (Data from FAO, Yearbook of Fishery Statistics.) 3/ See Appendix II, Table 7.34. - 203 - Table IV.14: CHILE - ANNUAL CATCH OF FISH AND OTHER SEAFOOD, 1955-1976 Thousand mt of Years live wt equivalent 1955-59 (ave.) 223 1960-64 (ave.) 666 1965-69 (ave.) 1,127 1970 1,209 1971 1,506 1972 818 1973 691 1974 1,158 1975 930 1976 1,264 Source: Appendix II, Table 7.34 438. The major fishing region is found along the coasts of the northern third of the country. The bulk of the catch from this region, consisting of the three species mentioned above, is processed into fishmeal. Much of the fleet and industrial installations are relatively modern and efficient. Hake, tuna, and other varieties which are commonly frozen or canned for human consumption are found off the central and southern coasts as are the mollusks and crustaceans. Operations in those regions are mostly at the artisan level of size and sophistication. 439. Some 80 percent or more of total annual landings are reduced into flour or oil, a large proportion of which is exported. Less than 10 percent is marketed fresh. The latter share is limited by poor distribution infra- structure, from on-board handling to refrigeration at the retail outlets, and by the low status given fish as a human food, particularly among the lower-income groups. Poor handling and sanitary control have also limited the growth of quality canned or frozen products for exports. The average unit export value is thus reduced when the catch must be converted instead to fishmeal. 440. Nevertheless, fisheries exports have grown rapidly over the past four years, reaching US$128 million in 1977 (Table IV.15). Fishmeal continues to account for about two-thirds of the total export value, although exports of canned and frozen fish have increased apace. Fisheries production contributed 13 percent of non-copper export earnings and 6 percent of total exports in 1977. - 204 - Table IV.15: CHILE - FISHERIES EXPORTS, 1960-1977 (Millions of US dollars) Years Fishmeal Other Total 1960-64 (ave.) 7.5 2.3 9.8 1965-69 (ave.) 16.7 7.2 23.9 1970 15.5 10.4 25.9 1971 28.5 12.4 40.9 1972 18.0 8.7 26.7 1973 13.6 7.7 21.3 1974 35.2 16.5 51.7 1975 25.3 21.8 47.1 1976 61.1 29.6 90.7 1977 86.5 41.4 127.9 Source: Appendix II, Table 7.35 441. Without a systematic resource survey, the potential offered by the Chilean fisheries sector for further development is only vaguely known. It is generally believed that the resources of the north coast, which account for around two-thirds of total catch (by weight), are being exploited at or near their biologically sustainable maximum. Opportunities in that region, therefore, lie primarily in improved efficiency of operations. Along other sections of the coast, however, particularly in the south, significantly greater fish catches are thought possible if the necessary investments are made in modern fishing vessels, processing plants, and communication and transport infrastructure. 442. Investments in fishing are regarded as especially risky in the absence of either a reliable resource survey or a mechanism f6r planning and regulating resource use. This is so, in part, because the level of one enterprises's fishing affects the region's fish population and, hence, the costs of all other enterprises which depend on those waters. Moreover, investments are needed currently on several fronts from fishing boats to port handling equipment to sanitary marketing facilities. 443. While attributing the major developmental role to the private sector, the Government recognizes the unique nature of the fishing industry and accepts responsibility for its planning and promotion. 1/ In order to provide better coordination and planning of public sector activities affecting fisheries, the Government in late 1976 created the Subsecretariat of Fisheries in the Ministry of Economy. A year later, however, the enabling 1/ See ODEPLAN, Estrategia Nacional de Desarrollo Economico y Social: Politicas de Largo Plazo, Santiago, September 1977, pp. 88-90. - 205 - legislation that would permit the agency's staffing had still not been pro- mulgated. A long-awaited reform of the National Fisheries Law, which dates from 1931, has also been delayed. In lieu of a new fisheries law, the incentives provided by D.L. No. 266 (para. 436) have repeatedly been extended on a temporary basis. The resulting uncertainty may be further inhibiting investment. 444. Not treated in the above discussion is the still unknown potential presented by the vast supplies of krill found in Antartic waters. Krill is a small, shrimp-like crustacean, rich in protein and vitamin A and the principal food source for most of the region's sea life. Various estimates of its sustainable annual catch range as high as 200 million mt. 1/ Research into its'processing and marketability is being undertaken by the Institute for Fisheries Development (IFOP), an agency of CORFO, which has already test- marketed various forms of the product -- e.g. sticks fried and frozen for later reheating, and krill powder for use as a soup additive. The results of these tests are not yet available. 445. In summary, substantial economic returns are achievable from the more efficient utilization of the present fishing levels--e.g. through the freezing or canning of sardines and mackerel for human consumption rather than their reduction into fishmeal for animal feed. In addition, a significant: expansion of fishing and the harvesting of shellfish appears possible off the central and southern coasts. To realize this potential, however, large investments are required in resource and marketing studies, modern vessels, transport and storage facilities, and processing plants. Important to the realization of these investments is the speedy firming up of the legal and institutional framework to implement the Government's intended role in the sector. Finally, assessment of the potentially enormous contri- bution that krill might make to the sector must await the results of on-going research in Chile and elsewhere regarding the economics of its exploitation. E. THE MINING SECTOR 446. Mining, particularly of copper and nitrates, was the major engine by which Chile had catapulted by the early 1900s into the middle class of world economies, but its protracted dependence on the sector also made Chile highly vulnerable to the vagaries of world commodity markets. Successive governments have attempted by various means to maximize Chile's share of the revenues flowing from mining and to increase that flow over time, while diverting the resources thus generated to the development of other sectors of the economy and to growing levels of consumption and social services. 447. Since 1965, mining output (at constant prices of 1965) has grown at an average annual rate of about 4.3 percent, as compared to 2.4 percent for the economy as a whole. Nevertheless, in 1977, a year of historically 1/ By comparison, the entire world catch of fish and other seafood was estimated at 73.5 million mt in 1976. - 206 - low real prices for Chile's mineral production, mining accounted for only an estimated 5 percent of GDP in current prices. It still contributed, however, 64 percent of merchandise exports. Despite the sector's importance as a generator of foreign exchange and investible resources for the rest of the economy, mining provides less than 3 percent of total employment. Table IV.16 summarizes the importance of Chile's mining sector to world minerals supplies. 1/ The following discussion concentrates on the copper subsector; the prospects of other minerals are treated only briefly. Table IV.16: CHILE'S SHARE OF WORLD MINING OUTPUT AND RESERVES (Percent) Production Reserves (1974-75 average) (1975) Share Rank Share Rank Copper 12 2 19 2 Selenium 1 9 19 2 Molybdenum 9 4 14 4 Vanadium 3 4 1 4 Iron ore 1 14 1 Silver 2 7 1 Iodine 20 2 14 2 Nitrate a/ a/ a/ Although reserves of naturally occurring nitrates are limited to the Atacama desert of northern Chile, other occurrences are known. However, industrially produced nitrates ("fixed nitrogen") compete with naturally occurring nitrates, and there is no possibility of depleting elemental nitrogen in the atmosphere. Source: U.S. Bureau of Mines, Commodity Data Summaries 1. Copper 2/ 448. Chile's major copper mines are located in the northern half of the country as shown by the map on the following page. Copper mining operations have traditionally been divided for legal purposes into three groups: large (Gran Mineria), defined as mines with annual output of at least 75,000 mt; 1/ Chile's share of copper production shown here is slightly below that indicated in Appendix II, Table 8.1, because 'the latter makes no esti- mate of production in the centrally-planned economies. 2/ An extended discussion of the sector's structure, organization, tech- nology, marketing procedures, etc. may be found in IBRD Report No. 602a-CH of January 7, 1976. IBRD 11417 72' 70-_. JANUARY 1975 18' t SOUT H 0Aric A M ERCAro A B O L I V I A Pisagu c t ADc "' O of map 20' IQUI2UE 4 ; 20' . I f ~~~~~~~~~TARAPACA ?> W'I ILO tA t..'A O ) \. __________________________ A PA NO~~~~RTE -2276 74' - Tocopilla 22- r, M.'AMATA CHILE CalIom o - . COPPER MINING SECTOR 0SonPedrodeAtocomo * GRAN MINERIA ANTOFAGASTA ANTOFAGASTA -24 ® MEDIANA MINERIA j 24@ A ENAMI SMELTERS O KNOWN ORE BODIES / - -PROVINCIAL BOUNDARIES Taltol INTERNATIONAL BOUNDARIES 26- 26- Barquito i ATACA MA 0 100 200 300 400 Copip0 r KILOMETERS -28' 0 50 I0o 150 200 250 / 28- MILES /-. 0Vollenor J K ARGENTINA jI S . \ A R G E N T I N A ' Lo SerenotJ -30- JdAndocollo 301 < v ° O0AN''ACO"L!° Q.r- PELAMBRES COQUIMBO' mllopel -32- 32- A(ONCAGUA\ h-.. (HA. RJES VENTANA SnFlp VALPARAISO1) ? ' E)N0NA VALPARAISO/ e;DISPUTADA San Antonio @SANTIAG0 SANTIAGO I _34' 7he b-od-tr k,ow tz hi trp do&t/aC9f -./ 1,265.1 a/ Because of chuogee in secctorai cIosificatious, data before December 1973 are not comparable with mub6eeuent dat.- Source: Leprctm.er.t of Econorcico, liaerbitcy of Chile - 330 - Table 1.17: EMPLOYMENT BY JOB STATUS, GREATER SANTIAGO, 1968-1978 (Thousands of persons) Non-remunerated White-Collar Manual Family Status Total Year/Month Employers Self-Employed Employees Workers Workers Unknown Employed 1968 March 21.0 145.3 295.6 375.8 14.5 0.2 852.4 June 21.3 168.4 304.8 360.0 15.3 - 869.7 September 27.4 156.4 310.5 369.5 15.8 - 879.5 December 22.2 166.7 338.3 367.4 18.3 - 912.9 1969 March 22.2 160.8 318.9 365.1 20.4 - 888.2 June 20.8 176.6 313.2 361.4 27.2 - 899.0 September 23.1 167.9 330.4 350.8 15.1 - 940.3 December 27.8 179.3 364.4 368.7 17.8 - 958.0 1970 March 19.2 159.1 373.9 351.3 16.5 - 920.0 June 21.9 179.9 348.3 379.5 22.4 - 951.9 September 19.4 180.3 364.9 366.8 23.9 0.2 955.3 December 19.5 172.6 397.3 337.5 21.9 - 948.8 1971 March 22.3 176.3 394.4 329.6 23.9 - 946.4 June 24.8 199.6 411.5 353.5 28.8 - 1,018.0 September 24.6 168.9 407.6 391.1 19.0 - 1,011.1 December 22.5 186.3 407.0 380.3 23.1 0.2 1,019.3 1972 March 26.6 193.5 387.2 381.1 21.8 - 1,010.2 June 28.3 205.8 450.2 349.4 30.8 - 1,064.7 September 23.0 195.1 418.3 381.2 16.5 - 1,034.0 December 21.4 198.9 447.5 351.2 21.8 - 1,040.9 1973 March 24.4 214.4 453.4 350.3 20.0 - 1,062.5 June 26.2 231.4 454.9 359.1 28.2 - 1,099.8 September n.a. n.a. n.a. n.a. n.a. n.a. n.a. December 22.1 256.4 411.0 408.3 21.4 - 1,119.2 1974 March 27.3 217.9 397.2 431.9 17.5 0.7 1,092.5 June 26.1 236.7 393.8 401.2 23.3 2.8 1,083.9 September 24.1 229.0 425.2 406.5 24.6 1.7 1,111.2 December 23.0 214.1 444.4 409.0 17.5 1.4 1,109.3 1975 March 25.9 213.6 431.7 374.7 20.0 1.4 1,067.2 June 22.9 222.0 410.5 349.3 24.8 - 1,029.5 September 21.6 201.6 435.8 340.4 20.1 0.5 1,019.9 December 23.6 198.4 416.6 383.5 18.4 0.7 1,041.2 1976 March 25.2 186.4 427.6 380.8 21.0 - 1,041.1 June 34.9 241.6 398.2 390.2 28.2 - 1,093.0 September 32.0 213.4 388.6 438.4 16.9 - 1,089.2 December 28.4 210.1 424.6 452.5 22.7 - 1,138.3 1977 March 24.8 199.3 486.3 423.2 17.0 0.8 1,151.4 June 29.5 226.5 439.1 464.3 31.1 - 1,190.4 September 28.1 227.8 468.6 446.9 24.2 - 1,195.6 December 30.9 236.9 450.9 454.3 20.9 - 1,193.9 1978 March 19.9 234.2 441.8 488.9 24.0 - 1,208.9 uune >e.6 53.6 456.4 47.i 22.9 - 1,244.8 $eptember 55.1 274.0 450.1 481.1 24.7 _ 1,265.1 Jource: Department of Economics, University of Chile - 331 - a! Table 1.18: UNEMPFLOYMENT BY SECTOR, GREATER SANTIAGO, 1968-1978 (Thousands of persons) Cosnini y Agr icult ure Goversinent and Transport, Total and PennR- ConSLruc- and Personal Social b/ Unem- Year/Mooch Fishing Mining factucing tion Commserce Finance Services Services etc. -Unspecified ployed 1968 March 1.3 0.2 12.7 8.i 5.5 0.8 4.1 6.3 1.8 -40.8 June 1.9 0.2 13.8 12.3 5.4 1.9 3.7 6.5 2.9 -48.3 September 1.3 0.3 16.5 11.1 6.4 2.0 4.4 6.4 3.9 - 52.2 December 0.5 0.7 12.2 10.0 5.1 1.2 3.9 7.5 2.2 0.2 43.4 1969 March 0.5 - 15.9 10.2 8.2 1.6 9.5 15.0 4.0 - 64.8 June 0.9 -13.2 9.7 6.4 1.6 8.5 9.9 3.3 -53.2 September 0.5 - 14.3 6.9 5.1 1.6 4.6 8.1 2.6 - 43.7 Decmber 0.9 0.4 11.1 10.4 4.0 0.9 4.8 7.9 3.5 0.2 44.0 1920 March 0.2 - 16.9 11.9 4.4 0.7 5.5 8.7 4.3 - 52.6 June 0.9 0.4 17.2 11.3 5.4 0.7 6.8 9.7 4.3 0.2 57.3 September 0.4 0.7 14.8 12.3 5.6 1.5 4.7 10.1 4.0 - 54.1 December 1.5 0.6 17.9 16.8 6.2 1.3 6.6 12.0 5.5 - 68.2 1971 March 0.2 0.7 22.3 15.5 3.7 1.3 8.3 7.2 4.8 - 63.9 June 1.3 1.0 13.2 9.0 5.4 1.2 2.6 6.4 3.4 - 43.2 September 0.8 0.2 9.9 8.3 5.1 2.2 3.6 5.4 2.8 - 38.3 December 0.8 - 8.1 6.6 3.2 0.6 3.6 5.5 1.3 - 29.7 1972 March 0.2 0.2 13.0 5.5 3.1 0.8 3 .8 8. 8 3.3 0.2 38.8 June - 0.6 7.3 3.9 3.3 0.4 2.7 4,4 2.3 - 24.9 September 0.2 - 7.6 3.5 4.3 0.2 2.5 2.7 2.3 -23.3 December 0.4 0.2 10.8 4.9 3.5 0.8 2.4 3.5 3.1 -29.7 1973 March - 0.2 8.7 3.6 2.8 0.8 3.0 6.1 2.2 -27.3 June -- 8.4 1.6 4.4 1.6 1.6 4.4 1.4 -23.4 September n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. December 1.1 0.9 17.6 9.6 9.4 1.6 9.1 4.3 5.5 0.9 60.0 1974 March 1.0 1.9 26.1 11.3 10.3 2.2 12.2 6.0 6.0 - 76.9 June 2.3 1.9 27.6 13.7 10.1 4.1 17.2 7.3 6.3 - 90.5 September 2.5 0.5 26.6 14.0 9.6 3.2 12.3 5.2 8.1 0.7 83.0 December 2.2 - 25.2 12.5 9.6 3.4 11.5 6.5 4.3 0.5 75.4 19)75 March 1.9 - 37.3 23.3 15.0 5.0 17.1 6.2 6.2 0.2 112.1 June 2.0 1.0 49.2 32.2 15.2 6.9 24.3 8.4 8.6 - 147.7 September 1.2 0.9 54.9 29.8 18.9 6.2 19.4 9.2 13.0 - 153.7 December 3.8 0.7 54.1 33.5 21.0 9.9 28.6 10.9 12.8 1.4 176.6 1976 March 4.0 0.5 59.7 37.5 26.5 9.3 26.7 14.7 12.7 - 191.7 June 4.6 1.1 60.3 32.5 23.9 6.2 33.5 7.5 8.9 0.3 178.6 September 2.8 1.5 48.8 34.2 16.8 8.3 26.7 7.8 9.8 0.3 157.0 December 2.5 0.5 43.7 22.2 14.8 9.1 22.7 2.2 8.6 0.2 131.6 1977 March 0.8 0.8 39.5 19.1 18.6 7.6 19.4 10.2 10.5 0.3 126.6 June 1.9 1.1 42.7 28.4 19.5 8.6 19.5 8.9 8.1 0.5 139.2 Septem.ber 3.5 1.1 40.9 30.3 15.7 7.7 2. 11.4 7.2 0.8 132.3 December 2.4 1.8 45.7 25.6 13.7 7.9 I. 13.7 8.7 -135.8 ±376 ihunch 1.9 i.c 46.4 20.8 22.6 11.. 29.9 14.6 5.6 0.5 155.2 lartaniber 2.3 0.25<3.5 21. '2.3 77 1.53- 0.3 16. Da,' tar befor.e b.eserner 1973~ sot copral ith sobsequest data boecause of chang.ing definitions. Incas cot arc'uads sersons aeeking work for firstrie b, Tranaport, atorssge, commusica~tions and §ubiic utilities. .ao,rr-e : bccartment of a,conamics, Jniveraity of Cnil-e - 3_2 - Table 1.18a: UNEMPLOYMENT RATES BY SECTORS, GREATER SANTIAGO, 1968-..y8 (Percent of sectoral labor farce) C-ssunity Agriculture Government aad Transport, and Mano- and Personal Social a/ Year/Mooth Fishing Mining facturing Constroction Comserce Fioance Servicees Services etc.- Unspecified Total 1968 llarch n x 5.2 15.5 3.9 1.0 2.9 3.9 2.9 - 4.5 June x a 5.3 23.6 4.0 2.4 2.4 4.0 4.2 - 5.2 September n x 6.0 21.4 4.7 2.5 2.9 4.0 6.0 - 5.5 Decenber x a 4.8 17.4 3.3 1.4 2.5 4.6 3.2 a 4.5 1969 March I a 4.9 16.6 4.3 1.4 4.7 6.9 4.4 -5.3 June x a 4.9 17.3 4.0 2.1 5.9 5.7 4.8 - 5.5 September a a 5.0 12.7 3.3 1.9 2.9 4.8 3.5 - 4.4 Decenber x x 4.1 20.1 2.6 1.0 2.8 4.2 5.1 x 4.3 1970 March a x 6.8 21.0 3.1 0.7 3.5 4.6 5.9 - 5.3 Jlre a a 6.4 17.2 3.6 0.9 4.3 4.9 6.3 a 5.6 Septesber x x 5.3 19.4 3.5 1.7 3.2 5.4 5.2 - 5.3 December a a 6.7 27.3 3.8 1.4 4.2 6.4 7.1 - 6.6 1971 March a a 8.2 26.2 2.5 1.3 5.5 3.7 5.8 - 6.2 June x a 4.7 15.2 3.4 1.1 1.6 3.0 4.4 - 4.0 September n x 3.5 12.8 3.2 2.3 2.2 2.9 3.6 - 3.6 Dece-ber x x 2.7 9.7 2.1 0.5 2.6 2.8 1.7 - 2.8 1972 March a a 4.6 9.7 2.0 0.7 2.5 4.4 4.0 a 3.7 .Jane a a 2.5 6.8 1.9 0.4 1.8 2.0 3.1 - 2.3 Septenber I a 2.5 6.2 2.6 0.2 1.7 1.3 3.1 - 2.2 Decenber x x 3.7 9.9 2.2 0.7 1.7 1.7 3.7 - 2.7 1973 March x x 2.9 6.6 1.8 0.7 2.0 2.9 2.5 - 2.5 Jone a x 2.6 3.2 2.5 1.5 1.0 1.9 1.6 - 2.1 September n.a. 0.0. 0.0. 0.0. n.a. 0.0. 0.0. 0.0. n.a. n.a. n.a. December a a 4.9 10.8 5.0 1.8 4.9 3.0 6.0 a 5.0 1974 March x a 7.6 11.6 5.5 2.3 6.8 4.1 6.4 a 6.4 Jone x a 8.0 14.5 5.5 4.6 9.2 5.1 6.3 a 7.5 September a a 7.7 13.7 5.0 3.2 7.0 3.6 8.8 x 6.8 December a a 6.9 12.2 5.3 3.2 6.8 4.3 5.1 a 6.1 1975 March a a 10.9 23.7 7.8 4.3 10.1 4.5 6.5 a 9.1 Jane a a 15.3 31.5 7.5 5.8 13.6 6.5 9.1 x 12.0 September x a 17.2 31.7 9.9 j.3 10.7 f.3 13.3 - 12.6 December I a 15.9 39.6 11.1 7.7 15.6 7.0 12.2 x 13.8 1976 March x a 18.1 39.8 12.5 7.2 14.6 9.3 12.8 - 14.8 June a a 17.0 35.7 10.3 5.2 16.3 5.1 9.5 a 13.4 September a a 14.2 35.3 8.4 6.5 13.2 5.2 10.6 a 12.2 December a n 12.5 25.5 7.5 7.2 10.7 4.5 7.9 a 10.0 1977 March a a 11.5 25.9 8.9 5.7 8.9 6.2 9.1 a 9.5 June a a 11.5 31.3 8.1 6.5 9.3 5.5 8.3 a 10.2 September a a 11.8 32.0 6.4 5.6 8.3 7.1 7.9 a 10.0 December a a 12.3 25.7 6.2 6.1 7.3 8.3 9.0 - 9.9 137I MRach a x 13.1 22.1 9.3 7.3 12.7 ^ . Jua 7 .7 7.6 f. e. 9 weroniac e a x 1_., 2 3.( .3 8 .f o 12.1 9 54.. :- 10.7 x,a n-r:- to 5rgnes eithe- lets th-r J.' or rot snetcsrrsn;ly r-rrr-eno.-tsv-. a,' Tr-s-Iort, storage, coanon.nitcons end :4b6c uslatwen. b/ Does rot inclide perrons seaking work for the first tsne. So-rnse: Dep-rtatns of Eco-oasco, University of C.ils - 333 - Table 1.19: UNEMPLOYMENT BY JOB STATUS, GREATER SANTIAGO, 1968-197a (Thousands of persons) Non-remunerated Self- White-Collar Manual Family Total b/ Year/Month Employers Employed Employees Workers Workers Unknown Unemployed 1968 March 0.5 5.1 7.4 27.7 0.1 - 40.8 June - 8.0 8.4 32.0 - - 48.3 September - 5.9 7.6 38.8 - - 52.2 December 0.3 6.1 8.7 28.3 - - 43.4 1969 March - 4.5 11.9 34.1 - - 50.5 June - 8.5 11.3 33.6 - - 53.2 September 0.2 6.2 7.4 29.9 - - 43.7 December 0.2 4.8 9.9 29.2 - - 44.0 1970 March 0.2 4.1 11.9 36.4 - - 52.6 June 0.2 7.4 10.2 39.6 - - 57.3 September 0.4 5.1 10.7 38.0 - - 54.1 December - 6.0 15.5 46.7 - - 68.2 1971 March - 3.9 15.6 44.3 - - 63.9 June 0.4 4.9 11.4 26.6 - - 43.2 September 0.4 3.4 12.4 22.2 - - 38.3 December 0.4 2.5 5.9 21.0 - - 29.7 1972 March 0.4 3.3 12.6 22.5 - - 38.8 June - 0.8 8.7 15.4 - - 24.9 September - 1.7 6.4 15.2 - - 23.3 December - 1.4 9.0 19.3 - - 29.7 1973 March 0.2 3.4 8.5 15.2 - - 27.3 June - 2.4 9.4 11.6 - - 23.4 September n.a. n.a. n.a. n.a. n.a. n.a. n.a. December - 9.1 14.6 36.3 - - 60.0 1974 March 0.2 12.0 17.3 47.2 - 0.2 76.9 June - 10.9 24.8 54.2 0.3 0.3 80.5 September 0.2 12.1 18.5 51.7 - 0.5 83.0 December 1.0 9.1 17.2 47.2 0.5 0.5 75.4 1975 March - 14.3 21.9 75.5 - 0.5 112.1 June 0.5 19.4 31.5 96.1 0.2 - 147.7 September 0.2 20.6 36.7 96.2 - - 153.7 December 1.2 21.7 46.3 107.2 - 0.2 176.6 1976 March 0.3 27.7 49.5 114.0 0.3 - 191.7 June 0.5 19.8 40.0 118.3 - - 178.6 September 0.5 20.4 31.5 104.4 0.3 - 157.0 December 0.2 10.4 22.9 93.1 - - 131.6 1977 March 0.8 10.2 39.0 76.6 - - 126.6 June 0.3 14.9 28.1 95.9 - - 139.2 September 0.3 14.1 30.0 92.9 - - 137.3 December - 14.8 36.5 84.5 - - 135.8 1978 March 0.5 14.6 44.7 98.4 i _ 158.2 June - 13.6 38.3 82.2 - i 34.3 September - 21.9 38.1 96.3 _ 156.4 a/ Data prior to December 1973 not comparable with subsequent data. b/ Does not include persons seeking work for the first time. 6ource: Department of Economics, University of Chile - 334 - Table 1,l9a: UNEMPLOYMENT RATES BY PRIOR JOB STATUS, GREATER SANTIAGO, 1968-1978 (Percent of occupational labor force) White- Unpaid Self- Collar Manual Family Total New Total Year/Month Employers Employed Employees Workers Workers Unknown Disemployed Entrants Unemployed 1968 March 2.3 3.4 2.5 6.9 - - 4.5 1.1 5.6 June - 4.5 2.7 8.1 - - 5.2 1.2 6.4 September - 3.6 2.4 9.5 - - 5.5 1.2 6.7 December 1.5 3.5 2.5 7.2 - - 4.5 0.9 5.4 1969 March - 2.7 3.6 8.5 - - 5.3 1.6 6.8 June - 4.6 3.5 8.5 - - 5.5 1.6 7.1 September 0.7 3.3 2.0 7.4 - - 4.4 0.9 5.3 December 0.6 2.6 2.6 7.3 - - 4.3 1.1 5.4 1970 March 0.9 2.5 3.1 9.4 - - 5.3 1.5 6.8 June 0.8 3.9 2.8 9.4 - - 5.6 1.4 7.0 September 1.8 2.7 2.8 9.4 - - 5.3 1.1 6.4 December - 3.4 3.8 12.2 - - 6.6 1.7 8.3 1971 March - 2.1 3.8 11.9 - - 6.2 2.1 8.2 June 1.5 2.4 2.7 7.0 - - 4.0 1.1 5.2 September 1.5 2.0 3.0 5.4 - - 3.6 1.2 4.8 December 1.7 1.3 1.4 5.2 - - 2.8 1.0 3.8 1972 March 1.4 1.7 3.2 5.6 - - 3.7 1.1 4.8 June - 0.4 1.9 4.2 - - 2.3 1.4 3.7 September - 0.9 1.5 3.8 - - 2.2 0.8 3.0 December - 0.7 2.0 5.2 - - 2.7 0.8 3.6 1973 March 0.8 1.5 1.8 4.2 - - 2.5 1.3 3.8 June - 1.0 2.0 3.1 - - 2.1 1.0 3.1 September n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. December - 3.4 3.4 8.2 - - 5.0 2.0 7.0 1974 March 0.9 5.2 4.2 9.9 - x 6.4 2.8 9.2 June - 4.4 5.9 11.9 1.1 x 7.5 2.9 10.3 September 1.0 5.0 4.2 11.3 - x 6.8 2.6 9.4 December 4.0 4.1 3.7 10.3 2.7 x 6.1 3.6 9.7 1975 March - 6.3 4.8 16.8 - x 9.1 4.2 13.3 June 2.1 8.0 7.1 21.6 - 12.0 4.0 16.1 September 1.1 9.3 7.8 22.0 - - 12.6 4.1 16.6 December 4.8 9.9 10.0 21.9 - x 13.8 4.9 18.7 1976 March 1.0 13.0 10.4 23.0 1.2 - 14.8 5.1 19.8 June 1.5 '.6 9.1 23.3 - - 13.4 4.6 18.0 September 1.6 8.7 7.5 19.2 x - 12.2 3.5 15.7 December x 4.7 6.2 17.1 - - 10.0 3.6 13.6 1977 March x 4.9 7.4 15.3 - - 9.5 4.4 13.9 June x 6.2 6.0 17.1 - - 10.2 2.9 13.0 September x 5.8 6.0 17.2 - - 10.0 2.8 12.8 December - 5.9 7.5 15.7 - - 9.9 3.3 13.2 1978 March 2.6 5 9 9.2 16.8 - - 11.2 3.5 14.7 June - ,.1 7.8 ;4.6 - - 9.4 3-3 12.8 September - 7.4 7.8 6.7- - 10.7 3.1 13.7 x/ Refers to figures either less than 0.5 percent or not statistically representative. Source: Department of Economics, Jniversity of Chile Table 1.20: U;EXPDOYiNOT rHATE BY SEX ANI DURATION OF UN1O?I)YiMENT, GREATER SsViNIAGC, 1973-1978 INE unemolo rent .late aLm lNE inemp loyment .ate aercenut) Aaration. o£ percentf Nean Year Experi- Unemru'oy- Womren iC Unemployment Nates Duration oi' and enced New Entrants rent / Experienced IeOw Experienced New Experienced New *Jnemployment Qaarter Total Workers to Labor rlorce (deeks)- Total lorkers Erntrants Total ',orkers Entrants iotal Workers Entrants (Monthis) 197W3 I 5.5 3.6 1.9 8.2 3.8 2.5 1.3 II 4.2 3.3 0.9 9.3 3.1 2.1 1.0 III 4.1 3.4 0.7 7.7 - - - IV 5.5 4.7 0.8 8.0 7.0 5.0 2.0 6.4 1974 I 6.6 5.5 1.1 10.7 9.2 6.4 2.8 7.6 II 8.2 5.9 2.3 13.9 10.3 7.5 2.9 8.0 III 8.4 6.4 2.0 13.6 9.4 6.8 2.6 7.6 IV 9.7 7.5 2.2 13.9 9.7 6.i 3.6 8.5 1975 I 12.4 9.5 2.9 13.4 11.2 9.3 1.9 15.1 10.0 5.1 13-3 9.1 4.2 9.7 II 14.8 10.5 4.3 13.6 13.5 10.8 2.7 17.3 10.1 7.2 16.1 12.0 4.o 8.5 III 16.4 12.8 3.6 15.0 16.6 14.0 2.6 15.o 10.3 5.5 16.6 12.6 4.1 8.4 IV 16.5 13.1 3.4 16.7 16.0 13.8 2.2 17.5 11.8 5.7 18.7 13.8 4.9 10.5 1976 I 17.6 13.8 3.8 14.6 15.6 13.3 2.3 21.3 14.8 6.5 19.8 14.8 5.1 12.3 II 19.1 14-S 4.6 15.6 16.6 13.9 2.7 23.4 15.6 7.8 18.0 13.4 4.6 10.3 III 17.8 14.3 3.5 20.6 15.4 13.4 2.0 21.6 15.8 5.8 15.7 12.2 3.5 11.8 IV 13.6 10.1 3.5 19.4 12.2 9.8 2.4 16.1 10.5 5.6 13.6 10.0 3.6 11.2 1977 I 15.8 11.7 4.1 13.9 9.5 4.4 12.0 II 14.9 11.0 ,.9 13.0 10.2 2.9 11.3 III 13.2 10.2 3.0 12.8 10.0 2.8 12.0 IV 11.5 9.4 2.1 13.2 9.9 3.3 11.5 1978 I 13.5 10.1 3.4 14.7 11.2 3.5 11.8 II 13.2 10.0 3.2 12.8 9.4 3.3 10.2 III 14.6 11.5 3.1 13.7 10.7 3.1 12.0 IV 13.7 10.4 3.3 1/ The median has been estimated by interpolation from grouped data. - 336 - Table 1.21: CHILE - MINIMUM EMPLOYMENT PROGRAM Number of Beneficiaries Monthly (Thousands of Persons) Benefit per Total Metropolitan Rest of Person Expenditures 1/ Area Country Total (Pesos) (Thous. of Pesos) 1975 March .. .. 19.0 86.4 3,000 June .. .. 60.0 150.0 6,600 September 28.9 82.3 111.2 190.0 23,158 December 28.7 98.3 127.0 243.2 35,618 1976 January 27.8 105.7 133.5 243.2 37,381 March 28.4 119.7 148.2 321.0 54,616 June 37.3 139.1 176.4 505.0 102,479 September 39.0 166.0 205.0 606.0 145,967 December 43.1 180.1 233.2 660.0 169,728 1977 January 39.7 158.5 198.2 (219.9) February 39.8 153.0 192.8 (217.7) March 39.8 149.0 188.8 (209.9) April 39.8 148.9 188.7 May 38.3 147.8 186.1 June 36.3 150.8 187.1 July 35.9 153.3 189.2 August 35.7 156.3 192.0 September 35.1 154.9 190.0 October 33.8 153.1 186.9 November 32.2 146.4 178.6 December 30.7 142.5 173.2 1978 January 34.3 145.0 179.3 February 33.9 134.7 168.6 March 33.6 128.6 162.2 April 32.3 124.5 156.8 May 30.2 118.7 148.9 June 29.0 119.0 148.0. July 27.5 114.1 141.6 August 27.3 109.2 136.5 September 27.5 107.7 135.2 October 26.4 104.5 130.9 November 24.3 99.6 123.9 December 22.1 95.5 117.6 Not Available 1/ Including other inputs such as training programs and supplies. Note: Source for 1975-76 data is ODEPLAN; source for 1977-78 is the Ministry of Interior. There are some discrepencies between the two series; note that for the first three months in 1977 the total in parenthesis--from ODEPLAN-- reveal estimates about 20,000 persons higher per month. Source: ODEPLAN and Ministry of Interior Table 1.22: CHILE - LABOR FORCE PROJECTIONS, GREATER SANTIAGO, 1978-1985 Ave. Annual Rate of Growth 1978 1979 1980 1981 1982 1983 1984 1985 % Working age population ('000)-/ A. 2,822.2 2,889.9 2,959.3 3,030.3 3,103.0 3,177.5 3,253.8 3,331.9 2.4 B. 2,822.2 2,921.0 3,023.2 3,129.0 3,238.5 3,351.9 3,469.2 3,590.6 3.5 C. 2,822.2 2,946.4 3,076.0 3,211.4 3,352.7 3,500.2 3,654.2 3,815.0 4.4 Participation rate (%) 50.6 50.9 51.3 51.6 52.0 52.3 52.3 52.3 Active labor force ('000) A. 1,426.9 1,471.0 1,518.1 1,563.6 1,613.6 1,661.8 1,701.7 1,742.6 2.9 B. 1,426.9 1,486.8 1,550.9 1,614.6 1,684.0 1,753.0 1,814.4 1,877.9 4.0 C. 1,426.9 1,499.7 1,578.0 1,657.1 1,743.4 1,830.6 1,911.1 1,995.2 4.9 Unemployment rate (%) 12.8 11.6 10.5 9.3 8.2 7.0 5.8 4-7 Unemployment ('0oo) A. 182.1 170.6 159.4 145.4 132.3 116.3 98.7 81.9 -10.8 B. 182.1 172.5 162.8 150.2 138.1 122.7 105.2 88.3 -9.8 C. 182.1 174.0 165.7 154.1 143.0 128.1 110.8 94.8 -8.9 Employment ('000) A. 1,244.8 1,300.4 1,358.7 1,418.2 1,481.3 1,545.5 1,603.0 1,660.7 4.2 B. 1,244.8 1,314.3 1,388.1 1,464.4 1,545.9 1,630.3 1,709.2 1,789.6 5.3 C. 1,244.8 1,325.7 1,412.3 1,503.0 1,600.4 1,702.5 1,800.3 1,900.4 6.2 a! Population 14 years and older. Note: Alternative A assumes that Santiago's working-age population will grow at the projected national average (Table 1.4); Alternative C extrapolates the rate experienced from 1974 to 1978 (Table 1.17); Alternative B suggests a mid range. - 338 - II. NATIONAL ACCOUNTS Table 2.1: C11ILE - GROSS [XDI4JTIC PRODUCT, BY :;ECTOR OF ORIGIN, 1965-1978 (Millions of current pesos) Sector 1965 1966 1967 1968 1969 1970 1)71 1972 1973 197' 1975 1976 1977 1978 a/ Agriculture, forestry and fishinig 1.8 2.2 3.0 3.3 4.5 7.0 9.8 16.8 80.1 536.3 2,396.5 11,767.0 33,010.8 32,693.6 Minling 1.8 2.9 3.4 4-7 8.3 10.0 8.7 18.5 110.6 921.8 3,546.9 12,101.9 16,051.2 15,922.8 Manufacturinig 4.6 6.2 8.4 12.4 17.8 26.1 32.6 58.6 316.2 2,244 3 8,636.4 31,631.1 65,468.2 70,574.7 Construction 1.0 1.3 1.5 1.9 2.6 3.7 6.2 11.9 38.7 325.5 992.1 2,937.1 6,316.0 6,695.0 Electricity, gas, water and sanitary services 0.3 o.4 0.5 0.7 1.1 1.5 1.7 2.5 5.7 87.3 606.0 2,699.4 5,572.5 587y, Transport, storage and communication o.8 1.2 1.6 2.2 3.2 4.3 5.6 11.2 53.9 374.1 1,628.5 5,342.9 12,005.1 12,605.4 Wholesale and retail commerce 3.7 5.9+ 7.0 9.0 12.7 18.6 25.1 52.8 305.9 2,781.5 13,316.36 41,791.9 93,221.0 105,526.4 Banking, insurance and real estate 0.4 o.6 0.9 1.4 2.9I 3.9 5.6 5.8 42.5 441.0 2,403.8 8,775.1 23,015.5 Housing 1.' 1.9 2.4 3.2 4.2 5.6 7.6 11.2 59.0 393.8 1,878.7 6,150.7 11,594.4 94,735.5 Public administration and defenise 0.9 1.3 1.7 2.3 3.2 5.5 8.5 17.3 69. 503.7 2,380.8 8,274.4 35,908.8 Services 2.0 2.8 3.8 5.3 7.4 10.8 17.7 32.3 131.1 1,051.2 4,304.8 15,176.6 19,024.1 ) GDP at market prices 18.8 26.2 54.4 46.3 67.4 97.0 129.0 239.0 1,213.1 9,660.5 42,091.0 148,648.2 321,187.9 344,632.4 / Preliminary estimates in 1977 pesos. Source: ODEPLAN Table 2.2: CHILE - GDP AT CONSTANT PRICES BY SECTOR OF ORIGIN, 1965-1977 (Thousands oi 1965 pesos) Sector 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 Agriculture, forestry asd fishing 1,784 1,929 2,063 2,114 1,919 2,037 2,174 2,084 1,780 2,077 2,156 2,213 2,526 Mining 1,771 1,928 1,944 1,980 2,230 2,252 2,297 2,249 2,286 2,650 2,519 2,885 2,944 Manufacturing 4,567 4,959 5,100 5,225 5,380 5,451 6,197 6,371 5,956 5,905 4,286 4,5,73 5,137 Construction 1,001 961 924 929 1,010 1,037 1,155 1,048 924 1,109 765 621 643 Electricity, gas, water and sanitary 289 307 357 330 333 346 392 448 461 518 525 544 570 services Transport, storage and communication 829 851 854 897 960 998 1,061 1,037 1,055 1,049 959 987 1,073 Wholesale and retail conimerce 3,749 4,095 4,100 4,283 4,432 4,666 4,906 4,936 4,912 5,057 4,273 4,324 5,099 Banking, insurance and real estate 410 470 554 601 782 912 1,058 847 803 1,041 1,259 1,332 1,402 Housing 1,438 1,509 1,558 1,610 1,678 1,737 1,769 1,812 1,865 1,903 1,912 1,948 1,979 Public administration and defense 916 965 994 998 1,008 1,024 1,060 1,095 1,121 1,211 1,212 1,286 1,235 Services 1,998 2,092 2,107 2,205 2,173 2,235 2,371 2,492 2,372 2,369 2,214 2,246 2,331 GDP at market prices 18,752 20,066 20,555 21,172 21,905 22,695 24,440 24,419 23,535 24,867 22,060 22,964 24,939 Source: ODEPLAN Table 2.2a: CHILE - ANNUAL RATES OF CHANGE OF REAL GDP, BY SECTORS, 1966- 1978 (Percent) Sector 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 Agriculture, forestry and fishing 8.1 6.9 2.5 -9.2 6.1 6.7 -4.1 -14.6 16.7 3.8 2.6 14.1 -0.1 Mining 8.9 0.8 1.9 12.6 1.0 2.0 -2.1 1.6 15.9 -4.9 14.5 2.0 -0.8 Manufacturing 8.6 2.8 2.5 3.0 1.3 13.7 2.8 -6.5 -0.9 -27.4 6.8 12.2 7.8 Construction -4.0 -5.9 0.5 8.7 2.7 11.4 -9.3 -11.8 20.0 -31.0 -18.8 3.5 6.0 Electricity, gas, water and sanitary services 6.2 16.3 -7.6 0.9 3.9 13.3 14.3 2.9 12.4 1.4 3.6 4.8 5.5 Transport, storage and communication 2.7 0.4 5.0 7.0 4.0 6.3 -2.3 1.7 -0.6 -10.5 5.1 8.7 5.0 Wholesale and retail commerce 9.2 0.1 4.5 3.5 5.3 5.1 0.6 -0.5 2.5 -15.2 1.2 17.9 13.2 Banking, insurance and real estate 14.6 17.9 8.5 30.1 16.6 16.0 -19.9 -5.2 29.6 20.9 5.8 5.3 Housing 4.9 3.2 353 4.2 3.5 1.8 2.4 2.9 2.0 0.5 1.9 1.6 ) 5.8 Public administration and defense 5.3 3.0 0.4 1.0 1.6 3.5 3-3 2.4 8.o 0.1 6.1 -4.0 Services 4.7 0.7 4.7 -1.5 2.9 6.1 5.1 -4.8 -0.0 -6.5 1.4 3.8 GDP at market prices 7.0 2.4 3.0 3-5 3.6 7.7 -0.0 -4.6 5.7 -11.3 4.1 8.6 7.3 Source: Tables 2.1 and 2.2; note that for 1978 growth a 1977 base is used, instead of a 1965 base Toble 2.3: CIHILE - EXPENDITURE Ol GROS6 DODiESTIC FRODUCT .T CUIRRENI' 120ICE6, 1963-1972, (Millions of -esos) 1960 1966 1967/ 19(68 1969 1970 1971 1972 1973 1974 1975 19/6 1977 1972 c.' Co-,or;tion 15.4 21.4 .8.8 38.8 55.1 81.2 112.1 217g.0 1,065o.'4 8,319.5 4,9*5 132,702.0 296,5,60.6 - 2 -sornal- (13.4) (18.4) (25.0) (39.6) (47.4) (68.6) (92.7) (179.3) (914.7) (7,048.7) (35,360.1) (113,773.8) (2,7,5,08.0) - (J7136'*() b Gevseral goverroro-t ( 2.0) ( 3.0) ( 3.8) ( 5.3) ( 7.6) (12.6) (19.4) ( 37.7) (150.7) (1,270.8) ( j,s29.3) ( 18,928.1) ( 39,032.5) ( 41,o67. ) Gros.s 1o:,,rsos In est,en.t f.f 4.5 5.1 7.1 1n.' 1).1 13.2 30.3 169.0 1,304.0 2,6'17.8 7,a96.9 Gross fixod iwest.e,it ( 2.9) ( 9.5) ( 4.8) ( 6.7) ( 9.7) (1.9) (16.8) ( 28.9) (161.5) (1,201.6) ( 4,267.5) ( 12,814.3) ( 28,890.1) ( >,)'3>.1) Chsnte isl i r,ve.t-ories ( 0.4) ( o.7) ( O.9) ( 0.4) ( 1.1) ( 1.8) ( L.5) ( 1.,) ( 7.5) ( 102.4) (-1,619.7) ( -4,817.4) - b. 1. EBg.orts of rgoods sod serveses 2.5 3.9 4.9 6.6 11.4 14.1 13.9 22.5 154.6 1,632.9 8,312.8 30,547.6 55,576.0 3L1, 7,. Irlsports of goods ald serveces -7. -3.6 -4.5 -6.3 -9.3 -19 -1 -1 .2 -70.7 -176.0 -1,595.9 -9,759.1 -24,598.3 -57,778.8 __ GDI st r,eket prices 19.3 26.2 34.4 46.3 67.4 57.O 129.0 239.0 1,213.1 9,6c0.5 42,091.0 146,648.2 321,187.9 -4 , 2 [a, In. luoses ooCnplnoS0 :O .soVvfrit ir.stisutolsS. b, Ii, 1 ), C555 e 1s -vent-orioo is inclade a.. r2-id5-l ia ei .sOllfl 1500. c,. I-rols.ssry osolno ussr' '1. 77 ,es,. coarse: 1020K,X:1 Table 2.3a: CHILE - DISTRIBUTION OF EXPENDITURE ON GDP AT CURRENT PRICES, 1965-1978 (Percent) 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 a/ Consumption 81.8 81.8 83.9 83.7 81.6 83.8 86.9 90.8 87.8 86.2 97.1 90.5 92.4 92.8 b/ Personal a/ 71.2 70.5 72.8 72.4 70.3 70.8 71.9 75.0 75.4 73.0 84.o 77.6 80.2 81.2 General government 10.6 11.3 11.1 11.3 11.3 13.0 15.0 15.8 12.4 13.2 13.1 12.9 12.2 11.6 b/ Gross Domestic Investment 17.3 17.1 14.8 15.4 15.9 15.5 14.1 12.7 13.9 13.5 6.3 5.4 _ - Gross fixed investment 15.2 14.5 13.9 14.5 14.3 13.7 13.0 12.1 13.3 12.4 10.1 8.7 9.0 10.3 Change in inventories 2.1 2.6 0.9 0.9 1.6 1.8 1.1 o.6 o.6 1.1 -3.8 -3.3 _ b/ - b/ Exports of goods and services 13.4 14.9 14.3 14.3 16.9 15.0 10.8 9.4 12.7 16.9 19.7 20.8 17.3 17.9 Imports of goods and services -12.6 -13.7 -13.0 -13.5 -14.6 -14.3 -11.8 -12.9 -14.5 -16.5 -23.2 -16.8 -18.6 -21.0 t GDP at market prices 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Includes consumption of nonprofit institutions. b/ In 1977 and 1978 change in inventories is irncluded as residual in personal consumption. / Note that in 1978 the preliminary estimate is in 1977 pesos. Source: Appendix Table 2.3 Table 2.4: CHILE - EXPENDITURE ON G1ROSS DOMESTIC PRODUCT AT CONSTANT PRICES, 1965-1977 (Thousands of pesos at 1965 prices) 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 Consumption 15,352 16,967 17,484 1 18,06 i9,459 2 22,637 19,21,846 21 19556 21,467-/ Personal 2 13,359 14,780 15,298 15,790 16,222 16,868 18,563 19,666 18,782 18,548 16,752 16,304 18,256 b/ General government 1,993 2,187 2,186 2,296 2,43J- 2,591 2,831 2,971 3,066 3,298 3,069 3,252 3,211 Gross Domestic Investment 3,254 3,442 3,132 3,370 3,730 _,874 3,746 7 3,041 3,451 1,862 1,709 F'ixed investment 2,859 2,900 2,941 3,166 3,313 3,407 3,446 2,917 2,834 3,229 2,355 2,246 2,655 Change in Inventories 395 542 191 204 417 467 300 130 207 222 -493 -537 - b/ Exports of goods & services 2,515 2 662 2,851 2,875 3,055 3,040 2,982 2, 682 3,725 3,978 4,773 5,231 Imports of goods & services -2,369 -3,005 -2.912 : X ,159 3 -3,678 -3,682 -3801 -4036 -4,155 -3,601 -3.074 4,414 GDP 18,752 20,066 20,555 21,172 21,905 22,695 24,440 24,419 23,535 24,867 22,060 22,964 24,939 a/ Includes corisumption of nonprofit institutions. " In 1977, change in inventories is included as residual in personal consumption. Source: ODEPLAN Table 2.4a: ANNUAL GROWTH OF EXPENDITURE ON GDP AT CONSTANT PRICES, 1966-1977 (Percent) 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 Consumption 10.5 3.0 4 3.1 4. 3 9.9 5 .8 -3.5 -0.0 -9.53 9.8 Personal a/ 10.6 3s5 3.2 2.7 4..o o. 5.9 -4.5 -1.2 -9-7 -2.7 12.0 b/ General government 9.7 -0.0 5.0 5.9 6.6 9.3 4.9 3.2 7.6 -6.9 6.o -1.3 Gross Domestic Investment 5.8 -9.0 7.6 10.7 3.9 -3 -18.7 -0.2 13.5 -46.0 -8.2 b (of which fixed) (1.4) (1.4) (7.7) (4.6) (2.8) (1.1) (-15.4) (-2.8) (13.9) (-27.1) (-4.6) (18.2) Exports of goods and services 5.8 7.1 0.8 6.3 -0.5 -1.9 -15.0 5.8 38.9 6.8 20.0 9.6 Imports of goods and services 26.8 -3.1 8.5 11.8 4.1 0.1 3.2 6.2 2.9 -13.3 -14.6 43.6 GDP at market prices 7.0 2.4 3.0 3-5 3.6 7.7 -0.0 -3.6 5.7 -11.3 4.1 8.6 Includes consumption of nonprofit institutions. b/ In 1977, change in inventories is included as residual in personal consumption. Source: Appendix Table 2.4 Table 2.5: CIBIL; - SAVINGS AND INVESTMSNT, 1965-1976 (Millions of current pesos) 1965 1966 1967 1968 1969 1970 1971 1972 1975 1974 1975 1976 Savings 1. General Goverlnmenit Savings O.b 1.6 2.0 2.6 5.5 7.7 -o.6 -11.4 -53.3 565.8 909.2 6,165.9 2. Corporate Savings 0.6 0.8 1.0 1.5 1.7 1.9 2.0 - 1.3 44.2 710.41 -784.7 2,889.8 3. Personal Savings ans Savings of-0.3 -0.6 -1.5 -2.0 -2.2 -4.o 2.8 14.5 18.2 -886.1 -4,137.8 -11,690.2 Non-profit Inistitutions Subtotal 1.2 1.8 15 2.2 4.8 5.7 4.2 1.7 9.2 390.0 -4,013.3 - 2,634.6 4. Depreciation Hllowances 1.8 2.3 3.0 4.o 5.5 8.2 11.4 19.4 129.4 851.2 4,036.1 12,746.6 Gross Natioaal Savings 3.0 4.1 4.5 6.2 10.3 13.9 i_,.6 21.2 138.6 1,241.2 22.8 10,112.0 3. Ilet 1rctor Incomes 0.4 0.7 1.0 1.3 2.0 1.8 1.3 1.7 8.5 10l.6 1,155.7 3,666.o Gross lionestic Savings 3.4 4.3 5.5 7.5 12.3 15.7 16.9 22.9 147.1 1,342.8 1,178.5 13,778.0 Inkvestmellt 1. Grors Fixed Investm.ent 2.9 3.8 4.8 6.7 9.7 13.3 16.8 28.9 161.5 1,201.6 4,267.5 12,814.3 a. Construction, (1.8) (2.3) (,.7) (3.7) (5.4) (7.5) (10.9) (20.2) (89.2) (807.7) (2,222.5) (6,029.5) b. Iachinery and Equipment (1.1) (1.5) (2.1) (3.0) (4.2) (5.8, ( 5.8) ( 3.?) (72.3) (393.9) (2,04,.0) (6,784.8) S. increane in Inventories 0.-4 o.7 0.3 0.4 1.1 1.6 1.5 1.7. 7-5 102.4 -1 ,619.7 -4,B17.4) Gross bor.estic lnvosteni -, 4, .5 ,1 7.1 ]0.8 15.1 18.2 30.3 169,. 1,304.0 2,647.e 7,996.9 Sorce: ()l)E;EPI; and mission estirmates Table 2.5a: CHILE - SAVINGS AND INVESTIENT, 1965-1976 (Percent of GDP) 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 Savings 1. General Government Savings 4.5 6.2 5.9 5.? 7.8 7.9 -0.4 -4.8 -4.4 5.9 2.2 4,2 2. Corporate Savings 3.4 2.9 2.9 3.2 2.5 2.0 1.5 -o.6 3.6 7.4 -1.9 2.0 3. Personal Savinigs and Savings of Non-profit Institutions -i.4 -2.3 -4.5 -4.3 -4.3 -4.1 2.1 6.1 1.5 -9.2 -9.8 -8.o Subtotal 6.4 6.8 4,4 4.6 7.1 5.9 3.3 0.7 0.8 4.0 -9.5 -1.8 4. Depreciation Allowances 9.7 8.3 3.7 8.7 8.2 8.5 8.9 8.1 10.7 8.8 9.6 8.7 Gross N:ational Savin,,s 16.1 l 1 Alx1 Tx.3 15. - 14.3 12.1 8.9 11.4 12.8 0.1 6.9 ,. Net iactor Incomes 2.0 2.7 3.0 2.9 2.9 .e 1.0 0.3 0.7 1.1 2.7 2.5 Gross Domestic 6avings 13.1 13.3 16.1 16.2 18.2 16.2 13.1 9.2 12.1 13.9 2.8 9.4 Investment 1. Gross Fixed Investmenat 15.2 14.5 13.9 14.5 14.3 13.7 13.0 12.1 13.3 12.4 10.1 8.7 a. Construction (9.6) (8.9) (7.9) (7.9) (8.o) (7.7) (8.5) (8.5) (7.4) (8.4) (5.3) (4.1) b. Machinery and Equipment (5.6) (5.6) (6.0) (6.6) (6.3) (6.0) (4.5) (3.6) (6.0) (4.1) (4.9) (4.6) 2. Increase in Inventories 2.1 2.6 0.9 0.9 1.6 1.8 1.1 o.6 o.6 1.1 -3.8 -3.3 Gross Domestic Investment 17.4 17.1 14.8 15.4 16.0 15.6 14.1 12.7 13.9 13.5 6.3 5.5 Source: Appendix Table 2.5 Table 2.6: CHILE - SAVINGS AND INVESTMENT AT CCNSTANT PRICES, 1965-1976 (Thousands of pesos of 1965) 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 I. Gross National Savings 5,022 3,128 2,771 2,881 5 ,57 3 5, 55 5,119 1,919 2,543 3,288 913 2,029 II. Net Factor Incomes 375 542 617 614 635 451 224 73 165 274 )96 574 III. Gross Domestic Savings 3,397 3,670 3,388 3,495 4,208 3,985 3.34S 1,992 2,508 5,562 1,509 2,603 IV. Gross Domestic Investment 3,254 3,442 5,132 3,370 3 ,730 5,874 3,746 5,047 3,041 3,451 1,862 1,709 A. Gros6 fixed investment 2,859 2,900 ,941 166 3,13 3,407 3,446 2,917 2,834 3,229 2,355 2,246 1. Construction 1,803 1,743 1,669 1,711 L 1,958 2,115 1,873 1,6 1,956 1,265 997 a. Housing (512) (528) (498) (572) (649) (635) (735) (616) (511) (5,80) (344) (270) b. Non-residential buildings (464) (403) (389) (366) (358) (342) (402) (374) (242) (284) (174) (162) c. Other (827) (812) (782) (773) (851) (961) (976) (883) (816) (1,072) (747) (565) 2. Machinery and equipment 1,056 1,157 1,272 1,455 1,455 1,469 1,333 1,044 1,265 1,293 1,090 1,249 B. Inicrease in inventories 395 542 191 204 417 467 300 130 207 222 493 -537 Source: ODEPLAN and mission estimates Table 2.6a: CHILE - ANNYUAL RATE OF CHAGGE OF CAVINGS AND INVESTMENT AT CONJTANT PRICES, 1966-197C (Percent) 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 I. Gross Nationial Savings 3.5 -11.4 4.0 24.0 -0.5 -12.2 -38.5 22.1 40.3 -72.2 122.2 1l. Net Factor Incomeo 44 .5 13.8 O j.4 -32.1 -48.C -67.4 126.0 66.1 117.5 -3.7 III. Gross Domestic Savinigs 8.0 -7.7 3.2 20.4 -5.3 -16.1 -40.4 25.9 42.0 -57.6 72.5 IV. Gross Domestic Investment 5.8 -9.0 7.6 10.7 3.9 -3.3 -18.7 -0.2 13.5 -46.o -9.2 A. Gross fixed investment 1.4 1.4 7.7 4.6 2.8 1.1 -15.4 -2.8 13.9 -27.1 -4.6 1. Constructioln -3.3 -4.2 2.5 8.6 4.3 9.0 -11.4 -16.2 23.4 -34.7 -21.2 a. Housing (3.1) (-5.7) (14.9) (13.5) (-2.2) (15.7) (-16.2) (-17.0) (13.5) (-40.7) (-21.5) b. Non-residential buildings (-13.1) (-3.5) (-5.9) (-2.2) (-4.5) (17.5) (-7.0) (-35.3) (17.4) (-38.7) (-6.9) C. Other (-1.8) (-3.7) (-1.2) (10.1) (12.9) (1.6) (-9.5) (-7.6) (31.4) (-30.0) (-24.4) 2. Machinery and equipment 9.6 9.9 14.4I 0.0 1.0 -9.3 -21.7 21.2 2.2 -15.7 14.6 B. Increase in inventories 37.2 -64.8 6.8 104.4 12.0 -35.8 -56.7 59.2 7.2 -322.1 -8.9 Source: Appendix Table 2.6 Table 2.7: PROJECTED GDP AND GNP 1978-1990 (Millions of 1975 US Dollars) Rates of Growth - % 1978 1979 1980 1985 1990 1978-80 1980-85 1985-90 Gross Domestic Product 10,368 10,979 11,618 15,294 20,235 5.9 5.7 5.8 Terms of Trade Adjustment -147 -156 3 712 1,253 Gross Domestic Income 10,221 10,824 11,621 16,006 21,489 6.6 6.6 6.1 Imports 2,626 2,846 3,131 4,769 6,618 9.2 8.8 6.8 Exports (volume) 2,577 2,801 3,017 4,153 5,428 8.2 6.6 5.5 Exports, Adjusted for TOT 2,431 2,645 3,030 4,865 6,681 11.5 10.0 6.6 Resource Gap 196 201 111 -96 -63 Consumption 9,537 9,997 10,488 13,509 18,180 4.9 5.2 6.1 Investment 880 1,028 1,244 2,401 3,246 18.9 14.1 6.2 Gross National Savings 352 590 856 2,183 2,954 56.0 20.6 6.2 Gross Domestic Savings 685 827 1,133 2,496 3,309 28.6 17.1 5.8 Gross National Product 9,991 10,711 11,317 14,964 19,861 6.4 5.8 5.8 Gross National Income 9,844 10,555 11,320 15,675 21,115 7.2 6.7 6.1 GDP in Current US$ 17,129 19,318 21,669 38,172 64,458 12.5 12.0 11.0 Source: IBRD - 351 - III. BALANCE OF PAYMENTS Table 3.1a: CHILL - BALANCE 02 PAYBENTS SUMMARY, 1967-1978 -/ (Millions of US dollars) i967 196° 196' 1970 1971 1972 1973 1974 1975 P 1976-/ 1977-/ 1978-/ 1. Exports 984.6 10. 1,508.0 1,251+.9 1,134 6 980.0 1,43286.6 1,763.1 2,392 2,636 3 089 a. Goods, EU3 c73.2 910. 1,171.9 1,111.7 9 . 7. 1,510.5 1,53553 2,109 2,177 24 b. Nonfactor services 110.3 120.0 134.7 143.0 136.0 130.8 118.8 143.2 192.2 276 4f50 598 c. Nonmonetary gold 1.1 0.2 1.4 0.2 1.8 1.8 5.6 4.5 35.6 7 9 11 2. Imports -907.9 -9358.0 -1,088.4 -1,160.2 -1 2251 -1,330.9 -1 625.6 -2,328.4 -2 o66.6 -1 946 -2, 725 -3, 415 a . Coods, Cll -7fi9.0 - -926.8 -956 .0 -1,01t4.9 -1,1' 02.6c -1t 447h4 -2, 015.1 -1, T 775-6 -1,655 -2,244 -2,917 b. Nonfactor services -138.9 -156.4 -161.6 -204.2 -210.2 -228.3, -178.2 -315.3 -291.0 -291 -479 -496 j. Resource Balance _74.1 73.0 21c).6 94.7 - 90.5 -550.9 -190.7 58.2 -303.5 ++Y6 -87 -324 4. Net Factor Payments -212.7 -215.2 -2'8.8 -199.4 -118.5 -59.3 -109.6 -184.5 -284.2 -326 -362 -463 a. Direct investment irncome -139.2 -19.6 -10.7. -00 - 0.1 -2 T.8 - 7.5 -4 -2 39 b. Net interest - 73.5 - 75.6 - 98.1 - 95.( - 88.5 -34.5 -109.5 -175.6 -276.7 -322 -339 -424 (of which public) (- 40.9) (- 49.9) (- 56.7) (- 63.7) - 62.8) (-17.2) (-105.2) (-144.4) (-229.5: (-) (-) (-) 5. Met Current Transfers 8.6 6.9 3.6 1.8 3.5 5.4 12.7 10.8 10.0 ,8 50 57 6. Current Accouint Balance -130.0 -135.3 - 5.6 -102.9 -205.5 _404.8 -287.6 -115.5 -577.7 *148 -399 -730 7. Boreign Direct Investment, net b/ 4.0 - 53.6 -177.3 4.5 21.9 - 0.3 - 4.1 - 16.7 - 4.2 -7 +30 +187 8. iOublic Medium- and Long-Term Loans, net 103.6 264.0 456.2 214.6 102.5 215.5 - 8.1 - 88.9 -179.8 -314 -138 574 a. Disbursements 175.X 36 531.5 375.2 229.4 275.4 2427 290.5 297.8 4 552 1,517 b. Repayments - 72.2 - 92.4 _ 9 .7 -158.6 -126.9 - 59.9 -250.8 -379.2 -477.6 -572 -G90 -743 3. vrivate iseuium- and Long-lerm Loans, net - 30.3 85. 75.0 70.8 - 20.5 - 9.8 - 1.1 30.6 102.1 +166 174 640 w a. Disbursements 10'.9 160. 175 145.9 20.0 TT. l - 53.9 139.3 2,9 73 b. Repaymente _ 79.6 - 83.2 - 67.5 - 75.3 - 4o0.3 - 27.9 - 1.1 - 23.2 3 57.2 -113 -362 _167 10. Debt Rescheduling Loans - - - - - - 249.8 331.2 253.6 - 11. Short-Term Capital, net - 14.0 8.1 -107.7 - 22.2 - 86.6 24.2 5.8 - 28.2-/ 127.0- 34 200 6 12. Allocations of SDRs - - - 21.8 16.7 18.2 - - - 13. Net Errors and Omissions - 17.3 - 50.3 - 46.1 - 72.9 - 84.5 - 72.0 - 66.6 -157.6 4.4 +164 -72 40 14. Change in Reserves (-denotes increas.e) 23.4 -117.9 -174.5 -113.5 299.8 229.0 111.9 45.1 274.6 -455 ±7 -617 a/ Medium- and long-terrn loan disbursements, repayments, and net interest attributed to public and private sector borrowers, debt reschedulings, and other capital transactions oni basis of classifications of the Central Bank. Similarly, debt reschedulings are treated as new loan disbursements (Item 10), and IMF credits are treated "below the line" as compensatory financinig rather than additions to reserves. b/ Includes only investments registered under the procedures of L.L. 600 and D.F.L. 253. Sose direct investments may also enter under Article 14 of D.L. 1,272, but are included here for lack of information, as private medium- and long-term loans (soe Note d). c/ Includes all loans to public sector institutions and loans to the private sector guaranteed by public sector institutions. d/ Includes funds entering under Article 14 of D.L. 1,272. e/ Estimate. f/ Includes capital repatriations. L/ Provisional. Source: Central Bank, mission estimates Table 3.lb: CHILL - BALANCE OF PAYMENTS SUMMARY, 1967-1977 (Millions of USB dollars) _______________________________ _ 1967 1968 1969 1970 1971 1972 1973 1974 1975-/ 1976:e/ 1977-/ 1. Exports 984.6 1,031.0 1,308.0 1,254.9 1 134.6 980.o 1,1+34.9 2 386 6 1,763.1 2,g392 26 a. Goods, FOB 073.2 910.8 1,171.9 1,111.7 996. 1,310.5 2,230- 1,535.3 2,109 2,177 b. Nonfactor services 110.3 120.0 134.7 143.0 136.0 130.8 118.8 143.2 192.2 276 450 c. Nonmonetary gold 1.1 0.2 1.4 0.2 1.8 1.8 5.6 4.5 35.6 7 9 2. Imports -907.9 -958.o -10_ -1 I 60.2 -1 225.1 -,330.9 -1 625.6 -2,328.4 -20 666 -1,946 -2723 a. Goods, CIF -769.0 ; T - W -956.0 -1,019 -1,1 .6 -1 -2,013.1 -1,7.6 -1,655 -2l b. Nonfactor eservices -138.9 -156.4 -i61.6 -204.2 -210.2 -228.3 -178.2 -315.3 -291.0 -291 -479 3. Resource Salanlce 74.1 73.0 219.6 94t.7 - 90.5 -350.9 -190.7 58.2 -303.5 446 -8/ 4. Net Factor Payments -212.7 -215.2 -228.8 -199.4 -118.5 - 59.3 -109.6 -i84.5 -284.2 -326 -362 a. Direct investment income -139- -l2 -130.7 -103.8 - 30.0 - 24. _- 0.1 - 8.9 - 7.5 -4 -23 b. Net interest - 73.5 -75.6 -98.1 -95.6 - 88.5 - 34.5 -109.5 -175.6 -276.7 -322 -339 (of which public) ( 41 2) (- 50.2) (- 54.3) (- 77.9) (- 80.4) (- 26.5) (- 36.7) (- 79.1) (-156.6) (-270) (-238) 5. Net Current Transfers 8.6 6.9 3.6 1.8 3.5 5.4 12.7 10.8 10.0 28 50 6. Current Account Balance -130.0 -135.3 - 5.6 -102.9 -205.5 -404.8 -287.6 -115.5 -577.7 tli48 -399 7. Foreign Direct Investment, net b/ 4.o - 53.6 -177.3 4.5 - 21.9 - -3 - 4.1 -419.5-/ - 4.2 Forestry products 1 1 1 1 1 1 5 2 2 3 4 1 1 2 Fishery products 1 1 3 1 1 1 1 1 2 5 6 7 9 16 Industrial Products 103 116 84 91 101 125 140 103 103 308 391 520 628 781 Manufactured copper 1 1 1 1 1 1 2 2 32 - Semi-manufactured copper 55 36 8 9 7 14 13 12 24 30 3 35 45 46 Paper and cellulose 10 17 23 24 28 32 31 27 30 110 94 136 134 159 Chemical products & petro. deriviatives 4 5 4 5 5 7 12 11 5 52 46 65 78 i6 Fishmeal 8 26 13 18 18 15 28 18 14 35 29 61 86 106 Canned and frozen fish 4 6 6 7 7 9 11 7 6 12 14 23 33 Other manufactured products 21 25 29 27 35 47 43 26 20 63 173 184 252 7 (Percent) Total Exports 100 100 100 100 100 100 100 100 100 100 100 100 100 Copper - 77 70 73 m 77 57 7 54 Other mining products 19 16 12 12 10 10 12 12 10 7 12 9 10 Agriculture and fishery products 3 2 3 3 2 3 4 3 2 2 6 6 7 Industrial products 15 13 10 10 9 ll 14 12 8 14 25 25 ' poke of the d c~er,t - 964-66 a represent export of prir:'y . by fabricators circumventing price accntro,.,, in ac0cr to take advantage of the di erential between producers' prices" ard hiigher LME prices. ^.cSrne: Central Barnk of Chile Table 3.3: CHILE - EXPORTS BY COUNTRY OF DESTINATION, 1967-1977 (Millions of US$) - --- _____________ 1967 194196 1970 197)1 1972 1973 1974 1975 1976 1977 550.8 507.1 624.7 753.7 542.3 460.5 635.7 1 122.4 816.2 953.3 863.5 Germany, Federal Republic 71. 75.7 102.1 34.9 122.9 117.0 172.4 239.1 310.2 Belgium 42.5 13.8 25.0 38.4 17.2 12.9 18.8 33.2 56.1 64.7 63.6 Spain 16.9 19.0 33.3 29.7 24.6 14.0 21.1 33.7 67.7 76.6 64.6 France 49.8 40.3 59.8 68.7 47.1 32.7 33.3 86.5 70.3 70.2 62.1 Netherlands 124.5 108.5 119.2 187.8 103.3 65.4 58.4 94.0 90.7 46.5 63.6 Italy 74.5 61.0 87.5 92.4 70.2 60.7 88.3 161.3 80.1 106.6 94.9 United Kingdom 123.9 141.8 154.3 154.2 110.1 94.o 123.6 217.2 137.2 141.1 108.6 Sweden 38.7 39.8 37.7 39.3 26.9 34.0 30.0 52.2 34.3 22.4 16.1 Rest of Europe 9.0 7.2 5.8 8.3 20.0 29.8 89.8 107.6 40.7 115.1 91.1 Latin America 83.7 93.8 115.3 156.3 142.8 113.6 147.9 412.7 394.7 516.8 552.1 Argentina 3 9. W -7 66.5 59.5 51.1 73. 125. 3 143.9 Brazil 16.2 19.9 23.7 24.4 30.1 19.3 33.0 144.0 98.0 252.5 283.1 Colombia 1.4 3.2 3.1 6.1 11.7 8.8 7.1 37.7 25.0 29.6 34.5 Mexico 8.3 5.5 7.6 10.5 15.4 7.9 10.2 22.7 10.0 15.7 6.4 Peru 6.7 4.4 4.6 9.0 8.5 7.8 12.7 15.6 25.0 29.0 12.3 Venezuela 4.9 4.9 2.5 3.2 2.3 1.5 1.8 8.5 23.9 - - Rest of Latin America 6.4 7.9 7.4 24.6 15.3 17.2 9.3 14.9 46.4 64.7 71.9 United States 168.4 210.9 185.9 177.2 76.4 82.0 105.8 286.1 146.5 222.6 289.4 Canada 0.5 0.5 0.9 0.5 4.7 1.1 21.4 64.7 20.0 18.0 4.3 China, People's Republic o.4 o.4 - - 6.5 23.2 0.5 117.2 12.5 32.5 19.4 Japan 108.0 124.9 146.0 149.8 183.5 147.7 217.4 407.0 186.6 223.7 263.7 Other 1.2 3.2 2.6 11.1 6.1 27.3 101.8 70.4 84.8 115.7 197.9 Total 913.0 940.8 1,075.4 1,248.6 962.3 855.4 1,230.5 2,480.5 1,661.3 2,082.6 2,190.3 Source: Central Bank Table 3 4 CHILE - IMPORTS OF GOODS AND NON-FACTOR SERVICES, 1965-1976 (Millions of US$ and % of total goods) 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 Total a/ 715.2 887.0 907.9 958.1 1,088.4 1 160.2 1,225.0 1,30.9 11625.6 2,328. 2o66.6 . Non-Factor Services 99.7 111.6 156.4 1. 20 210.2 228.3 315.3 291.0 Total Imports, fob 615.5 775.4 769.o 801.7 926.8 956.o 1,014.8 1,102.6 1,447.4 2,013.1 1,775.6 1,64o.o Consumer Goods 84.8 120i5 110.1 130.9 138.8 150.1 177.9 298.8 314.3 267.2 175.9 187.8 Food / 53. 2 55.9 -53.9 B73 10 0.41 -51 70.9 9 90.6 Other 44.6 51.9 57.7 79.1 82.9 96.2 89.4 118.4 134.1 196.3 93.0 97.2 Intermediate Goods 371.2 447.7 431.6 433.5 543-8 529.6 588.9 618.2 889.8 1 467.0 1,318.7 1,104.2 Food2/ 97.1 105.3 115.4 1 11. 109.2 T7 103.7 . 336. 374. 6 277.9 180. Fuels / 16.5 28.9 28.6 23.6 35.8 28.5 57.3 63.8 71.3 344.7 251.6 338.6 Dther 257.6 313.5 287.7 298.1 398.8 416.4 427.9 396.3 482.o 747.7 789.2 585.5 Capital Goods i59.6 222.4 227.3 237-3 244.2 276.2 248.0 185.6 243.3 278.8 281.0 348.0 … - - - - - % of Total - - - - - - Total Imports, c.i.f. 100 100 100 100 100 100 100 100 100 100 100 100 Consumer Goods 13 14 14 16 15 16 18 27 22 13 10 12 Food 7 7 7 T 7 7 9 7 13 3 T5 7 Other 7 7 7 10 9 10 9 11 9 10 5 6 Intermediate Goods 61 57 56 54 59 55 58 56 61 73 74 67 Food 16 13 15 12 9 10 23 19 11 Fuels 3 4 4 3 4 3 6 6 5 17 14 21 Other 42 40 37 37 43 43 42 36 33 37 44 36 Capital Goods 26 29 30 30 26 29 24 17 17 14 16 21 ai Includes freight, insurarnce, etc. b/ Includes C.1.1.U. categories: 01 Agriculture and cattle; 20 Edible manufactured products except beverages; and 21 Beverages. c/ Includes C.I.I.U. categories: 01 Agriculture and cattle; 04 Fish; and 20 Edible manufactured products except beverages. d/ Includes C.I.I.U. category: 13 Crude petroleum and natural gas. Source: Central Bank Table 3.5: CHILE - IMPORTS BY COUNTRY OF ORIGIN, 1966-1974 (Millions of USV) ________ __ ___ _1969_ 1967 1968 1969 1970 1971 1972 171_497 Europe 236.9 236.1 230.3 284.7 328.2 337.5 341.4 415.9 493.4 Germany, Federal Republic 977 91.5 o4.7 93.1 145.5 102.5 -11.7 112.8 151.4 Spain 10.4 9.3 12.3 16.1 21.3 30.9 34.6 25.8 31.1 France 19.9 17-9 10.2 27.9 31.6 32.3 40.6 36.4 54.4 Netherlands 11.8 13.0 12.5 12.9 13.0 11.3 25.5 31.4 48.4 Italy 10.2 13.1 16.5 28.8 24.8 19.8 32.2 30.6 18.1 United Kingdom 42.3 48.7 42.4 48.2 58.1 64.4 54.4 64.o 68.9 Switzerland 11.9 11.2 11.0 17.4 16.7 14.2 16.2 13.4 10.8 Rest of Europe 33.6 31.4 41.4 40.3 17.2 62.1 49.5 101.5 110.3 Latin America 177.2 195.9 189.5 229.9 201.9 249.3 286.2 332.0 636.5 Argentina (7 77.1 9o.O -947 93.3 110.7 -TW. -o 323.8 Brazil 25.6 22.7 19.2 31.5 24.8 27.4 38.9 33.9 84.9 Ecuador 5.6 7.3 9.5 12.2 9.0 10.2 14.6 13.4 78.1 Mexico 17.0 23.5 26.5 21.2 18.7 30.2 25.7 27.9 29.9 Rest of Latin America 65.7 65.3 54.3 72.6 56.1 70.8 63.0 90.2 119.8 United States 299.8 256.6 285.4 349.0 343.6 267.3 160.5 179.1 415.7 Australia 1.6 6.6 9.4 7.3 2.0 12.9 23.9 47.4 98.0 Canada 8.7 10.2 8.3 10.2 11.6 13.8 12.0 28.3 39.9 Japan 16.8 8.9 13.2 18.2 27.7 44.3 33.5 35.2 48.6 Other 9.6 8.1 6.6 2.8 15.8 54.9 83.6 60.0 179.0 Total 750.6 722.4 742.7 902.1 930.8 980.0 941.1 1,097.9 1,911.1 Source: Central Bank (Superintendencia de Aduanas) Table 3.6: CHILE - IMPOPT REGI6Ti?ATIONS, BY PPODUCT GROUIP, 1968-1978 (Millions of UC dollars) 19_ 1969 19_7=___1 3 19 71 192 1973 1974 975 197( 1977- 19.78 1. Consumer Goods 109.9 141.5 164.7 245.3 276.6 237.8 153.2 83.8 154.0 366.2 524.4 a. Agricultural origin 25.0 33.3 29.2 73.7 11.6 9.0 10.0 11.5 13.0 10 .7 b. Processed foods 23.5 28.5 41.5 110.0 190.8 167.5 35.8 13.9 39.2 89.4 112.8 c. r-harmaceutical 23.5 75.1 90.5 27.7 36.4 32.4 30.4 15-7 17.6 23.6 34.6 d. Tools 13.6 - - 10.7 . 7 6.8 15.3 9.4 10.2 13.6 17.3 e. Other 24.6 6.5 3.7 62.1 32.1 22.1 61.8 33.3 78.2 226.6 341.0 2. Intermediate Goods and ar Materials 283.6 486.3 519.3 720.4 822.6 1,110.2 1,757.6 872.1 1,119.0 1,308.2 1,629.6 a. Paw rnaterials of agricultural origLn 6i.1 92.'7 100.8 152.3 216.7 3°4-. 328.7 240.5 246.7 154.8 282.4 (i) 'ood (43.6) (69.1) (76.0) (121.8) (146.8) (255.3) (255.0) (222.2) (200.8) (96.2) (226.3) (ii) Nonfood (17.5) (23.6) (24.8) ( 30.5) ( 70.0) ( 70.6) ( 75.7) ( 18.3) ( 45.9) (58.6) ( 56.1) b. Raw. mnaterials of industrial origin 100.3 162.1 173.5 232.8 267.5 372.3 575.9 188.6 264.1 357.6 371.9 (i) Food (12.2) (15.6) (24.7) ( 44.5) ( 98.4) (137.6) (215.4) ( 69.8) ( 74.2) (121.5) ( 82.8) (ii) 1ionfood (88.1) (146.4) (148.9) (188.5) (169.1) (234.7) (362.6) (118.8) (189.9) (236.1) (289.1) Industrial intermediate goods 43.4 62.7 63.8 92.9 90.1 107.6 141.7 76.7 102.7 178.2 248.3 °' d. keplacement parts 4'7.1 115.6 114.3 132.7 125.8 155.2 183.4 107.5 103.7 127.0 171.1 (i) of rnachinery and equipmrent (j5.2) ( 66.5) ( 63.7) ( 71.4) ( 48.6) ( 76.0) ( 99.1) ( 91.8) ( 85.6) ( 95.8) (121.3) (ii) of transport equipment (13.9) ( 49+.3) ( 50.6) ( 61.4) ( 75.2) ( 79.1) ( 84.5) ( 15.7) ( 18.1) ( 31.2) ( 49.9) e. luels and lubricants 51-7 55.2 66.9 109.7 101.4 148.0 48o.8 257.0 391.7 446.2 479.2 f. Assembly parts - - - - 23.1 25.1 26.5 1.5 10.1 4 4.4 76.6 g. Other - - - - - - 20.7 0.2 - - _ p. Capital Gioods 67.6 289.0 264.4 200.0 312.2 55. 502.1 582.5 410.7 5C'.2 632.3 a. Machinery anid equipment 5 4., 202.7 200.2 1j9.0 17 r. 201.9 217.2 237219327.9 b. Trans-Fport equipnent 12.3 85.2 57.4 57.9 145,.7 144.c 217.7 164.9 171.9 260.( 302.0 c. Peproductive animals 1.1 3.1 6.8 j.0 i0.0 12.5 2.o 0.2 0.9 '__.7 2.4 Total 461.0 916.7 948.4 1,16'.6 1,411.4 l,68l.-4 2,412.0 1,338.2 1,685.7 C,2596 2,786.4 uonrce: Cen,tral 9ank Table 3.6a: ChILF - DISTERiLsUTI-OIK FW IiOER 2Gir:2TATIOL -,T Y PRODUCT GROUP, 1968-1978 (Percent) 1968 - 197, 1971 1972 1973 1975 1976 1977 1978 1. Consumer Goods 33,8 15.4 17.4 21.0 19. 6 14. . 6.- 6.3 9.1 16. 18..8 a. Agricultural origin .i - 3.1 . 0.0 0.5 0.4 0. 0.' 0. O. 7 b. Processed foods '.2 3.1 L.4 9.; 13.5 10.( 1.5 1.0 2. 4.O 4.o c. Pharmaceutical 5.1 8 2.4 2.6 1.9 1. 1.2 1.0 d. Tools _ - 0. 4 0.X o.6 0.7 o.6 o6 o. e. Other C.'3 '-3 1.3 2 .6 2.5 4.6 C)o 0 2. Intermediate GoodIs and 35. IO8 8. 66.o 72.8 65.2 66.5 -' - __ Raw Materials a. Raw materials o)f ]3. ] 01 10o.6 13.1 15 4 18.1 13.6 18.0 14.7 6.9 IJ.1 agricultural origin (i) Food (9 (7.5) (8.o) (Ic04) (10. 4) (13.9) (10.5) (16.6) (11.9) (4. (8.1) (ii) Nonfood (3.8; (2.( (2.6) ( 5.0 .2) ( 4.2) ( 3.1) (1.4) (2.7) 6s.6) (2 b. Raw materials of industrial origin " 17.7 18.3 2. 0 19.'0 22.1 23.9 1Y I 15.7 1 8 1 (i) Food (2. 6) (1.7' (2.6) ( 3.8) ( 7.0) ( 8.2) ( 8.8) ( 5.2) ( 4.4) (5.4) (2.0) _ (ii) Nonfood (19.1) (16.0) (15.7) (16.2) (12.0) (14.0) (15.0) ( 8.9) (11.3) (1o.44(1o.3) c. Industrial intermediate goods 9.4 6.8 6.7 8. o 6.4 6.4 5.9 5.7 6.1 7.9 8.9 d. Replacement parts 10.2 12.6 12.1 11.4 8.8 9.2 7.6 8.o 6.2 5.6 6.1 (i) Of machinery and equipment ( 7.2) ( 7.2) ( 6.7) ( 6.1) ( 3.4) ( 4.5) ( 4.1) ( 6.9) ( 5.1) ( 4.2) (4.3) (ii) Of transport equipment ( 3-0) ( 5.4) ( 5.3) ( 5.3) ( 5.3) ( 4.7) ( 3.5) ( 1.2) ( 1.1) ( 1.4) (1.8) e. Fuels and lubricants 6.9 5.8 7.1 9.4 7.2 8.8 19.9 19.2 23.3 19.7 17.2 f. Assembly parts - - - - 1.6 1.4 1.1 0.1 0.6 2.0 2.7 g. Other - - - - - - 0.9 0.0 - - - 3. Capital Goods 14.7 31.5 27.9 17.2 22.1 19.8 20.8 28.6 24.4 25.9 22.7 a. Machinery and equipment 11.8 22.1 21.1 11.9 11.2 10.5 11.7 16.2 14.1 14.2 11.8 b. Transport equipment 2.7 9.1 6.1 5.0 10.2 8.6 9.0 12.3 10.2 11.5 10.8 c. Reproductive animals 0.2 0.3 0.7 0.3 0.7 0.7 0.1 0.0 0.1 0.1 0.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table 3.7: CHIILE - NET INTER14ATIONAL RESERVES, 1960-1978 LI (Millions of US dollars) 1960 1965 1970 1971 1972 1973 1974 1975 1976 1977 1978 I. Central Bank, net 38.4 -34.2 393.8 154.1 33.5 12.' -42.3 -375.7 143.5 16/.2 87 .0 , Assets 151.7 162.5 435-. 253.5 199'.7 BSTL7 512.1 2+1.3 650.5 722.0 1,337.0 1. Gold (45.1) (43.9) (46.7) (47.1) (51.5) (58.1) (60.7) (54.8) (56.4) (57.6) (5807) 2. Special Drawing Rights ( - ) ( - ) (21.8) (538.3) ( 2.2) ( 0.4) (16.8) (24.5) (55.9) (66.2) (26.9) 3. IMiF subscripticn (18.7) (25.0) (39.5) (59.6) (42.9) (47.6) (48.2) (46.3) (45.7) (47.8) (51.4) 4. Foreign exchange -a (65.5) (93.6) (510.3) (120.9) (96.7) (134.9) (35-7) (31.4) (343.1) (316.1) (769.2) 5. Bornds and other investments ( - ) ( - ) ( '9.93) ( 7.5) ( - ) ( - ) ( - ) ( 2.0) ( 8.0) (44.0) (244.0)) 6. Payments agreements ( 2.4) ( - ) ( 6.8) ( 0.1) ( 1.4) ( 65.o) (148.7) (82.3) (149.4) (190.3) (226.8) B. Liabilities 93.3 196.7 41.2 99.4 161.2 293.1 354.4 617.0 615.0 557.8 5 1. To IIIF (29.4) 125.0) (41.0) (79.0) (128.7) (145.0) (245.3) (453.7) (511.5) (411.8) (46.6) 2. Payments agreements (29.5) ( 2.3) ( 0.2) (20.4) ( 18.2) ( 71.4) (111.1) ( 50.4) (103.5) (141.2) (155+4) 3. Short-term credits (54.4) (69.4) ( - ) ( - ) ( 14.3) ( 78.7) ( - ) (132.9) ( - ) ( 4.8) ( 5.0) II. Commercial Bans, net -15.4 -58.5 15.5 -44.6 -153.0 -244.3 -234.2 -175.4 -139.4 -266.7 -355-2 A. Assets 16.9 21.7 66.7 4.2 71.5 107.1 96.2 124.2 104.7 5 1. Gold ( 2.1) ( 5.5) ( 4.2) ( 4.1) ( 4.3) ( 4.) ( 5.7) ( 5.7) ( .s) ( 5.6) ( 5.8) 2. Foreign exchange (l14.8) (16.2) (62.5) (40.1) (52.0) ( 67.2) (101.4) ( 90-5) (11-3) ( 99.1) (158.0) B. Liabilities 52.3 80.2 51.2 88.8 209.2 315.8 341.5 271.6 263.6 371-4 w99.o III. Net Reserves of the Banning System -/'23.0 -92.7 409.3 109.5 -119.5 -251.4 -276., -551.1 -95.r -102.5 (Import equivalent - months) 0.4 - 1.6 4.2 1.1 - 1.1 - 1.7 - 1.4 - 3.3 - 0.7 - 0.4 2.1 a/ Excludes blocked or frozen foreign exchange assets. Such assets totaled US$2 million during 1972-74, 912 million in 1975, 517 million in 1976, 925 million in 1977, and 317 million in mid-1978. source: Central Bank - 361 - Table 3.8: AVERAGE ANNUAL NOMINAL EXCHANGE RATES, 1940-1978 (Escudos per dollar) a/ Year Nominal Exchange Rate b/ 1940 0.025 1945 0.030 1950 0.051 1955 0.181 1960 1.049 1961 1.049 1962 1.153 1963 1.871 1964 2.418 1965 3.237 1966 4.ooo 1967 5.o80 1968 6.860 1969 9.040 1970 11.83 1971 13.47 1972 21.87 1973 Jan.-Sept. 58.77 1973 Oct.-Dec. 405.18 1974 863.65 1975 4903, 1976 13052. 1977 21540. 1978 31670. a/ The escudo replaced the peso as Chile's currency unit in 1962 at the rate of 1,000 escudos = 1 peso. The escudo was, in turn, replaced by a new peso in October 1975, again at the ratio of 1,000 to one. b/ Figures through 1972 are weighted averages of legal exchange rates calculated by Behrman; 1973 and 1974 figures are averages of the average bankers and brokers rates with weights of 0.8 and 0.2, respectively; only the average bankers rate is used from 1975 on. Sources: Jere R. Behrman, Foreign Trade Regimes and Economic Development: Chile, National Bureau of Economic Research, Columbia University Press, New York, 1976; Central Bank of Chile - 362 - Table 3.9: EXPORT AND IMPORT PROJECTIONS, 1975-1990 (US$ Millions) 1975 1976 1977 1978 1979 1980 1985 1990 Exports In 1975 Prices Copper 849.6 1086.8 1097.8 1116.4 1138.7 1161.5 1482.4 1636.7 Agricultural Goods 84.3 94.1 94.3 122.2 140.6 154.6 21C.8 282.1 Manufactured Goods 395.0 536.2 611.5 681.7 797.6 917.2 1423.5 2375.9 Other Goods 242.0 184.3 181.0 203.1 211.2 219.7 267.3 325.2 Non-Factor Services 192.2 258.7 378.2 453.9 512.9 564.1 769.2 807.7 Total 1763.1 2160.1 2382.7 2577.3 2801.0 3017.2 4153.3 5427.6 In Current Prices Copper 849.6 1238.0 1167.0 1239.6 1387.1 1768.5 4249.8 7087.9 Agricultural Goods 84.3 119.0 160.0 207.4 230.4 251.7 466.4 815.8 Manufactured Goods 395.0 539.0 670.0 799.1 995.7 1213.7 2520.8 5369.8 Other Goods 242.0 185.0 198.0 210.9 235.3 255.7 500.5 846.C Non-Factor Services 192.2 276.o 450.0 577.8 695.4 810.8 1479.4 1982.5 Total 1763.1 2357.0 2645.0 3034.8 3543.8 4300.5 9216.9 16102.0 Imports In 1975 Prices Food 360.8 263.3 187.9 194.4 204.7 214.3 258.0 321.3 Other Consumer Goods 93.2 97.4 328.8 360.5 378.8 397.4 514.0 707.1 Petroleum, Oil, Lubricants 251.6 314.5 361.8 378.0 367.9 384.7 562.0 743.6 Other Intermediate Goods 789.2 510.6 609.6 768.1 839.9 910.4 1325.4 1947.4 Capital Goods 1/ 281.0 352.3 468.7 529.1 626.6 765.0 1488.6 2063.5 Non-Factor Services- 290.8 272.7 407.5 446.6 480.9 514.4 692.4 933.6 Total 2066.6 1810.7 2364.3 2626.4 2846.1 3130.9 4768.8 6618.1 In Current Prices Food 360.8 332.0 339.0 347.4 399.6 L55.5 778.2 1262.7 Other Consumer Goods 93.2 105.0 382.0 385.7 431.7 480.1 830.9 1458.7 Petroleum, Oil, Lubricants 251.6 337.0 418.0 447.2 486.7 552.0 1078.3 1812.2 Other Intermediate Goods 789.2 513.0 572.0 906.0 1055.1 1212.3 2361.8 4428.9 Capital Goods 1 281.0 354.0 517.0 624.5 787.6 1019.2 2654.3 4695.9 Non-Factor Services-/ 290.8 291.0 445.0 568.6 652.0 739.4 1331.6 2291.8 Total 2066.6 1932.0 2813.0 3279.3 3812.6 4458.5 9035.1 15950.2 1/ Imports are stated CIF during 1975-77, and non-factor services excludes insurance and freight. Thereafter imports are calculated FOB. Source: IBRD Table 3.10. BALANCE OF PAYMENTS AND EXTERNAL BORROWING PROJECTIONS (US$ Million) Actual Projected 1975 1976 1977 1978 1979 1980 1985 1990 Exports of Goods and Non Factor Services 1763.1 2357.0 2645.0 3034.8 3543.8 4300.5 9216.9 16102.0 Imports of Goods and Non Factor Services 2066.6 1932.0 2813.0 3279.3 3812.6 4458.5 9035.1 15950.2 Resource Balance -303.5 425.0 -168.0 -244.5 -268.8 -158.0 181.8 151.8 Net Factor Service Income -284.2 -315.0 -381.0 -48o.5 -363.8 -432.9 -635.6 -918.2 (of which: On Public M+LT Loans) (-156.6) (-208.9) (-201.3) (-395.4) (-301.2) (-345.0) (-428.4) (-647.0) Current Transfers 10.0 28.0 50.0 57.0 42.0 35.0 32.8 46.0 Current Account Balance -577.7 138.0 -479.0 -668.o -590.6 -566.o -421.0 -720.4 Direct Foreign Investment -4.2 7.0 25.0 200.0 250.0 200.0 200.0 100.0 Capital Grants 5.8 1.2 .4 .0 .0 .0 .0 .0 Public M+LT Loans, net -57.5 -115.6 -80.7 839.0 379.8 98.9 214.2 732.8 (Disbursements) (287.4) (432.7) (569.8) (1503.0) (1060.2) (924.9) (1308.4) (2234.9) (Amortizations) (-344.9) (-548.3) (-650.5) (-664.0) (-680.4) (-826.0) (-1094.2) (-1502.1) Other M+LT Loans, Net - - - 433.0 212.5 428.9 158.7 118.3 (Disbursements) - - - (600.0) (562.5) (578.9) (811.9) (994.6) (Amortizations) - - - (-167.0) (-350.0) (-150.0) (-653.2) (-876.3) Use of IMF Resources 190.4 78.0 -100.0 -79.7 -182.7 -86.o .0 .0 Short-Term Capital and Capital n.e.i. 359.0 424.4 528.3 -11.0 20.0 22.0 35.4 57.1 Change in Reserves (-=increase) 84.2 -533.0 106.0 -713.3 -89.1 -107.9 -187.3 -287.8 Memorandum Item: Net Foreign Reserves at end of Period -551.1 -95.9 -102.5 635.1 724.2 832.0 1596.3 2751.1 Source: IBRD - 364 - IV. EXTERNAL DEBT - 365 - Table 4.1 : RESOURCE FLOWS BETWEEN CEILE AND JNTERNATI3NAL LENDERS, 1968-1976 - (Millions of US dollars) Multi- Private Other B1lateral latera%1 Suppliers Financial Private Loans Loans- Credits Institutions Debt- T 0 T A L A. Commitments 1968 122.5 23.9 87.7 57.6 - 291.7 1969 110.7 1.8 71.9 208.2 - 392.6 1970 16.8 31.3 162.6 132.2 - 3L2.9 1971 169.4 - 79.1 28.6 - 277.1 1972 174.9 2.2 92.0 90.4 - 359.6 1973 255.0 0.2 60.8 12.3 - 325.4 1974 307.9 138.0 271.5 30.7 - 748.1 1975 119.1 67.1 178.9 38.4 - 403.5 1976 110.3 97.3 155.7 120.2 - 483.5 1977 23.4 65.2 45.5 825.9 - 960.0 B. Disbursements 1968 166.3 26.7 127.7 36.9 - 357.7 1969 147.5 26.6 103.3 149.7 - 427.1 1973 98.3 33.7 155.7 109.6 - 397.3 1971 59.3 24.1 64.9 42.2 - 190.5 1972 66.4 13.2 1C5.2 72.6 - 257.5 1973 149.4 11.2 69.0 £6.2 - 315.8 1974 262.9 41.3 194.5 40.8 - 539.5 1975 91.4 45.7 108.9 41.5 - 287.4 1976 90.7 27.5 199.6 115.0 - 432.7 1977 83.4 47.6 92.9 346.0 - 569.8 C. Repayments 1968 40.7 10.3 39.0 32.4 43.5 165.8 1969 52.7 13.5 37.L 20.0 40.4 164.0 1970 60.5 15.9 47.- 29.9 9.6 163.4 1971 58.7 14.4 51.7 22.6 i4.L 161.8 1972 22.8 12.5 13.3 9.2 13.3 71.1 1973 57.2 10.1 22.0 12.0 18.6 119.9 1974 70.6 24.7 44.6 32.0 27.0 198.9 1975 115.2 21.3 73.2 35.2 99.9 34-.9 1976 209.5 19.3 119.4 108.7 91.4 548.3 1977 236.9 23.7 216.1 117.1 56.8 650.5 D. Net Disburse- ments (B-C) 1968 125.6 16.4 88.8 4.6 -43.5 191.9 1969 94.8 13.1 65.9 129.8 -40.4 263.1 1970 37.8 17.8 108.3 79.7 - 9.6 233.9 1971 0.6 9.7 13.2 19.6 -14.4 28.7 1972 43.6 0.7 91.9 63.4 -13.3 186.3 1973 92.2 11 47.D 74.2 -18.6 195.9 1974 192.3 16.6 149.9 8.8 -27.0 340.6 1975 -23.8 24..4 35.7 6.3 -99.9 -57-5 1976 -118.8 8.2 80.2 6.3 -91.4 -1156 1977 -153.5 23.9 -123.2 228.9 -56.8 -00.7 E. Interest 1966 21.3 8.0 19.7 4.4 5.8 50.2 1969 26.3 9.1 11.7 4.2 3.1 54.3 1970 39.6 9.9 17.5 T.o 2.2 77.9 1971 24.4 10.0 24.5 14.6 6.8 80.1 1972 3.6 o.9 5.1 1.6 2.4 26.5 197, 4.2 6.7 11.1 10.4 4.2 36.7 197- 20.4 22.0 9.4 21.4 5.8 79.1 1975 69.9 17.0 11.6 19.9 38.2 156.6 1976 90.0 16.7 36.7 31.9 34.6 208.9 1977 73.1 16.5 39.0 44.6 26.9 201.3 F. Net Resource Flow (D-E) 1968 104.3 8.4 78.1 0.2 -49.3 l'1.7 1969 68.5 4.0 51.2 125.6 -43.5 208.8 1970 7.2 7.9 90.8 61.9 -11.8 156.0 1971 -23.8 -0.3 -11.1 5.0 -21.2 -51.7 1972 35.0 -8.2 86.8 61.8 -15.7 159.8 1973 oo.U -5.6 35.9 b3.o -22.8 159.2 1974 171.9 -5.4 140.5 -12.6 -32.8 261.6 1975 -93.7 7.4 24.1 -13.6 -138.1 -214.0 1976 -298.8 -8.5 43.5 -24.7 -126.0 -324.5 1977 -226.6 5.4 -162.2 184.3 -82.8 -282.0 a/ Actual flows after rescheduling; includes mediur- and long-term public debts repayable in foreign currency. b/ Excludes loans made in foreigr. currency but repayable in local currency. 0/ Includes public bonds and nationalization agreements. Source: Table 1.2 Page 1 of 3 Table 4.2: CHILE - EXTERNAL PUBLIC DEBT REPAYABLE IN FOREIGN CURRENCY OUTSTANDING AS OF DECEMBER 31, 197T, -- BY TYPE OF CREDITOR AND CREDITOR COUNTRY (IN THOUSANDS OF U.S. DOLLARS) D E B T O U T S T A N D I N G : I N A R R E A R S TYPE OF CREDITOR ---------------------------------_ --____________________ CREDITOR COUNTRY DISBURSED :UNDISBURSED: TOTAL PRINCIPAL INTEREST ……--…_…---_-_-_--___--- --- --- __ __ _-- _----- ----------- -___-____ __--__--- SUPPLIERS CREDITS ARGENTINA 53,683 1,600 55,283 - AUSTRALIA 946 - 946 - - BELGIUM 3,361 - 3,361 - - BRAZIL 38,187 42,743 80,930 - _ CANADA 700 700 - COLOMBIA 66 - 66 - - CZECHOSLOVAKIA 7 - 7 -- DENMARK 3,381 - 3,381 - - FINLAND 48 - 48 - - FR4NCE 24,118 - 24,118 - - GERMAN DEM. REP. 2,320 - 2,320 - - GERMANY, FED.REP. OF 29,327 4,631 33,958 - - ITALY 12,589 1,894 14,483 - JAPAN 143,684 3,917 147,601 -- NETH. ANTILLES 6,000 - 6,000 - - NETHERLANDS 6,092 137 6,229 - - NORWAY 2,142 - 2,142 - - PANAMA 241 - 241 - - PERU 44 - 44 - - SPAIN 42,227 29,853 72,080 - - I SWEDEN 5,340 - 5,340 - - SWITZERLAND 8,032 619 8,651 - - UNITED KINGDOM 28,384 - 28,384 - - UNITED STATES 140,336 - 140,336 - - TOTAL SUPPLIERS CREDITS 551,255 85,394 636,649 - - FINANCIAL INSTITUTIONS ARGENTINA 979 - 979 AUSTRIA 2,588 12,030 14,618 - BELGIUM 15,-142 1,146 16,588 - - CANADA 15,194 - 15,194 - - FRANCE 119,728 26,007 145,015 - _ GERMANY, FED.REP. OF 42,896 53,304 96,200 - - ITALY 21,271 - 21,271 - - NETH. ANTILLES 457 - - NETHERLANDS 12,000 30,000 42,000 - - PANA MA 500 - 500 - - SPAIN 10,525 125,000 135,525 - - SWEDEN 265 - 265 - - SWITZERLAND 6,232 25,065 31,297 - - UNITED KINGDOM 45,322 15,172 60,494 - - UNITED STATES 382,184 261,261 643,445 - - TOTAL FINANCIAL INSTITUTIONS 675,583 549,0G5 1,224,648 - - Table 4.2 Page 2 of 3 (IN THOUSANDS OF U.S. DOLLARS) D E B T O U T S T A N D I N G I N A R R E A R S TYPE OF CREDITOR --------__________________________ ----------------------- CREDITOR COUNTRY DISBURSED :UNDISBURSED: TOTAL PRINCIPAL INTEREST BONDS SWITZERLAND 6,731 - 6,731 - - UNITED KINGDOM 5,682 - 5,682 - UNITED STATES 806 - 806 TOTAL BONDS 13,219 - 13,219 - - NATIONALIZATION FRANCE 3,170 - 3,170 - GERMANY, FED.REP. OF 2,895 - 2,895 - - NETHERLANDS 2,500 - 2,500 - - PANAMA 100 - 100 - - SPAIN 578 - 578 - - UNITED STATES 290,025 - 290,025 - - TOTAL NATIONALIZATION 299,268 - 299,268 - - MULTILATERAL LOANS ADELA 12,235 - 12,235 - _ CORP. ANDINA FOMENTO 16,550 - 16,550 - _ IBRD 141,202 88,651 229,853 - - IDA 21,450 - 21,450 - -0C IDB 90,592 132,962 223,554 - - TOTAL MULTILATERAL LOANS 282,029 221,613 503,642 - - BILATERAL LOANS ARGENTINA 98,481 96,984 195,465 - - BELGIUM 8,115 - 8,145 - - BRAZIL 133,227 58,346 191,573 - BULGARIA 2,738 - 2,738 - - CANADA 19,871 - 19,871 - CHINA, P.R. OF 16,775 - 16,775 - CZECHOSLOVAKIA 1,649 - 1,649 - _ DENMARK 4,776 - 4,776 - - FRANCE 93,643 691 94,334 - _ GERMAN DEM. REP. 8,397 - 8,397 - - GERMANY, FED.REP. OF 150,970 - 150,970 - ITALY 26,004 - 26,004 - OAPAN 21,848 - 21,848 - - MEXICO 4,781 13,438 18,219 - _ NETHERLANDS 21,654 1,421 23,075 - _ NORWAY 2,206 - 2,205 - - ROMIANIA 6,686 - 6,686 - - SPAIN 53,049 10,000 63,049 - - SWEDEN 7,373 - 7,373 - SWITZERLAND 15,159 - 15,159 - - Table 4.2 Page 3 of 3 (IN THOUSANDS OF U.S. DOLLARS) D E B T O U T S T A N D I N G : I N A R R E A R S TYPE OF CREDITOR -----------__-----____ ----------------------- CREDITOR COUNTRY DISBURSED :UNDISHURSED: TOTAL PRINCIPAL INTEREST UNITED KINGDOM 58,992 - 58,992 - - UNITED STATES 892,640 18,503 911,143 - - USSR 92,812 - 92,812 - - MULTIPLE LENDERS 20,000 - 20,000 - - TOTAL BILATERAL LOANS 1,761,876 199,383 1,961,259 - - TOTAL EXTERNAL PUBLIC DEBT 3,583,230 1,055,455 4,638,685 - NOTES: (1) ONLY DEBTS WITH AN ORIGINAL OR EXTENDED MATURITY OF OVER ONE YEAR ARE INCLUDED IN THIS TABLE. (2) DEBT OUTSTANDING INCLUDES PRINCIPAL IN ARREARS BUT EXCLUDES INTEREST IN ARREARS. o EXTERNAL DEBT DIVISION ECONOMIC ANALYSIS AND PROJECTIONS DEPARTMENT SEPTEMBER 20, 1978 Table 4.2a: CHILE - PROJECTED SERVICE PAYMENTS AND DISBURSEMENTS ON FOREIGN CURRENCY EXTERNAL PUBLIC DEBT OUTSTANDING AS OF DECEMBER 31, 1977 (IN THOUSANDS OF U.S. DOLLARS) TOTAL YEAR DEBT OUTSTANDING AT T R A N S A C T I 0 N S D U R I N G P E R I 0 D OTHER CHANGES BEGINNING OF PERIOD DISBURSED : INCLUDING : COMMlT- DISBURSE- : S E R V I C E P A Y M E N T S CANCEL- ADJUST- : ONLY :UNDISBURSED: MENTS : MENTS -----------:-----------:-----------: LATIONS : MENT * : : : PRINCIPAL INTEREST : TOTAL : (1) : (2) (3) (4) : (5) : (6) (7) (8) (9) 1971 2,065,748 2,533,957 277,112 190,438 161,762 130,387 242,149 20,162 94,584 1972 2,179,803 2,723,729 359,572 257,465 71,139 26,499 97,638 14,424 226,365 1973 2,580,901 3,224,103 328,392 315,772 119,868 36,718 156,586 119,782 27,396 1974 2,812,115 3,340,241 748,120 539,545 198,909 79,056 277,965 116,398 601.243 1975 3,789,056 4,374,297 403,517 287,424 344,910 156,561 501,471 83,920 10,935 1976 3,751,475 4,359,919 483,465 432,684 548,311 208,938 757,249 4,154 -29,218 1977 3,609,136 4,201,702 960,002 569,786 650,494 201,269 851,763 9,603 77,076 1978 3,583,230 4,638,685 * * * 4* * THE FOLLOCVING FIGURES ARE PROJECTED * * * * * * 1978 3,583,230 4,630,085 - 700,101 589,343 236,590 825,933 - -49,980 1979 3,644,009 3,999,362 - 195,318 690,878 225,462 916,340 - 4 1900 3,148,452 3,300,488 - 60,939 602,832 106,G92 789,524 - 11 1981 2,614,570 2,705,G67 - 40,765 528,187 149,511 677,698 - -1 W 1982 2,127,148 2,177,479 - 21,297 449,506 115,492 564,998 - 13 1933 1,698,951 1,727,986 - 17,385 347,545 89,076 436,621 - - 1984 1,368,792 1,380,441 - 7,050 212,029 70,101 282,130 - 3 1985 1,163,816 1,168,415 - 3,383 168,195 58,366 226,561 - -3 1986 999,001 1,000,217 - 949 137,821 48,557 186,378 - 7 1987 862,136 862,403 - 191 108,122 41,371 149,493 - 1 NOTES: - INCLUDES ALL DEBTS LISTED IN TABLE 1, PREPARED SEPTEMBER 20, 1978. - PROJECTIONS EXCLUDE US$50.0 MILLION FROM USSR WHICH ARE ELIGIBLE FOR RESCHEDULING AND THE TERMS OF WIIICH ARE UNKNOWN. * THIS COLUMN SHOWS THE AM'1OUNT OF ARITHMETIC IMBALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSED FROM ONE YEAR TO THE NEXT. THE MOST COM,MON CAUSES OF IMABALANCES ARE CHANGES IN EXCHANGE RATES AND TRANSFER OF DEBTS FROM ONE CATEGORY TO ANOTHER IN THE TABLE. EXTERNAL DEBT DIVISION ECONOMIC ANALYSIS AND PROJECTIONS DEPARTMENT SEPTEMBER 20, 1978 Table 4.3: CHILE - EXTERNAL PUBLIC DEBT REPAYABLE IN LOCAL CURRENCY OUTSTANDING AS OF DECEMBER 31, 1977 BY TYPE OF CREDITOR, CREDITOR COUNTRY, AND CURRENCY OF DRAWINGS (IN THOUSANDS OF U.S. DOLLARS) TYPE OF CREDITOR D E B T O U T S T A N D I N G : I N A R R E A R S CREDITOR COUNTRY ------------------------------------ ---_----_-----_-___ CURRENCY OF DRAWINGS DISBURSED :UNDISLIURSED: TOTAL : PRINCIPAL : INTEREST MULTILATERAL LOANS IDB DRAWINGS IN LOCAL CURRENCY 31,022 28,452 59,474 - - DRAWINGS IN FOREIGN CURRENCY 94,573 200 94,773 - - TOTAL IOB 125,595 28,652 154,247 - - TOTAL MULTILATERAL LOANS 125,595 28,652 154,247 - - BILATERAL LOANS UNITED STATES DRAWINGS IN LOCAL CURRENCY 17,970 - 17,970 - - TOTAL UNITED STATES 17,970 - 17,970 - - TOTAL BILATERAL LOANS 17,970 - 17,970 - - TOTAL EXTERNAL PUBLIC DEBT 143,565 28,652 172,217 NOTES: (1) ONLY DEBTS WITH AN ORIGINAL OR EXTENDED MATURITY OF OVER ONE YEAR ARE INCLUDED IN THIS TABLE. (2) DEBT OUTSTANDING INCLUDES PRINCIPAL IN ARREARS BUT EXCLUDES INTEREST IN ARREARS. w 4 EXTERNAL DEBT DIVISION ECONOMIC ANALYSTS AND PROJECTIONS DEPARTMENT SEPTEMBER 20, 1978 Table 4.3a: CHILE - PROJECTED SERVICE PAYMENTS AND DISBURSEMENTS ON LOCAL CURRENCY EXTERNAL PUBLIC DEBT OUTSTANDING AS OF DECEMBER 31, 1977 (IN THOUSANDS OF U.S. DOLLARS) TOTAL YEAR DEBT OUTSTANDING AT T R A N S A C T I 0 N S D U R I N G P E R I 0 D OTHER CHANGES BEGINNING OF PERIOD DISBURSED : INCLUDING COMMIT- DISBURSE- S E R V I C E P A Y M E N T S CANCEL- ADJUST- ONLY :UNDISBURSED: MENTS MENTS …L ------------ LATIONS MENT * PRINCIPAL INTEREST TOTAL : (1) : (2) (3) (4) (5) (6) (7) (8) (9) 1971 137,524 217,423 11,600 25,941 6,685 4,916 13,601 229 -1,076 1972 153,708 219,033 - 16,855 8,913 4,937 13,850 62 -3,007 1973 158,643 207,051 - 14,373 7,581 4,557 12,130 - -1,987 1974 163,448 197,483 - 14,435 8,728 4,672 13,400 7,553 -3,431 1975 165,724 177,771 - 7,195 9,542 4,599 14,141 1,019 -1,924 1976 161,381 165,286 27,500 2,205 14,117 5,355 19,472 386 2,282 1977 151,751 180,565 4,400 4,336 12,403 4,999 17,402 226 -119 1978 143,565 172,217 * * * * * * THE FOLLOWING FIGURES ARE PROJECTED * * * * * * 1978 143,565 172,217 - 3,G10 12,979 4,801 17,780 - I 1979 134,205 159,239 - 4,671 12,587 4,436 17,023 - -2 1980 126,287 146,650 - 5,414 12,496 4,103 16,599 - 1 1981 119,206 134,155 - 5,499 12,2.11 3,783 16,024 - -2 1982 112,462 121,912 - 4,023 11,309 3,441 14,750 - 1 1983 105,177 110,604 - 2,571 10,669 3,118 13,787 - 2 1984 97,081 99,937 - 1,820 11,308 2,796 14,104 - -2 1985 87,591 88,627 - 819 11,129 2,452 13,581 - - 1986 77,281 77,498 - 217 10,570 2,096 12,666 - -1 1987 66,927 66,927 - - 9,120 1,774 10,894 - -1 * THIS COLUMN SHOWS THE AMOUNT OF ARITHMETIC IMBALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSED FROM ONE YEAR TO THE NEXT. THE MOST COMMON CAUSES OF IMBALANCES ARE CHANGES IN EXCHANGE RATES AND TRANSFER Of DEBTS FROM ONE CATEGORY TO ANOTHER IN THE TABLE. EXTERNAL DEBT DIVISION ECONOMIC ANALYSIS AND PROJECTIONS DEPARTMENT SEPTEMBER 20, 1978 - 372 - V. PUBLIC FINANCE Table 5.0: CHILE - PUBLIC SECTOR FINANCE, 1960-1970 (Thousands of pesos) 1960 1961 1962 l963 1964 1965 1966 1967 1968 Adj. 1969 - 197 ! A. Current Revenues 1247.0 1453.9 1779.2 2558.8 3755.7 5868.0 8691.1 11799.3 16575.2 24526.4 34819.8 Central government 707.7 796.7 971.6 1353.8 1962.2 3209.1 4897.9 6312.2 8757.6 3068.6 19302.3 Other public sector a/ 539.3 657.2 807.6 1205.0 1793.5 2658.9 3793.2 5487.1 7817.6 11457.8 15517.5 B. Current Expenditures 1064.7 1239.5 1503.4 2060.8 3000.5 4772.0 6800.7 9230.7 12645.4 18350.2 28658.0 Central government b/ 418.7 425.7 556.7 730.0 1079.7 1650.3 2211.4 2955.9 3954.7 5619.8 9618.2 Other public sector c/ 646.0 813.8 946.7 1330.8 1920.8 3121.7 4589.3 6274.8 8690.7 12730.4 19039.8 C. Current Balance (A-B) 182.3 214.4 275.8 498.0 755.2 1096.0 1890.4 2568.6 3929.8 6176.2 6161.8 Central government 289.0 371.0 414.9 623.8 882.5 1558.8 2686.5 3356.3 4802.9 7448.8 9684.1 Other public sector -106.7 -156.6 -139 .1 -125.8 -127.3 -462.8 -796.1 -787.7 -873.1 -1272.6 -3522.3 D. Capital Expenditures d/ 299.9 393.9 558.4 790.9 1189.7 1897.2 2692.7 3592.9 5357.0 6361.1 9808.2 15625.0 Central government b/ 105.7 100.4 142.5 211.9 323.2 600.4 820.2 872.1 1164.4 1164.4 1684.7 2605.7 Other public sector c/ 194.2 293.4 415.9 579.0 866.5 1872.5 2720.8 2720.8 4192.6 5196.7 8123.5 13019.3 E. Capital Revenues 51.5 102.9 72.4 123.1 132.2 229.0 271.9 544.3 906.7 1677.1 2634.7 Central government - 12.0 6.5 8.0 - - - - 0.4 53.5 163.0 Other public sector 51.5 90.9 65.9 115.1 132.3 229.0 271.9 544.3 906.3 1623.6 2471.7 F. Overall Balance (C-D+E) -66.1 -76.6 -210.2 -169.8 -302.2 -572.2 -530.4 -480.0 -520.5 -1524.6 -1954.9 -6828.5 Central government 183.3 282.6 278.9 419.9 559.3 958.4 1866.3 2484.2 3638.9 3638.9 5817.6 7241. Other public sector -249.4 -359.1 -489.1 -589.7 -861.5 -1530.6 -2396.7 -2964.2 -4159.4 -5163.5 -7772.5 -14069.9 a/ Excludes transfers from central government. h/ Excludes transfers to other public sector institutions. c/ Includes transfers from central government. d/ Excludes amortization payments. e/ Estimate. Sources: IBRD, Report No. WH-2026, September 10, 1970; Report No. 551-CH of October 18, 1974. Table 5.0a: PUBLIC SECTOR FINANCE, 1960-1970 (Thousands of pesos of December 1969) 1968 e 1960 1961 1962 1963 1964 1965 1966 1967 1968 Ad1. 1969 - 1970 A. Current Revenues 10834 11772 12654 12421 12383 15015 18103 20803 23076 26136 27990 Central government 6149 6451 6910 6572 6470 8212 10202 11129 12192 13926 15516 Other public sector a/ 4685 5321 5744 5850 5913 6804 7901 9674 10883 12210 12474 B. Current Expenditures 9250 10036 10693 10004 9893 12211 14165 16274 17605 19555 23037 Central government b/ 3638 3447 3959 3544 3560 4223 4606 5211 5506 5989 7732 Other public sector c/ 5613 6589 6733 6460 6333 7988 9559 11063 12099 13566 15305 C. Current Balance (A-B) 1584 1736 1962 2417 2490 2805 3938 4529 5471 6582 4953 Central government 2511 3004 2951 3028 2910 3989 5596 5917 6686 7938 7785 Other public sector -927 -1268 -989 -611 -420 -1184 -1658 -1389 -1216 -1356 -2831 D. Capital Expenditures d/ 2606 3189 3972 3839 3923 4855 5609 6334 7458 8856 10452 12560 Central government b/ 918 813 1014 1029 1066 1536 1708 1538 1621 1621 1795 2095 Other public sector c/ 1687 2376 2958 2811 2857 3318 3900 4797 5837 7235 8657 10466 E. Capital Revenues 447 833 515 598 436 586 566 960 1262 1787 2118 Central government - 97 46 39 - - - - 1 57 131 Other public sector 447 736 469 559 436 586 566 960 1262 1730 1987 F. Overall Balance (C-D+E) -574 -620 -1495 -824 -996 -1464 -1105 -846 -725 -2123 -2083 -5489 Central government 1593 2288 1984 2038 1844 2452 3887 4380 5066 5066 6199 5821 Other public sector -2167 2908 -3479 -2863 -2840 -3917 -4992 -5226 -5791 -7189 -8283 -11310 a/ Excludes transfers from central government. b/ Exciudes transfers to other public sector institutions c/ Tncludes transfers from central government. d/ Excludes amortization payments. Sources: IBRD, Report No. WH-202b, September 10, 1970; Report No. 551-CH of October 18, 1974 Table 5 L: CHI5E - uS'dLlliRY OPELRATIGN5 LL 119E ChlITiAL GOVEuNIIuT, INCLUDING U.2. ANI) LCAL CU22RV9CY Ofr.RATIONS, 1960-1977 (Inon thu.uds of ourreon Leoon) 1960 1961 1962 1)63 1964 1965 1966 1967 1968 1969 1970 1971 i972 1973 197__ 74 155 976 ]977 2/ Current Hevenues 71)8 808 759 1 4 ,7 3 ,492 5 S 6,6431 9n5070 41,63 la 140 Z5,361 41 598 224 622 1 961 973 8 973 3354 30 202 211 63 521 400 Tax devenuco Tb E l 97 --t7 1,533 3,12' &:>, 6 6,t0 8 ,7E s 7 18tiW 22,720 6 ,6 18 729, 678 o5 79tt37 7 31 6l83 Non-Tax Reveosgeb 5>) .17 5.1 i' 119 .'4o 27b 2(1 4°9 726 1,OS6 1,761 2,92.' i6,655 93, 29 596,609 916 ,685 1,9563,000 Adj-eto-L - _ 4 66 6 :126 368 30S 1, 122 1,9tL 8960 2079 22,068 - - - - Current Bopenditures 673 71 5 903 1 817 2 ' 997 065 6 99, 10 565 17 706 27 392 52, 624 250,607 1, 718,001 6,939,899 23 852 036 74 902 100 Personnel Outlays VT VS 7 575 '07 2,0 220 ? 579 t < 19 O u,691 14 c5 2d,007 7 5177 711 ,210 ,216,1 5 17169 21927t200 Purchase of Go-ds and .erc.io- 71 63 82 134 1'7 283 375 4u7_ 478 7S 1,090 l, '4g 3,013 20,135 234,449 8'75,145 2,722,59S 7,738,500 Tr-aaf-ra to Pltlic Sector i66 198 272 341 6519 867 ' (05 1,238 1,83.' 2,42 3,970 7/,'6 l';G607 96, 26 607,944 1,736,592 4,572,841 17,673,400 Tra-sf-ra to Prionte Seotor 45 42 53 74 99 126 58 261 44) 646 907 i,81i 3,519 ll4g19 88,187 467,674 ,6215,47 5,6638,i0 Interest Paymeots 11 10 15 55 50 71 6S 175 19? 36'7 553 681 403 I,784 76,21 644,353 2,223,906 2,212,600 Adjustmen-s - - - _ 4 6 61; 116 3°0 68 6 ' 1,422 1,9]5 86o 2,075 22,068 - - -36,o Current Aconont luuplu- or Deficit (-_9 736 IO 52 6 19' 7 64 1 1,220 1, 578 2,17 1 07I,0 94.74 - 2031 -i 2 597 2,03,'17 6,350.275 9.619.3 00 Capitoalevenues .> --- 16 6 1 91 72 i6f Op 4Z7 i 51 8 5, 71 ------ C,pitnl Expenditures 222 702 45 674i n4 6'76 2,983 3,84 5 5 9 40' 1' 491 76,701 863 289 98886 66o 4. 158,2V 8,137,600 Direct Invceotment 99 100 17 211 330 '5770 925 7 1 072 1,76 2 1 , 9V ,t 2232 5tt 1,15I1, 12:022,767 6,790,90 F'inlanlcial Investment (inla. trao-fe-) 120 12'2 176 248 328 602 89' 859 1,446, 2,025 2,905 5,119 6,536 39,952 404,627 733,846 2,135,760 3,346,'701 Adjustments - - - 1 16 l6 31 76 92 76 3555 479 215 718 5,517 - Expenditoree fionced Dire-tly by Bunking iyt-en - - _ - - - - _ _ - 4-049 169,000 - - - - Oneroll 5murplu or Definit i-) -36 -127 -24_4 2'79 31 -56L -4 -205 -l70 080 -971 -10,219 -28,038 -266,169 -619,35l 1',4,775 2,191,748 481 70 Fi-naninA, Net 136 127 244 279 361 261 14l 205 190) -80 9'71 10 '19 28 o98 266 169 619 51 -144, 775 -2 191 748 -481 700 D..entio L-ons T 90 V 159 277 32 4 T 299 2,395 61216 42 135:186 950,74016 3, 651 216 4,64 Speoial Dire,t Financing by Monetary Synte- - - - - - - - - 4,249 169,000 External Le-ding, Net -20 28 78 117 4S 267 2l0 -177 -254 -(;35 -1, 7., -5,617 -954 -6,992 -235,508 -1,2042,720 -3,567,063 -5,443100 fareiga banhonge Opernoinrin - 1 6 15 2r - - 49 - 7 h-27 -6 25 7 -58,137 -92,2)9 -696,327- Others - 8 -2S 10 15 -52 -8 -1I. -9 -2p1 99 -51 -2,122 -31,142 -374,80 -979,982 1,579,754 M Nionin unmed that the off-etting rceipto and e- oeodohurnn o hc- by ths Yoin.try of Finance undor th- e (1tefery culled "Dererdon tdhn c tou-yeeoto orcpdre upcedt-rio"'--a anjoatneot itee which mainly refle-st iteorst triffe foregone by public sect or imports--for the pleriod 196S-19773 In thle moo. ourrenoy portion of ehc un,,truil gevrernmeno budges represented 90 Iperueao currentL expenditures pnod 20 percent ccyitcl nunicaye. In 19777 figures reprsents ether e-peAdit-reo -nd rereipts ant other-isecluasifiod. 5/ Inlcldes asotintic Il discrepenoy. 5/ orneissinnal. Seulree: Ministry of ulaiurce, lIMF, mi.ione eatinateo la,bia 5Th; 0111K - CEIIT!IaL ICVER11TNT CPER2xT1Ol1 RELATIVE' TO TOTAL EXPENDITUBIO, 1961-1971 (In.ecet 170 ll 92 16 11 55i)LO7 99 49 17 91 91 17 9w 17 1996 172 Carrer.o xaarxxes 0 66~~~~~~~~~~~~~~~~~~~.4 . 82.9 9.19 91.1 0.9) 9£3 9.2 191.6)93.6 71.9 62.v 69.6 76.0 101.6 10)7.9 £00.8 Tax Re-a-axea 817 7 'FT FT 7g r-7 7 777T O7FT ha T75 71 7 FT7. 770 9. 0. lan-lax aevea4xos 9,4. . ~ 44 -.o 4,, ~ o . .1 9.9 . 2.91. Axjxatmetta ~~~~~~~~~~~~~~~~~~~~,' 4 29~~~~~~~~~. 2 .l99 38,. 6.7 -- Cx-eat bx5e2l6tare4 4,x 9.6 266.6 .6 ;.6 85.2 17.1 bersaaarl Oxtlxyx 59~~~~~~~~~~~~~~7-T T9'F= 77 T5'F3-l F-T-I 7- 7,O7 VIT T12.7 FT9 zy. TTT- 8.337 6x~h f' Goada -ar beraxc 8a x . .) 6 6.~ ~o "8 4, . 6.2 9.1 .9 72 12.7 Trxaesto ab p" lexixt- 1~7?. 26 1. ' 1 17- 1). 3 /~ 17 4 21. 2 .6 29.9 as.6 19.", 56..o Txrfaato pr-vat Se..... 464. . . .L4 .c . - .5 3. 3. 12.) 9.9 Taera Payrmtenta. 1. 5 1. L7 216 '.5 15~ oh o.h 9.0 7.5 3. o.5 ..xjasteer.r~~~~~~~~~~~~~~~~~~- ).3 5. . a a 9. 2 1.3 - -6 Curret ..--xt luxpl-a axDfic-t 1024911 11 ~ 2 21 ~ 2. ,.32 b 16 951 1i67 zZi2 9 5 230 2.33.7 Capital derextex a! 16 1.7 - -~~~~~~~~~~~~~~~~ I O- 1 I -L - Cxpital Eape-ditrrra 21. 6 2e 9 9 2. 2 7.1 I ____ ;&. 2'.' 23. 4. 21.4 14.9 12.3 Di-at lxr-xt-et 10 0 OT 12 1 1, 19 9 1 10. Pb 8 97 9.5 17.93. 72 'O FxxaaIx Ia-etr...nte (irl. tp... f-r) 1i.-3 13.1 I4.( 1¼'.' 13. L7 3c 1.. 1 1 4.) 121.8 3. 9.9 12.2 11. 8.3, 7.6 5.9 Al1nat-ata eq- - . 0.5 o.6 0.3 1.5 1.3 0.0 2.5 2.1 0.6C o.h 1.7 ---- apeateaFia-acd D-rrtly by BNkglaTe - - - - - . - -- - - 6.i 91.6 ---- Overal Sxrplx-o Deficit 1--.2 -19.6 -29.3 -lb6.2 -1S.5 -13. -v.9S -3.91 -2.2 .1) -.95 -29.6 -12.64 -6l1. -24. 1.L6 7.6- Ml9 xrc:Table.1 Table 5.2: CHILE - SUMMARY OPERATIONI 01 TRE CENTRAL GOVEIRNMENT, 1960-1977 (Is thousands of pesos at tsstant December 1969 prices) b/ 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977k/ Carcass decenee 6 148 6,543 6 822 6 907 6 962 8,935 10o ,8 11 712 12 755 15,596 16 994 16,975 15,660 9,943 19,279 18,563 20,026 21,975 Too Acesses 3,3 6,139 6 208 7 63W3 6:206 6,371 7,9603Wt 11 ,66 13,307 t4,606 15,207 13,779 6,229 16,996 17,739 19,666 21,947 Non-TCo Revenes 342 385 412 364 360 624 569 460 370 772 849 1,192 1,100 737 2,283 623 360 341 Adj-st .na. - - 28 320 211 322 635 649 422 1,515 1,539 576 780 977 - - - - C.rrerit Elseoditureo i6 5,/4 6419 6034 3963 7,264 6296 6929 9 429 1128 13735 18 333 i 8i 11, 4o4 1 74 579 15,816 36 993 persanne Outls7o 2,96 57386 2787 7tB 2,969 9,3135 5 31, 4,69 5249 9, 6 9,63 1034 023 6, +R663 7,0 728 P-rchase of Cssds and Services 620 668 584 649 380 724 781 798 663 759 876 1,031 1,134 900 2,304 1,810 1,805 2,677 Transfers tI Public Sector 1,442 1,607 1,936 1,654 1,712 2,219 2,161 2,182 2,551 2,656 3,159 5,211 5,875 4,273 5,974 3,593 3,032 6,114 Tr.s.fers tI Private -ectsr 374 337 337 357 327 322 381 460 619 687 729 1,212 1,325 652 867 967 2,397 1,950 Interest Psympctc 97 77 107 170 i64 182 132 309 275 392 4454 456 152 79 749 1,333 1,476 765 Adjustments - - - 28 320 211 322 635 649 422 1,515 1,539 576 780 977 - - - 125 CorrectL Accoont Sarc-ls or Deficit C-) 631 769 403 873 980 1,650 2,541 2,783 3,226 4,336 3,259 -1,359 -4,151 -1,150 2,397 4,207 4,211 2,982 Copital R--enues a _ ._=. j '78 53 79 158 _162 o106 378 385 _44 _ 1 2 - - __ _ Capital Expenditures 1,817 1,79 292/ 2 2304 2,222 3,164 ,625 3,307 3,597 94738 4,423 3 6 3073 3 393 6,483 3,907 2,337 2,61 Direct Investmeet 772 811 84 1,024 1,06 1,3 60 1,6 30 1,480 1,62 1,706 2,05 62 ,19 1 383 4:307 72,3d 1,341 1677 Fi-ani Ins snt-ent (inal. transfers) 1,045 988 1,250 1,202 1,081 1,540 1,863 1,515 2,012 2,158 2,334 3,426 2,461 1,769 3,976 1,518 1,416 1,158 Adjosests-t - - 7 78 53 79 158 162 106 378 385 144 195 244 - - - - Expenditures Fina.ned Directly by Barxing Syates - - 1,524 7,48l - Overall S-rplas cr Deficit (-) -1,1i 1,030 -1,734 1,353 -119 -14 -925 -362 -265 618 -781 -6,840 -10,333 -11,783 -6,083 307 1,453 167 Pisasciog, let 1,163 1 031 174 1,333 1,190 1,433 923 362 264 -618 780 6,83 10,333178 6 6,085 -20 -1,433 -167 Dopeitic Loans 1,355 733 1,307 673 913 53 32 612 631 316 1,907 7 10,097 7 4 9,339 ,?T 2 67 Special Direct Pinansisg by tausinry system - - - - - - - - - - - - 1,524 7,481 Extersal Lesdinfg, Net -173 228 553 570 140 683 438 -312 -354 -677 -1,185 -1,083 -276 -305 -2,314 -2,371 -2,365 -1,683 Psehigo Ecciasge Opsration 3 12 60 64 87 1 - 87 - 7 -21 -6 9 - -571 -170 -l,62 - Others - 65 -185 44 49 -82 -17 -25 -13 -266 79 -34 -799 -1,379 -368 -1,158 -1,047 - a/ bee lsotscit s/ic Tsble 5.1. 7/ DIflated by sfficial CPI 1960-1972, by thi acage of the official and IBRID adusted CPIs in 1973 sod by the IBRD adjusted CPI thereafter. Tbroisical. table 5.Js: H11i1 - ArENIAI. REAL GROWTH 0211 MAJOR CE ;TRAL GOVERTMMRT 02PERATIOI60, 1961-1977 (In percent) 19n1 1962 PrO 1364 19165 196s 196, 1968 19G9 I970 1971 1972 1979 1974 1995 1976 1977 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 6 . 4 4 . 1 0 . 0 O . 8 2 . 1 2 7 2 1 . 9 - 0 . 1 - 7 .o 9 1 . 9 . 9 9 . 7 Jorrenl lccncnAec r 20.. ~~~~~~~~~~~~~~~-T10.1 10. 1911 T -:?. 25 25 on-To- oenec 1_.3 , .0 -c- .;' -1.1 (1.3 -4.9 -19.1 23.' 35.7 9 4 no.3 -7.7 -33.0 200.6 -6i.9 -34.. 0.2 tirmnt Jnenn con C6 4.7 11.p -b.0 -0.9 oi.6 19.9 7.6 7.6 19.'. 2-.0 963.5 8.1 -4.0 00.0 -15.0 10.2 2 ). ] i ersonnaci utooys -TS 7 i3.t 17 .7 T7 7Y 7 331 777 -7 3 77 P37 5 -9 i7 7 7 ioo-oln.nc of icOns ann Ocinnncas .u- -12.5 11.0 -10.6 24.8 7.0 2.2 -16.6 14.2 11.4 19.7 10.1 -2Z0.7 153.9 -21.4 -0.3 49.7 Tcopfers to obli icctor I11, 90.4 -I4.6 37- 29.6 -2.6 1.) 96.9 4.1 39.0 ('.9 12.7 -27.3 39.3 -y9.9 -l'.t 101.7 *rnsferp .2 Proocce hepccr - ..o fl.B -p.- -6.4 -] -- 13.2 22).0 34. 11.2z n.1 66.2 9.3 -,o.6 32.26 11.7 ,147.8 -18.7,' paterrot Royseons -30.9 .&.5 76.7 -3.0 10.& -27.3 pc0.0 -11.1 .4 13.6 .4 -66.7 -4d.o 84c.f 79.0 137, -48.2 -pitel Lc-endt-reo -1..1 12.2 7.4 -7.5 0.4 3s.7 -6.9 3.3 13.9 P49 27.1 -9. -,3.1 1o -3.8 3.9 -03.- 9.1 ritent IncensteoL 5.0 ' .5 77 3 7; 7.2 1.2I .2 30. '73 -92.9 2361 -o7_ - 4.77 27.6 la,-.ceel -n-noont (-nci. cr4n3fenl) _- o.4 3 -10.1 12.7 20.3 -16.3 32.8 7. 3., 46.9 -_28.2 -28.1 124.8 -61.9 -6.7 -13.2 ExpePdnc,t-n Fisnreo- DLertlly by B-kn-gnycssn - _ _ _ _ _ _ - _ _ - 0.0 391.0 - _ - _ S6ou-c ble T .b . - H O 0<0<4>4>0<0<00OH4>000<000000..oH'H H oH 0 H4>ZH4>OH0OHC00.CHH 00 H OHHHHHHHHHHHHHHH00OO0 0000. 00 HHHHHHHHHHHHOHHHH00HO OH- H>' H...0.0,.. HHHHHHHH,HHHHHHHHHOHH o - - HHHHHHHHHHHHHHOOHHOOO 4> HHHHHH HHHHHH HHHOOHHH H HHHHHHHHHOIHHHHHO.0.00H 0< <0 0<<00000<0<00<0<0<0<0H4>HH> 4> CoHn'-' H H HHHHHHHHHHHHHHHHO0O H H HHHHHHHHHHHHOHHH-. 00 -. H0000HH0000HOOO 04>004>00000 H 00 H H0,o OHO00000OHHOHOHOO o,o H H -, -. H OH4>HZOOOOOHOHOOH4> o.0H0HOH0H0oH .0 H H4>aZHO0rH-0H 4>"oO,0'ooo-o HO HH00HH00OHH4>oOHHHHoIHH OH 00H00H004>HH4>00HHHOHHH 4>HHHHH00OHHHH00-.HHHH HHHHOHH00HHHHHHOOOOHHHH HHHHHHoHo-HH0000000H00 H HHHo-..-.H H.0o.HrH 00HHHo0 0 HHOHHHHHo..HoooOoHHoo.o.oH 'H HOO.HHHHOH.HOo.00HHo...HH oo.HHHOH Ho HOHOOIOI HHHO.-00 H H 0H H HOHH H H H00H.00HHHo H HOHO 00 - OH 0H0H0Oo- 0000 HHHH H H H. OH H HOOHHO H HOHH H Ho 00 H HOOHO H H- 0< H 4>100 H H 00 4>001 H H H H20004> OH H H 0<0004> H -. OOH H 00 H 000 HH H 00 H H - 00 H 4>000. H H HoN H H H HoN H o 0000 H 0000 H 00> 000 H H 04 000 H4>O..o4> 4>4> H I o-H 4>onO.Hoo,ooaonHHo H I H * 4>0 4>.0OHH.OOHO4>0H0004>4>.H OHOHOH r HO .0 OH OHH4>UO4>.40 000 H H HOC 4>4>4>0004>4> OHHO4>oo.4>H4>4> 0 0 4>0 4>4>H04>4>HOH..0H0004>4> 4>4>4>4>0.0 4>4>04>4>00.00 4>4>4>HHO 4>HOHO.H H aonon4>o-4>4>Ho.0 OH4>00OH4>HO400H HO 4> H Ho-4> 4>000 4> 4>4>0'4>OHHOHO H'4>OH..H 0 '00 H .0000 H I 0 00 HO..OH4>4>4>0HUOHOH4>4>0H4>Hon .H4>OHHHH 4>oo.ooo H H 0.04>4>4>4> HH4>4>4>000OH4>H04>OH 0 I OH' 00.04> HH0000-4>HH4>4>4> OH4>HH4>HO Ho- 4> 4>HOHH4>H4>0004>OoO4>4>H4>.- 4>H4>0HHH OH H'4>OH4>H4>oHH4>-00H H OH o H 0 000ononOHon4>HHH4>H4>4>HHH Hon H a o H 4>4>4> 4>4>4> K to 0 0 OH' OH-H' 4>4>4>0004> HOOHOHHO 4> 4>4>4> o..HHO 0 4> 4>4> 000HO4> 4>4>0.. HO HO 4>H'OonoOH.0on4>.HO.0onOH4>4> OH 0 0 04>0 4>4>4>OH4>4>HOH4>HOHO.HHH OH F.0 HO - HHO4>.Ho. H OH 0H OH .00,04>4> OH OH OH H 4> 0 0 000000 0000 4> 4> HO4>H'o4>4>4>4>OHHHO4>4>4>4>H4> H I 0 4> 4>H4> OHHO4>HO004>H4>4>H4> H 00 4>o.44>on4>4>00.O04>4> 4>4>4>4>4>4>0.0 oOH H 1000 4>4>oonHHO 4>4>HO4>OH,-4>0004>OHOH4> -- 4>4> 4>4>4>.o4> OHOHHHOoH4>HH 4>  0.00 4>4> on 4>4>Hono-Ho.0 0004>4>4>4>0tH OH - H on 4>4>OH4>4>HO4>4> on4>o4>Oon04>o 4> 0 HO 4> HHO4>HO4>onHO-.HO 001 4> 0 0 0 0000 4>4> OHHO..04>o-.04> 4>04>4>4>4> OHOHO Hon 4> 0.0 0-0H4>o4>OH4>HOHOon4>4> OHH4>HOOO H-. . . . . 00-0.0 H Ho 0.0 4> H 4>04>4> HH4>H4>00HHOH4>4>4>4> 14> H h H H 4> HOoOon 4>HOHHo.o4>HOOHooo00004> 04> 004> H H Hon 0004>4>HO4> 4>H4>HHH on0OH4>404>4> H H 0 4> 04>4> -4>4> OH 4> 4> .04>4> HOHO CHH4> 4> 00 4> 0 4> Oo-0 ODHHOHOH H4>4>O0H4>O0.. HOH H 0< 00 O.00 4> H o H H - 4> 4> 4>H4>4>00HO4>4>H HO HO 4>HOHOHH 4>0Ho -  0 4> ..04> 4> O4>H4>4>4>O4>4>4>4>4>HO HO4> H 4> HHO4>4>00H4>4>4>Hon4>.- H - 00 0 onOOH4>4>4>4>H4>04>O4>4>H4> H H 4>HOOon4>4>OHH H4>OH4>4>4>O4>HOO H I 4> H4>H4>4> 4>4>4>4>onHOo.04>000H4>-. 1.0 4>4>4>4> 4>4>4>4>4>H4>OH4>4>H 4> H0000HOHOH000o0 10 0000000 00000000000 oH Ion 0 0 0 4>4>4> 4>4>4>4> 4>4>HOon 0004> 000 [4> 0 0 4>4>4>4>H4>4>4>4>HH4>000HO4>4>o4>004> HH H 4>04>4> OHHo.OH 4>4>4>OHOH4>4>H O O4>4>4>4>4>onOOOHOH4>HO4>OH.HOOHo   4> 0 on4>on4>4>4>4>00 OH4>HOH4>4>H Hon 0 OHHOH4>OH4>0-.4>04>4>H HHOUOH4>HO 4>...004> H .0-H 000004004>4> 0004>4>OHHon4>4>4>HOH 4> oo H OH o-oo- con HO-H' H joawotototo%I.0owo00toon 004> 0. . . . 4> 4>OH4>OHHo4>004>on4>4>HOH4> 4>4>4>4>4> H- 4> 0 0 04>0 OH H4>OH4>O4>4>ooo4> 00 Hon 4> 4> onO4>4>4>4>Oo0oonon,04>000 HHO 000 4>4>4>4>00000 on4>4>4>H4> H'4>HO4>4>0004>H 00 4> 4> 4>4>04>4>4>4>4>4>4>4>04> HHO H 0 HO 4>4> 4>4> 4> H 0 0 0 4>0 HonHO4>H4>4>HO4>0-0-H0OHonOonO H H'4>o-H' 4>4> 4>04> 4> 4> OH4>HOH4>HO4>H HOHO4>4>OH4>HOO4>4> H - HO4>4>4> OH4>4>H4>4>4>H4>4> 0.00 OH 4>4>4>4>HH'H4>4>'-4>HO4>H 2 OH 0 0 0 HO0 OH4>'H'4>on 4>HHO4>H 4>oH4>OonH Hon 00 4> oO4>HOH4>4>oOH'OHOH,oOooO4>OH4>4>HO H 000 4> - 4>O-4>0H4>onH- OH4>004>4>4>HHHO H 4>4> 7 0 0 4>4> 4>4>4>4>4>4>4>4> 4>4> - 00 - 380 - Page 1 of 2 Table 5.4: ChILE - CENTRAL GOVERNMENT EXPENDITURES BY FUNCTION, 1965-1974 (Thousaoda of correct pe6sos) 1965 1966 1967 1966 1969 1970 Total Total Total Total Currect Capital Total Curre- t Capital Trtil Cunret Capital Goe..nment 195.9 327.4 466.9 695.0 635.3 59.7 1,294.8 1,215.3 79-5 1 882.3 1,740.4 141.9 7olitonal Admini6tratlon 122.2 116.6 7 187 163.6 15.1 28t4. 265.5 19.1 Financial AdT.inicattio- 382.9 351.1 31.8 903.7 851.9 51.8 1,162.4 1,128.5 33.9 Commuoity Adataistsation 103.9 87.2 16.7 96.8 89.1 7.7 274.8 193.1 81.7 Legal Ad o..iatratioa - - - - - - - - - External Relationa 86.0 80.2 5.8 115.6 1107. 4.9 160.5 153.3 7.2 Protectio., Peronsal Property 222.9 310.1 405.4 531.7 524.5 7.2 739.1 729.4 9.7 1 2LO' 1 224 3 16.5 Justice 132.6 12.7 72 2 3.8 126.7 73.3 Police 366.6 363.7 2.9 519.5 t15.8 3.7 899.6 891.0 8.6 Other 32.5 32.4 0.1 41.3 40.9 0.4 67.4 66.8 o.6 Defense 357.6 541.5 681.1 917.0 799.6 117.4 1,318.8 1,087.1 231.7 2,404.7 1,998.8 405.9 k"ny 31.3 274.9 79h 427.3 370.1 57.2 889.9 693.3 196.6 Navy 392.1 334.0 38-1 574.3 48o.6 93.7 942.3 862.5 79.8 Aie Force 202.4 162.5 39.9 303.4 222.6 80.8 950.9 421.4 129.5 Other 8.2 8.2 - 13.8 13.8 - 21.6 21.6 - Pcbl-r tecith, etc. 362.5 494.4 608.1 767.1 715.3 51.8 1,069.4 996.2 73.2 1,693.4 1,398. 97.2 Public Health 738.2 68 7.0 51.2 1,021.9 70.1 1,517.0 37 Sociul A-niet--oe, at. 28.9 28.3 0.6 47.5 44.4 3.1 82.0 79.2 2.8 housing ad Srbaiostin 372.5 468.1 512.0 737.8 111.9 3 886.8 86-9 799.9 1,154.0 156.5 997.5 HMacslug 361. -38.-9 321.9 57F7 52.9 *91.5 5TM3 102.5 ~ 3 Urbanization 777.0 72.6 304.4 342.4 34.o 308.4 563.7 54.0 511.7 Scial Security 473.6 698.8 723.6 1,05D.8 1,050.8 1,145.7 1,145.7 - 2*459.6 2,459.6 - Ecucation 592.3 881.2 1,174.2 1,654.3 1,376.9 277.4 2 4i8 8 2,161.7 257.1 3 841.8 552.3 289.5 Prisory 555.7 535.2 0.5 1t033 945.6 1o.2 1,559.5 70.7 Secoadary 142.7 142.6 0.1 307.3 274.2 33.1 463.o 428.7 34.3 Pr-fe-ai-las & Teulnaunl 152.3 10-.6 49.7 292.4 214.6 77.8 324.6 324.4 0.2 Uai-eruity 542.1 511.0 31.1 616.1 583.2 32.9 1,118.3 1,263.4 54.9 Con. of Fauce. Pacilitles 41.1 10.0 31.1 36.6 12.2 24.4 24.1 9.6 14.5 F;iscellaneous 218.7 53.8 164.9 130.3 129.6 0.7 278.6 163.7 114.9 School Adaiai.trat... 1.7 1.7 - 2.3 2.3 - 2.4 2.9 - Cultocal D-eelop-ent 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ Agriculture sad FLshing 291.1 337.9 4L6.6 635.8 208.5 427.3 786.- 261.4 929.1 1 102.6 38c.0 718.6 Ir-igat.o. 92.7 20.0 72.7 103.6 5 1273.0 9'~tT 161.5 Tec .1al Asiaitance 310.5 112.9 197.6 270.5 166.2 104.3 417.7 265.3 142.4 Colanlsati.a 9.7 9.4 0.3 12.7 12.5 0.2 25.4 25.3 0.1 FTahing 3..a 3.2 0.4 3.9 4_ -1. 4.3 - ikgnarian Reface 193.4 38.4 155.0 316.5 *5.8 270.7 451.0 56.0 395.0 General Adcicistatic., 26.i 24.8 1.3 32.9 32.4 0.5 28.2 27.5 0.7 COR2 Agr-c1lt-ce - - - 46.4 - 46.4 18.9 - 18.9 Other T-onsp-rt & -assnaicatio- 665.1 956.7 1,024.9 1,302.8 643.2 659.6 2 114 2 924.1 1 190.1 3,268.6 1 468 9 1,799.7 Ate 77.8 25.2 52 .4 37.3 84.1 131.3 8661 6S M-arit-' 133.3 85.3 46.0 190.0 112.6 79.4 282.5 126.6 155.9 UrSbo 43.8 42.1 3.7 49.5 46.2 3.3 97.5 86.6 10.9 Rand 5o4.8 78.3 426.5 651.4 - 651.4 1,C96.6 - 1,096.6 hail 337.4 246.7 90.7 445.1 302.1 143.1 630.7 479.6 131.1 Saul & Islet caunicatian 197.2 166.4 30.8 271.7 213.7 58.0 638.9 402.3 236.6 M_scellaneous 8.5 1.2 7.3 - - - - - - Genera. A*ninzttctihn - - - 385.1 214.2 170.9 638.9 402.3 236.6 Mitg 54.9 66.2 75.2 112.1 47.8 64.3 179.3 67.8 111.5 310.6 82.2 228.4 Enacts R Puela 78.7 115.9 119,2 148.9 6.2 142.7 237.0 10.5 226.5 284.8 14.4 270.4 :dndatry ard Caons-ce 60.0 83.8 109.4 234.0 69.7 164.3 248.1 88.9 159.2 5a'.7 137.6 424.1 Other 322.6 L13.3 541.9 9C5.1 341.6 583.3 1,599.2 3 .1 1,232.1 1,9 1.5 544.2 1,367.5 Public DSbt 302.7 360.0 196.6 748. 197.6 551.0 1,277.2 367.1 910.1 1,9 3.2 543.9 1, 39.9 Miscellaneoun 19.9 33.3 45.3 156.3 143.8 12.5 322.0 - 322.0 -71.7 0-7 -72.4 Ootal 3,991.5 5,693.3 6,884.3 9,692.4 6,530.9 3,161.5 i4,037.7 9,112.1 4,895.6 22,11i.4 15,360.2 6,757.2 1' Ioclded an other f-ntinar cf ed-catios. 2/ -ncludes Cnh bila-acec. it'vsce I'intry of Firance 381 - Page 2 of 2 Table 5.4: CHILF - CENTRAL GOVERNMENT EXPENDITURES BY FUNCTION, 1963-1974 (Thousands of current pesos) 1931 1972 1973 1974 Total Current Capitol Total CTrrent Capitol Total Curreot Capital Total Curroat Capital Government 2,719 9 2,6oo.4 119.5 6,232.8 5,973.7 259.1 21 662 21,194 468 435 387 210 913 204 474 Politicol Adrinietration 414.4 406.4 8T 764.2 715.9 6t.3 8t72 2,48 22o787 17,050 0 ,6a8 Financial Adiminitration 1,564.9 1,531.5 33.4 3,680.2 3,577.8 102.4 11,499 11,537 -58 321,941 139,094 182,847 Co-asnity Adoinistr,tion 442.3 375.1 67.2 1,338.2 1,256.8 81.4 4,874 4,757 117 43,493 28,625 14,868 Legol Administration - - - - - - 1,027 1,026 1 9,278 9,276 2 External Reltio.sa 298.3 287.4 10.9 430.2 423.2 7.0 1,534 1,426 128 17,997 i6,868 1,129 Pro-ection, Personal & Property 1 865.3 1800 4 60.9 3, 735.2 3,614.7 120.3 13,173 14,456 717 138,263 125,767 12,498 Juoti-c 42. 9 23 .2 75 .9 79.3 2,103 1,762 341 19,725 17,613 2,090 Police 1,282.4 1,270.7 11.7 2,666.6 2,632.2 36.4 12.531 12,167 364 115,104 124,717 10,387 Other 110.9 108.6 2.3 234.4 229.6 4.8 539 527 12 3,456 3,435 21 Defense 2,931.2 2,873.7 77.5 6,314.2 5,752.2 382.0 41,434 37,742 3,692 431,646 367 120 64,526 Aray 1,030.6 999.9 30.7 2,415.0 2,143.2 271.6 12,944 11,569 1,375 171,703 137, 8 33,813 Navy 1,301.1 1,269.5 31.6 2,647.2 2,496.9 150.3 15,827 14,871 956 167,826 154,519 13,307 Air Forse 568.8 534.1 lh.7 1,237.8 1,100.7 137.1 6,648 5,427 1,221 87,042 69,783 17,259 Other 50.7 50.2 0.5 14.2 11.4 2.8 6,015 5,875 14o 5,075 4,930 145 Poblic Health, etc. 2 858.o 2,700.9 157.1 6.361.3 6 010.3 351.2 31,007 28,106 2 901 193,423 170 666 22 757 Public Health 2,592.3 155.2 6,101:2 5 , 7 5 4.3 30,302 27,414 28 1882271 1,32, Soc-l1 Asaistance, etc. 112.5 1o8.6 1.9 260.1 251.4 8.7 705 692 13 5,152 3,103 49 Eousing and Urbanization 3 025.0 484.2 2,540.8 5 ,573.8 943.0 4,632.8 30 386 3 783 26 603 236 237 22 48o 213 777 Housing 1,350 * 283.7 1,220.7 3,07o.5 393.3 2,479.2 17,0 2 14,7 163,12 12,3 5 507 Urb-aisntiua 1,520.6 200.5 1,320.1 2,501.3 347.7 2,153.6 13,338 1,439 11,899 73,131 10,135 62,996 Social Security 5,244.8 5,244.7 0.1 9,351.1 9,350.9 0.2 28,127 28,12 1 211,794 211,793 1 Education 6,240 1 5 9168 328.3 12,816.4 11 916 3 900.1 46 891 41 4±03 5,48c 392 575 357 400 35 ,11 Primary 2, T7 . 2,79 3 .1 5, 493:0 5.8.2 44.8 17, 3 17, 12 u6500 1156 Secondary 631.0 592.4 38.6 1,070.9 1,069.6 1.3 3,584 3,584 10)5 22,470 22,449 21 Professional and Technical 445.8 445.3 0.3 905.7 866.7 39.0 3,171 2,966 205 26,900 18,184 8,716 University 1,917.0 1,857.6 59.4 4,491.0 3,964.9 5a6.1 18,848 15,313 3,535 118,181 110,280 7,901 Cone. of Educa. FPcilities 54.8 16.7 38.1 181.9 19.4 162.5 1,693 125 1,368 13,006 2,847 10,159 Miscellaneous 288.9 181.4 107.5 657.8 531.5 126.3 1,749 1,689 60 95,217 87,o67 8,150 School Adininiration 3.2 5.1 0.1 11.6 14.3 0.1 45 414 1 301 289 12 Cultural Development 24.0 24.0 - 1.5 1.3 - 13 13 - - - - Agrioulture end Fiohing 2,936.0 1,131.0 1,825.0 4, 448 8 2,451.0 1,997.8 18,660 11,834 6 826 io8,799 at,960 32,839 Irrigation T3-=2 71.3 309.9 122.9 715.2 3,629 323 3,106 33,371 6 32,391 Technical Assista.ce 871.3 749.7 121.6 1,647.0 1,369.9 77.1 9,366 8,798 568 52,674 40,958 11,716 Ooloanirtioa 38.9 36.8 2.1 79.3 64.7 11.6 228 209 19 1,486 1,413 73 Fishing 3.0 5.7 - 6.7 6.7 - 13 13 - 1,392 - 1,392 Agrarian Refo.. 1,074.8 142.7 932.1 1,593.7 495.7 1,098.0 4,864 1,755 3,109 15,609 8,544 7,083 G-erner Adm.initration 124.8 124.8 - 191.1 191.1 - 212 212 - 1,960 1,960 COR O Agriculture 439.3 - 459.3 39.2 - 39.2 - - - - Other - - - 53.7 348 324 24 2,607 2,40c 202 Transport t Co-nication 4,472.3 2,537.1 1,935.2 7,454.o 3 902 0 3,502.0 33,458 14,487 18,971 345,379 115 213 230,166 Air 207.9 139.3 82.5 342.4 1 163.6 2,183 1,064 1,119 19,6235 6 13,007 Mariti.e 501.8 354.3 150.3 1,076.9 655.6 421.3 3,991 2,257 1.734 21,876 6,582 15,294 Urban 491.7 171.1 320.6 6,397.4 267.5 540.2 7,200 1,313 5,887 71,417 5,921 67,496 Rods 1,367.8 244.2 1,123.6 107.7 328.7 1,789.9 9,101 1,325 7,776 18,441 - 118,441 Rol1 1,034.2 864.3 169.9 1,602.3 1,251.3 351.0 3,311 4,045 1,266 59,505 50,333 9,170 Mail h Telecomunictieon 581.5 506.7 74.8 936.4 878.4 58.0 3,728 3,610 Il8 23,333 22,704 629 Miscellaneous - - - 64.7 - 64.7 142 - 142 - - - ,-eneral Adcioi-oratlo 270.5 257.0 13.5 505.0 341.7 163.3 1,802 873 329 31,122 24,993 6,129 ning 229.7 160.2 103.3 347.7 189.4 15863 1,841 233 908 7,568 282 7,286 En-est & FPols 46. 4 33.4 13.0 107.6 71.0 36.6 388 225 11 65,761 12,88 63, Industry snd Commerce 895.2 293.2 602.4 392.9 269.0 123.9 22,973 21,619 1,334 220,749 100,621 120,128 Other 2,907.4 615.7 2,291.7 1,812.7 356.4 1,456.3 13,350 2,494 i0,856 217,162 23,892 193,270 Public Debt 2,511.6 615.7 1,993.9 1,382.3 3W567 1,225.9 2,421 1,427 7,997 211,993 23,740 198,53 liscellnnenou 395.8 - 395.8 230.4 - 230.4 3,926 1,067 2,859 5,169 152 5,017 Total 36,L16.7 26,395.7 10,061.0 64,950.5 50,799.9 14,150.6 305,348 226,404 72,944 2,984,765 1,764,255 1,220,310 1/ Included in anher f-nctione co education. 2/ Include- cash balances. SAourn: Ministry of Firnoce - :5: - Fair 1 oT 2 Table 5.5: MrILE - CENTRAL GOVERNIENT EXPENDIr1URES BY FUNCTION, 1965-1974 a''dR.Pl cc ' .sa CUal I eoRsnbrl 71, 19C1 1 - 1965 1966 1967 _ 19651969 1979 Function Total Total Total Total Currnt Capital Tatal Current Capital Total Carton: _CoalI Sovuernnnt 501 692 823 968 8B4 63 1.380 1,295 85 1,513 lA9 114 Politiaal adninloteotlon 170 163 7 190 174 16 229 213 15 Floanacial adiniaitration 533 489 44 963 908 55 934 907 27 Coesus-ity admicistrati-a 145 121 23 103 95 8 221 155 66 40601 aininistration_ __ _ ____ ECtetnal relations 120 112 8 123 11 5 129 123 6 Fratsctiau, FPrernal and TeaSorar 570 646 715 742 730 730 10 787 777 10 997 13 Ju-tice 185 179 6 190 184 6 220 214 6 police 510 506 4 554 550 4 723 716 7 Other 45 45 6 44 /4 0 54 53 l Def-n-c 915 1,128 1,201 1,276 1,113 173 1,405 1,158 247 1,933 1,607 326 Amy 438 383 55 455 394 60 715 537 158 Ya-y 546 493 53 612 512 100 757 693 64 Air for- 282 226 55 323 237 86 442 339 104 Other 11 11 - 15 15 - 17 17 - Pablic HcaIth, etc. 927 1,030 1,072 1061 996 _72 1j140 1,062 78 1,361 ],283 78 Public health 1,028 956 71 1,099 1,014 75 1,295 1,219 75 Social aesiotate, etc. 40 40 1 51 47 4 66 64 2 Hausing and UebaaisatL-n 953 975 903 1.027 155 872 945 892 113 _2 126 801 Housing 502 54 448 580 56 524 473 82 391 Urbanization 1,082 101 424 365 36 329 455 44 411 Social Secr-it 1,217 1l456 1,276 1,463 1,462 - 1,220 1,220 - 1,977 1,977 - Education 1,1 1,835 2,075 2,003 1,16 386 2,578 2 4 _74 3,088 2,856 232 pri-ary 774 773 1 1,102 1,008 94 1,310 1,254 56 Secondary 199 199 0 327 292 35 372 345 26 Pfro-iesinal and technical 212 142 69 311 229 03 261 259 1 Uoieeo-ity 755 711 43 657 621 35 899 855 44 C-onstrction 57 14 43 39 13 26 19 8 11 Miscell aneousb/ 304 75 230 130 138 1 223 132 92 School administration 2 2 - 2 2 - 2 2 JNAEB b/ b/ b/ b/ b/ b/ b/ b/ b/ Agric-lture aAd _'inh 591 704 787 885 290 595 838 279 559 186 309 578 Lrrigation 129 28 101 110 I 1f9 134 5 123 Technical assistance 43Z 157 275 288 117 111 328 213 15 Calonizati-n 13 13 0 13 13 0 20 20 Fishiog 5 4 0 4 4 4 4 hra_-,aI, r-if-n 269 53 215 337 49 283 363 45 310 General adninistraeian 36 34 2 35 34 1 23 22 1 CORFF agricalt-re Al - 49 - 49 15 - 15 Othee T-anopert and Ca,eeenication 1.702 1,993 1.07 1,813 _895 918 2,252 934 1,261 2,627 1,4l1 I&4o Air 101 35 73 129 40 89 106 54 52 Wdatr 186 119 67 202 118 84 227 102 125 0eban 61 56 5 53 49 4 78 70 8 Road 763 109 594 694 - 694 882 - 862 Rail 470 343 126 474 322 152 507 386 121 Kail and telecemmunicati-on 275 232 43 290 228 62 513 23 190 lliseell neanol 12 2 10 - - - - - Gen-ra1 adniniateatian - - - 410 228 12 513 323 192 Miaioc 140 138 132 156 67 89 191 72 119 250 66 184 be1rgy aud uael _201 237 203 20 7 199 253 11 242 229 12 217 Tadoetre and Comerece _153 175 193 326 97 229 264 95 169 451 111 341 Other 825 161 955 1,260 475 784 1,704 391 1,303 1.537 437 15995 Public debt 774 792 876 1,942 275 767 1,361 351 970 1,594 437 1,157 Siiacellanraou 51 69 80 218 200 17 343 - 343 -57 1 -58 Total 15,215 11,859 1 2_17 11,4 93 9,092 4,401 14959 9.742 52017 17 57_ 12,347 5, 43 - 380 - age 2_ of 2 Table 5.5' CHILE - CENTRAL GQVERNENT EXPENDITITURES BY FUNCTION, 1965-1974 (Th--j.cdt ocos ci ecer 31, 1971 1972 1973 1974 Function Total Cotrret Capital Total Curret Capitol Total Current Capitol Ttal Curet Capital GMvernom-t 1,822 1.742 80 74744 2,250 98 1,231 1,204 27 4_082 2,073 279 Political adninistratien 277 272 5 295 270 26 155 139 16 223 1,671 55 Financial adriniutration 1,048 1,026 22 1,386 1,348 39 654 657 -3 3,163 1,367 1,797 Iouuenity adriniutration 296 251 45 504 473 31 277 270 7 427 281 14l Legal odrinistration - - - - - - 58 58 0 91 91 0 Internal relation, 200 192 8 162 159 3 87 80 7 177 166 11 Protetio,, Prono1 and Property l,249 1.208 41 1,407 1.361 40 9353 933 41 1 558 1 215 123 J-uti-c 316 285 31 314 284 30 120 100 20 194 173 21 Pulicr 859 851 8 1,004 991 14 712 692 20 1,131 1,029 102 Other 74 73 1 89 86 2 31 30 1 34 33 1 efecse 1,977 1,924 52 2,378 2,167 212 2,355 2.1SS 209 4_241 53607 634 A-y 693 670 20 910 807 102 736 658 78 1,687 1,335 332 CN-y 871 850 21 997 940 57 900 845 55 1,649 1,518 131 Air force 381 371 10 466 415 52 378 309 69 855 686 169 Other 34 34 0 5 4 1 342 334 8 55 49 1 Public Health, ot,. 1,014 1.809 108 2,395 2.20 132 1,763 1,598 165 1,901 1,677 224 Public health 1,840 1,736 104 2,298 2,169 129 1,723 1,559 165 1,853 1,627 223 l-ieal auniunuoce, etc. 74 73 1 97 95 3 40 39 1 S1 50 I Ho-siug and Urbanization 2,026 324 1,702 2,100 _55 1,745 1,722 __215 1,512 2,321 221 2,7I0 H ousing 1,00S 190 818 1,158 224 934 969 133 836 1,603 121 1,482 Urhb -izatioc 1,018 134 884 942 131 811 758 82 676 719 100 619 Ooefal5ecuoitc 47417 32513 0 3.522 3,522 0 1,599 l,559 0 2,051 2,03l 0 lducttnox 74,183 3,983 220 4.827 4,488 327 2.666 2,354 312 3,857 3,512 345 Princry 1,928 1,871 57 2,055 2,052 17 1,005 1,831 1 1,143 1,143 2 Se-c-darY 423 397 26 4.03 403 1 204 204 6 221 220 1 Profesuional and technical 299 298 1 343 326 15 180 159 12 584 179 86 'Jniversity 1,284 1,244 40 1,691 1,493 198 1,072 871 201 1,161 1,084 77 Construction 37 11 26 69 7 61 96 7 89 128 28 103 il.uoellaneoee b/ 193 121 72 25 200 48 99 96 3 936 856 80 School odoieistrotioc 33 3 0 6 5 0 3 2 1 3 2 1 3715B 16 16 - 1 1 - 1 1 - - - - Agriculture and Piuhina 1.980 _757 1.223 1,676 924 752 1,860 673 388 1,069 550 519 I-rigoti-n 255 48 207 316 46 269 206 30 176 325 7 318 Te-hnifal ausistance 584 502 82 620 591 29 532 500 32 518 403 115 Colonizatio- 26 25 1 30 24 5 13 12 1 15 14 1 Fishing 4 4 - 3 3 - 1 1 - 14 - 14 Agrarioc reCorm 720 96 624 600 187 413 276 103 176 153 84 69 General Aduiuictr-ti- 84 84 - 72 72 - 12 12 - 19 19 CbOrO agrieulcrr 0/ 307 3 507 15 - 15 - Oth- - - 20 - 20 20 18 2 26 24 2 Tranuport and Cacrrucicocion 2,993 81,99 1,296 %2 807 1,470 28013 1,904 074 1,070 32,39 1,132 7,262 Air 139 93 55 129 67 129 124 60 64 193 66 127 WOtet 338 237 101 406 247 105 227 123 99 215 55 150 Urban 329 115 214 2,410 101 2,410 409 75 334 702 39 663 Read 916 164 752 798 124 793 517 75 442 1,164 - 1,164 Rail 693 579 114 603 471 603 302 230 72 585 495 90 Mail and telecmcnfcationu 389 339 50 352 331 352 212 235 7 229 253 6 Miscellaneous - - - 24 - 24 8 - 8 fonerul adminicsration 182 172 10 190 129 190 102 50 52 305 246 60 Atin4g 810 107 74 131 71 131 105 53 52 74 _ 3 _71 E-rg and Fels 31 22 9 40 27 40 22 13 9 646 _21 625 IndtLstry and Co.e-ece 600 196 404 _ 148 101 148 1,306 1,229 77 2_169 993 9 1L16, Cth-c 1.947 412 1.535 _683 __134 883 759 142 _ 617 2.134 235 1,899 Public :'bt 1,682 412 1,269 596 134 595 536 81 455 2,053 233 1,850 Miucellaneoue 265 - 265 87 - 87 223 61 162 51 1 50 Total 24, 1737 80 o<.7d4 24,463 19,134 24 ,44 17.359 12,871 483 29.329 17,336 11,993 a! 1955-72 are deflated by offi CPel CPI; 1973 by an average of the official and IbRD adjouted CPIu; thereafter by the IBRD adjusted CPI. h/ IS clodod ic other education fo4ocfoos. So urco e lob loe Table 5.6: CHILE - CENTRAL GOVERNMENT EXPENDITURES FOR SOCIAL PROGRAMS, 1965-1977 (Millions of constant 1976 US dollars) 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977a/ Health 138.3 148.0 139.7 136.5 134.4 154.2 211.6 247.8 237.2 190.7 133.4 135.4 153.2 Education 237.6 272.0 281.6 302.1 316.0 362.0 473.1 524.2 354.9 381.3 289.1 320.7 371.0 Housing 149.9 143.9 122.7 136.1 115.7 108.6 229.0 228.3 229.9 172.8 70.0 72.7 90.4 Child Assistence - - - o.6 0.7 0.7 o.6 o.8 0.7 4.1 3.4 8.7 8.5 Social Welfare & Labor Benefits 9.6 5.7 7.6 5.3 6.2 7.8 8.4 10.6 5.3 5.1 5.1 8.2 12.8 Social Subsidies - - - 2.3 1.5 1.9 1.5 o.8 0.3 2.0 8.9 6.4 7.5 Minimum Employment Program - - - - - - - - - _ 34.8 79.4 112.9 A. Total Social Expenditure 535.4 569.6 551.6 582.9 574.5 635.2 924.2 1,012.5 828.3 756.0 544.7 631.5 756.3 B. Total Fiscal Expenditure (excl. Public Debt) 1,646.3 1,795.8 1,666.7 1,740.4 1,896.8 2,195.9 2,757.5 2,949.0 3,829.3 2,736.0 1,853.5 1,884.5 2,188.7 A/B (%) 32.5 31.7 33.1 33.5 30.3 28.9 33.5 34-3 21.6 27.6 29.4 33.5 34.5 a/ Budget. Source: Ministry of Finance Table s.7: CHILE - CENTRAL GOVERNMFNT TAX REVENUES, 1965-1977 (Millions of current pesos) 1965 1966 1967 1968 1969 197F0 1971 1972 1973 1974 1975 1976 1977 I. Direct Taxes 1.4 2.1 2.7 5.4 5.1 7.7 7.9 10.0 59.8 680.2 3,394.7 12,311.7 22,357.8 A. Taxes on income o.6 1.0 1.4 1.7 2.5 3.8 6.1 8.3 53.9 431.1 2,101.1 6,426.8 11,514.4 B. Taxes on property 0.3 o.4 0.4 0.5 o.6 0.8 1.3 1.6 5.1 51.4 314.2 1,035-8 2,887.1 C. Copper 0.4 o.8 0.9 1.2 2.0 3-1 0.5 0.1 - 159.0 866.8 4,594.2 7,520.4 D. Other - - - - - - - 0.1 o.8 38.7 106.6 254.9 435.9 II. Indirect Taxes 1.7 2.5 3.3 4.9 7.4 10.7 14.8 26.1 124.6 1,043.2 5,182.1 18,734.6 42,836.1 A. Sales a/ 0.8 1.1 1.6 2.3 3.4 4.7 7.7 13.3 64.4 487.7 2,113.2 8,200.6 22,781.5 B. Production excises 0.2 0.3 o.4 o.6 0.9 1.4 1.9 4.4 24.9 244.5 1,205.2 4,432.8 9,015.9 1. Alcoholic beverages (0.3) (1.7) (9.1) (51.1) (88.4) (349.9) (689.5) 2. Tobacco (0.9) (1.5) (5.8) (53.3) (265.3) (1,038.5) (2,436.9) 3. Fuels (0.7) (1.0) (7.4) (137.5) (850.8) (3,044.4) (5,889.5) 4. Other (0.0) (0.3) (2.7) (2.5) (o.o) (-) (-) C. Services 0.2 0.3 o.4 o.6 1.0 1.4 1.6 2.7 12.3 75.1 519.6 1,864.9 814.5 D. Legal transactions 0.1 0.2 0.3 0.4 0.7 1.0 1.3 1.9 7.2 54.4 288.6 1,033.3 3,026.7 E. Customs duties 0.3 0.5 0.7 1.0 1.5 2.0 2.3 3.8 12.3 176.1 1,040.1 2,915.8 6,794.9 F. Other 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 3.5 5.4 15.3 287.2 402.6 III. Total Taxes 3.0 4.6 6.1 8.4 12.5 18.3 22.7 36.1 184.4 1,723.3 8,576.8 31,046.3 65,193.9 j/ Cascading sales tax from 1965-1974; value-added tax from 1975. b/ Breakdown not available 1965-70. Source: Ministry of Finance Table 5.7a: CHILE - DISTRIBUTION OF CENTRAL GOVERNMENT TAX REVENUES BY TYPE, 1960-1977 (Percent) 1965-69 Average 1970 1971 1972 1973 1974 1975 1976 1977 I. Direct Taxes 43.4 41.8 34.7 27.8 32.4 39.5 39.6 39.7 34.3 A. Taxes on income 21.0 20.6 26.9 22.8 29.2 25.0 24.5 20.7 17.7 B. Taxes on property 7.2 4.4 5.7 4.4 2.8 3.0 3.7 3.3 4.4 C. Copper 15.3 16.9 2.1 0.3 - 9.2 10.1 14.8 11.5 D. Other - - - 0.2 0.5 2.2 1.2 o.8 0.7 II. Indirect Taxes 56.6 58.2 65.3 72.2 67.6 60.5 60.4 60.3 65.7 A. Sales 26.0 25.9 33.8 36.9 34.9 28.3 24.6 26.4 34.9 B. Excises 7.2 7.6 8.5 12.3 13.5 14.2 14.1 14.3 13.8 C. Services 6.8 7.4 7.2 7.4 6.7 4.4 6.1 6.o 1.2 D. Legal transactions 4.8 5.4 5.5 5.2 3.9 3.2 3.4 3.3 4.6 1 E. Customs duties 11.5 11.2 10.3 10.4 6.6 10.2 12.1 9.4 10.4 w F. Other 0.3 0.7 0.0 0.0 1.9 0.3 0.2 0.9 o.6 ON III. Total Taxes 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Table 5.7 Table 5.7b: CHILE - DISTRIBUTION OF NON-COPPER TAX REVENUES, 1960-1977 (Percent) 1965-69 Average 1970 1971 1972 1973 1974 1975 1976 1977 I. Direct Taxes 33.2 30.0 33.3 27.6 32.4 33.3 32.8 29.2 25.7 A. Taxes on income 24.7 24.7 27.5 22.9 29.2 27.6 27.3 24.3 20.0 B. Taxes on property 8.5 5.2 5.8 4.5 2.8 3.3 4.1 3.9 5.0 C. Other - - - 0.2 0.5 2.5 1.4 1.0 0.8 II. Indirect Taxes 66.8 70.0 66.7 72.4 67.6 66.7 67.2 70.8 74.3 A. Sales 30.6 31.2 34.5 37.0 34.9 31.2 27.4 31.0 39.5 B. Excises 8.5 9.1 8.7 12.3 13.5 15.6 15.6 16.8 15.6 C. Services 8.0 8.9 7.4 7.4 6.7 4.8 6.6 7.1 1.4 D. Legal transactions 5.7 6.5 5.6 5.2 3.9 3.5 3.7 3.9 5.2 E. Customs duties 13.6 13.5 10.5 10.5 6.6 11.3 13.5 11.0 11.8 F. Other 0.3 0.9 0.0 0.0 1.9 0.3 0.2 1.1 0.7 w III. Total Taxes 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 < Source: Table 5.7 Table 5.8 CEIIE - CENTRAL GOVERNMENT TAX REVENUES AT CONSTANT PRICES, 1965-197? (Thousands of pesos of December 1969) a/ 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 I. Direct Taxes 3,489 ,1 4,781 4,782 5,401 6,161 5,260 3,784 3,400 6,683 7,023 8,163 7,735 A. Taxea on income 1,625 1,983 2,402 2,420 2,655 3,027 4,082 3,110 3,o63 4,236 4,346 4,261 3,983 B. Taxes on property 822 743 735 744 591 642 859 605 290 505 650 687 999 C. Copper 1,042 1,685 1,643 1,618 2,148 2,493 320 45 - 1,562 1,793 3,046 2,602 D. Other -- - - - - 24 47 380 220 169 151 II. Indirect Taxes 4,294 5,221 5,888 6,866 7,908 8,563 9,914 9,830 7 082 10,250 10,720 12,422 14,819 A. Sales 1,964 2,327 2,812 3,147 3,589 3,814 5,124 5,019 3,659 4,792 4,371 5,437 7,881 B. Production excises 587 618 756 886 991 1,112 1,287 1,673 1,417 2,402 2,493 2,939 3,119 1. Alcoholic beverages (210) (633) (517) (502) (183) (232) (239) 2. Tobacco (603) (550) (327) (524) (549) (689) (843) 3. Fuels (469) (378) (419) (1,351) (1,760) (2,019) (2,037) 4. Other ( 4) (112) (153) (25) ( 1) ( - ) ( - ) C. Services 458 623 686 894 1,014 1,086 1,095 1,004 701 738 1,075 1,236 282 D. Legal transactions 365 472 444 549 739 797 838 707 408 535 597 685 1,047 E. Customs duties 888 1,143 1,170 1,373 1,547 1,646 1,565 1,422 696 1,731 2,152 1,933 2,351 F. Other 32 37 19 17 28 10 5 4 200 53 32 190 139 III. Total Taxes 7,783 9,633 10,668 11,648 13,308 14,724 15,174 13,614 10,483 16,933 17,743 20.585 _2-553 2/ Deflated by IBRD adjusted CPI. Source: Table 5.7 Table 5.8a: CHILE - ANNUAL GROWTH OF TAX REVENUES, BY MAJOR TAX, 1966-1977 (Percent) 1966 1967 1960 1969 1970 1971 1972 1973 1974 1975 1976 1977 I. Direct Taxes 26 8 - 13 14 -15 -28 -10 97 5 16 -5 (excluding copper) (11) (15) (1) (3) (13) (35) (-24) (- 9) (51) (2) (-2) (-) A. Taxes on income 22 21 1 10 14 35 -24 - 2 38 3 -2 -7 B. Taxes on property -10 -1 1 -21 9 34 -30 -52 74 29 6 45 C. Copper 62 -2 -1 33 16 -87 -86 -100 x 15 70 -15 II. Indirect Taxes 22 13 17 15 8 16 - 1 - 28 45 5 16 19 A. Sales 18 21 12 14 6 34 - 2 -27 31 -9 24 45 a/ B. Excises 5 22 17 12 12 16 30 -15 70 4 18 6 C. Services 36 10 30 13 7 1 - 8 -30 5 46 15 _77 D. legal transactions 29 -6 24 35 8 5 -16 -42 31 12 15 53 E. Customs 29 2 17 13 6 -5 - 9 -51 149 24 -10 22 III. Total Taxes 24 11 9 14 11 3 -10 -23 62 5 16 10 (excluding copper) (18) (14) (11) (11) (lo) (21) (- 9) (-23) (47) (4) (lo) (14) f The tax on services was merged with the VAT in 1977. Source: Table 5.8 Table 5.9: CHILE - CENTRAL GOVERNMENT REVENUES AND EXPENDITURES RELATIVE TO GDP, 1965-1977 (Percent) 1965-69 1960 Ave. 1970 1971 1972 1973 1974 1975 1976 1977 I. Current Revenues 17.0 18.5 19.9 18.5 16.1 16.3 19.9 20.9 21.7 21.7 A. Taxes 16.1 17.6 18.9 17.6 15.1 15.2 '1775 2-07 21.2 20.3 1. Direct taxes (5.8) (7.6) (7.9) (6.1) (4.2) (4.9) (7.0) (8.1) (8.4) (7.0) a. Income <3.7> <3.9> <4.7> <3.5> <4.4> <4-5> <5-0> <4.4> <3.6> b. Property <1.3> <0.8> <1.0> <0.7> <0.4> <0.5> <0.7> <0.7> <0.9> c. Copper <2.2> <2.7> <3.2> <0.4> <0.0> < - > <1.6> <2.1> <3.1> <2.3> d. Other < - > < - > < - > <0.0> <0.1> <0.3> <0.2> <0.1> 2. Indirect taxes (10.3) (10.0) (11.0) (11.5) (10.9) (10.3) (10.8) (12.3) (12.8) (13.3) a. Sales <4.6> <4.9> <5.9> <5.6> <5.3> <5.0> <5.0> <5.6> <7.1> b. Excises <1.3> <1.4> <1.5> <1.9> <2.1> <2.5> <2.9> <3.0> <2.8> c. Customs <2.0> <2.1> <1.8> <1.6> <1.0> <1.8> <2.5> <2.0> <2.1> d. Other <2.1> <2.6> <2.3> <1.8> <1.9> <1.4> <1.9> <2.2> <1.3> B. Nontax Revenues 0.9 0.9 1.0 0.9 1.0 1.1 2.1 0.5 0.5 1.4 \ 0 II. Expenditures 20.2 19.7 21.4 26.8 28.4bb/ 38 27.2 23.7 20.1 22.0 A. Current 15.3 13.9 15.8 20.5 23.0- 32.6- 18.3 19.2 17.3 20.2 B. Capital 5.0 5.8 5.6 6.3 5.4 5.8 8.9 4.5 2.8 1.8 III. Current Surplus 1.7 4.6 4.1 -1.9 -6.9 -16.3 1.7 1.7 4.4 1.6 IV. Overall Surplus a -3.2 -1.2 -1.3 -7.8 -11.9 -21.7 -6.9 -2.3 1.5 -0.3 a/ Includes capital revenues except in 1976 and 1977. bD/ Includes expenditures financed directly by banking system. Source: Tables 2e3, 12<1 5 nd 527 Page 1 of 6 Tacble .10: CHTLEh - GEIR,AL Ph1 Vh, Tlhi ( -R- .cL ZO ILHE t U:i- t 1, PUB,LIC Pus, l -1--, I. Ctrrent Transfers -lo:.;.*rdZoZ c-e:pso .1 O0I0ltP g, 3o l,0 19 1967 1968 1 1970 1971 Pesos USS __eso ISS_ Pesos HIS Pesos 7J1 TPesos _ Pesos USS__ Sonial Secsrity Payments, Pessnose & Fapily Allowances .. - 0o ' : OC 16. 66, Social escority foods (SS.S& Caja Previe.) -4 _0,- _ , - _ 2T_ - _- Pensiosa and other direst psymests 1 | 40- - 612 EmZployers ' costrihonioss (govt. - Pseily allowances ISO L 1. _ 4 700 26 66C 45 680c Transfers to the Public Sestor 953 17,770 .i,174 7,0 -, S0 _ 7 l1o Sn-' , j2 1,,0.0 State Enterprises 2 , 3 555 22c7 696 0 = , 2 150 Railrods 151 £W T9 -0 _27_ __0 _ is R-i 151 7~~~~~~~450 2,'~~~OW 2? 838<1 '0 " 2,150 Notional airline (LAN) 5 1,410 6oG 12 -0 8 1,00 21 3,350 62 430 Maritime transport ('MPREMAR) 6 a 5 _ 1 200 22 800 31 o00 S9 - Poblic obe co..pay (ETC) 23 0)C 31 0( 41 6G 3350 105 6o Port company (EMPREPORT, EMPORCBI) 27 1>0 2c 46 j65 ,; 3 4. 60 cl6 6^ Agricolt 1ral Sn-titotiose 49 3D _ 272 - 3 . 3 r 682 (Agrarian Refore-CORA) (15) (-) ) (3S) (-) ( (06) (- 29) I (Agrarian Dev. Inst.-INDAP) (20) (5C) jr 1- (2) (-, (44, (- (85) (-) (271, & (Agri. & livestock Serv.-SAG) (-) (-) i -. (64) (- (4, Q-2 713<. (360) (36); (Agri. M-rketiag Inot.-EKA) (1) O-() o-) ( (- () -. (85) (Others) 11) -) (4 -) 2) (- () (- (38) (120) _ State mining company (ENAFI) 8 1 - 5,7 1S ., O4 ',22C 140 n, EMPRECAN or ECA - - - - Economic Development Inotitstion. 22 6 0 22 - 5 - 6c 18 - 25 Development -orporation (CORFO) 7 '0 - - - - - - Public ho-iing 15 - 5 - 53 - S8 - 118 _ 244 (Ho.aing Corp.-CORVI) (4) ,- (_; 0O) (_) (1) (- 1) -) (-) -) (HMasing Foondation-CORHABIT) 0) (-) ) (- (26) (-) (33) - (63) ) (154) -) (Others) 1) (- I '- (27) (-) (34) (54) -) (90) ,-) S1cmi1 Institutions 411 3.C .71 7 , ',439 0<-1 2,502 5,200 National health service (IN7S) 4 0 3 3,70, 5_C) 2,71C7 34 90 Medical -ervice for employees (SERMENA) 8 - - 7 - - _ - Others - - - - -20 Ed-cntiona1 ISntitotion. 171 1,2- 0 6o , . , - 4, L,0,p 715 _,0 33Z1 '40 Usiver-ity of Chile 137 1, i 70 244 1,07 3 - ' 1,C 55 . , 932 ,3 State technical. Uiver-ity 034 t 70 4 4 _ l L- 264 School constrtction 6sciety - - 9 - -_ 12 1D - 17 Others - - - - 2 - 20 -_ Defense 15 - 17 - 30 30 i3 4, 76 nO 174 90 Municipalities - - - - - - 89 - 193 _ 375 Miscellaneous - - 71 - 21 4 91 3 330 3 6 4,6,0 "nco del Ectsd _ _ _ - - - - 213 - 3 65 - 73 c / 0 36 Transfers to the Private Sectcr i13 3 261 - 445 _ _ .OC c7i 2,j9 1,771 2,);D Education - - - _2'4 - 351 - 530 _ x Univeesities - - - - 2 L 7 - 36i1 _-/+ Catolica de bntingo - _ - _ - - 112 - 1'3" Catolica de Valparsiso - - - - - o - 0 - Pederico Stn. MFario _ - - o _ < - 4 - Concepcion - _ - - . - - - 2C - Rorte - _ _ _ - _,, _3 _; .tstra. - t _ - _ - 2 - 46 - 42 Other _ - - _ _ - - 6 _ Private -hcnoc, - - - - - - _ . - 219 Oth-r _ _ - - 80 - 1 2 - Tan Rebnoen and CTstos. Duties - _ - 142 2C 206 4C0 239 447 I Subsidies _ _ - - 13 - 1 20 - 239 Other 133 - 6 - 76 20 78 1,?02 87 -1C 204 2,30 Total 1.8 32 . 0,238 0, 4,5C2 L7,00 7.388 12,0 2215,038 1& ) - 392 - P Table 5.10: CHIIZ - CENTRAL COVRE1,NMENT FSO AZiD OREICT CU 1T2ENCY TB.XISFE>S PT THE REST OF THE PUBLIC SECTOR, 1966-1975 I. Carrent Transfers (Thousands cf current pesos and US dollars) 1972 1973 1974 1975 Pesos ISS Pesos 197 `eo IT Pesos US$ Social Security Payments, Pensions & Family Allowances 10,067 750 29,959 970 232,274 1,030 180 Social security funds (S.S.S. & Caja Previs.) ,5 - 25,767 759,052 Pensions and other direct payments 966 - 2,298 - 15,270 - 58,545 180 Employers' contributions (govt.) - - - - 3,953 - 28,505 - Family allowances 736 750 1,894 970 37,159 1,030 229,601 - Transfers to the Public Sector 15 76 11 25 94 465 18,560 569 245 4,2380 82 13 830 State Economic Enterprises ,105 5.1 2 00 26 20 Railroads 1,221 1,600 3,621 TF,151 70 58 687 5,42 National airline (LAN) 4 4,000 355 - Maritime transport (EMPREMAR) 113 - 311 - Public bus company (ETC) 167 180 492 435 3,921 - 4,034 Port company (EMPREPORT, 0MPORChI) 283 70 894 200 300 370 5,145 Agricultural Institutions 2,145 - 1o,244 - 79,194 250 151,806 i,000 (Agrarian Reform-CORA) (473) (-) (1,687) 1-) (7,961) C-) (22,940) (-) (Agrarian Dev. Inst.-INDAP) (578) (-) (3,931) C-) (9,459) (-) (21,883) (-) (Agri. & Livestock Serv.-SAG) (559) (-) (2,096) (-) (14,573) () / (39,762) (750) (Agri. Marketing lnst.-SCA) (10C) (-) (-) (- (32,914) (57,200)- (-) -) (Others) (435) (-) (2,550) (-) (14,279) (230) (47,221) (250) State mining company (SNAMI) 172 - 798 _ _ _ 46,843 - EKPRECAN or ECA - - 18,294 - - Economic Development Institutions 516 - 3.582 29 6,8 2,500 94'7°5 1,500 Development corporation (CORFO) - - 1,127 2,500 28,951 1,500 Public housing 516 - 2,555 - 17,844 - 65,754 - (Housing Corp.-CORVI) (29) (-) (440) (-) (4,301) (-) (14,428) (_) (Housing Foundation-COREHABIT) (314) (-) (1,112) (-) (4,908) C-) (25,895) (-) (Others) (173) (-) (1,005) (-) (6,635) (-) (25,431) (-) Social Inctitutions 566 ,60 25.6041114 11 450 536,162 3,220 National health service (SNS) 5,589 3 0 25,32 11,1t40 151,291 11,400 532,977 3,180 Medical service for employees (SERMENA) 63 - 194 - - - Others 15 - 68 - 1,752 50 5,185 40 Educational Institutions 2 413 - 10,654 - 124.061 - 68011 - University of Chile i - 7,100 - 1,195 - 249,252 State technical University 563 _ 2,275 - 19,085 - 62,400 School construction society 19 - 125 - 2,847 - 4,477 Others 16 - 1,135 - 10,934 - 51,292 Defense 454 1,030 7,628 2,2.0 16,741 2,48c 74,527 2,510 Municipalities _ 4,757 - 28,625 - 70,304 Miscellaneo-u 1,465 740 6 7 71 .0 90,501 58,700 448 519 383 Bance del Estado 531 - 3 1 _ _ Other 534 740 2,936 70 90,501 58,700 251,732 380 Transfers to the Private Sector ,34 38 14,35_ 3 3,20 84,215 4600 31,798 4,410 Elducation 16, 7 - 757, - 6.2227 426 33 llniversities - 580 _g _ld60 30 Catclice de Santiago 493 - 1,807 - 20,447 - 59,225 - Catolica de Valparaiso 172 - 634 - 6,580 - 20,579 - Federico Sta. Maria 116 - 469 - 5,675 - 16,079 330 Concepcion 485 - 1,759 - 16,777 51,26 - Norte 138 - 636 - 7,245 _ 21,D64 - Austral 165 - 575 - 5,686 - 16,407 - Other 19 - - - - - - Private schools - - - - 6,209 - 39,9S3 - Other 40 - 1,697 - 5,670 - - Tan Rebates and Customs Duties 719 - 2,3 270 2OO/ 10 28,467 1,520 Subsidies 419 - 4 - 1,490 - 1,738 Other 702 2,380 4,99 2,990 5,683 4,590 44,167 2,560 Total 29,409 D.4,380 138,777 22,79C 8,734 9,86 ,556,083 18,420 / Debt re-fisan ging, not included in total. 2/ Includes 0.352 Reintegros y Devoluciones and 0.448 Devolucion de Impuestos. ,/ Includes 0.210 unemployment compensation. Source: llnictry oP Finance - 393 - Page 3 of 4 '-able 5.10: CHILE - E;NTRAL GOVERNMElT PESO ;!AL FOREIGN C'JRRENCY TRANSFERS TO THE REST OF THE PUBLIC SECTOR, 1966-1975 II. Capital Transfers (Thousands of current resos and US dollars) 1966 1967 1968 i___9 69___ _ 1970 Pesos USS Pesos US$ Peo-s US5 Pesos US$ Pesos 'US Transfers to the Public Sector 1,642 89,000 1,769 80,180 1,361 10,770 ,916 11,400 2 519 31 160 Stgte Economic Interprises 213 19,900 272 9,30 370 5,000 12 5,760 Railroads 43 9,100 6 2 1,t *4 50 990 134 1,000 126 2,200 National airline (LAN) 2 6,400 1 3,360 1 2,990 1 2,800 0 640 Maritime transport (EMPPEMAR) 0 400 0 150 0 800 0 600 0 So0 Public bus company (ETC) 9 300 2 720 2 200 2 100 4 630 Port company (EMPREPORT, EMPORCHI) 1 500 1 90 6 90 25 100 700 310 Agricultural Institutions 129 300 181 530 247 170 373 200 543 1,180 (Agrarian Reform-CORA) (62) (-) (105) (-) (151) (-) (266) (-) (390) (-) (Agrarian Dev. Inst.-INDAP) (52) (-) (54) (-) (66) (-) (76) (100) (-) (Agri. & Livestock Serv.-SAG) (-) (-) (-) (-) (10) (-) (12) (-) (28) (-) (Agri. Marketing Inst.-ECA) (8) (300) (5) (180) (5) (170) (5) (200) (5) (1,180) (Others) (7) (-) (17) (350) (15) (-) (12) (-) (20) (-) State mining company (ENAMI) 29 2,900 25 3,000 30 - 54 - 69 gMPBECAN or ECA - - Economic Development Institutions 364 9,400 320 580 863 5,330 1 140 5,900 1,432 18 760 Development corporation (CORFO) 59 9,30D 117 5cO 510 5,330 5,400 747 Public housing 305 100 203 - 353 - 540 500 685 18,760 (Housing Corp.-CORVI) (246) (-) (106) (-) (112) (-) (216) (-) (203) (-) (Housing Foundation-CORHABIT) (34) (-) (7N (-) (179) (-) (163) (-) (160) (-) (Others) (25) (100) (26) (-) (62) (-) (141) 500 (322) (-) Social Institutions 16 500 - - 26 - 35 - 44 National health service (OS) _7 500 - - - 35 - 4 Medical service for employees (SERMENA) - - - - Others - - - - Educational Institutions 59 1,4C0 180 190 57 - - 55 800 University of Chile 15 1,000 11 - 20 - 25 - 31 220 State technical University 5 300 6 _ 11 - 8 - '0 20 School construction society 15 - 16 - 22 - 24 _ 14 Others 26 1o0 147 190 4 - * _ _ Defense 20 12,900 22 10,510 4 200 5 0 6 700 National Security Fund - - - - - - Other 20 12,900 22 10,510 4 200 0 6 700 Murnicipalities _ - - - - - 8 - 14 Miscellaneous 970 44,900 975 59,600 41 77 5°0 156 640 Banco del Estado - Other 970 44,900 975> 59,60o 41 - 77 500 16 5,140 Transfers to the Private Sector - I _ _ 1 400 - 1 1,280 Education _ _ _ - - - - 790 Universities - _ - _ _ _ _ _ 90 Catolica de Santiago _ _ _ _ _ _ _ - - 20 Catolica de Valparaiso - _ - - - - - - - 60 Federico Sta. Maria - _ - - - - - - - L40 Concepcion - Norte - --0 Austral - Other - - Private schools - -_ _ _ _ _ 70 Other Tan Rebates and Customs Duties - Subsidies Other I -oO - - 1 490 Total 1,642 89,00o 1,769 80,180 1,362 1,170 1,916 11,400 2,520 32,41' Source: XLr.iatrv o linaace - 394 - Page 4 of 4 Table 5.10: CRILE - CENTRAI GOVERNMENT PESO AND FOREIGN CURRENCY TRANSFERS TO THE REST OF TRE PUBLIC SECTOR, 1966-1975 II. Capital Transfers (Thousands of current pesos and US dollars) Pesos 1971 1972 1973 U974 1975 Transfers to the Public Sector 4 913 13,970 6 421 4,890 8,404 4,200 162 AG 509 533 39 190 State Economic Enterprises 3,090 _1 920 2,520 2 d , 77 31, 06 _3 Railroads 15 ,00 324 1,021 2,200 5,050 11,93 National airline (LAN) 6 400 - 100 - - - Maritime transport (EMPREMAR) - 800 - 70 - - Public bus company (ETC) 5 510 4 - 40 - 2,224 - 1,761 440 Port company (EMPREPORT, EMPORCHI) 45 100 31 - 202 320 2,732 660 - Agricultural Institutions 1,061 16o 1,162 - 5,455 - 1l,871 - 4,4Q06 (Agrarian Reform-CORA) (932) (-) (1,098) (-) (3,109) (-) (7,023) () (2,488) (-) (Agrarian Dev. Inst.-INDAP) (71) (-) (10) (-) (85) (-) (8,551) C-) (-) (-) (Agri. & Livestock Serv.-SAG) (35) (-) (53) C-) (221) (-) (755) C-) (700) (-) (Agri. Marketing Inst.-ECA) (7) (180) (6) (-) (4) (-9 (1,000) (-) - (-) (Others) (16) (-) (13) (6) (,542 () (1,220) (-) State mining company (EMENAI) 108 50 139 270 800 - - 3,000 13,705 EMPRECAN or ECA - - - - 117 - - - Economic Development Institutions 3 018 5 780 3,000 290 22 58 - 23,088 47,500 234,931 32,920 Development corporation (CORFO) T 2 290 2 2157,355 47,500 204,500 32,920 Public housing 1,772 100 2,783 - 19,973 - 81,733 - 30,431 - (Housing Corp.-CORVI) (579) (-) tL,056) (-) (8,422) (-) 44,508 - (15,677) (-) (Housing Foundation-CORHABIT) (319) (-) (489) (-) (2,424) (-) (3,862) - (919) (-) (Others) (874) (100) (1,238) (-C (9,127) (-) (33,363) (-) (13,835) (-9 Social Institutions 55 - 78 _ 275 - 3 131 - 1354 990 National health service (SNS) 55 - 70 - 275 - 12,72 990 Medical service for employees (SEE4ENA) - - - - Others - 8 _ _ _ 1,175 - 863 Educational Institutions 76 _ 679 - 4 243 4,076 -University of Chile 35 - 404 0, - 5,001 _ 7,910 State technical University 17 - 122 - 561 - 2,900 _ 3,164 School construction society 24 _ 153 - 1,568 _ 10,159 - 32,002 Others - - - - - - 105 - Defense 22 460 37 1,300 352 1,0 3,47 1,600 7,188 1,350 iatr nal Security Fund Other 22 460 37 1,300 352 1,560 3,347 1,600 7,188 1,350 Municipalities 12 4,50O 81 _ 117 - 344 Miscellaneous 348 140 866 1,380 5,197 120 105,100 104,980 178,858 69C Banco del Estado - - - - - - - - - Other 348 140 866 1,380 5,197 120 105,10C 104,980 178,858 690 Transfers to the Private Sector 630 8 885 10 5,789 770 25,463 1,40 Education S4 - I -76 - 5,737 - 2,85 4'70 Univ-erities - 1 - - 5,737 - 23,754 470 Catolica de Santiago - - - _ 176 - 2,207 - 12,793 - Catolica de Valparaiso - - - 147 - 900 - 1,414 - Federico Sta. Maria - - - - 99 - 500 - 146 470 Concepci6n - - - - 221 - 900 - 2,205 - Norte 4 - - - 100 - 530 - 1,196 - Austral 4 - i 115 - 700 - 6,100 - Other - - - - - - - Private schools - - - Other - - - - 2 Tax Rebates and Customs Duties - _ _ Subsidies - Other _ 630 7 - 25 10 52 770 1,609 930 4,92 1460 ; 4,3 39,26 4,210 403,841 162,910 534,506 40,590 Total 160____ Source: Iliniotry of Finance Page 1 of 2 Table .11: CHILE - CENTRAL COVERNMENT TRANSFERS TO MAJOR STATE ENTERPRISES AND LNSTITITTTONS, 1966-7S (Thou.ands of ucrrent peaos) _ 966 196" I _ 9f6. 1969 970 __ ,,il Tt Curreent Capital Ttl Crent Capi Total Curent Capita Total Current Capital Total C-rrent Capital Total Social Security Paynents. Pensions, and Family Allowances 69t, 02r 1,173 - 1,1.73 127. - 1,127 709 _ ,707 State Fnterprises: 298 292 ,9C 339 ) 62, >,' 40f 2 024 794 f7,4 1 408 '?7f 878 1,84 Railroads ; 79 7T " s7? 247 91 3 3 8 301 4 T4 479 151 6 30 Airline (LAN) 10 27 7 8 18y 26 l 21 40 27 26 3 60 7 67 Shipping (EMPREMAR) 10 5 2 9 36 40 9 49 Bus (ETC) i2 10 j6 6 2 40 3 47 3 50 87 11 98 Purts (EMPREPORT, EMPORCHT) 20 S 31 3' i 7 55 ,G P 2 41 74 119 Agricultu,ral: 49 130 u,9 6u14 247 202 24O 450 272 575 6, ± 403 >57 960 CORA (15) (62, (/1) (- ) (105) (±0 ) (38) (191) (1o9) (46) (266) 79±2) (56) (590) (446) TNDAP (20) (52) 1, (10) (24) 172 (28) (66) 094) (44) (78) (122) (86) (100) (186) SAG ( , ( ) ( j (-) ( / ( , (6 (10) (74) (94) (1. ) (lo,) (1S8) (28) (166) ECA ', i ' O) a, ' 0° ( ' ( u, (l)u ( 5) (p;s (t) ( 7/ C-,,n) (09) ( L9) (104) Other (13) ( 7, (cC) (45) (19) (64) (22) (15) (37) (28) (12) (40) (38) (20) (58) Mining (ENAMT) 8 40 4`8 1o O 8 1,3 30 73 62 54 16 74 69 143 EMPRECAN - - - - - - - - - - - - CORFO S1 96 .2y - 10 i20 - 546 596 - 6248 646 _ 964 964 Housing (CORVI, CORIIABIT. etc . 19 30b 321 22 203 22 953 555 406 68 544 612 118 685 803 Health (SNS. SERMFNA, etc.) 423 1 421L 531 - 931 665 28 699 939 59 374 1,497 44 94i Edu,cational nstitutions 176 65 241 232 .ol 413 935 57 592 796 62 956 1,297 73 1,330 Public 176 69 241 2S2 181 ItL 321 97 378 465 62 927 727 64 791 Private - - - _ _ _ 2i4 - 214 351 - 331 530 9 53y State Bank (BECII) -- - - - - 213 - 213 Other 265 1,218 1,481 351 1,579 1,701 29& 90 51n8 539 94 633 981 290 L,231 Total 1,902 1,994 3,096 2,300 7,L72 4,472 3,542 4 2 4,784 2 6,680 7,769 2,899 10,644 Source: Table 9.10 Page 2 of 2 Table 5.11: CHILE - CENTRAL GOVERNMENT TRANSFERS TO MAJOR STATE ENTERPRISES AND FNSTITUTTONS, 1966-75 (Thousands of current pesos) 1971 1972 1977 1974 1975 _____ Current Capital Total Current Capital Totaal Total C urrentl Total Current Capital Total Current Capital Total Social Security Payments, Pensions, and Family Allowances 5,6935 - 5,693 10,082 - 10,082 30,066 - 30,o66 233,131 - 233,131 1,186,587 - 1,186,587 State Enterprises: 2 317 1, 420 3,737 4,219 1,717 5,936 36 0511 5 914 41,968 1f4 197 35,583 169,780 287,876 47,712 335,588 Railroads 865 170 1,035 1,252 353 1,605 4 12 5 5,385 o5,2 ,71T 5c,99 95,139 25676 120,1lb Airline (LAN) 67 11 78 82 2 84 350 - 350 - -- - - _ Shipping (EMPREMAR) 59 10 69 113 1 114 311 - 311 - - - - - Bus (ETC) 106 11 117 171 4 175 54o 40 580 - 2,224 2,224 4,034 3,921 7,955 Ports (EMPREPORT, EMPORCHI) 186 46 232 284 31 315 916 237 1,153 608 3,281 3,889 5,145 - 5,145 Agricultural: 883 1,063 1,946 2,145 1,182 3,327 10,244 3,455 13,699 79,385 18,871 97,256 136,716 4,408 14,124 CORA (129) (932) (1,051) (473) (1,098) (1,571) (1,687) (3,109) (4,796) (7,969) (7,023) (15,092) (22,940) (2,488) (25,428) INDAP (271) ( 71) (342) (578) (10) (588) (3,931) (85) (4,016) (9,459) (8, 551) (18,010) (21,883) ( - ) (21,883) SAG (363) ( 35) (398) (559) (53) (612) (2,096) (221) (2,317) (14,573) (755) (15,328) (43,444) (700) (44,144) ECA ( - ) ( 7) ( 7) (100) ( 6) (lOu) ( - ) ( 4) ( 4) (30,522) (1,000) (31,552) (-j (-) (-) Other (120) (16) (136) U435) (15) (450) (2,530) ( 16) (2,546) (14,470) (1,542) (16,012) (48,449) (1,220) (49,669) Mining (ENAMI) 152 108 260 172 144 316 798 0oo 1,596 - 2,496 2,496 46,843 13,705 62,548 EMPRECAN - - - - - - 18,294 117 18,411 - - - - - - CORFO 6 1,316 1,324 - 227 223 1,027 2,612 3,639 13,594 196,875) 210,316 36,316 366,137 4F02,4'37 Housing (CORVI, CORHABTT, etc.) 244 1,773 2,017 516 2,783 3,299 2,555 19,973 22,528 17,644 81,735 99,577 61,754 30,431 96,185 Health (SNS. SERMENA, etc.) 2,566 55 2,621 5,738 78 5,016 26,838 275 27,113 162,559 3,131 165,690 551,972 18,447 57,419 Educational Institutions 2,240 84 2,324 4,039 68o 4,719 13,231 5,103 23,334 200,348 23,902 224,250 597,057 69,238 666,295 Public 1,358 76 i, 434 2,417 675 3,095 10,654 4,243 14,897 124,061 18,165 142,226 368,011 456o,6 411,007 Private 6c2 8 o90 1,626 1 1,627 7,577 860 8,437 76,287 5,737 82,024 229,046 26,162 255,208 State Bank (BECS) 3 - 3 531 - 531 3,818 - 3,818 - - - 186,787 - 186,787 Other 2,199 455 2,654 4,564 1,043 5,607 22,713 5,878 28,591 198,525 198,158 396,683 734,176 202,238 936,414 Total 15,1270 5,13 20,373 29,689 6,526 36,215 141,302 39,755 -31,057 960,493 539,382 1,499,o30 3,646,525 734,203 4,330,728 Source: Table 5.10 Page 1 of 2 Table 5.12: CHILE - CENTRAL G)VERNMENT TRANSFERS TO MAJOR STATE ENTERPRISES AND INSTTTTTIONS, 1966-75 (Thousands of pesos of December 1969) 19tf65___ _ 1967 1969 -1970 Curren Ctal Tal l Current Capital Total C-rrent Capital Tent Capitant Capital Total Current Capital _Total Social Security Payments. Pensions and Family Allowances 1,450 - 1,450 1,454 -4 1, 45 1,633 6, 1 625 2_ T617 State Enterprises: 621 608 1229 596 362 5, 160 860 . 6 1, 426 P46 676 1,522 7R4 706 1490 Railroads 350 164 '14 314 122 43; 344 127 1"71 321 152 473 7is 121 506 Airline (LAN) 21 56 77 14 32 46 26 29 56 29 2F .6 48 6 54 Shipping (EMPREMAR) 17 4 21 9 2 11 25 7 32 51 7 38 32 7 39 Bus (ETC) .52 21 73 63 10 74 56 4 60 50 3 S3 70 9 79 Ports (EMPREPORT, EMPORCHI) 58 6 64 53 9 55 67 10 76 60 28 88 73 59 92 Agricu1tural 102 271 373 111 324 435 281 345 626 990 400 690 324 448 772 CORA (31) (199) (160) ( ) (185) (185) (53) (210) (263) (49) (283) (332) (45) (314) (359) INDAP (42) (10P) (LS (32) ( 95) (127) (59) 92) (151) (47) ¢ 53) (130) (69) ( 80) (150) SAG (- ) ( - ) ( - ) (- ) ( ) ( ) (R9) 14) (103) (100) ( 13) (113) (111) ( 22) (133) ECA ( 2) ( 19) ( 21) (- ) ( 10) ( 10) (70) ( 7) ( 77) ( S4) ( 7) ( 71) 1 65) ( 1,) ( 93) Other (27) ( 15) ( 42) (79) ( 5) (113) () ( 21) ( 52) ( 30) ( 13) ( 43) ( 30) ( 16) ( 47) Mining (ENAMI) 17 63 100 52 70 102 60 42 102 66 56 124 59 55 115 EMPRECON - - - - - - - - - - - CORFO 64 200 264 - 212 212 - 760 760 - 690 690 - 775 775 ° Housing (CORVI, CORHABIT. etc.) 31 637 669 39 3.58 397 74 491 565 72 580 652 95 551 645 Health (SNS, SERMENA, etc.) 881 37 918 936 - 936 926 39 968 1,001 37 1,038 1,203 35 1,239 Educational institutions 366 136 502 409 319 728 745 79 824 848 66 914 1,010 59 1,069 Public 366 136 502 409 319 728 447 79 526 496 66 162 584 51 636 Private - - - - - - 298 - 298 353 - 353 426 7 433 State Bank (BECH) - - - - - - - - - - - - 171 - 171 Other 548 2,537 3,085 619 2,380 2,999 415 70 484 574 100 674 788 201 989 Total 3,962 4,153 i1, 4,055 3,829 7,884 4,653 2,002 6,660 4,968 2,150 7,6,229 2,327 ,1 s16 Source: Table 5.1-1 Page 2 of 2 Table 5.12: CHILE - CENTRAL GOVERNMENT TRANSFERS TO MAJOR STATE ENTERPRISES AND INSTTTUTTONS. 1966-75 (Thousands of pesos of December 1969) 1971 1972 1973 1974 1975 C-rrent Capital Total ent Cnt Capttal Total Current Capital Total Current Capital Total Current Capital Total Social Security Payments. Pensions and Family Allowances 3 ,1 3I - 3 , 8 3,797 - 3-797 1,709 1,709 2 291 -2,455 - 2.455 State Enterprises: 1 ,552 951 1, 505 1589 647 2 6 .,0s0 36 86 1,319 3 5 0 1,66R 196 99 695 Railroads 579 114 93 472 13 3 604 254 72 506 494 86 580 197 53 250 Airline (LAN) 45 7 52 31 1 32 20 - 20 - - - - - - Shipping (EMPREMAR) 40 7 47 42 0 43 18 18 - - Bus (ETC) 71 7 78 64 2 66 51 2 33 - 22 22 8 8 16 Ports (EMPREPORT. EMPORCHI) 124 31 155 107 12 119 52 15 66 6 32 38 11 - 11 Agricultural: 591 712 1,353 808 445 1,253 552 196 779 780 185 956 2P3 9 292 CORA (86) (624) (704) (178) (414) (592) (96) (177) (273) (78) (69) (148) (47) ( 5) (5S) INDAP (182) ( 48) (229) (21') ( 4) (222) (223) ( 5) (228) (93) (84) (177) (45) (- ) (45) SAG (243) (23) (266) (210) ( I0) (250) (119) (13) (152) (145) ( 7) (151) (90) 1) (91) ECA ( - ) ( F) ( 5) ( 78) ( 2) ( 40) ( - ) ( 2) ( 2) (791) (10) (801) ( I ( Other (R0) (11) ( 91) (164) ( 6) (169) (144) (1) (145) (142) (15) (157) (100) ( 2) (lO3) Mining (ENAMI) 102 2 174 65 54 119 45 45 90 - 24 24 96 2e 129 EMPRECAN - - - - - - 1,040 7 1,047 - - - - - - CORFO 5 8R1 886 - q4 84 58 148 207 137 1,934 2,071 75 757 832 Housing (CORVI, CORHABIT, etc.) 165 1,188 1,351 194 1,048q 1,242 145 1,135 1,281 175 80, 978 136 67 199 Health (SNS, SERMENA, etc.) 1,719 37 1,756 2,161 29 2,100 1,526 16 1,541 1,597 51 1,628 1,142 58 1,160 Educational institutions 1, 500 56 1,556 1,521 25z6 1,777 1,036 290 1,326 1,969 2535 2,203 1,235 143 1,57c Public 910 51 960 909 256 1,165 606 241 847 1,219 178 1,598 761 P9 °50 Private 591 , 596 612 0 612 431 49 480 750 56 806 474 54 52° State Bank (BECH) 2 - 2 200 - 200 217 - 217 - - - 385 -38h Other 1,473 305 1,778 1,719 ,97 2,112 1,291 334 1,625 1,951 1,947 3.899 1,519 419 1,937 Total 10_228 I.418) 1  46 11 l,12 9.457 13,640 8L055 2,160 10,298 9,458 5,500 14,738 7,544 1,S19 9,062 Source: Table _5.11 Table 5.13: CHILE - SUMMARY OF PUBLIC SECTOR FINANCIAL MOVEMENT, 1967-74 (Thousands of current pesos) 1967 1968 1969 1970 1971 1972 1973 1974 Current Revenues 1l1799.3 16,575.2 24,526.4 34,819.8 46,798.3 77,592.1 360,067 4,137,162 Central Government 6,312.2 8,757.6 13,068.6 19,302.3 23,602.9 38,300.8 195,834 1,841,857 Decentralized agencies 5,487.1 7,817.6 11,457.8 15,517.5 17,502.2 30,101.6 94,798 2,295,305 Public enterprises n.a. n.a. n.a. n.a. 5,693.2 9,189.7 69,435 n.a. Current Expenditures 9,230.7 12,645.4 18,350.2 28,658.0 46,577.9 88,128.2 378,137 3,530,949 Fiscal sector 2,955.7 3,954.7 5,619.8 9,618.2 14,694.7 28,561.5 119,779 894,381 Decentralized sector 6,275.0 8,690.7 12,730.4 19,039.8 23,845.6 45,126.3 141,878 2,636,568 Public enterprises n.a. n.a. n.a. n.a. 8,037.6 14,440.4 116,480 n.a. Public Sector Surplus or Deficit -) 2,568.6 3,929.8 6,176.2 6,161.8 220.4 -10,536,1 -18,070 606,213 Capital Revenues 1,670.9 2,698.2 4,218.7 7,233.1 21,199.8 47,930.7 257,048 1,497,534 Central Government 572.1 934.8 910.3 2,745.6 12,112.0 27,532.3 134,912 907,684 (Domestic loans) (401.6) (677.2) (548.0) (2,439.2) (11,509.7) (26,592.8) (130,955) (568,610) (Foreign loans) (170.5) (257.2) (258.5) (125.4) (198.6) (97.5) (63) (277,048) (Other) 1/ (-) (0.4) (103.8) (181.0) (403.7) (842.0) (3,894) (62,026) Decentralized agencies 1,098.8 1,763.4 3,308.4 4,487.5 7,328.4 15,062.3 86,136 589,850 (Domestic loans) (128.9) (202.0) (521.5) (1,028.3) (3,855.7) (10,504.3) (20,892) (232,328) (Foreign loans) (425.6) (655.1) (1,163.4) (987.4) (696.7) (543.5) (1,309) (63,464) (Investment income)2/ (544.3) (906.3) (1,623.5) (2,471.8) (2,776.0) (4,014.5) (63,935) (294,058) Public enterprises n.a. n.a. n.a. n.a. 1,759.4 5,336.1 36,000 n.a. (Domestic loans) - - - (1,652.8) (5,123.1) (34,904) - (Foreign loans) - - (35.6) (51.2) (194) - (Investment income) - - - - (71.0) (161.8) (902) Various Adjustments - - - - -1,939.5 -4,125.0 -61,972 -380,623 Available Financial Resources for Capital Expenditures 4,239.5 6,628.0 10,394.9 13,394.9 19,480.7 33,269.6 177,006 1,723,124 Capital Expenditures 4,239.5 6,628.0 10 394.9 13,394.9 19,480.7 33,269.6 177,006 1,723,124 Total public investment 3,509.4 5,002.2 7,217.8 9,783.8 15,939.3 28,555.8 163,736 1,230,369 (Direct inivestment) X/ .. .. ..,,(10,549.6) (19,274.8) (91,107) (989,601) (Indirect investment)4/ .. .. .. .. (5,389.7) (9,281.0) (72,629) (240,768) Amortization of the public debt 406.5 758.8 1,641.4 2,149.9 3,541.4 4,713.8 13,270 492,755 (Domestic debt) (130.9) (275.6) (588.4) (869.6) (1,672.9) (3,878.4) (5,304) (206,070) (Foreign debt) (275,6) (483.2) (1,053.0) (1,280.3) (1,868.5) (835.4) (7,966) (286,685) Other 323.6 867.0 1,535.7 1,461.2 - 1/ Includes pesos 50.3 thousand statistical discrepancy in 1969; and pesos 18.0 thousand statistical discrepancy in 1970. 2/ Includes pesos 0.1 thousand statistical discrepancy in 1970. 2/ Corresponds to capital formation, purchases or sasets and other capital expenditures. Corresponds to transfers and financial investment. Source: Ministry of Finance Table 5.14: CHILE - CONSOLIDATED INCOME OF THE PUBLIC SECTOR (Thousands of current pesos) 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 Current Revenues 5868.0 8691 1 11,799.3 1 7.2 24,5264 34,819.8 46,798.3 77,592.1 360,067 4,_37,162 Sales of goods au,d services 1,099.3 1,521.3 2,220.8 3,210.0 4,714.8 5,122.8 7,401.4 11,653.7 77,087 1,571,166 Income from investments 139.5 182.0 282.7 559.0 993.2 913.9 738.2 1,336.1 8,850 54,796 Social taxes L,201.5 1,699.3 2,162.5 2,927.9 4,236.6 6,422.3 10,126.2 19,096.7 57,590 230, 192 Special taxes - - - - 1,344.6 2,272.2 4,047.6 5,940.3 13,716 352,536 Direct taxes 1,363.5 2,117.9 2,711.5 3,434.9 5,068.0 7,664.4 7,853.7 10,047.6 57,652 662,282 (Income) (635.2) (952.1) (1,362.5) (1,738.2) (2,491.7) (3,765.2) (6,093.8) (8,257.4) (52,625) (419,912! (Property) (321.3) (356.9) (417.1) (534.6) (560.4) (798.5) (1,282.4) (1,605.9) (4,1921 (44,694) (Copper) (407.0) (808.9) (931.9) (1,162.1) (2,015.9) (3,100.7) (477.5) (120.2) (-) (158,96L) (Other direct) (6) (-) (-1 (-) (-) (-) (-) (84.1) (835) (38,715) Indirect taxes 1,678.1 2,506.7 3,339.6 4,932.1 7,402.5 10,645.5 14,802.5 26,093.6 124,395 980,028 (Sales) (767.5) (1,117.2) (1,595.2) (2,760.9) (3,367.7) (4,745.0) (7,650.2) (13,325.1) (64,366) (457,615) (Production) (229.5) (296.9) (429.0) (636.5) (930.3) (1,383.3) (1,921.9) (4,442.3) (24,931) (222,544) (Service) (179.0) (299.1) (389.2) (642.1) (951.9) (1,350.6) (1,634.4) (2,661.3) (12,158) (64,063) (Legal services) (142.5) (226.7) (251.7) (394.0) (693.1) (991.6) (1,251.9) (1,878.4) (7,187) (54,408) (Foreign trade) (347.2) (549.0) (664.0) (986.4) (1,451.5) (2,047.6) (2,336.1) (3,776.3) (12,254) (176,004) (Other indirect) (12.4) (17.8) (10.5) (12.2) (26.0) (127.4) (8.0) (10.2) (3,499) (5,394) Transfers of the public sector - - - - 99.8 538.7 51.1 177.7 4,240 42,438 Other cu,rrent revenues 386.1 663.9 1,082.2 1,511.3 638.5 1,216.9 1,424.3 3,246.4 16 ,537 243,724 Adjustment for foreign exchange transactions - - - - 10.4 23.1 -9.5 - - Capital Revenues 1,294.6 1,482.2 1670.9 2,698.2 4,168.4 7,215.0 21,199.8 47,930.7 257 048 1,497,534 Sales of assets 20.3 11.7 18.5 81.2 214.5 111.9 202.6 397.4 32,728 52,598 Loan recsperations 178.9 213.8 300.7 455.7 761.3 1,097.3 1,496.7 1,885.1 6,603 39,232 l Domestic credit 409.6 510.3 530.5 879.2 1,069.5 3,467.5 17,018.2 42,220.2 186,751 778,523 , Foreign credit 656.0 702.0 596.1 912.3 1,421.9 1,112.8 930.9 692.2 1,566 340,512 ° Other revenues 29.8 44.4 225.1 369.8 456.1 1,425.5 1,551.4 2,735.8 29,400 286,669 l (Bonds) - - - - (119.4) (869.2) (624.5) (1,250.4) (2,342) (170,457) (Savings deposits) _ - - (99.0) (131.0) (163.6) (-) (19,569) (9,535) (Other resources) - - - - (53.5) (219.9) (90.1) (174.7) (- [65,924 (Public sector transfers) - - - _ (92.1) (63.4) (23.6) (69.8) (2,201) (Other capital revenues) - - - - (92.1) (142.0) (649.6) (1,240.9) (5,288) (40,753) Total Revenue 7,162.6 10,1_73.3 13,470. 2 19, 273.4 28,4_49.7 42,052.9 67.998.1 125,522.8 617_115 5,634,696 Miscellaneous Adjustments - - - - 295.4 - -1,939.6 -4,125.0 -61,972 -380,623 Owing to exchange operations - - - 245.0 - - -198.2 5,020 -115,804 Cash balances - - 1,939.6 -3,950.9 -66,992 -267,738 Exchange fluctuations - - - - - - - -0.7 - 2,919 Statistical discrepancy - - - - 50.4 - - - - Total Financing 7,162.6 101_73-3 13,470.2 19, 2 73.14 28745.1 42,052.9 66,058.5 121,397.8 555,143 5,254,073 Source: Ministry of Finance Table 5.15: CHILE - CONSOLIDATED EXPENDITURES OF THE PUBLIC SECTOR, 1965-1974 (Thousands of current peros) 1965 _ 1966 _ 1967 1969 1970 1971 1972 1973 -197 Current Expenditures 4,772.0 6,800.7 9,230.7 12,645.4 18,350.2 28,658.o 46,577.9 88,128.2 378,137 3,530,949 Operational Expenditures 2,762.0 4 023.9 5_225.5 7 225.2 10 980.6 16,480.2 25 428.9 48 694.9 241,658 2 561 390 Wages arnd salaries 1,723.2 2,506.7 342.2 61,982.9 11,373.0 35,847.1 131,379 1To69 952 Purchases of Goods and Services 1,038.8 1,517.2 1,793.3 2,458.4 3,997.7 5,107.2 7,312.7 12,847.8 110,279 1,491,438 Transfers 1,881.9 2,710.5 3,834.1 5 134.4 7 080.2 11 882 1 20 254,8 37 414 r 132,292 927 015 Pensions and Iamily Atlowances 1,530.2 2,202.0 2,989.? 5,427.3 u2 76607 (Pensions) (1,017.0) (1,486.0) (2,009.1) (2,624.0) (3,671.1) (6,034.7) (11,066.2) (19,537.1) (56,411) (404,817) (Family Allowances) (513.2) (716.0) (980.6) (1,213.8) (1,756.2) (2,629.8) (4,319.4) (9,150.4) (20,196) (170,977) Transfers to the Private Sector 1/ 156.7 273.5 412.9 646.1 901.7 1,295.2 2,380.2 5,126.5 38,475 137,651 Transfers to the Public Sector 2 115.1 110.4 199.1 322.6 210.7 1,183.2 1,495.7 2,675.5 17,139 62,802 Transfers to the Fiscal Sector - - - - - - - 40.4 116 774 Interest on the Public Debt 79.9 124.6 232.4 327-9 540.5 739.2 993.3 884.8 2,955 149,994 (Internal) (24.6) (34.3) -(76.o) (88.8) (101.8) .. (314.0) (632.2) (1,007) (105,935) (External) (55-3) (90-3) (156.4) (239.1) (438.7) .. (679.3) (252.6) (1,948) (44,059) Other Current Transfers 128.1 66.3 171.1 285.8 289.4 295-7 894.2 2,018.6 1,187 42,544 Capital Expenditures 2,390.6 3,372.6 4,239.5 6,628.0 10,394.9 13,394.9 19,480.6 33,269.6 177,006 1,723,124 RCa Investment 1,602.6 2,299 2 727.2 3,948.3 5,388.5 79019 11,1761 21169.1 94927 1,045,064 Capital Formation 1,530.3 2,226. 3,314. 5,002.2 10,159.6 1o 056.3 956,407 Purchase of Assets 27.7 26.3 74.7 312.7 165.4 206.0 335.4 1,089.7 5,378 31,373 v Transfers 46.6 47.1 86.9 321.2 220.9 908.5 681.1 2,023.1 4,803 57,284 (To Private Sector) (1.2) (1.0) (3.6) (13.8) (22.1) (112.5) (36.2) (385.9) (1,391) (8,153) (To Central Government) (-) C-) (-) (-) (-) C-) (0.5) (46.6) (630) (770) (To Public Sector) (45.4) (46.1) (83.3) (307.4) (198.8) (795.5) (644.9) (1,590.6) (2,782) (48,361) Financial Investment 517.7 736.1 1,105.8 1,816.9 3 365 0 3,343.1 4 763.1 7 257.8 67,826 183 484 Purchase of Securities 31. 1596 357-9 252.5 2 I 7 8 6.1 36,599 5 2,5 Loans 360.4 545.7 892.7 1,168.4 1,700.9 2,856.4 3,428.9 4,471.7 20,778 130,898 Devaluation of Savings Deposits 22.5 - 29.2 18.1 9.3 - 94.o - 10,449 - Cash Balances 103.4 181.9 24.3 292.5 962.4 86.8 - Other Capital Expenditures - - - 104.0 44.0 147.4 54.5 - - Amortization (Public Debt) 268.3 336.7 406.5 758.8 1641.4 2,149. 41.4 4713.9 1 270 492,75 Internal 137.7 153.3 130.9 275.6 588. 1, 672.9 3TF78-5 5,304 206,070 External 130.6 183.4 275.6 483.2 1,053.0 1,280.3 1,868.5 835.4 7,966 286,685 Other Capital Expenditures - - - 128 8 983 1,821 Total Expenditures 7,162.6 10,173-3 13,470.2 19,273.4 28,745.1 42,052.9 66,o58.5 121,397.8 555,143 5,254,073 Includes transfers of the Central Government and other public agencies Transfers to agencies in the public sector not included in these data. Source: Ministry of Finance _ 'C2 - P.,e I of 2 Table 5.1t, CHILE -EXPENDITURES OF T 8 PUIBLIC SECTOR, FUNCTIONAL CLASSIFICATION, 1965-74 (Tho.--ad of p,a.s) 1965 1966 1967 ~~~~~~~~ ~ ~ ~~~~~~~1968 1969 1970 Ioa F. -'. Total Curten Capital Total C.rr-n Capital Total C-ret aual .otal-'~- Curten Capital Governstnt ~~~~~~~~~~~205.7 347.3 490.7 442.0 48.7 749.0 664.8 84.2 1,439.2 1,297.2 142.0 2,145.S 1,855 2 290.3 Pqlitica Admlnistrtion '37.7 69.2 102.1 102.0 0.1 122.3 lll6 d 5.5 178 8l 163 .7 l5.1 284.7l 265 ,6 ~ 1.'I FanilAd-li--rti- 109.5 88. 716 24. 30.4 63. 80. 51. 976.7 909.4 67. 1.4. 1199.1 50. Co=un ity adiltain 29.a 46. 5b6.6 40.0 16.6 108:6 87.2 21.4 '67. 114.0 53.7 450.8 238.2 212.6 Legal Ad i.i-.t-al - - - - _ Eternal R.latit.g 29.5 42.6 6n.4 58.8 1.6 85.8 80.0 5.8 115.8 110.1 S.7 160.3 152.3 8.0 Frotect ion, Pesoa .. Prpet 223.3 310.1 405.4 400.0 5._4 550.8 535.8 15.0 771.5 756-2 15.3 1,307.9 1,273.0 34.9 Justice 2 73.9 99.6 96.3 3 151.5 139.6 Il.'i 2In.6 199.4 11.2 340.8 315.2 25.6~~~~~~11:1 1914 1,:,2 3 11 111.2 15. Plice 1563 Ill.6 279.6 277.7 1.9 3668 363, 3. 51. 1. . 99.7 891 . Other 16. 23.6 26.2 26.0 0.2 32.5 32.4 n 41.3 40.9 0.4 67.4 66.a O.b Def--s 402.7 565.9 697.0 627.2 69.8 939.2 819.7 119.5 1,349.6 1,114.3 235.3 2,436.9 2,026.4 410.5 A-m 112.9 191.79 240.7 M:973 21. U 14. 274.8 3.5 4727.3 370.1 5,7.2 889.9 693.3 19,6:6 N-Y y 6. 3.8 28. 6. 4.3 3I21 354.0 38.1 574.3 480. 93. 92.4 862.'6 7. Ail forc 73.8 107.1 144.8 121.1 23.7 203.1 163.1 40.0 303.4 222.6 80.8 SSI.O 421. 129.5 Other 48.8 29.1 21.9 21.1 0.8 29.7 27.8 1.9 44.6 41 .0 3.6 53.6 49.0 4.6 Publi elhec 660.1 802.6 1,069.9 922.9 147.0 1,392.3 1,227.0 105.3 2,073.6 1,774.8 298.8 3,408.4 2,912.6 495.8 P.blic elh601 720 949 821 9. 1,339.,7 1,175.2 164:5 1,93'1.7 1,69II6 H33.1 30. 7421 2 8.0 964. i1~ 21 S.-Ia Assistance, etc. 60.0 60.4 105.0 50. 54.2 52. 518 0.8 141.9 76.2 657 218. 127.6 90 7 Rouing and C'rb.ni..ti- 658.7 913.3 1212 186.6 1.027.6 1,685.8 225.3 1.460.4 2.278.4 2 16.4 2,6. 3.327.9 406.6 2 2 RDusing ~~~~~~~~~~~523.4 776.0 881.2 92.6 788.6 1,205.0 118.3 1,086.7 1,775.3 169.9 1,605.4 2,576.5 285.7 2,290.8 Urbanization ~~~~~~~~~135.3 13 7.3 333.0 94.0 239.0 480.8 107 .0 373.8 503.1 46.5 456.6 751.4 120.9 630.5 Social 8ecuity 1,669.4 2,353.0 3.146,2 2,923.2 223.0 4015 3,695.1 346.4 5383 4,973.9 409.4 9,407.3 8,671,1 736.2 Ed ...ti.a 683.8 1.019.8 1,406.1 1,161,4 244.7 1,986.6 1,7. 414.0 2,878.3 2,467.7 410.6 4,649.2 3,983.3 665.9 Primary ~~~~~~~~~~~274.7 398.9 506.9 C85.4 215 678 639.3 8.5 1,034.8 946.6 88. 1,630.3 1,559.6 70.7 Secondary 5~~~~~~~~~~~9.4 93. 152.9 136.9 16.0 142.7 142.6 0.1 308.1 275.0 33.1 463.0 428.7 34.3 P-ofesio.-l & Teehnical 597 1061 I759 1157 60.2 174.l 112.7 61.4 31,4.3 289.4 24.9 468.9 345.2 123.7 University ~~~~~~~~~~206.5 3F6.6 368.2 333.'3 34 .9 651.9 602.3 4,9.6 775.6 711.6 64.0 1,,354.3 1,2751.2 83.1 C-ns -cti- 76.7 96.3 167.8 55.7 112.1 149.8 20. 129.6 169.4 13.5 155.9 221.4 45.6 17. Miseellaneous b/ 6.~~~~~~ ~~~8 8.7 34.4 34.4 - 218.6 538 148 143.4 127. IS.S 30. 6. 138. Schoql Admnsrto - 1.7 1.'7 - ___2.9 2.9 J.N A.E.B. - - - - - - - - 132.7 103.7 29.0 205.4 165.1 40.3 Agricultur and Fishin g 270.3 426.6 628.9 228.1 400.8 936.2 324.9 611.3 1,17 399.3 912.7 1761.2 643.62 1.117. Irrisation /6 d 90.7 129.7 lO.0 119.7 9~~~~~~~~~~~~~~~ ~~~~~4.7 20 .0 74.57 1073.6 0.6 10,1.0 167.9 6.4 161.5 TenclAssistanc 119.2 220O.3 226. 11.1 II. 492. 20. 28. 0.4 262.4 145.0 615.1 425.7 189.4 Colonization 4.2 ~~~ ~ ~~~~~~~~6.1 6.6 81 05 98 .5 .3 27 1.5 02 25.4 25. 0.1 Fishiag 27.7 6.8 6'.8 54. 7.5 13.5 9.1 4.4 17. 13.6 3.8 24.6 208 . Ag--aria R'fo- 11.8 973 193.4 38.2 155.2 299,5 53.4 246. 558.8 77. 481. 84. 1237.9 736.8 Geneal Ad.iai.trati.a 0.71 5.4 8.8 6.4 2.4 26.0 24.7 1.3 32.9 32.4 U. 28.2 27.5 0.7 CORF0 Agricultea_ __ _ _ - - 184.92 - 184'.2 258.3 - 25.3 _ansport & C-=icatio. 953.1 1,7. 1,7. 1,074.0 70L d 2.476.4 1,487.7 988.7 3,560.7 2,097.0 1,463.7 538.1 3125.7 2,060.4 Ai, 100.8 156.1 258.5 129.3 129.2 417.7 185.4 232.:3 483.n 3126.4 l56.6 528.4 458.5 69.99 W. -e 158.1 178.4 251. 208.8 427 364. 292. 72. 51. 4177 95.9 731. 586.6 144. Urba. 45.4 59.4 9:5. 69.0 '26.1 94.4' 91.3 3.10 1lO9.64 105.1 4.3 162.9 141.7 21.2l Rtad 287 .5 441.7 413.1 47.6 365.5 572.1 78.2 493.9 651,4 - 651.4 1,096.6 - 1,96. Rail 304. 432.5 557.6 466.6 91.0 782.5 649.8 132.7 1,048 .8 787.6 261.2 1,502.6 1,228.9 273. F[a & t:almuicto 5'. 15. 178. 147.6 31.2 233.0 190.1 42.9 369.4 246.0 123.4 525.4 307.7 217.7 General1 Ad.iiat-atl- 0.9 2.1 21.2 5.1 16.1 8.2 0.9 7.3 385.1 214.2 170.9 638.9 402.3 236.6 Miaing 254.7 363.3 519.9 316 d 203 1 955.5 478.9 476.8 1,346.7 L7_2.8 573.9 2,0_07.2 1,187.7 819.5 Eaergv I'd F""l 549.9 696.1 918.b 424.3 494.3 1.264.7 665.0 599.7 1,887.0 1.139.9 747.1 1,984.4 1,355.7 628.7 Industry and Commerce ~~~~~149.2 331.3 474.1 271.3 202.S 754.4 466.2 288.2 1,162.5 654. 508.3 1,208,3 283.7 924.6 Other ~~~~~~~~~~~~~481.7 669.0 723.2 252.7 470.5 1,541.0 482.4 1,058.6 3,292.3 681.5 2,610.8 3,222.6 933.4 2,289.2 Fublic Debl 348.2 461.3 638.9 232.4 406.5 1.,C86.7 T27.9 7 58.8 6 2 182.0 540.6 1,641.4 2,889.51 7319.2 2, 149.9 'stiscellanaous ~~~~~~~~133.5 207.7 84.3 20.3 64.0 454.3 154.5 299.8 1, 1t03 C! 140.9 969.4 c! 333.5c 194. 39.3 'Otal ~~~~~~~~~~~~7,162.6 10,173.3 1,02 9,230.7 4,2_39.5 19274 12,645,4 6,628.0 28.745.1 18,350.2 10,394.9 42,052.9 28,658.D 13,394.9 _ IC3 - Page 2 of 2 Table 5._- Cdl1E - EXPENDITURES OF ThE PUBLIC SECTOR, FPUECTIONAL LASSI0ICAT1ON, 1965-74 (Thousands of pesos) 1971 1972 1973 1974 Total Crtent Capital Taotl C-r-eot Capital Total Curroot Capital lotal Cnrrent Capital Government t3,002.1 2,770.7 231.4 6,S36.3 6,521.1 315.2 23,597 22,734 863 264,798 145,219 119_579 Politiclu Administration 414.4 406.4 8.0 784.2 715.9 68.3 2,728 2,448 780 22,678 17,050 5,678 Fi-..ttial Administr-tio- 1,721.1 1,630.3 90.8 4,283.9 4,126.7 157.2 12,966 12,672 294 155,074 49,066 106,008 Ceoss-nity Administ-ation 568.5 447.9 120.8 1,338.2 1,256.8 81.4 5,340 5,186 154 59,783 53,030 6,753 Legal Administrticn - - - - - - 1,027 1,026 1 9,278 9,276 2 EIternal Relations 298.1 286.1 12.0 430.0 421.7 8.3 1,536 1,402 134 17,985 16,797 1,188 Pr-otctin, Personal 4 Property 1,943.5 1,867.6 75.9 3,866.9 3,712.1 154.8 15,479 14,732 747 1 25,124 12,043 Justice 559.1 488.3 61.8 966.5 854.2 112.3 2,441 2,041 400 19,647 16,933 2,714 Polite 1,282.5 1,270.7 11.8 2,666.0 2,628.3 37.7 12,499 12,164 335 114,064 104,756 9,308 other 110.9 108.6 2.3 234.4 229.6 4.8 539 527 12 3,456 3,435 21 Defense 3,013.9 2,929.1 84.8 d 5,961.1 592.3 42,163 38,027 4,136 432,772 372,169 60,603 Amy 1,030.6 999.9 30.7 2,522.2 2,240.0 282.2 12,943 11,568 1,375 170,584 137,888 32,696 Navy 1,301.1 1,269.5 31.6 2,640.0 2,487.0 153.2 16,016 14,620 1,396 168,575 155,153 13,422 Ait fo-t 568.8 554.1 14.7 1,240.2 1,102.8 137.4 6,520 5,295 1,225 83,525 69,840 13,685 Other 113.4 105.6 7.8 150.8 131.3 19.5 6,684 6,544 140 10,088 9,288 800 Publi e Health, etc. 5,429.7 4,761.3 668.4 10,845,0 9,677.8 1,167.2 34,142 28,922 5,210 253,319 214,185 39,134 Public Health 5,058.3 4,571.0 487.3 12,191.5 9,295.5 896.0 32,164 27,835 4,329 242,215 207,228 34,987 Social Assistatce, etc. 371.4 190.3 181.1 653.5 382.3 271.2 1,978 1,087 891 11,104 6,957 4,147 Honting acd Urbaniatio- 6,061.0 835.3 5,225.7 12,308.9 1,428.9 10,880.0 87,876 6,176 81,70 310,020 27,889 282,131 Heating 4,131.9 511.4 3,620.5 8,521.7 903.3 7,538.4 72,200 3,824 68,376 196,330 15,915 180,415 Urbanization 1,929.1 323.9 1,605.2 3,787.2 445.6 3,341.6 15,676 2,352 13,324 113,690 11,971 101,716 Social Sec-rity 15,761.6 14,795.9 965.7 28,690. 26,692.4 1.997.9 82_915 78,834 4,081 628,774 578_393 50,381 Edcation 7532.7 6,666,4 866.3 14,8_99.3 13441.5 1,457.8 57.891 47,613 10,278 404,363 360,210 44 153 Primary 2,878.4 2,794.3 84.1 6,254.9 6,110.2 144.7 20,172 19,932 240 135,688 134,342 1,346 Seda-y 631.0 592.4 38.6 1,070.9 1,069.6 1.3 3,703 3,597 104 22,470 22,449 21 Pofiessio-al & Technical 678.2 445.3 232.9 905.7 866.7 39.0 4,960 4,343 617 26,333 23,949 2,384 llniv-rsity 2,311.3 2,199.2 112.1 4,995,0 4,653.2 341.8 19,981 17,448 2,533 102,091 90,865 11,226 C-o-stcative 391.7 121.5 270.2 435.3 131.0 304.3 2,137 316 1,821 14,840 1,745 13,095 Miscellaneons b, 270.4 197.5 72.9 1,222.9 596.3 626.6 6,893 1,931 4,962 102,640 86,571 16,069 Schcol Administration 5.2 5.1 0.1 14.6 14.5 0.1 45 44 1 301 289 12 J.N.A.E.8. 366.5 311.1 55.4 - - - - - - - - - Agriclit-re and Fihig 3,886.9 1,3961 2,490.8 7022.4 2,38.6 4,483.8 25,601 11,109 14,492 123,381 60_024 63,557 Irrigation 381.2 71.3 309.9 838.1 122.9 715.2 3,623 523 3,100 33,070 680 32,390 T-choical Adsist-nco 1,330.9 844.9 486.0 2,477.9 1,469.5 1,008.4 13,956 7,757 6,199 58,243 41,447 16,796 celoniation 38.9 36.8 2.1 79.3 64.7 14.6 228 209 19 1,486 1,413 73 Ptithing 41.5 35.7 5.8 97.4 66.1 31.3 261 193 68 1,797 4,694 103 Agrsrian Reform 1,617.7 282.6 1,335.1 2,763.4 611.9 2,151.5 6,841 1,958 4,883 24,154 11,461 12,693 b--ors1 Admioistrotion 124.8 124.8 - 191.1 191.1 - 212 212 - 1,960 1,960 CORFO Agriceltare a/ 336.6 - 336.6 521.7 12.4 509.3 - - 0thcr 15.3 - 15.3 52,5 - 52.5 - - - 2,871 1,369 1,502 Iransport 4 Comnncation 7,197.4 4,923.8 2,273.6 12 401.6 8 641.2 3,759.7 52,455 32,701 19,754 568,928 316 341 252 587 Air 793.9 679.5 114.4 1,620.4 1,344.2 276.2 7,463 6,373 1,090 76,200 63,148 13,052 Watcc 1,089.1 903.3 185.8 2,232.1 1,766.7 465.4 9,069 6,935 2,134 72,500 55,102 17,398 Urban 582.4 258.8 323.6 1,087.4 463.3 624.1 8,917 2,692 6,225 81,968 14,076 67,892 Read 1,367.8 244.2 1,123.6 2,118.6 328.7 1,789.9 9,101 1,325 7,776 118,441 - 118,441 Rail 2,311.6 2,015.5 296.1 3,773.9 3,412.6 361.3 12,463 11,237 1,226 105,174 92,273 12,901 Mall & Telecommanicaci-n 761.3 565.5 195.8 1,074.3 984.7 89.6 3,421 3,266 155 81,245 66,749 14,496 'lscellaneous 203. - 20.8 7,7 - 7.7 219 - 219 Cencral Admlsiotratlos 270.5 737.3 13.5 487.2 341.7 145.5 1,802 0i3 929 33,400 24,993 8,417 litiog 2,239.9 1,818.9 421.0 3_397,2 2,839.3 357.9 22,464 18,219 4,245 261,624 234,163 27.461 nergy and Fela 2,378.8 1831.6 547.7 4319 3,803.7 315.3 22,127 19,567 2,560 615,320 470,254 145,066 ndaustry nd Cotmerce 1,919.5 639,9 1,279.6 2,060.3 1,293.2 767.1 62,063 54,375 7,688 605,710 476,604 129,106 Other 5.691.6 1,341.4 4,350.2 81_97.2 1,376.6 6,620.6 26,370 5,128 21242 647,697 150_374 497,323 Public Debt 4,534.7 993.3 3,541.4 5,242.3 528.4 4,713.9 16,226 2,956 13,270 642,749 149,994 492,755 Miscellaneous 1,156.9 348.1 808.8 2,954.9 1,048.2 1,906.7 10,144 2,172 7,972 4,948 380 1,568 t1 66,058.6 46.5h78. 0 1 9,480.6 121,397. 88,126.2 33,269.6 555,1 43 3 78,137 17706 2254,073 3,530,949 72324 ./ Ic 1965-68 l-clndnd i0 technical assistance. / Itcludcs cnlntcal disseensatien and stud-t .nssistance. c/ Icclades p-eso 0.96 millien cah balacces in 1969; p-osa 0.09 nillien it 1970. Sforc.a YiiErty of Pi-anca Page I of 2 fable '.1?: CHI Li - PUBLIC SEClUB EPECP)TtDt ES BY FUNtmoN,19-17 Thousads of peso at Deceber 1969 pe ore) 1969 1966 '969 1968 1969 1970 Fortia- Tarol . Cor Coral. Corec Capote Total C-rren Capita Total Correct Capitl Total Correc Capitol _____-_-__ 526 123 155 7 79 86 17043 926 117 1, 534 1_ 312 5 2 ' 777 25 1491 234 Pc,i cite- le ra , - i-a 96 144 183 180 3 170 163 7 190 17C 16 229 213 16 p,no-- odritrr ra 280 393 478 423 54 672 930 72 1,041 969 72 1,005 964 41 rr trot ~~~ ~~71 97 103 71 29 151 121 30 179 121 58 362 191 171 cE. - rra - 75 Z 89 106 134 2 169 III a 123 117 t 129 122 7 7~~~~9ijp,l'ereoa1ond tair 325_1 646 7 10 703 10 26_46 2 22 -806 16 112.0234 2 me.tier 126 194 176 170 211 194 17 224 212 12 274 293 21 Pal re 403 443 493 490 3 211 506 5 004 350 41 723 716 7 Celee 43 49 46 46 0 45 45 0 44 13 1 54 54 1 Decense 1-037 1,179 77229 7_406 _123 1,307 17141 166 1.438 1.187 2019597 17629 330 Anry 289 400 424 387 37 438 383 00 403 094 61 715 557 198 Nova 428 490 511 461 43 546 493 53 612 513 100 738 693 64 Air tote 169 203 250 214 42 283 227 56 323 237 86 443 339 104 Orhee 125 61 39 37 2 41 39 2 46 44 4 43 39 4 Prblic Health. cc 1,689 1,671 17886 1,627 209 17937 17087 1_47 2,309 1,891 368 2,740 2,341 399 Peblic health 1,5330 1.346 1,701 1,038 164 1,865 1,636 229 2,039 1,810 248 2,364 2,238 326 -inc al -otst-, etc. 104 126 180 89 96 73 72 1 131 81 20 170 102 73 PoReln nod flrbaniao1.688 1,902 2,141 329 1,8_12 2.347 314 2,033 2.421 2--31 2,197 2 617 327 2 346 Teasing ~~~~~~ ~~~~1,339 1,816 1,534 163 1,390) 1,678 160 1,512 1,892 181 1,711 2,271 230 1,841 I rbaoieerioa ~~~~ ~~~ ~~346 286 587 166 421 669 149 528 536 50 486 60C 97 307 Sorrol Orc-rer 4.272 401 ~ 3 542 5,134 393 5.626 3,144 482 5,742 5,306 437 7,562 6,970 592 idacotlon 1.700 77474 4,47% 77048 ~~~~ ~~~~~~~~~~~~431 'M 760 1897 370 3.0b7 2629 430 3,737 3.202 535 P'inoe 703 831 094 60 36 932 690 12 1,103 1,038 94 1,312 1,054 56 scroedoty ~~~~ ~~~~ ~~~152 194 370 241 28 199 199 3 328 293 33 372 345 28 Proilsoa fa r nrol13 221 313 234 106 242 107 85 335 308 27 377 277 190 fnlaer-oty 326 639 649 588 61 906 839 69 827 758 68 1,089 1,022 67 Conera..r 4i / 196 20t 296 88 198 209 28 101 181 14 467 178 37 141 9fi-tll--oo 17 18 61 61 - 304 75 229 133 136 17 244 133 III School adi---rti-o- . 2 2 --- -2 2 - TAO - - - - 141 110 31 165 133 32 AoRroe-ta an-d Fisbs-c 692 889 4,109 402 -707 _,,303 432W 8-51 1.603 4~23 978 1.416 317 698 Ucelgatlor ~~~~ ~~~~ ~~197 189 229 18 311 132 '8 134 110 1 139 133 5 130 Oruherral ee etoore ~~~~ ~~313 450 430 196 204 688 290 396 434 280 104 493 342 153 Caloerearlon 11~~~~~~~~~i 13 15 14 1 14 13 1 14 13 20 20 0 Pithing 71 14 1fI 06 f3 19 13 I 19 14 5 20 17 3 Agro_i_ refac 137 233 341 67 274 417 74 343 395 82 503 733 511 39 Upttldeaisaro 2 -11 Iao -1 3 _36 _34 2 35 35I 1 23 2'3 1 'Onttag -lcr ae?- - - - .- - ~ 96 -106 21 20 Troosrort ood Coteconet t~~a- 2-4 L 27171 3 aill ,_794 ._747 3,448 2,071 1_376 3,784 2,233 1,359 4, 1 2,51 1 636 Air 208 328 -.00 723 27~8 582 290 323 515 348 167 425 369 16 W tro 403 372 443 361 70 507 407 130 547 445 102 568 471 117 Urban 416 124 160 '22 486 131 127 4 117 112 5 131 114 17 Raod 736 920 726 84 644 796 189 687 894 - 691, 802 - 882 Oa 766 931 933 823 167 1,8 903 184 1,116 839 278 1,206 988 220 Call ao t cnrad cia 14'2 219 315 260 35 324 263 59 394 762 137 422 247 173 Pieclionpeos - - - - - ~ ~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~6 -6-- --- leorral adniaf 5 tear an -.~ ~~~ ~ ~ ~~ 37 0 08 11 - 10 410 271 182 514 323 190 Dbms ~ ~~~~~~~~~~~~-6aI2 7a2 316 359 508 1,330 667 _6_63 1,435 824 611 17613 935 651 ~~~~~ ~ ~~~~~ ~~~~1 aOl, 1_430 61 5 7____ -_ 31 926 -833 2,711 1_213 78116 1 383'm 50 lad err' ord Ca fop-c nO'~~_,8 t690 083a5 421 956 1,050 - 9 431 1 .7 6997 342 971 228 743 rther 7723~~~~~~~~~~-Z3 1,393 1.,275 446 8709 77775 6712 1,473 3.306 7002~ 7782 22720 790 _1242 Ib dtbt 001 961 1,1126 410 716 1,313 4~57 1,056 2,32507 336 l,749u, 2,322c, 59 1,28 8lscs L n' 342 432 '6 13 632 210 417 Il3- 133 l,333 766 156 lIT fatal 77276 277477 77,779 16.274 77744 777~~~~~~~~~~~~~~26831 17634 89'2 30 432 -19.54 11,077 33,804 03,037 10 787 - 45 Page 2 of 2 Table .ly CHILE - PUBLIC SECTOR EXPENDITURES BY FUNCTION, 1965-1974 d/ (Thousands of peace at December 1969 prices) 1971 1972 1973 1974 Function Total Curret Capital Total tot Capital Total Current Capital To1tal Currt -Capital Govermsent 2,011 1,856 155 2,575 2,456 119 1,341 1,292 49 2.602 1,427 1,175 Political administration 279 272 6 295 270 25 155 139 16 223 168 55 Financial administratian 1,153 1,092 61 1,613 1,554 59 737 720 17 1,524 482 1,042 Consunity adniniatratian 381 300 81 504 473 31 303 295 S 587 521 66 Legal administration - - - - - - 58 58 0 91 91 0 EIternal relations 200 192 8 162 159 3 87 80 7 177 165 12 Protection., Personal and Property 1.301 1.251 50 1,456 1,398 58 880 838 42 1.348 1.229 118 Justice 368 327 41 364 322 42 139 116 23 193 166 87 Police 859 851 8 1,004 990 14 711 691 19 1,121 1,029 92 Other 74 72 2 88 86 2 31 30 1 34 33 l Defense 2.019 1.962 57 2.46B 2,245 223 2,397 2.161 235 4.252 3.656 595 Are-y 690 670 20 950 844 106 736 658 78 1,676 1.355 321 Navy 871 850 21 994 937 57 911 831 79 1,656 1,525 131 Air force 381 371 10 467 415 52 371 301 70 821 686 135 Other 76 70 6 57 49 8 380 372 8 99 91 8 Public Health, etc. 3637 3.189 448 4,0585 3,645 440 1941 1,644 296 2.489 2,104 385 Public health 3,388 3,062 326 3,839 3,501 338 1,829 1,582 246 2,380 2,036 344 Social assistance, etc. 249 127 121 246 144 102 112 62 50 109 68 41 Housing and lrbanisation 4,059 559 3.500 4,636 538 4,098 4.996 351 4,645 3,046 274 2.772 Housing 2,767 343 2,425 3,209 370 2,839 4,105 217 3,887 1,929 156 1,773 Urbanization 1,292 216 1,075 1,426 168 1,258 891 134 757 1,117 117 999 Social Security 10.557 9.910 647 10,806 10.054 752 4,714 4,482 232 6,178 5,683 495 Education 5.045 4.465 580 5,612 5.063 549 3.291 2.707 584 3,973 3,539 434 Prinary 1,927 1,872 56 2,356 2,301 55 1,147 1,133 14 1,333 1,320 13 Secondary 422 397 26 403 403 1 210 204 6 221 221 0 Professional anr technical 454 298 156 341 326 15 282 247 35 259 235 23 University 1,548 1,473 75 1,881 1,753 128 1,136 992 144 1,003 893 110 Ctnstrution 262 81 181 164 49 115 121 18 103 146 17 129 Miscellaneoua _ 181 132 49 461 225 236 392 110 282 1,008 851 157 School administration 3 3 0 6 5 0 3 3 0 3 3 0 JNARB 245 208 37 - - - - - - - - - Agricolture and Fishing 2,603 935 1,668 2,645 956 1,689 1.,455 632 823 L1,i2 590 624 Irrigation 255 48 208 316 46 269 206 30 176 325 7 318 Technical assistance 891 566 325 933 553 380 793 441 352 572 407 165 Colonisation 26 25 1 30 24 6 13 12 1 15 14 1 Fishing 28 24 4 37 25 12 15 11 4 18 17 1 Agrarian refons 1,084 189 894 1,041 230 810 389 111 278 237 113 124 General ad8nistration 04 84 - 72 72 - 12 12 - 19 19 - CORFO agriculture a/ 225 - 225 196 5 191 - - - - - - Other 10 - 10 20 - 20 - - - 28 13 15 Transport and touication 4.820 3.298 1.522 4,671 3,255 1,416 2,982 1,859 1,123 5,590 3.103 2.482 Air 532 455 77 610 506 104 424 362 62 749 620 129 Water 729 605 124 841 665 175 516 394 121 712 541 171 Urban 390 173 217 410 175 235 507 153 354 805 138 667 Road 916 164 752 798 124 674 517 75 442 1,164 - 1,164 Rail 1,548 1,350 198 1,421 1,285 136 708 639 69 1,033 907 126 Mail and telecomsunications 510 379 131 405 370 34 194 186 9 798 656 142 Miscellaneuss 14 - 14 3 - 3 12 - 12 - - - Genaral odninietration 181 172 9 183 129 54 102 49 52 328 246 82 MSinig 1.500 1213 282 1,280 1.069 211 1,277 1,035 241 22570 2,301 269 Energy and Fuels 1.593 1,226 367 1.627 1,422 194 1L258 1.112 146 6,046 4,620 1,426 I 1dustry assd Cssrce 1286 428 858 776 487 289 3.528 3,091 437 5,952 4_683 1.260 Other 3,812 898 2.914 3087 594 2.493 1_499 291 1,208 6,364 ,478 4.886 Public debt 3,037 665 2,372 1,974 199 1,775 922 168 754 6,315 1,474 4,841 Miscellancous 775 233 542 1,113 395 718 577 123 453 49 4 45 Total 44,245 31,197 13,048 45,724 _33,13 12_531 31_560 2_1.97 1_.063 51,627 34,695 16,932 a In 1965-68 included in technical assistance. h/ Includes cultural disseminatiea and student assintan-e. c/ Includes peess 0.96 million cash balances in 1969; 0.09 millien in 1970. d/ 1965-72 deflated by official CPI; 1973 deflated by average of official and IBRD adjusted CPIa; and therea-ter by IBRD adjusted CPI. Sourc±: Table 5.19 Table 5.18: CHILE - FINANCING OF PUBLIC SECTOR CAPITAL EXPENDITURES, 1965-1974 (Thousands of pesos) 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 I. Financing Fublic Savings 1,325. 2,6. 3,112.9 4,837.6 7,903.4 8,81.6§.! 3,108.2 -6,45.~2 9,3 l5685 Central Govt. current account surplus 599.8 1,220.1 1,615.9 2,226.7 3,925.7 3,949.0 -2,471.8 -12,424.8 -28,226 159,879 (Revenues) (3,209.1) (4,897.9) (6,312.2) (8,757.6) (13,068.6) (19,309.2) (23,924.4) (38,375.1) (198,178) (1,924,134) (Expenditures) (2,609.3) (3,677.8) (4,696.3) (6,530.9) (9,142.9) (15,360.2) (26,395.7) (50,799.9) (226,404) (1,764,255) Decent. agencies' current account surplus 496.2 670.3 952.7 1,703.5 2,249.7 2,212.8 3,192.3 3,954.0 31,702 353,714 (Revenues) (2,658.9) (3,793.2) (7,831.9) (11,383.8) (16,662.4) (23,801.5) (30,943.2) (53,097.5) (185,269) (3,434,422) (Expenditures) (2,162.7) (3,122.9) (6,879.2) (9,680.3) (14,412.7) (21,588.7) (27,750.9) (49,143.5) (153,567) (3,080,708) Pub. enterprises current account surplus n.a. n.a. n.a. n.a. n.a. n.a. -863.5 -3,033.5 -23,567 n.a. (Revenues) (-) (-) (-) (-) (-) (-) (7,610.7) (11,629.9) (95,894) (Expenditures) (-) (-) (-) (-) (-) (-) (8,474.2) (14,663.4) (119,461) - Other fiscal revenues - - - - 104.5 181.0 403.7 4,014.5 4,639 31,403 Other revenues of the decentralized agencies 229.0 269.9 544.3 906.3 1,623.5 2,471.8 2,776.0 842.8 106,630 1,041,859 Other revenues of the public enterprises - - - 71.0 161.8 3,460 - External Credits 656.0 702.0 596.1 912.3 1,421.9 1,112.8 930.9 692.2 1_566 386,996 To fiscal sector 461.3 500.3 170.5 257.2 258.5 125.4 198.6 97.5 63 323,532 To decentralized agencies 194.7 201.7 425.6 655.1 1,163.4 987.4 696.7 543.5 1,309 63,464 To the public enterprises - - - 35.6 51.2 194 - Domestic Credits 409.6 510.3 530.5 879.2 1,069.6 3,467.5 17,381.1 43,187.6 189,384 1,038,150 To Central Government 321.3 295.1 401.6 677.2 548.0 2,439.2 11,872.6 27,560.2 133,588 805,822 2 To decentralized agencies 88.3 215.2 128.9 202.0 521.6 1,028.3 3,855.7 10,504.3 20,892 232,328 To public enterprises - - - - - - 1,652.8 5,123.1 34,904 - Adjustments - - - _ - - -1,939.5 -4,125.0 -61,972 -380,623 Available Financial Resources for Cap. Exp. 2,390.6 3,372.6 _,239.5 6,628.0 10_,94.9 13,394.9 19,480.7 33,269.6 223,616 2,63l,378 Ti. Use of Resources Public Investment 2,018.9 2,854.0 3,808.7 5,576.7 7,791.1 11,158.2 15,939.3 28,555.8 210,347 1,906,097 Direct investment;/2/ 1,603.4 2,299.8 2,725.8 4,038.5 5,167.6 6,993.4 10,549.6 19,274.8 91,108 1,059,966 Indirect investment- 415.5 554.2 1,082.9 1,538.2 2,623.5 4,164.8 5,389.7 9,281.0 119,239 8,846,131 Amortization oi the Public Debt 268.3 336.7 406.5 758.8 1,641.4 2,149.9 3,541.4 4,713.8 13,269 725,281 Domestic debt 137.7 153.3 130.9 275.6 588.4 869.6 3,672.9 3,878.4 5,304 207,871 Foreign debt 130.6 183.4 275.6 483.2 1,053.0 1,280.3 1,868.5 835.4 7,965 517,410 Change in Cash Balances 103.4 181.9 24.3 292.5 962.4 86.8 - - - - Total Capital Expenditures 2,390.6 3,372.6 4,239.5 6,628.0 10,394.9 13,394.9 19,480.7 33,2_69.6 22,616 2,63i,378 2. Corresponds to capital formation, purchases of assets and other capital expenditures. 2/ Corresponds to transfers and financial investment. Source: Ministry of Finance Table 5.19: CHILE - SUMMARY OF SOCIAL SECURITY OPERATIONS, 1970-76 (thousands of pesos) A c t u a l 1970 1971 1972 1973 19T4 1975 1976 Revenues Employees' contributions 3,468 5,163 8,900 27,441 179,457 802,176 7,323,20 Employees' contributions 5,971 9,401 17,628 57,100 568,984 2,292,702 LJ0 a. Government (531) (707) (1,561) (5,125) (140,384) (616,324) b. Private (5,440) (8,694) (16,067) (51,975) (428,600)(1,676,378) Government transfers 5,186 9,325 17,625 60,839 377,931 1,587,465 3,506,goo a. Direct 4,896 (8,856) 16,852 58,513 (362,413)(1,521,045) b. Indirect (296) (469) (773) (2,326) (15,518) (66,420) Investment revenues 194 276 501 2,350 11,019 77,519 j 5,936,000] Other revenues 336 924 1,550 3,406 30,571 169,175 L o Total Revenues 15,159 25,089 46,204 151,136 1,167,962 4,929,037 16,766,100 Expenditures Pensions and services 11,795 20,089 34,581 10T,580 .793,943 3,513,822 14,130,000 Administrative Expendi- tures 1,301 1,710 3,510 11,160 71,333 301,117 Other expenditures 12 427 778 173 22,750 84,962 259,300?i Total expenditures 13,108 22,226 38,869 118,913 888,026 3,899,901 15,445,700 Surplus 1/ 2,051 2,863 7,335 32,223 279,936 1,029,136 13,2o4,400 1/ Includes personal loans, mortgages, bonds, other investments and cash balances. 2/ Includes personnel and goods and services as reported; the clastification is different than the one used in previous years. Source: 5uperintendencia de Seguridad Social and Contaduria General de la Republica - 408 - Page I of 8 Table 5.20: CHILE - SUMMARY TRANSACTIONS OF MAJOR PUBLIC ENTERPRISES I. 6tate Railroad lisnpresa de 'errocarriles uei bstado) (T'housands of current pesos) Budget 1970 1971 1972 1973 1974 1975 1976 1977 I. Current Revenues 1,330 2,292 3,672 16,963 113,568 366,483 1,156,654 1,989,488 Operating revenues 691 976 1,797 9,583 57,285 212,366 659,654 1,465,601 Retirement fund contributions 68 116 189 552 3,751 14,840 12,762 101,890 Current transfers 571 1,200 1,686 6,827 52,056 137,048 381,088 420,951 (Government) (571) (1,200) (1,686) (6,827) (52,056) (137,048) (339,255) (420,951) (Other) () () () ()( _ (41,832)(- Other revenues - - - - 476 2,229 103,150 1,046 TI. Capital Revenues 298 399 385 1,784 23,710 54,73 206,43 19,315 Government transfers 289 380 369 1,498 19,962 43,541 200,703 - Sales of assets and others 9 20 17 286 3,748 11,198 5,730 19,315 III. Total Revenues 1,628 2,691 4,057 18,747 137,278 421,222 1,363,087 2,008,803 IV. Current Expenditures 1,489 2,337 3,742 14,185 112,072 378,369 1,153,028 1,923,108 Personnel 686 1,058 2,119 8,318 43,593 136,810 460,207 832,827 Goods and services 252 352 280 2,149 34,798 120,172 308,633 511,933 Interest on debt - - - - - 3,002 28,031 24,888 Taxes - - - - - - 24,154 59,616 Current transfers 293 464 722 2,468 25,935 106,646 309,178 493,844 (Pensions and other social security) (293) (464) (722) (2,468) (25,935) (106,646) (280,034) (480,686) (Other) (-) (-) (-) ( (29,144) (13,158) Other 258 464 621 1,250 7,745 11,738 46,980 V. Capital Expenditures 212 291 356 1,228 22,565 51,729 188,041 85,691 Investment 212 291 356 1,228 13,563 34,209 126,517 24,144 Debt amortization - - - - - - 61,524 61,547 Capital transfers - - - - 9,002 17,520 - - VI. Total Expenditures 1,701 2,628 4,098 15,413 134,637 430,098 1,341,070 2,008,799 VII. Current Surplus (+) -159 -45 70 2,778 -1,496 11,886 3,626 66,380 VIII. Overall Surplus ( +) -73 63 -41 2,641 -8,876 -22,017 4 1/ Cash transactions. Source: Empresa de Ferrocarriles del Estado - 409 I Page 2 of 8 Table 5. 20: CHILE - SUMMARY TRANSACTIONS OF MAJOR PUBLIC ENTERPRISES II. Agricultural Marketing Enterprise (ECA) (Thousands of current pesos) 1970 1971 1972 1973 1974 1975 1976 I. Revenues 1,137 2,188 5,396 21,440 231,776 1,112,100 2,397,800 Sales 1,137 2,188 5,396 21,440 231,776 1,062,900 2,329,800 Other revenues - - - - - 49,200 68,000 II. Expenditures 1,343 2,699 6,008 96,929 337,955 996800 1,639,100 Sales costs 1,279 2,595 5,788 98,164 334,594 835,600 1,166,800 (Costs of products) (1,105) (2,262) (5,077) (68,881) (275,693) (764,600) (1,095,500) (Distribution costs) (81) (153) (320) (1,739) (19,628) 1/ 1/ (Financial costs) (41) (64) (154) (4,742) (27,967) (71,000) (71,300) (Taxes) (5) (7) (15) (125) (1,667) 1/ 1/ (Other) (43) (109) (222) (22,677) (9,639) 1/ 1/ Administrative costs 37 66 152 447 2,989 155,200 468,000 Investment 27 38 71 319 1,855 6,000 4,300 III. Balance -206 -511 -612 -75,489 -106,179 115,300 758,700 Minus: Government Transfers 85 200 100 18,294 114,942 - - IV. Net Balance -121 -311 -512 -57,195 8,763 115,300 758,700 V. Financing (net) 121 311 512 57,195 -8,763 -115,300 -758,700 Credit (gross) 515 1,506 4,790 81,305 104,221 319,500 516,300 Banco del Estado (440) (1,331) (4,451) (39,187) (103,016) .. Central Bank (75) (175) (305) (38,040) (-) Other banks (-) (-) (34) (4,078) (1,205) Amortization 394 1,195 -4,278 -24,110 -112,984 -431,400 -1,267,600 Cash balances - - - - -3,400 -7,400 1/ Included in administrative costs. .. not available Source: Ministry of Finance - 41o - Page 3 of 8 Table 5.20: CHILE - SUMMARY TRANSACTIONS OF MAJOR PUBLIC ENTERPRISES III. National Electric Company (ENDESA) (Thousands of current pesos) 1970 1971 1972 1973 1974 1975 I. Current Revenues 792 950 1,304 2,698 50,326 319,095 Sales 760 923 1,272 2,538 45,890 303,851 Other 32 27 32 160 4,436 15,244 II. Expenditures 773 1,O56 1,544 12,373 82,000 528,137 Sales costs 550 781 984 5,423 59,286 233,545 Administrative expenses 50 72 111 503 3,516 28,515 Financial expenses 81 117 296 5,637 17,660 72,921 Other 92 86 153 810 1,538 13,067 Monetary correction - - - - - 180,089 III. Profits (+) or Losses (-) 19 -107 -240 -9,674 -31,674 -209,042 Source: ENDESA IV. National Petroleum Company (ENAP) - Sources and Uses of Funds (Thousands of current pesos) 1970 1971 1972 1973 1974 1975 1976 I. Sources of Funds 761 1,104 1,393 10,493 172,634 1,151,153 2,596,213 Operating revenues 663 833 824 1,451 47,161 119,414 536,027 Fiscal transfers 9 - - - - - - Other 1 10 26 473 34,856 473,386 853,773 Domestic credit 29 29 467 3,926 8,542 132,317 291,164 External credit 59 232 76 4,644 82,075 426,036 915,249 II. Uses of Funds 761 1,104 1,393 10,493 172,634 1,151,153 2,596,213 Investment 539 647 848 2,020 16,091 94,774 411,132 Debt service - 35 - 388 5,827 33,529 97,736 Loans to employees 10 7 28 14 902 18,761 10,263 Operating losses - - - 4,965 - 38,420 354,390 Stocks 127 128 134 833 60,856 700,924 1,405,247 Transfers to other enterprises 69 88 76 64 - 3,463 40,866 Other 16 200 308 2,109 88,959 261,282 276,579 Source: ENAP -, -Page 4 of 8 Table 5.20: CHILE - SUMMARY TRANSACTIONS-OF MAJOR PUBLIC ENTERPRISES V. Chilean Chemical Company (SOQUIMICH) (Thousands of current US dollars) 1/ 1969/70 1970/71 1971/72 1973 1974 1975 I. Revenues 51,760 81,023 112,066 92,281 61,639 Sales 29,877 41,298 62,399 40,067 89,188 59,238 Drawback (Law 16.528) 4,353 9,751 13,894 7,316 - - Other revenues 83 711 4,730 64,683 3,093 2,401 II. Expenditures 47,998 64,366 102,163 59,366 85,075 65,068 Sales costs 35,453 47,221 78,487 37,574 61,968 42,530 Depreciation & depletion allow. 3,230 3,310 5,131 3,543 5,697 8,880 Interest 4,088 6,643 7,231 4,015 6,356 8,234 Other 5,227 7,192 11,314 8,034 8,669 5,424 Profits tax - - - 6,200 2,385 - III. Profits (+) or losses (-) -13,685 -12,606 -21,140 52,699 7,206 -3,429 1/ Eighteen-month period. Source: SOQUIMICH and Ministry of Finance VI. Chilean Telephone Company (Compafima de Telefonos de Chile) (Millions of current pesos) Budget 1973 1974 1975 1976 1977 I. Revenues 3.2 49 208 1,224 2,139 Sales 3.1 1/ 48 203 1,115 1,814 Other .1 1 5 59 325 Government transfers - - - 50 - II, Expenditures 6.3 69 430 1,212 2,139 Sales costs 2/ 27 106 367 426 Depreciation, etc. 0.3 4 176 173 515 Interest & foreign exchange 34 56 4/ 4/ Wages and salaries 1.4 19 300 461 Administrative costs and others 6.0 1.9 3 Taxes _ 0.3 13 I23 462| Monetary correction - -57__ Debt service (net) - - 5 13 275 III. Profits (+) or Losses (-) -3.1 -20 -222 12 - 1/ Net of sales costs. 2/ Deducted from sales revenues. 3/ Breakdown not available. T/ Included in debt service. Source: Compaftia de Telefonos de Chile and Ministry of Finance - 412 - Page 5 of 8 Table 5.20: CHILE - SUMMARY TRANSACTIONS OF MAJOR PUBLIC ENTERPRISES VII. Pacific Steel Company (CAP) (Millions of US dollars) Budget 1973 1974 1975 1976 1977 I. Revenues 238 261 217 256 265 Sales 140 240 193 212 264 Other 98 21 24 44 1 II. Expenditures 235 246 212 235 247 Sales costs 184 192 159 180 181 _/ Depreciation and other reserves 16 19 20 20 2/ 23 Administrative expenses 9 5 4 4 2/ 1/ Financial costs 11 21 28 30 2/ 26 Taxes 2 1 1 1 2/ 1/ Other 13 8 - - 8 III. Profit (+) or Losses (-) 3 15 5 21 17 1/ Included in sales costs. 2/ Estimate. Source: CAP and CORFO VIII. Chilean Electric Company (CHILECTRA) (Millions of current pesos) 1973 1974 1975 1976 I. Revenues 2.9 65 353 1,796 Energy sales 2.9 64 350 1,384 Other - 1 3 26 Monetary revaluation - - - 386 II. Expenditures 12.6 88 469 1,529 Sales costs 1.6 39 218 787 Wages and salaries 1.9 16 94 308 Depreciation and other allowances .6 3 29 376 Taxes .03 0.3 8 26 Interest and amortization 8.5 29 20 32 Other - 1 - - Monetary correction - - 101 - III. Profits (+) or Losses (-) -9.7 -23 -116 267 Source: CHILECTRA - 413 - Page 6 of8 Table 5.20: CHILE - SUMMARY TRANSACTIONS OF MAJOR PUBLIC ENTERPRISES IX. National Coal Enterprise (ENACAR) (Millions of current pesos) 1973 1974 1975 1/ I. Revenues -1.7 43.4 177 Sales -1.7 1/ 43.0 143 Other .4 4 Monetary correction - _ 30 II. Expenditures 3.7 49.0 239 Sales costs 1/ 34.0 134 Depreciation and other reserves 1.3 3.0 11 Other expenses 0.1 1.0 10 Financial expenses 2.2 11.0 80 Other 0.1 1.0 4 III. Profits (+) or Losses (-) -5.4 -5.6 -62 1/ Net of sales costs. Source: ENACAR X. National Telecommunications Enterprise (ENTEL) (Millions of pesos) 1973 1974 1975 I. Revenues 5.6 20 101 Sales 5.4 18 92 Other 0.2 2 9 II. Expenditures 6.3 23 97 Operating expenditures 4.9 16 63 Depreciation and other reserves 1.3 7 1/ Other - - 2 Monetary correction - - 2 III. Profits (+) or Losses (-) -2.0 -3 4 1/ No breakdown is available. Source: ENTEL - 414 - Page 7 of 8 Table 5.20: CHILE - SUMMARY TRANSACTIONS OF MAJOR PUBLIC ENTERPRISES XI. National Mining Enterprise (ENAMI) (Millions of current pesos) Budget 1975 1976 1977 I. Revenues 752 2,207 3,119 Operating revenues 611 2,054 2,882 Sales of assets 1 14 54 Loan recuperations 8 15 17 Other revenues 11 2 4 Government transfers 104 58 - Previous year operations 18 64 163 II. Expenditures 711 2,164 3,285 Personnel 79 190 415 Goods and services 519 1,505 2,293 Current transfers 18 39 106 Real investment 45 188 299 Financial investment 5 4 2 Debt service 46 238 170 III. Balance (I-II) 41 42 -166 Source: Ministry of Finance XII. National Sugar Institute (IANSA) (Millions of Current pesos) 1973 1974 1975 I. Total Revenues 6.2 90.6 500.1 Sales 5.7 69.7 467.9 Other .5 20.9 32.2 II. Expenditures 9.2 84.6 490.8 Sales costs 3.4 53.6 298.8 Depreciation and other reserves 1.2 5.2 81.5 Other 4.6 25.8 110.5 III. Profits (+) or Losses (-) -3.0 6.0 9.3 Source: IANSA - 415 - Page 8 of 8 Table 5.20: CHILE - SUMMARY TRANSACTIONS OF MAJOR PUBLIC ENTERPRISES XIII. CODELCO-CHILE: CASH FLOW STATEMENTS, 1973-1976 (Millions of US dollars) 1973 1974 1975 1976 A. FOREIGN CURRENCY 1. SOURCES OF FUNDS 295.6 1,696.8 1,229.0 1,446.3 Sales Revenue 834.0 1,532.1 852.0 1,100.0 Loans Revenue 54.0 125.3 356.0 299.0 Other 5.6 18.4 6.8 41.6 Initial Cash 2.0 21.0 14.2 5.7 2. USES OF FUNDS 347.0 710.4 766.6 962.7 Materials and Supplies 63.6 129.4 113.1 65.3 Freight and Insurance 19.7 41.9 38.0 42.9 Refining Costs 20.2 12.7 7.0 5.4 Selling Expenses 4.8 4.6 2.2 3.0 CODELCO Charge 14.6 17.5 15.1 3.5 Copper Chilean Commission -.- -.- -.- 5.5 Miscellaneous 41.8 11.5 6.0 10.2 Taxes 21.2 199.8 188.0 262.3 Anticipated Profits -.- -.- -.- 104.1 Investment -.- -.- 44.5 38.9 Debt Servicing 161.1 293.0 342.7 421.6 3. SURPLUS (-=DEFICIT) 548.6 986.4 472.4 483.6 B. LOCAL CURRENCY 1. SOURCES OF FUNDS 277.8 74.3 65.7 104.8 Sales Revenue 55.9 43.7 42.7 76.0 Loans Revenue 182.2 -.- -.- Company Store 28.8 10.8 7.8 12.8 Other 9.6 18.5 13.9 14.7 Initial Cash 1.3 1.3 1.3 1.3 2. USES OF FUNDS 804.1 1,045.2 531.1 561.5 Salaries 298.8 274.9 138.3 176.0 Salary and Custom Taxes 19.2 82.4 51.8 42.0 Materials and Supplies 217.3 424.7 196.6 191.6 Services 180.6 84.0 75.6 80.7 Refining Costs -.- 28.7 Company Store 44.9 50.4 14.1 16.2 Other 3.3 - - 4.5 1.3 Investment 33.6 99.5 50.2 53.7 Debt Servicing 6.4 0.6 . 3. SURPLUS (-=DEFICIT) 526.3 970.9 465.4 456.7 Net Cash Flow 22.3 15.5 7.0 26.9 Source: CODELCO-Chile Table 5.21: CHILE - PRICE INDEX FOR PUBLIC ENTERPRISE TARIFFS, 1972-1976 (December 1974=100) Price Index 1/ Ratio CAP ENACAR ENAP ENDESA CIIILECTRA C.T.C. Pub. Enterprises IPE (Steel) (Coal) (Petroleum) (Elect.) (Elect.) (Telephone) (IPE) CPI CPI 1972 First Semester 1.4 2.9 0.6 1.8 1.8 3.0 0.7 1.5 .47 Second Semester 1.2 2.9 0.6 1.8 2.0 5.4 0.8 2.7 .30 1973 March 1.2 2.9 1.2 1.8 1.9 5.7 1.0 4.2 .24 June 2.8 11.4 1.2 1.8 1.9 6.o 1.4 6.4 .22 September 2.7 13.5 1.2 1.8 1.9 14.5 1.9 10.1 .19 December 15.5 13.8 13.0 11.4 11.4 33.3 14.1 21.0 .67 1974 March 24.0 30.8 33.0 24.5 24.1 33.3 30.9 34.1 .91 June 41.0 48.3 54.2 38.9 31.7 46.6 47.8 51.6 .93 September 89.o 60.9 76.4 81.1 80.5 79.2 77.5 72.0 1.08 December 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1.00 a 1975 March 190.9 145.3 172.6 186.6 180.8 146.0 173.3 160.9 1.08 June 326.9 257.6 341.7 314.1 212.9 224.8 314.2 270.0 1.16 September 369.3 269.1 446.8 472.7 458.1 303.5 424.6 350.9 1.21 December 387.5 304.9 476.5 732.4 616.2 425.7 481.7 440.7 1.09 1976 March 715.5 473.5 710.7 944.6 800.5 587-7 708.6 608.4 1.16 June 946.8 613.1 835.6 1,367.7 1,123.3 832.4 909.5 840.0 1.08 September 1,038.2 660.3 915.1 1,624.6 1,344.8 942.7 1,031.1 1,038.0 .99 December 1,370.9 940.7 1,202.7 1,987.0 2,186.4 1,118.1 1,384.6 1,208.9 1.15 1/ Includes IANSA, the National Sugar Institute, until September 1974. Source: Ministry of Finance, Ministry of Economy - 417 - Table 5.22: PUBLIC PERSONNEL BY MINISTRY AND ENTERPRISE, 1970-1977 Sept. Sept. Maximum April March Budget 1970 1973 D.L. 785 1975 1976 1977 Total 187,772 309,350 248,266 237,881 215 090 208,943 Junta 381 1,035 1,397 975 1,070 1,362 Congress n.a. n.a. 549 385 303 361 Jiudciairiy? n.a. 2,384 2,711 2,711 2,647 n.a. Ministries of: Interior 12,382 12,550 10,040 9,920 9,161 9,547 Foreign Affairs 602 791 751 701 704 723 Economy 1,971 3,121 2,847 2,551 2,153 2,178 Finance 9,867 10,643 10,058 9,756 9,417 9,765 Education n.a. n.a. n.a. n.a. n.a. (93,765) Justice 6,069 7,475 8,368 8,015 7,307 8,248 Defense n.a. n.a. n.a. n.a. n.a. n.a. Public Works 21,249 36,038 30,199 26,806 21,906 21,557 Agriculture 10,909 27,128 15,771 15,771 13,335 14,360 Land and Colonization 429 489 391 391 381 388 Labor and Welfare 1,922 1,845 1,745 1,743 1,610 1,695 Health 54,380 68,805 68,316 66,375 61,992 65,091 Mining 94 109 106 82 71 98 Housing 8,340 36,458 10,915 10,178 9,094 5,980 Transport 193 175 285 196 206 213 Economic Coordination - - 47 23 - _ Municipalities n.a. 24,145 22,060 21,142 20,218 20,479 Regions 526 1,562 857 750 750 n.a. CORFO and Institutes 4,988 11,970 8,826 7,759 4,852 3,157 Retirement Funds 7,052 9,923 8,032 8,032 7,543 8,032 Enterprises: ECA (Agri. marketing) 1,623 3,133 1,800 1,800 1.735 1,800 EMPORCHI (Ports) _5,063 5,257 5,000 4,430 4,385 4,412 EMPREMAR (Shipping) 921 1,419 1,348 1,228 1,182 1,205 LANCHILE (Airline) 3,010 3,777 3,800 3,800 3,705 3,200 FFCC del Estado (Rail.) 27,185 27,196 22,050 22,050 20,326 16,000 Agua Pot. Santiago (wat.) 1,264 1,734 1,290 1,280 1,518 1,571 Agua Pot. El Canelo (wat.) 326 414 343 323 - _ Other 3,442 4,652 4,274 3,813 3,705 3,924 1/ Figures do not cover the entire public sector. Source: Ministry of Finance Table 5.23: CHILE - PROJECTED GROWTH OF CURRENT EXPENDITURES AND TAX RECEIPTS OF CENTRAL GOVERNMENT, 1978-1990 Actual P R O J E C T E D 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 (Billions of 1977 pesos) Current expenditures 2/ 64.8 68.0 71.4 75.0 78.7 82.7 86.8 91.1 95.7 100.5 105.5 110.8 116.3 122.1 Current tax receipts 65.2 70.8 77.0 87.3 97.2 111.0 119.8 129.5 139.4 149.3 159.7 170.7 182.4 194.6 From copper b/ 7.5 8.7 11.0 17.3 22.9 32.1 36.o 40.3 44.6 48.4 52.5 56.6 61.0 65.5 Other i/ 57.7 62.1 66.o 70.0 74.3 78.9 83.9 89.2 94.8 100.8 107.2 114.1 121.4 129.1 Current Balance -/ o.4 2.8 5.6 12.3 18.5 28.3 33.1 38.3 43.7 48.8 54.2 59.9 66.1 72.5 (Percent of GDP) Current expenditures 20.2 19.7 19.6 19.4 19.2 19.1 18.9 18.7 18.5 18.4 18.2 18.0 17.8 17.6 Current tax receipts 20.3 20.5 21.1 22.6 23.8 25.6 26.1 26.6 27.0 27.3 27.5 27.7 27.9 28.1 From copper b/ 2.3 2.5 3.0 4.5 5.6 7.4 7.8 8.3 8.6 8.8 9.0 9.2 9.3 9.4 Other -/ 18.0 18.0 18.0 18.1 18.2 18.2 18.3 18.3 18.4 18.4 18.5 18.5 18.6 18.6 Currerit Balance d/ 0.1 0.8 1.5 3.2 4.5 6.9 7.2 7.9 8.5 8.9 9.3 9.7 10.1 10.5 Current5Balance - a/ Projected to grow at 5.0 percent per annum; includes transfers to rest of public sector and to private sector. b' Cn = Cn1 + .6 (x - X - 1 +.9 (X -X )7,where C = copper tax revenues; X = copper exports in constant prices of 1977; X X = copper exports in current prices; and n denotes the year For the above calculation, the value of (X - X ), originally expressed in current U.S. dollars, was deflated by the IBRD Index of International Inflation (projected) and converted to 1977 pesos at the exchange rate of21.54 pesos = US$1.0O. c/ "Cn = NCn-1 1 1.05 (yn - Y where NC = norn-copper tax revenues; and n n-l Y Gross Domestic Product y d/ Excludes non-tax current revenues. Source: Appendix Tables 2._, 5.7, and mission estimates - 419 - VI MONEY AND BANKING Page I of 2 Table 6.1: CHILE, - SUMMIARY ACCOUNTS OF T09 BANKINC SYSTEM, 1971-1977 1971 1972 1931974 93____ Sec. Leo. leo.~~~D Se,pt. Sept. oo Ie fl1 3i.ma- Mar J-n ue50. -cp.Ss (0 528>.0125 peos ...OSpeo SSl1=.340 7000 5580=.600 2500. 0581-2.313 pea.. 0501=4.054 pe.se us1305.748 p...e 1381=7.50 pesos USSO1-11.1 pesos Not Iuotrn..looa Ocoesce.t11~ 2.711 -.9 - _ _ -c6 -i8.0 - -139.5 -/1,136. -1,991.5 -25326.0 -3,297.8 -2,524.1 -_3,293 -4,133 -5.517 ... t. 74 . 2-7 16.51 127.553 20 251.6 969. 2,5713,7 Llsh,iliti-e 4.70 9.26 24.08 207.03 565.5 417.6 1,609.2 6,666 8,895 Esoets, net ~~~~~~~~~~ ~ ~ 120.55 201.01 ~~~~~~~~~ 5s2.30 77141-~ 61.3-0132.7 4,375.3 5,075.2 8T30579 8,543.4 113 169V ~ 11,67.8" 1201 16541 19 70 T~po.b ?2e- os st.(18) 13 <22 4.5 7.3 5.10,9. 46065539 8 790 7,910.2 10948 1,0. 't2T3g 36 To tIK- . t - 3-0 (,58.21) (905:.1) (141.99) (427.43) t4So.97( (756.6) (1,153.7) (5,638.3 (4,24{6.2) (6,777.9) (6,603.2) (9,152.9) (9,180.0) (11,889) )12,626( (16,772) Stof publso octor, set )4.69/- (19'392q )2X_25L ) 59.09 (11671 )(1S.5~ 8j ~ (35.5) ((2L9.0) 757.0) (809.0) (4400.3) (407.0) (1, 811.9) (2,269.8) (Z2,749) (2o86fl ( 3,626) Ossetralsed sesuss /.5 ~ . .4 &.J 05.9/ /9.05 8.9/ /0.37 7'.287 10. 57.87 509.7 §15.89/2-198 91T6.T /22107 7-3'-7 38589 "o7lscsl ud a? / , / / / / a/ /sI I / /16.8 /06. 7-33.1 /213 .7 /2 . 718067 5 -O 7. 7-224.i7 7-28 7-s357 57-3st7 OuOtc sospruco77 7., 27 7Th7 9.47 51047 7857 76857 57o3.7 57l.0 7-6oi.7 57520.07 578o575752.7 56 7 57 4457/ Lasts ,uoposcorpuuoeo 57.57~ ~ 5.7 57-.57 T 1.27 7572.747 572-3547 721507. 7 821.7 7233.37 573157 573.7 72 oo(7 5- 1257 - 74.(7 57 807 71377 OvOlsasocOasC fosoactol £w7 78,7 - -2 357 5.7 20143.i2.7 __4 - '- - T7-< T7 2.7 577 57 T- . T..731.s 3 7 7 -7 7 20 t7 Zi ~ *;star puOusa sector tnt 35,5 _ £i.V £905 __ ..t 79,797.7 87 77,oo37~~~~~~~~~~ 7 76 OvateAF) us 0.00 1.29 5.17 12.7 4. 414. 609 9-43. 0431. I,8oI 2,38. 2,49.,7 3,191 4,00 4,84 uoau oat sept001 sod ouspOuc - 3.21 -6.28 - 8.io ~~~~~~~~~~~~~7-10.59 -21.49 -4.45 - 7. Oeaoj2011us eccousto ~~~~~~-150 -445 y- 4.0384.01 -39.370-19.827-70.4 SeN. louoo ass 2.79 2.57 -18.63 - 2.64 - 2.55 88.39 154.3 los 8 -~58 -8.8 -,3.2 -1,247.8 -2,083.6 -2,446.1 -3,608 -,u- s Deposit abOtfottutO 1- 0~~~~~.51 (_2.56) - 4.22) ( 7.04) (-23.12) (-47.67 (-63.5)) 1 556 -8 150-,~, -,3 Sine asts sa_atlcs, t )-4g.B( 5.33) (-14.40) ( 4.oo4 ) 22.57) (146.06) (198.4)) T-es 1-Pllo - .71 -5.87 o.O115 1.82 41.50 (-10.79) (-1.1)) SURr-etr 10IX.2 1.48 3.86 4.28 22.42 22.62 39.6 60.0 154.2 191.1 279.4 275.3 390.4 365.1 476 480 641 Medtu.- 1-d Js-g-tes f-siga lIsilit I- 1.79' 8.06 20.95 168.33 297.1 551.7 1,355.9 1,239.1 2,171.6 2,120.6 5,006.7 3,553.0 4,636 5,965 5,230 Liatolitie- on psis-te so-bus flooi__ iteeosse - - -- -- -- -- -- -- -- -- 24.6 24.6 95.8 96 70 70 t,to p-t01100.. trsoe sols 7;g ~ j52 t 4 88.48 7 A.6 4±2 02. 2tSS £8_44-s 1 __ 002 lussoisrcotis18.97) (28.23) )28.23( (76.44) )76.44) )95,.66) )95.7) )349.3) (349.3) (48.6) 4 o8.6) (612.6) 2612.6) 722) ) 722) (1,358) (1,358) Osss (12.5) (25.97) (25.97) (58.64) (58.64) (185.16) 1(185.2) 460.2) (480.2( (684.2 )640 5.) (750 120 126 165 161 5aoss-sotep ~~~~~~~~~~11.5 265 544 63.29 196.89 207.66 302 750 1,714 1,66.7 2,535.5 2414 3,08.3 5,200 3,742 4,o3o ,7 Cepposo os lcal sus- oop 8.33 (77) (17.77 (31.71) )31.3o) ) 660 86.6) (406.4) (406.4) (522.0) )522.0) ) 7.) )83.) 5,3)),432) (184(,9) Depu-ito is foseo,s c--esy )1.36) )1.76) ) 4.576) 5.24) )25.40) ( 8.19) )32.1) )37.9) (145.9) (137.0) ( 40.) I ) 256.1) )363.2) ) 64) ) 475) 513i) (685) Fnoa-d osle- of fore-gs -uhtoge I 186) (5.04) (13.10) )26.54) (137.78) (102.87) (181.5) (210.5) (811.3) (650.4) (1,139.9) ( 0s.l) (1,141.5) )921) (1,207) (1,514) (2,021) 12220A- -- -- -- -- -- ( 90.2) (347.8) 3s6o.s) ) 651.5) 5 496.4) ) 703.9) ) 461, 628) ( 09) ) 679) lou -et esso B-kt, IMF, Mio-ias eatiotte Poge 2 of 2 Table 6.1: CHILE - SUMMARY ACCOUNTS OF TRE BAMKING SY29TM, 1971-1977 (Million6 of p00..) 1976 1977 M=-. Ser. Junp Jne Sept. Sept. Dec. Dec. MNr. N-r. Jure Jpuno Sept. 5Spt. Dec. US1S=10.01 peoos U551=12.53 p-ooo 1111=11.55 pesos U351=16.11 pe.ao USS1=18.43 pe... UsS -19.44 pe..o US$1l22.26 p2000 USS= Net Interr=tional AoR-er-e -4,149 -52194 14011 -4,357 -2,520 -2 996 453 -1,767 -8 - 920 -2770 - 881 -2,201 A.sets 3 , G 8 285 7,679 12 4,3 1457 It"it 1,066 ]4,d37 15,052 17,236 15,072 Liebilities 7,829 9,820 11,098 12,001 10,898 12,957 14,154 16,193 14,938 15,756 15,8Z2 18,117 17,274 Drrestic As=ets, net 20,95 23762 25 488 26 760 26,943 2943 35,311 78 .14 43_259 44 146 20 public eoctor 21,673 26,897 2-7,632 2-2,883 52,221 8949 3b,o9 93,703 78,517 t.7t Control gn-e-nnent, net (11,597) (11,656) (21,990) (23,799) (24,004) (28,675) (30,194) (34,629) (37,463) (39,393) RBot of public nt nr t 4,276 ( 2,191 ( 642) ( 6,024) ( 7,242) ( 8,221) ( 8,283) ( 9,074) (11,052) (11,382) locentrollood ngoccion f-sso7 f-6077 Z-3TZ g_3727 ~-5067 ,-5227 : 3357 /2 3287 / 7197 / 7097 Sncial scunrity fundo ,-4°47 4-940Z /-47t7 /-4717 /7047 /-704 /-1,0432 72,0927 7:1,1327 7:1,2327 lao-go coppoc cooponios 22,3071 677' ,- -l 7~~~~~~~~~~~~~~~~~~~~~~7 -Il - Public onterprieeo 1r,O9Z ,3 7:,670 78,816 72,O77 Z2,4637 -/,0327 /,29g 2,2907 /2,3397 L6rge opper ompan=s _ 2g;7 L 7t7 z 3§7 7_ 357 -107 -122;7//2957 gg 2097 6C 2957 S 307 Public nonbonkc firanni=l internedisries (lUIDA) /2,1077 /2,1077 /2,8927 /2,8921 3,182Z L,1827 17,147Z /2,1477 /2,011Z /7,011J NnunciPalitiee Z-3 7!-1537 T-11( ~-1107 -19 &;-l95 / 183L /71817 393 /7337/ Other pbIin 000100 L2,90AJ s,48y - 7,12,/ 9.55§/ .5t /2,11E7 ,! ,1U0J 79,6797 f,0907 7'9527 2o Bolcate aontnr 5,985 6,921 7,97B 8,587 10,890 12,382 15,912 16,693 21,837 22,970 Offici=l napitel snd eanplno ( Accolnalion onenunto ( Net onclanolfiod 00000 - (-f6,7G3 -9,106 -10,222 -11,450 -15,195 -19,547 -18,528 -22,238 -27,295 -29,099 lPpoeli otligotinn7 ( Other onneto and li=biliti==, o=t. (1 Inlerben k floet ( C tntro- dntr2 lOBe 639 8 0 ?83 846 857 1,018 102'0 1,166 1,168 1,232 1,416 Mediur- nod lung-tero fooreign lab1lt1ea 5,226 f9.475 6,385 6,882 6,945 8,188 9,717 11,067 20,992 21,519 12,399 llohllitleo to privte noobonk finOntial ioteroediorloo 56 56 155 155 199 199 1 7 252 252 -463 LaAlOtl to 10Priv=te notor 1 7 19 179 1 027 17,035 22,842 23,321 300285 30,223' 39 ,98 Mooey 3,- 2 3 72 596 4, 59 5,718 5,718 575 8,55 1, 929 103 12,172 12,172 37 1 5 19,305 Currency in circul=tion (2,571) (1,571) (1,986) (1,986) (2,661) (2,661) (9,980) (4 4Ao) )5 144) (5,199) (5,679) (5,673) (6,978) (6,978) (5,-S40) De6=nd BApoolto (2,101) (1,101) (2,973) (2,473) (3,057) (5,057) (9,099) (9,099) (5,780) (5,780) (6,4999) (6,999) (7,077) (7,077) (8,965) i.~~~~~~~ ~ .... t_ ntour n .tr=l6,675 7,_6 9,15 1i,451 10,79 11,547 B19,27 19,736 M9,1095 19,9925, GEPAC ( 791) ( 927)~~~~~-22 ) 828) 85 86)62 ) 772)5 9,17) 9 ,018 2,D288 )1,136) (1,5198) 1,9908 Linbilitle. t. p-l ... b.66, Iolnet,ne - 422 - Table 6.2: CHILE - CURRENCY AND DEMAND DEPOSITS IN HANDS OF THE PRIVATE SECTOR, 1969-78 (Millions of pesos) Nominal December 1969 Prices a Percent Change Percent Change Money During From Year Real Money During From Year Supply Quarter Earlier Supply Quarter Earlier 1969 6.1 6.1 1970 10.0 63.9 7.4 21.5 1971 21.5 115.0 10.4 40.2 1972 March 25.0 16.3 11.0 5.5 June 28.2 12.8 9.5 -13.4 September 32.4 14.9 8.3 -12.9 December 54.1 67.0 151.6 7.4 -10.6 -28.9 1973 March 73.5 35.9 194.0 6.9 - 7.0 -37.3 June 97.5 32.7 245.7 4.6 -32.5 -51.1 September 135.1 38.6 371.0 5.6 21.3 -31.9 December 280.8 107.8 419.0 7.6 34.9 2.8 1974 March 348.6 24.1 376.2 5.8 - 4.4 -15.1 June 429.8 23.3 341.7 4.7 -18.4 2.4 September 580.7 35.1 330.1 4.6 - 3.2 -18.3 December 829.6 42.9 195.4 4.7 2.8 -37.9 1975 March 1,102.8 32.9 216.4 3.9 -17.4 -32.9 June 1,365.5 23.8 217.7 2.9 -26.3 -39.2 September 1,958.0 43.4 237.2 3.2 10.1 -30.9 December 2,963.3 51.3 257.2 3.8 20.5 -19.1 1976 March 3,671.8 23.9 233.0 3.4 -10.3 -12.1 June 4,459.4 21.4 226.6 3.0 -12.0 5.8 September 5,717.8 28.2 192.0 3.1 3.7 - 1.3 December 8,574.6 50.0 189.4 4.o 28.8 5.6 1977 March 10,924.1 27.4 197.5 4.3 7.2 26.1 June 12,172.2 11.4 173.0 4.3 - 0.7 42.1 September 14,055.4 15.5 145.8 4.4 3.6 42.3 December 18,305.0 30.2 113.5 5.3 18.6 30.8 1976 March 22,436.7 22.6 105.4 6.o 14.3 39.4 June 22,871.8 1.9 87.9 5.7 -4.6 34.0 September n.a. n.a. n.a. n.a. n.a. n.a. December 30,207.0 n.a. 65.0 7.5 n.a. 26.6 a/ Deflated by IBRD adjusted CPI. Source: Central Bank I~~~ ~~~~~~~~~~~ -k 0 00 l~ ~ ~~~..'' 00.00'o0 0 00 I~ ~ ~ ~ 0±'o-oY41 l~ ~~~~~ ~ ~ ~~ a 0; ec W DO I H | H Xo > ns\o~ 00000 000.0 00000.0 X)FAJ ! ~~~~.00 .' 0000000000.0 . 9 >~~~O o 00.; 00 , 00 -,8g @4x I c 00 0 00 00000o 8. U I ~ ~ ~ 0 00 I 0.00 0000 ~*° o ~ ~ ~ ~ I0 0 ~ 00 ~ .H ~ ~ ~ ~ 0 00 I. .9 kOO rNXQUO OU Table 6.4 : CHILE - BANKING SYSTEM CREDIT, 1970-1977 b/ (Millions of pesos at December 1969 prices) Credits in Local Currency Credits in Foreign Currency Total Public Sector Public Sector Public Sector Central Private Banking Central Private Central Private Banking End of Period Government Other Total Sector Sector!/ Total Government Other Total Sector Total Government Other Total Sector Sector-/ Total 1970 0.7 1.0 1.7 5.5 - 7.1 6.1 0.6 6.8 0.7 7.6 6.8 1.6 8.4 6.2 - 14.6 1971 4.5 3.3 7.8 5.2 _ 13.0 6.0 1.2 7.2 0.4 7.5 10.5 4.4 14.9 5.6 _ 20.5 1972 4.5 4.0 8.6 3.3 - 11.9 3.2 1.1 4.2 0.1 4.4 7.7 5.1 12.8 3.4 - 16.3 1973 December 4.9 4.7 9.6 2.8 - 12.4 9.8 1.6 11.4 0.7 12.1 14.7 6.3 21.0 3.5 - 24.6 1974 March 3.1 3.0 6.1 2.1 - 8.2 9.0 2.0 11.0 1.0 12,0 12.1 5.0 17.1 3.1 _ 20.1 June 3.6 2.1 5.7 1.6 - 7.3 9.2 2.6 11.8 0.9 12.7 12.8 4.7 17.5 2.6 - 20.1 September 4.6 1.7 6.3 1.6 - 7.9 10.0 2.5 12.5 1.1 13.6 14.6 4.2 18.9 2.7 - 21.6 December 5.3 0.8 6.1 1.8 - 7.9 13.6 2.0 15.7 1.4 17.1 19.0 2.8 21.8 3.2 - 25.0 1975 March 4.2 1.2 5.4 1.2 - 6.6 16.2 1.7 17.9 2.1 20.0 20.4 2.9 23.3 3.3 - 26.7 June 3.0 1.2 4.2 1.4 - 5.6 16.9 1.5 18.4 2.4 20.7 19.8 2.7 22.6 3.8 - 26.3 September 2.4 1.3 3.7 1.7 0.0 5.4 17.6 1.4 19.0 1.6 20.6 20.0 2.7 22.7 3.3 0.0 26.0 December 1.9 1.4 3.3 1.9 0.0 5.2 19.9 1.4 21.2 1.9 23.1 21.7 2.8 24.5 3.8 0.0 28.3 1976 March 1.2 1.5 2.7 1.6 0.0 4.3 19.3 1.9 21.2 2.2 23.3 20.5 3.4 23.9 3.7 0.0 27.6 June 1.0 1.8 2.8 2.0 0.0 4.8 18.2 1.8 20.0 2.1 22.1 19.3 3.6 22.8 4.1 0.0 26.9 September 0.9 2.5 3.4 2.5 0.0 5.9 16.1 1.6 17.7 2.3 20.0 17.0 4.1 21.1 4.7 0.0 25.9 December 0.9 2.8 3.7 3.2 0.0 6.9 16.6 1.2 17.7 2.7 20.5 17.4 4.0 21.4 5.9 0.0 27.4 1977 March 0.7 3.6 4.4 4.0 0.0 8.4 15.1 1.0 16.1 3.2 19.3 15.9 4.6 20.5 7.2 0.0 27.7 June 0.8 4.5 5.2 5.1 0.0 10.4 14.8 0.9 15.7 3.7 19.4 15.6 5.3 20.9 8.8 0.0 29.8 September 0.8 5.4 6.2 6.4 0.1 12.7 16.4 0.9 17.3 4.6 21.9 17.2 6.4 23.5 11.1 0.1 34.7 December 0.9 5.4 6.3 7.7 0.1 14.1 18.3 0.9 19.1 6.4 25.5 19.2 8.6 25.4 14.1 0.1 39.7 a/ Includes Central Bank Credits to development banks. b/ Deflated by IBRD adjusted CPI. Source: Table 6.3 a/ Table 6.5: CHILE - REAL QUARTERLY EXPANSION OF BANK CREDIT, 1973(IV) - 1977 (IV) (PereQnt) Foreign Currency Local Currency _ (Current U.S. dollars) (Peso equivalent/ _ _ Total Public Private Public Private Public Private Public Private Year/Quarter Sector Sector Total Sector Sector Total Sector Sector Total Sector Sector Total 1973 ( IV) n.a. n.a. 31.9 n.a. n.a. -3.2 n.a. n.a. 152.1 n.a. n.a. 73.2 1974 ( I) -36.5 -25.0 -33.9 11.1 47.7 13.4 - 3.5 42.9 -0.8 -18.6 -11.4 -18.3 II) - 6.6 -23.8 -11.0 8.2 -2.6 7.4 7.3 -10.0 5.8 2.3 -16.1 - (III) 10.5 - 8.2 5.0 20.0 6.1 5.9 22.2 7.1 8.0 3.8 7.5 IV) - 3.2 12.5 - 9.8 8.6 9.7 25.6 27.3 25.7 15.3 18.5 15.7 1975 ( I) -11.5 -33.3 -16.5 7.0 41.3 9.8 14.0 50.0 17.0 6.9 3.1 6.8 II) -22.2 16.7 -15.2 4.5 14.8 5.6 2.8 14.3 3.5 - 3.0 15.2 - 1.5 (III) -11.9 21.4 - 3.6 1.3 -35.3 -2.9 3.3 -33.3 -0.5 0.4 -13.2 - 1.1 IV) -10.8 11.8 - 3.7 3.5 12.8 4.2 11.6 18.8 12 1 7.9 15.2 8.8 1976 ( I) -18.2 -15.8 -17.3 5.7 20.7 6.9 - 15.8 0.9 - 2.4 - 2.6 - 2.5 II) 3.7 25.0 11.6 3.8 6.0 4.0 -5.7 - 4.5 -5.2 -4.6 10.8 - 2.5 (III) 21.4 25.0 22.9 3.0 27.2 5.3 -11.5 9.5 -9.5 - 7.5 14.6 - 3.7 ( IV) 8.8 28.0 16.9 -1.6 17.1 0.5 - 17.4 2.5 1.4 25.5 5.8 1977 ( I) 18.9 25.0 21.7 0.4 29.5 4.3 - 9.0 18.5 -5.9 - 4.2 22.0 1.1 ( II) 18.2 27.5 23.8 -0.9 17.2 2.1 - 2.5 15.6 0.5 2.0 22.2 7.6 (III) 19.2 25.5 22.1 4.0 18.7 6.8 10.2 24.3 12.9 12.4 26.1 16.4 ( IV) 1.6 20.3 11.0 4.9 31.3 10.4 10.4 39.1 16.4 8.1 27.0 14.4 a/ Pesos of December 1969; deflation by IBRD adjusted CPI. b/ Conversion at average banking rate of exchange for each period. Source: Table 6.4 Table 6.6: BANKING SYSTEM LOCAL CURRENCY CREDITS, BY ECONOMIC SECTORS, Constant Prices, 1950-1977 (Millions of Escudos at December 1965 Prices) Years Agriculture b/ Industry Other Total (Manufacturing) (Construction) (Transport and (Mining) Private Private Storage) 1950 319.9 456.1 654.0 1,430.0 1951 310.3 447.4 629.4 1,387.1 1952 317.8 421.1 628.4 1,367.3 1953 350.8 465.8 604.8 1,421.4 1954 377.3 409.3 482.8 1,269.4 1955 332.9 341.5 305.3 979.7 1956 311.6 291.3 254.8 857.7 1957 349.6 263.3 279.7 892.6 1958 368.2 293.5 281.9 943.6 1959 332.1 260.3 255.9 848.3 1960 408.9 440.0 453.5 1,302.4 1961 505.2 501.1 588.4 1,594.7 1962 599.9 608.4 639.4 1,847.7 1963 557.3 620.4 507.6 1,685.3 1964 558.5 612.6 381.3 1,552.4 1965 (Fuenzalida & Undurraga)457.5 717.2 506.2 1,680.9 1965 (INE) 518.0 738.4 (589.2) (110.4) (18.1) (20.7) 444.5 1,700.9 1966 490.5 853.2 (695.7) (117.9) (20.7) (19.0) 525.8 1,869.5 1967 499.5 895.3 (747.8) (109.4) (24.0) (14.0) 546.7 1,941.5 1968 560.6 937.5 (776.9) (109.5) (23.4) (27.8) 529.0 2,027.1 1969 559.0 934.1 (773.7) (118.6) (20.9) (20.8) 542.3 2,035.4 1970 504.2 971.6 (788.1) (122.5) (32.3) (28.8) 578.1 2,053.9 1971 595.6 1,157.0 (936.5) (139.0) (35.8) (45.7) 556.2 2,308.8 1972 341.7 835.5 (699.2) (56.1) (41.8) (38.5) 220.5 1,397.7 1973 1974 314.4 533.1 (477.1) (17.1) (14.3) (24.5) 229.6 1,077.1 1975 1976 576.0 1,156.1 (1,001.8) (54.4) (60.3) (39.6) 656.7 2,388.9 1977 815.2 1,263.8 (1,021.2) (116.2) (89.6) (36.8) 1,130.8 3,209.8 1978 (June) 953.0 1,547.1 (1,239.6) (166.7) (105.4) (35.4) 1,684.3 4,184.4 a/ Includes credits to private sector only. Data for 1950-64 are as of June 30 of each year and do not include Central Bank direct credits. Remaining data refer to December 31 unless otherwise noted. Deflation by IBRD adjusted CPI. b/ Includes fishing and forestry. Sources: Data for 1950-65 from Javier Fuenzalida and Sergio Undurraga, El Credito y su Distribucion en Chile, Editorial Landa Santiago, 1968. Tables 22 and 23. Data for 1965-70 from INE, Finanzas, Bancos y Cajas Sociales, Santiago, various years, Data from 1971 on are taken from various issues of Superintendencia de Bancos e Instituciones Financieras, Boletin Estadistico. I.bem 6*7: -ILE - LEGA REERVE REQUIRELrNTSO, 1971-1977 (Percet) I-nstIttIon andmTye o nrnl 1971 1T971 1972 1914 1974 19751 1975 1975 1975 59 75 1975s It U6 97 97 97 97 17 97 197 197 197 177 171 17 1. Private C - Wnrca Banks 49- 6y-~ BA'2l SWA nt 10I' 635 6o SI 60 Bo 65 6.5 83 7.5 75 73 68 65 6' 61 19 59 54 50 Onr-nlrats75- 75/--- 75-/ 95 I0 no 9o - - - - - - - - - - - - -- - - Dread drpnilrs (po~blic aorta) P0 70 20 20 70 20 20 20 20 pn 20 20 2I 75 70 20 70 lime dc Ial 0-89 d... lBt/ 19b' 1~~,t/ 4) 6 6 9.2 9.2 9.7 9.2 9.2 57 50 47 47 4555 7. 5 75 71 71 28 75 20 20 99 dny - I yea --- - 0/ - - cn - V 6, 68 70 15 15 159 12 El 7 a SavEgoIdapoelts - - - - - - - - - - 6 6 IA"~j, -W - A' 38 666 66 - o ... ed depnslrs 20 21 20 201 71 25 20 20 20 70 70 75 2n 20 75 20 20 2n 20 PO 2n 2pn P0 20 20 Ti-edeposits 6 3l 5 6 7 6 6 3 6 6 6 6 6 6 6 6 6 5 5 63 6 8 0 connd drp-elrs (pri-tEr a-c-) Savings 70 70 21 20 70 20 20 SI Po 20 2I 71 20 70 71 20 20 20 70 20 70 70 70 20 2n 0 B:~~~~~k -1. 2~~~~~0 ilCA' 1Io'J 60 6O 60 65 II 731 85 67 7.5 75 77 668 6C 67 6i 59 59 54 50 Meariel r-nt - II 60 II - - - - --- - lamnd epoit (ph_ c aror Besta core 6~~~~~~ ~~~~~~~~~~ ~~0 100 toI 6' 67 67 67 87 87 637 67 67 87 67 Othr ....or - 20 20 7n 70 20 I0 70 70 20 70 71 20 20 Tine deposits 71-69 doyo 18 16 11 40 a 6 9.7 9.7 9.2 9.2 9.7 55 SI 47 47 45 77 71 75 77 71 28 71 20 20 9Idaye -yIa --- - - - - -/ p - -p j 6 A 20l 15 1s 11 12 10 6 6 a n iagies1 techeicel rsve - - - - 91- 90- 89 60 8 W l7'S I7& - - - Savisga drpositn 9 8 6 8 9.7 9.7 9.2 9.7 9.7 9.2 6 8 8 6 6 8 6 6 6 6 6 8 B b. F-rigonorreocy. a-sd depo-sre 20 2O 712 0 20 P 20 10 71 20 70 20 70 70 70 70 70 20 71 Po 70 20 20 7 20 2 200 Ti.nedeponits 6 8 6 6 6 6 6 6 6 6 6 6 63 6 6i 6 6 6~ 6 7. DIrvlp-en sod Nsrgage Baeks Les than 90 days laslc reserve 9.7 71 71- 75 71 71 71 7S 70 70 26 70 20 20~~~~~~~~~~~~~~~~~~92 3 3i/ 35 35 5 5 S 2 5 2 2 2 2 Techical rsvn20 - ---- 90 daa- 1 year L. 8 ~ ~ ~ ~~~~~ ~~~ ~~~~ ~~~~~~~~~~~~~~~~~ 73 6 70 15 ES 11 17 10 6 8 0 Technirslrseerve 12 17 12 - - - - -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~2 lp 12 - - - 4. Finace... soe Les eha 90 days p 2 . 0 's Basic resrv . 6 97 97 0 5 5 T5 75 55 0 57 71 76 P0 70 70 Tecsheicalrss- - - - - 12 17 70 290 70 ----- - - - 90 dsye - I ysa B..i. t-r- - - - - - - - - 6 6 8 P0 15 15 15 12 10 6 8 0 0 Tschn5c-l reeon- - -- - 122- - - --- - Lees tha 90 days Bsaic reev d 8 6 6 6 6 9.2 70 71-i 75 70 75 75 736 72 00 - - Techoicalreee - - - - 12 12 P 20 2 - - - -- - -- - - - - 90 days -Iya Basicrsre- - - - 8 6 70 ES 15 10 17 10 - - - - Technic-l esre- - - - - - - - - 12 12 17 - - - - - 6. savings Cooperaive and Csdit Iioos1-1/ teas than 90 days 30 3.5-/ 09 71 71 71 75 72 71 26 20 20 20 90 days - I ya.. 9.y 0 6 I 20 is 1s 15 12 If 8 6 B Trcbele-l reev20 17 12 12 - - - - - - - - - hJ DanCe noreide Isoetegn and valpacalse affectd by rats of 8 pacceat C' Pelced n dpnprsl_ serv _eee_ 19,71 Case. d/Applied -o av-ege daily depneiee of Secenh- 1977. 9JAppl ied n a--rge datly dnpssire nf Septeber 1974. 2/ To he ievetid Le esth-r en--djoetable T-asey notes or Cnetrs Bsnnoee a~ Nagealesarveeq,ireent .e depoinn of 90 dsys - I ye.- S-ors. CentralB-ek - 428 - Table 6.8: CHILE - ANNUAL INTEREST RATES ON INDEXED SAVINGS INSTRUMENTS (Percent) Interest Institution/Instrument Rate Form of Payment Treasury: Readjustable Treasury Bills 6.5 Semi-annual Central Bank: Readjustable Savings Certificate (CAR) 7.0 Annual State Bank: Term Savings Deposits 7.0 Annual SINAP: Voluntary Savings Accounts 5.0 Quarterly Systematic Savings Accounts From 4.0 Annual Readjustable Mortgage Securities (VHR) 6.o Quarterly Readjustable Mortgage Bonds (BHR) 8.o Semi-annual Mortgage and Development Banks: Readjustable Development Bonds From 6.0 Determined issue by issue CORVI: Savings Deposits 3.0 Incorporated into share value CORFO: Readjustable Investment Bonds 7.0 Semi-annual Debt Amortization Fund: Reconstruction Bonds 8.5 Semi-annual Cooperatives: Readjustable Savings Shares From 7.0 Determined by each cooperative Private Commercial Banks: Deposits in Savings and Investment Depts. 12.0-18.0 Negotiated Readjustable Term Deposits 13.0-21.0 Negotiated Other: Readjustable Debentures of the Compania Manufacturera Papeles y Cartones (CMPC) 8.0 Quarterly Source: Central Bank _ 429 - Table 6.9: CHILE - AVERAGE MONTHLY INTEREST RATES ON NON-INDEXED 30-DAY TIME DEPOSITS, OCTOBER 1974-DECEMBER 1970 (Percent) Savings and Loan Commercial Banks Finance Companies Associations 5/~~~~~~~/a Year/Month Nominal Real- Nominal Real - Nominal Real 1974: October 6.6 -10.3 8.2 -9.0 7.2 -9.9 November 6.6 - 2.9 8.2 -1.4 7.2 -2.3 December 9.0 2.3 12.5 5.6 8.8 2.2 1975: January 9.3 - 4.0 11.1 -2.5 8.8 -4.5 February 10.4 - 5.2 11.8 -4.0 11.0 -4.7 March 11.5 - 8.0 13.3 -6.5 12.0 -7.6 April 12.6 - 6.8 17.1 -3.1 15.6 -4.3 May 14.5 - 1.3 18.4 2.1 16.9 0.8 June 15.8 - 3.3 18.1 -1.4 17.9 -1.6 July 15.2 5.4 18.4 8.3 17.1 7.1 August 13.0 3.8 14.0 4.7 13.7 4.4 September 9.5 0.3 12.1 2.7 13.0 3.5 October 8.0 - 0.4 10.3 1.8 9.0 0.6 November 8.0 - 0.2 9.0 0.7 8.5 0.3 December 10.0 2.7 11.0 3.6 11.0 3.6 1976: January 10.1 - 0.4 11.5 0.9 11.2 0.7 February 10.2 0.1 11.2 1.0 11.0 0.8 March 10.0 - 3.2 10.8 -2.4 10.9 -2.3 April 10.4 - 1.3 11.6 -0.3 11.5 -0.4 May 12.3 2.3 12.6 2.6 12.7 2.6 June 11.6 - o.6 12.2 -0.1 12.0 -0.3 July 7.9 - 0.9 8.9 - 8.6 -0.3 August 8.2 2.6 8.7 3.0 8.5 2.8 September 7.9 0.3 8.1 0.5 8.0 0.4 October 8.1 1.3 8.5 1.7 8.3 1.5 November 8.6 4.6 8.9 4.9 8.8 4.8 December 9.1 3.8 9.5 4.2 9.2 3.9 1977: January 7.9 1.9 8.6 2.5 7.6 1.6 February 6.9 1.0 7.6 1.7 6.7 0.9 March 6.2 0.1 6.8 0.7 - - April 5.7 0.9 6.o 1.2 - _ May 5.2 1.4 5.6 1.8 - - June 4.7 1.4 5.1 1.8 - - July 4.5 o.6 5.1 1.2 - - August 4.5 1.0 5.0 1.6 - - September 4.7 1.0 5.1 1.4 - - October 5.6 1.3 5.9 1.6 - - November 6.1 3.8 6.4 4.1 - - December 6.1 2.9 6.4 3.2 - - 1978: January 6.0 4.2 6.2 4.4 - - February 4.7 2.2 4.9 2.4 March 3.0 0.1 3.2 0.3 _ _ April 3.4 0.7 3.5 0.8 - - May 4.6 2.4 4.7 2.5 - - June 3.4 1.3 3.5 1.5 - - July 3.2 0.7 3.3 c.8 - - August 3.8 1.0 3.9 1.1 - - September 4.3 1.3 4.5 1.6 - - October 4.6 2.7 4.7 2.8 - - November 4.3 2.9 4.5 3.2 - - December 4.7 3.1 4.9 3.3 _ _ a/ Deflated by CPI. Source: Central Bank - 430 - Table 6.10: CHILE - AVERAGE MONTHLY INTEREST RATES CHARGED ON SHORT-TERM CREDITS, 1975-DECEMBER 1978 (Percent) Savings and Loan Commercial Banks - Finance Companies a Associations Year/Month Nominal Real- Nominal Real - Nominal Real - 1975: January 9.6 -3.5 13.9 -0.0 - - February 9.6 -5.9 14.1 -2.1 - - March 9.6 -9.6 15.0 -5.1 - - April 9.6 -9.3 20.0 -0.7 - - May 19.0 2.6 22.2 5.3 23.6 6.6 June 21.0 1.0 23.7 5.3 23.7 3.3 July 21.2 10.9 24.6 14.0 22.8 12.4 August 19.1 9.14 20.7 10.8 18.4 8.7 September 18.7 8.7 19.0 8.9 17.8 7.9 October 12.0 3.3 12.0 3.3 12.0 3.3 November 12.0 3.5 12.0 3.5 12.0 3.5 December 14.5 6.9 15.5 7.8 15.5 7.8 1976: January 14.6 3.7 15.5 4.5 15.4 4.4 February 14.5 3.9 15.3 4.7 14.5 4.0 March 14.6 1.0 15.3 1.6 15.2 1.5 April 14.8 2.6 15.3 3.0 14.9 2.7 May 15.1 4.8 15.8 5.5 15.6 5.3 June 14.1 1.6 15.4 2.8 15.1 2.5 July 11.8 2.7 12.2 3.0 11.6 2.5 August 11.9 6.0 11.8 5.9 11.4 5.6 September 11.6 3.7 11.3 3.4 11.0 3.2 October 11.8 4.8 11.8 4.8 11.3 4.3 November 12.5 8.4 12.9 8.8 12.8 8.7 December 13.2 7.7 13.5 8.0 13.5 8.0 1977: January 12.4 6.2 13.1 6.8 - - February 11.5 5.-4 11.9 5.8 - - March 10.1 3.8 10.4 4.1 - - April 8.8 3.9 9.2 4.3 - - May 7.8 3.8 8.3 4.3 - - June 6.9 3.5 7.1 3.7 - - July 6.4 2.4 6.8 2.8 - - August 6.2 2.8 6.8 3.3 - - September 6.2 2.4 6.6 2.8 - - October 6.9 2.6 7.4 3.1 - - November 7.5 5.2 7.8 5.5 - - December 7.4 4.2 7.7 4.5 - - 1978: January 7.3 5.4 7.6 5.7 - - February 6.1 3.6 6.4 3.9 1.arch 4.4 1.5 4.5 1.5 - - April 4.4 1.8 4.6 2.0 - - May 5.7 3.6 5.9 3.7 - - June 4.8 2.8 5.0 3.0 - - July 4.4 1.8 4.5 2.0 - - August 4.7 1.8 4.9 2.1 - - September 5.1 2.1 5.3 2.4 - - October 5.5 3.6 5.8 3.8 _ _ November 5.3 4.0 5.5 4.2 - _ December 5.6 4.0 5.7 4.2 _ _ a/ Deflated by CPI. b/ Excluding agricultural credit. Source: Central Bank - 431 - Table 6.11: CHILE - NOMINAL INTEREST RATE SPREADS ON SHORT-TERM OPERATIONS, MAY 1975-DECEMBER 1978 (Percent) Commercial Banks Finance Companies Year/Month Gross a/ Net b/ Gross a/ Netb/ 1975: May 4.5 3.0 3.6 2.0 June 5.2 3.5 5.6 3.1 July 6.o 4.0 6.2 4.2 August 6.1 0.9 6.7 5.0 September 8.8 -0.3 5.6 4.2 October 4.0 -0.0 1.7 1.3 November 4.0 0.3 3.0 1.3 December 4.5 -1.3 4.5 1.6 1976: January 4.5 -0.3 4.0 1.4 February 4.3 0.2 4.1 1.8 March 4.6 0.4 4.5 2.2 April 4.4 -0.0 3.7 1.4 May 2.8 0.9 3.2 0.9 June 2.5 o.8 3.2 1.0 July 3.9 1.3 3.3 1.1 August 3.7 1.0 2.8 0.5 September 3.7 1.0 3.2 0.9 October 3.7 0.9 3.3 0.9 November 3.9 0.9 4.0 1.3 December 4.1 0.8 4.0 1.0 1977: January 4.6 2.1 4.5 1.9 February 4.6 2.1 4.3 1.6 March 3.9 1.8 3.6 1.3 April 3.1 1.5 3.2 1.4 May 2.6 1.5 2.7 1.4 June 2.2 1.4 2.0 1.2 July 1.9 1.3 1.7 0.9 August 1.8 1.2 1.8 1.0 September 1.4 0.9 1.5 o.8 October 1.3 o.6 1.5 0.7 November 1.4 o.6 1.5 o.6 December 1.3 1.1 1.4 1.1 1978: January 1.3 1.0 1.4 1.1 February 1.4 1.4 1.5 1.4 March 1.4 1.3 1.3 1.2 April 1.1 o.8 1.2 0.8 May 1.2 o.6 1.2 o.6 June 1.5 1.2 1.5 1.2 July 1.2 0.9 1.2 0.9 August 0.9 o.6 1.0 0.7 September 0.8 0.5 o.8 0.4 October 0.9 o.6 1.1 0.7 November 1.0 o.8 1.1 0.7 December 0.9 o.6 0.9 0.5 a/ Gross spread is the difference between loan and deposit rates. b/ Net spread is gross spread less-the cost of maintaining legal reserves. Source: Central Bank - 432 - VII. AGRICULTURE - 433 - Table 7.1: CHILE - ESTIMATED GROSS VALUE OF MAJOR FARM PRODUCI'S, 1964/65-1973/74 (Millions of pesos at prices of December 1974) C R O P Y E A R S 1964/65 1969/70 1973/74 Field crops: Wheat 215.9 252.8 142.0 Oats 10.9 14.7 19.9 Barley 12.1 16.0 24.5 Rye 1.1 1.4 1.9 Rice 16.0 15.2 6.8 Corn 35.6 32.8 50.2 Beans 15.3 17.1 19.5 Lentils 4.2 5.0 5.7 Chickpeas 1.8 1.9 1.8 Peas 1.1 1.6 2.7 Potatoes 34.7 33.8 50.0 Sunflower seeds 11.9 7.4 2.7 Rapeseeds 16.6 16.1 8.0 Sugar beet 22.6 46.6 26.5 Tobacco 1.1 2.0 1.2 Subtotal 400.9 464.4 363.4 Tree fruits: Apples n.a. n.a. 29.3 Peaches and nectarines n.a. n.a. 31.3 Table grapes n.a. n.a. 13.3 Oranges n.a. n.a. 12.9 Lemons n.a. n.a. 18.3 Pears n.a. n.a. 9.6 Plums n.a. n.a. 2.6 Avocados n.a. n.a. 13.6 Cherries n.a. n.a. 3.6 Apricots n.a. n.a. 7.1 Walnuts n.a. n.a. 4.7 Cherimoya n.a. n.a. 1.2 Quince n.a. n.a. 0.9 Almonds n.a. n.a. 3.3 Subtotal n.a. n.a. 151.7 Livestock products: Beef 202.4 250.0 283.6 Mutton 27.9 26.3 25.2 Pork 36.o 44.2 39.8 Poultry 39.4 102.2 92.5 Eggs 59.1 67.1 77.7 Milk 109.0 120.5 121.9 Wool 34.2 31.4 28.3 Subtotal 508.0 641.7 669.o Garden fruits and vegetables 157-5 Wine 154.0 151.8 196.2 TOTAL 1,537.8 a/ Value of production was calculated by multiplying output by price to producer prevailing during the prime marketing period, deflated by the official CPI base December 1974=100. Source: Data on field crops, livestock products, tree fruits and wine from: ODEPA, Chile: Estadisticas Agropecuarias 1965-1974, Santiago, 1976; garden fruits and vegetables are taken from AID Sector Overview. Table 7.2: CHILE - AREA PLANTED OF 14 M2AJD0 CROPS (Thousands of heotares) == _C R O P Y E A RS 1955/5r 1906/fl:- - - - ----- 1929/30 1935/36 1954/55 1959/60 1963/64 1964/65 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 Crop (c nsus) (census) (ensus) Ave age Average (census) Wheat 697.9 775.6 792.2 802.6 759.3 727.1 780.0 718.5 700.2 743.0 740.3 727.4 711.8 533.8 591.0 686.2 697.6 628.0 579.6 Barley 61.6 66.o 62.5 53.1 42.1 38.3 38.7 5o.4 71.6 44.4 43.4 52.5 67.1 63.9 79.8 66.2 57.8 63.1 63.8 Rye 3.4 9.7 6.7 7.3 6.8 7.1 6.9 6.5 6.8 8.4 8.3 8.9 9.2 6.3 io.6 8.7 9.5 11.4 11.3 Oats 120.4 86.9 94.5 93.2 79.0 70.3 66.1 68.3 105.4 83.1 72.6 75.3 83.8 75.7 96.6 94.4 79.5 75.0 74.8 Rice - - 33.9 33.1 31.9 27.5 36.9 33.0 32.5 16.2 25.2 27.3 25.7 18.5 13.2 22.9 28.6 35.5 32.6 Corn 37.9 41.9 71.9 77.3 85.1 87.6 80.7 92.2 88.6 58.4 73.9 77.0 84.5 86.4 107.4 91.6 96.2 115.6 93.9 Beans 66.5 73.7 77.9 78.6 71.8 58.4 64.7 68.4 53.4 47.2 57.2 69.9 79.5 67.6 73.9 68.o 81.6 97.3 111.7 Peas 21.1 22.8 12.4 12.8 10.0 7.3 10.7 8.5 17.0 10.9 10.7 10.1 13.1 11.7 35.4 8.6 8.5 15.7 17.2 Ch-ckpeas 5.9 10.3 7.6 6.9 7.7 8.4 8.7 9.3 16.1 8.7 11.3 16.1 20.3 15.5 13.6 7.8 7.1 8.3 11.0 Lentile 14.5 38.3 25.2 28.1 25.6 24.1 lo.6 6.8 7.4 13.7 17.3 18.1 18.3 16.0 19.5 20.6 22.5 30.9 31.8 Potatoes 42.6 42.8 81.5 86.6 90.3 91.1 76.3 77.1 79.2 76.5 71.7 8o.o 79.2 66.7 93.3 71.5 68.4 85.9 90.8 Sunflower Seeds - - 28.3 38.0 32.3 31.9 42.1 22.4 29.0 24.6 20.2 15.3 14.8 11.9 8.4 13.3 21.5 10.3 20.9 Rapeseeds - - 0.1 16.2 37.8 57.6 61.8 45.1 37.4 48.4 53.7 49.4 56.1 30.8 25.0 45.5 59.6 53.7 34.4 Suger Rents - 1.4 9.8 14.3 18.0 21.0 28.7 30.2 27.6 41.7 35.1 35.0 23.0 26.3 4o.3 63.8 56.2 21.0 Total 1,071.8 i,i68.o 1,296.1 1,343.6 1,294.0 1,254.6 1,305.2 1,232.2 1,274.8 1,211.1 1,251.5 1,262.4 1,294.7 1,027.8 1,172.2 1,245.6 1,302.1 1,286.8 1,394.7 Source: INE, 2ANSA Table 7.2a: CHILE - INDEX OF AREA PLANTED, 14 MAJOR CROPS, 1930-1977 (Average 1960/61-1963/64=100) C R O P Y E A R S b/ / 2/ a/ ,/1955/56- 1960/61- 2 Crop 1929/30 1935/36 1954/55 1959/60 1963/64 1964/65 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 971/72 1972L73 1973/74 974/75 1975/76 1976/77 1977/78 Wheat 92 102 104 106 100 96 103 94 92 98 98 96 94 70 78 90 92 83 76 Barley 146 157 148 126 100 91 92 120 170 105 112 125 159 152 19C 157 137 150 152 Rye 50 143 99 107 100 104 101 96 100 124 122 131 135 93 156 128 140 168 166 Oats 152 110 120 118 100 89 84 86 133 105 92 95 106 96 122 119 101 95 95 Rice n.a. n.a. 106 104 100 86 116 103 102 51 79 86 81 58 41 72 90 111 102 Corn 45 49 84 91 100 103 95 108 104 69 87 90 99 102 126 108 113 136 110 Beans 93 103 108 109 100 81 90 95 74 66 80 97 111 94 103 95 114 136 156 Peas 211 228 124 128 100 73 107 85 170 109 107 101 131 73 117 86 85 157 172 Chickpeas 77 134 99 90 100 109 113 121 209 113 147 209 264 109 201 101 92 108 143 Lentils 57 150 98 110 100 94 41 27 29 54 68 71 71 62 76 80 88 121 124 w Potatoes 47 47 90 96 100 101 84 85 88 85 79 89 88 74 103 79 76 95 101 Sunflower seeds n.a. n.a. 88 118 100 99 130 69 90 76 63 47 46 37 26 41 67 32 65 Rapeseeds n.a. n.a. 0 43 100 152 163 119 99 128 142 131 148 81 66 120 158 142 91 Sugar beets n.a. n.a. 10 69 100 126 147 201 211 193 292 245 245 161 184 282 446 393 147 Total 83 90 100 104 100 97 101 95 99 94 97 98 100 79 91 96 101 99 92 2/ Agricultural Census years. V/ Annual averages. Source: Appendix Table 7.2 Table 7.3: CHILE - PRODIITCION OF 14 MAJOR CROPS (Thousands of metric tons) C R 0 P _ Y E A R S 1955/56- 1960/61--_ __ 1929/30 1935/36 1954/55 19i9/60 1963/64 1964/65 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 197/1/72 1972//S5 19/5/74 1974/75 1975/76 1976/77 1977/78 Crop (census) (census) (census) Average Average (census) Wheat 912.5 865.9 1,097.3 1,069.4 1,073.7 1,115.8 1,346.4 1,203.4 1,215.9 1,214.2 1,306.9 1,368.0 1,195.1 746.7 939.0 1,003.1 866.5 1,219.3 892.6 Borley 99.9 106.9 99.9 91.4 73.8 74.0 88.o 117.5 156.9 80.1 97.4 113.6 139.0 107.4 149.6 120.6 89.0 143.1 125.5 Rye 3.3 7.2 6.9 5.9 6.8 8.5 11.1 8.4 7.7 10.2 10.7 12.3 12.4 8.5 14.6 11.1 9.3 16.4 10.8 Oats 151.0 98.5 130.5 100.2 90.7 82.2 107.4 115.2 158.4 97.3 110.6 112.0 111.3 109.1 149.9 131.1 95.9 123.7 92.6 Rice - - 91.4 83.3 85.7 80.4 76.7 84.2 93.5 36.7 76.2 67.1 86.3 55.0 34.3 76.4 97.6 120.0 104.8 Corn 59.6 52.2 116.5 157.3 190.3 259.9 285.3 362.2 320.9 153.8 239.1 258.3 283.0 294.0 366.3 329.0 248.o 355.3 256.9 Reans 76.7 69.5 77.7 71.3 69.4 58.9 68.8 89.8 65.1 46.8 65.6 72.2 82.9 65.0 74.8 74.1 70.3 112.4 112.1 Peas 29.6 18.9 11.1 7.9 5.8 5.3 13.9 8.9 11.6 6.7 7.4 8.5 10.7 8.8 12.5 6.3 7.1 13.7 15.7 Chickpeas 4.4 4.4 3.9 3.4 3.6 5.1 4.9 8.0 7.6 3.5 5.4 7.2 9.3 4.1 5.0 4.9 2.7 5.0 5.5 Leotile 13.2 26.1 17.6 17.2 14.0 9.3 4.6 3.9 4.0 7.8 11.2 12.0 10.7 9.8 12.8 12.1 13.5 23.8 19.0 Potatoes 4C2.3 343.5 725./ 753.4 816.0 703.3 803.o 716.6 724.1 604.6 683.8 835.8 733.1 623.6 1,012.0 737.9 538.9 928.4 980.7 Sunflower Seeds - - 40.2 46.9 35.2 45.2 56.o 33.3 43.0 28.2 28.2 20.3 19.9 13.5 10.4 17.8 27.0 15.3 30.0 Rapeseeds - - 0.2 12.8 42.5 72.0 77.1 60.7 47.9 65.6 69.9 82.1 78.0 40.0 34.8 61.4 104.8 82.7 52.0 Sugar Beets - - 30.1 292.1 508.1 680.6 767.6 1,047.9 1,142.6 1,065.9 1,655.1 1,390.7 1,201.6 855.9 915.3 1,481.0 2,276.2 2,208.4 840.4 Note: Production aata described here do not neceos.rily cor-espond to implicit output s,ggested by Table 7.1, wh-ch oseA a diflerent source. 2ocrce: INE, IANSA Table .3a: CIIILE - INDEX OF CROP PBODUCTION, 14 MAJOR CROPS, 1930-1978 (Average 1960/61-1963/64=100) ____________ __ _ _ CROP Y E A R S _- 1955/56- 1960/61- Weights Crop 1929/30 1935/36 1954/55 1959/60 1963/64 1964/65 1965/66 1966/67 1967/68 1968/69 1969/70 70/71 191/72 1972/73 97j74 974/75 1975/76 1 .46 Wheat 85 81 102 100 100 104 125 112 113 113 122 137 111 70 87 93 81 114 83 .03 Barley 135 145 135 124 100 100 119 159 213 109 132 154 188 146 219 163 121 194 170 .01 Rye 49 106 101 87 100 125 163 124 113 150 157 181 182 125 278 163 137 241 159 .03 Oats 166 109 144 110 100 91 118 127 175 107 122 123 123 120 173 145 106 136 102 .01 Rice n.a. n.a. 107 97 100 94 90 98 109 43 89 78 101 64 31 89 106 140 122 .07 Corn 31 27 61 83 100 137 150 190 169 81 126 136 149 154 193 173 130 187 135 .07 Beans 111 100 112 103 100 85 99 129 94 67 95 104 119 94 105 107 101 162 162 .01 P-6a 338 326 191 136 100 91 240 193 200 116 128 14/ 184 152 233 109 122 236 271 .01 Chickpeas 122 122 108 94 100 142 136 222 211 97 150 200 258 114 183 136 75 139 153 .01 Lentils 94 186 126 123 100 66 33 28 29 56 80 86 76 70 96 86 96 169 136 .12 Potatoes 49 42 89 92 100 86 98 88 89 74 84 102 90 76 114 90 66 114 120 .02 Sunflower seeds n.a. n.a. 114 133 100 128 159 95 122 80 80 58 57 38 28 49 77 43 85 .04 Rapeseeds n.a. n.a. 0 30 100 169 181 143 113 150 164 193 184 94 80 132 247 195 122 .11 Sugar beets n.a. n.a. 6 57 100 134 151 206 225 210 326 274 236 168 180 291 448 435 165 1.00 Total-' 70 66 87 100 109 127 130 131 113 139 146 132 95 118 127 134 166 115 Yield index 84 73 87 84 100 112 126 137 132 120 143 149 132 120 130 132 133 168 125 / Weighted by share in value of output during 1969. Source: Appendix Table 7.3 - -38 - Table 7.4: CHILE - YIELDS MR 14 MAJOR COPS (Metric tons per hectare) C R O P Y E A R S 1955/56- 1960/61- -964/65 Crop 1929/30 1935/36 1954/55 1959/60 1959/60 1963/64 (Census) 1965/66 1966/67 1967/68 1968/69 1 1969/70 Wheat 1.31 1.12 1.39 1.33 1.25 1.42 1.53 1.73 1.67 1.74 1.63 1.77 Barley 1.62 1.62 1.60 1.72 1.79 1.76 1.93 2.28 2.33 2.19 1.81 2.00 Rye o.96 o.74 1.03 0.81 0.77 1.00 1.19 1.61 1.30 1.14 1.21 1.29 Oats 1.25 1.13 1.38 1.07 1.03 1.15 1.17 1.62 1.69 1.50 1.17 1.52 Rice - - 2.70 2.51 2.76 2.69 2.92 2.08 2.55 2.88 2.27 3.02 Corn 1.57 1.25 1.62 2.03 1.95 2.23 2.97 3.54 3.93 3.62 2.63 3.24 Beans 1.15 o.94 1.00 0.90 0.91 0.97 1.01 1.06 1.31 1.22 0.99 1.15 Peas 0.93 0.83 0.89 0.62 0.50 0.59 0.73 1.30 1.05 0.68 0.62 0.69 Chickpeas 0.74 0.43 0.52 0.49 0.38 0.47 0.61 0.57 o.86 o.47 o.40 o.48 Lentils 0.91 o.68 0.70 0.61 0.55 0.55 0.39 o.43 o.58 0.54 0.57 o.65 Potatoes 9.44 8.02 8.90 8.72 7.81 9.05 7.72 10.53 9.29 9.14 7.90 9.54 Sunflower seeds - - 1.42 1.24 0.98 1.10 1.41 1.33 1.49 1.49 1.14 1.39 Rapeseeds - - 1.68 0.80 1.14 1.12 1.25 1.25 1.35 1.28 1.32 1.30 Sugar beets - - 21.66 29.57 28.02 35.03 37.94 36.48 36.56 37.87 38.55 39.69 CROP YEARS Crop 1970/71 1971/72 1972/73 197 4/75 1975/76 1976/77 1977/78 Wheat 1.88 1.68 1.40 i.38 1.46 1.24 1.94 1.54 Barley 2.16 2.07 1.68 1.S5 1.82 1.54 2.27 1.97 Rye 1.38 1.35 1.35 1.40 1.27 0.97 1.44 o.96 Oats 1.49 1.33 1.44 1.57 1.39 1.21 1.65 1.24 Rice 2.46 3.36 2.96 2.63 3.34 3.42 3.38 3.21 Corn 3 ,5 3.35 3.40 3.43 3.59 2.58 3.07 2.74 Beans 1.03 1.04 0.96 1. C1 1.09 o.86 1.15 1.00 Peas o.84 0.81 0.75 0. 81 O.73 o.84 0.88 0.91 Chickpeas 0.45 o.46 0.27 o. 36 0.63 0.39 o.60 0.50 Lentils o.66 0.59 0.61 0. ,5 0.59 o.60 0.77 0.60 Potatoes 10.45 9.26 9.35 10. 8 10.32 7.88 10.81 i.80 Sunflower seeds 1.33 1.35 1.13 1.24 1.34 1.25 1.48 1.44 Rapeseeds 1.66 1.39 1.30 1.33 1.33 1.76 1.54 1.51 Sugar beets 39.58 38.22 37.21 34.80 36.72 35.68 39.27 40.02 a/ Jnweighted annual average. Table 7.4a: CHILE - INDEX OF YIELDS PER HECTARE, 14 MAJOR CROPS, 1930-1978 (Av-rage 1960/61-1963/64=100) C R O P Y E A R S 1955/56- 1960/61- Crop 1929/30 1935/36 1954/55 1959/60 1963/54 1964/65 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/ Wheat 92 79 98 94 100 108 122 118 123 115 125 142 118 99 112 103 87 137 1o8 Barley 92 92 91 98 100 110 130 132 124 103 118 123 118 95 104 103 88 129 112 Rye 96 74 103 81 100 119 161 130 114 121 129 139 135 135 141 127 97 144 96 Outs 109 98 120 93 100 102 141 147 130 102 132 130 116 125 137 121 105 143 108 Rice - - 100 93 100 109 77 95 107 84 112 91 125 110 99 124 118 126 119 Corn 70 56 73 91 100 133 159 176 162 118 145 151 150 152 154 161 116 138 123 Beans 119 97 103 93 100 104 109 135 126 102 119 106 107 99 107 112 89 120 103 Peas 158 141 151 105 100 124 220 178 115 105 117 142 137 127 139 124 142 147 154 Chickpeas 157 91 111 104 100 130 121 183 100 85 102 96 98 57 100 134 83 128 106 Lentils 165 124 127 111 100 71 78 105 98 104 118 120 107 111 116 107 109 140 109 Potatoes 104 89 98 96 100 85 116 103 101 87 105 115 102 103 115 114 87 119 119 Sunflower seeds - - 129 113 100 128 121 135 135 104 126 121 123 103 112 117 114 135 131 Rapeseeds - - 150 71 100 112 112 121 114 118 116 148 124 116 122 110 157 138 135 Zugar beeta - _ 62 84 100 108 104 104 108 110 113 113 109 106 99 105 102 112 114 Source: Appendix Table 7.4 Table 7.5: CHILE - OUTPUT, AREA PLANTED, AND YIELDS OF MAJOR TREE FRUITS, 1965 and 1974 Area Planted Output Yield ('000 has) ('oo0 mt) (mt/ha) Species 1965 1974 1965 1974 1965 1974 Apples 13.8 11.3 121.4 120.3 8.80 lo.65 Peaches and nectarines 12.1 14.8 70.1 139.5 5.79 9.46 Table grapes 10.2 4.1 57.8 57.2 5.67 14.02 Oranges 5.2 4.5 48.6 46.2 9.35 10.29 Lemons 4.8 7.4 26.7 63.0 5.56 8.56 Pears 3.4 2.6 24.2 32.5 7.12 12.53 Plums 3.4 1.7 14.7 12.6 4.32 7.49 Avocados 4.7 4.4 11.5 14.2 2.45 3.23 Cherries 2.6 1.0 5.9 4.9 2.27 4.86 Apricots 1.2 1.4 3.8 12.0 3.17 8.81 Walnuts 3.4 3.7 2.2 2.5 0.65 0.69 Cherimoya 0.5 o.4 2.0 1.2 4.00 3.38 Quince 0.1 1.0 1.8 5.1 18.00 5.36 Almonds 2.6 1.6 0.4 0.5 0.15 0.30 Total 68.0 59.6 Source: ODEPA, Estadfsticas Agropecuarias 1965-1974, Santiago, 1976 - 441 - Table 7.6: CHILE - GRAPE CULTIVATION AND WINE PRODUCTION Area Wine Other Cultivated Production Beverages Year ('000 ha) (Mill. liters) (Mill. liters) 1953 88.9 364.7 n.a. 1954 91.9 352.6 7.3 1955 91.8 364.0 6.5 1956 98.9 395.4 5.6 1957 92.0 357.9 5.1 1958 95.7 372.0 5.2 1959 100.4 363.8 7.0 1960 98.0 368.8 7.0 1961 101.0 485.3 7.3 1962 102.2 552.9 10.0 1963 101.1 460.6 9.2 1964 103.4 483.7 9.5 1965 103.0 364.8 10.2 1966 102.6 473.6 12.4 1967 101.7 488.8 12.0 1968 103.8 518.2 11.3 1969 102.8 381.2 11.6 1970 i04.0 363.6 10.3 1971 105.4 509.8 15.5 1972 105.9 640.2 13.4 1973 108.1 544.6 11.9 1974 110.8 466.5 15.0 1975 110.0 / 464.9 n.a. 1976 110.7 - 514.3 n.a. a/ Assumes area devoted to grapes for other beverages remained constant at 1975 level; i.e. 4,800 ha. Source: INE; ODEPA; Servicio de Impuestos Internos - 442 - Table 7.7: CHILE - LIVESTOCK BY TYPE, 1965-1977 (Thousand head) Egg-Laying Year Cattle Sheep Pigs Chickens 1965 2,870.2 6,690.3 1,021.6 6,703.4 1966 2,869.4 6,630.4 1,022.3 7,747.6 1967 2,883.5 6,732.6 1,023.1 9,433.8 1968 2,910.7 6,834.7 1,023.8 8,699.1 1969 2,916.5 6,506.5 1,024.5 7,735.8 1970 2,931.1 6,131.2 1,025.3 7,105.8 1971 2,890.8 5,906.7 1,026.0 7,513.3 1972 2,961.5 5,529.8 1,026.8 7,412.7 1973 3,164.6 5,353.3 967.8 7,862.1 1974 3,356.2 5,543.7 866.1 7,827.8 1975 3,332.7 5,644.4 700.6 6,789.0 1976 3,256.9 5,729.1 704.1 6,152.0 1977 3,314.8 5,700.8 908.5 6,496.8 Source: ODEPA Table 7.8: CHILE - LIVESTOCK PRODUCTION, 1965-1976 _ _ ___ __ ___ _ 1964/65 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 1971/72 1972/ 1973/74_1974/75 1975/76 1976/m79/ Beef ('000 mt) 139 159 160 173 168 172 158 160 172 195 206 184 n.a. Lamb and mutton ('000 mt) 27 30 34 28 27 26 24 23 21 26 27 29 n.a. Pork ('000 mt) 40 41 43 48 48 49 51 53 47 44 34 35 n.a. Chicken - broilers ('000 mt) 9 20 27 28 37 46 41 41 35 40 29 31 30 Milk (million liters) 810 812 829 846 889 895 940 880 855 906 956 1,022 n.a. Eggs (millions) 1,063 1,255 1,563 1,489 1,307 1,206 1,310 1.307 1,394 1,396 1,196 1,067 1,137 Wool ('000 mt) 22 22 22 23 21 20 19 18 18 18 19 19 vI' Provisional. Source: ODEPA - 444 - Table 7.9: CHILE - FERTILIZER CONSUMPTION, 1950-1977 (Thousands of metric tons of nutrients) Year Nitrogen Phosphates Potassium 1950 8.5 17.4 7.9 1951 8.1 17.3 3.9 1952 11.8 24.9 5.1 1953 14.9 36.2 7.4 1954 15.4 31.0 12.1 1955 15.2 36.5 5.6 1956 8.9 32.2 4.7 1957 11.6 34.5 7.7 1958 11.9 40.3 7.8 1959 11.4 35.2 5.8 1960 12.9 39.2 6.6 1961 16.6 56.o 10.6 1962 23.8 58.o 12.2 1963 27.3 77.1 12.0 1964 32.8 73.4 13.1 1965 33.1 73.3 15.7 1966 37.5 84.9 20.7 1967 38.2 75.1 12.5 1968 33.9 96.9 9.8 1969 45.1 98.9 13.6 1970 44.4 98.6 15.1 1971 49.7 103.6 16.7 1972 54.7 84.6 18.9 1973 60.7 121.2 15.5 1974 53.0 103.5 16.2 1975 37.5 57.5 b.4 1976 49.9 64.3 14.8 1977 37.9 32.1 9.9 Source: 1950-60 data are from Pierre R. Crosson, Agricultural Development and Productivity: Lessons from the Chilean Experience, The Johns Hopkins Press, Baltimore, 1970, Table 16. Data for 1961-76 are from ODEPA. - 445 - Table 7.10: CHILE - SALES OF PESTICIDES, 1952-1975 -/ (Thousands of Kg or liters of active ingredients) Years Herbicides Fungicides Insecticides 1952 104 2,141 1958 347 5,334 1,106 1961 178 7,266 587 1962 171 6,700 709 1963 292 6,687 789 1970 410 977 1,760 1971 419 714 1,137 1972 478 4,521 2,670 1973 597 7,344 2,454 1974 450 5,226 1,354 1975 653 4,083 1,454 1976 407 3,072 2,062 1977 364 999 1,887 Source: 1952-63 from Crosson (op. cit.), Table 17; 1970-75 from the Servicio Agricola y Ganadera (SAG) and ODEPA Table 7.11: CHILE - SALES OF COMMERCIAL SEEDS, 1964-1974 Seeds 1964 1965 _1966 l9_ 6 17 -- 1 -9a __1969_ _ 1970 1971 1972 1973 1974 Wheat 58.8 65.8 59.5 43.9 48.7 49.7 55.3 56.o 57.9 61.2 64.8 Barley 3.8 3.9 3.3 3.9 4.5 5.7 5.8 4.7 6.1 7.8 7.2 Oats 1.9 1.8 1.6 2.1 1.3 2.1 2.3 1.5 3.0 3.3 2.8 Rice 3.7 3.4 3.8 2.9 2.0 2.4 3.3 3.0 2.6 0.5 2.2 Corn 0.9 1.0 1.2 0.8 0.8 0.7 0.7 1.0 1.4 1.3 1.0 Beans 2.7 3.4 2.1 1.4 1.3 1.3 1.7 3.3 3.2 2.7 3.0 Potatoes 2.5 1.5 1.6 1.7 2.3 1.4 2.4 2.4 9.6 14.5 15.9 Rapeseeds 0.1 0.2 0.1 0.1 0.1 0.1 0.1 0.2 0.1 0.1 0.1 Sugar beets 0.3 0.3 0.3 o.4 o.4 o.4 0.5 0.5 0.3 o.4 o.4 Source: AID Sector Overview, (op. cit.), Table 4.11 Table 7.12: CHILE - AGRICULTURi0DL CREDIT BY MAJOR LENDING INSTITUTIONS, 1965-1976 (Millions of escudos at December 1969 prices) 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 Production Credit 796.5 1 106.7 1,237.2 1,340.8 1 375.0 1 519.4 1 780.5 1,276.8 1 122 0 996.2 905.1 1,1741.4 BFCH 271.6 616.o 706 5 722.7 839. 6 1,198.8 1,003.2 998.4 662.1 754.2 Private commercial banks 34l1.1 268.0 245.3 265.3 253-9 239.6 221.8 170.6 56.5 6o.i 95.8 -o6.8 Central Bank 110.3 107.4 125.0 136.8 132.8 133.1 78.4 16.1 2.0 - - CORA 8.4 32.7 75.8 117.0 146.5 196.9 170.5 32.4 5.5 3.3 - _ INDAP 39.7 30.8 30.1 29.5 31.9 30.8 61.3 34.9 49.9 97.4 87.6 66.4 IANSA/CCMARSA 25.4 51.0 54.4 69.5 91.7 79.4 49.7 19.5 9.8 127.6 59.7 47.0 Investment Credit 83.o 251.0 275.3 259.5 281.0 231.7 347.0 414.9 138.0 152.3 180.8 396.0 BECH 10 . 7 123.6 129.3 111.6 92.4 635]..2 1T31.1 226.67 O 51.1 T Private commercial banks - - - - - - - - - - 0.5 18.4 CORAL - 23.0 32-5 21.6 56.6 54.8 123.3 113.3 31.7 6.7 - - INDAP 0.5 7.0 13.2 27.1 32.5 22.3 43.3 32.3 18.0 14.5 5.6 34.4 r CORO 63.8 97.0 95.5 92.8 92.1 78.4 39.7 38.4 4.4 79.9 51.5 69.5 Z IFICOOP - 0.4 4.7 6.5 7.5 11.0 9.7 4.4 2.0 0.2 26.6 93.7 Total Credit 879.5 1,357.7 1,512.4 1,600.4 1,656.1 1,751.1 2,127.6 1 691 6 1,260 0 1 148 6 1 086.0 1 570.4 BECH 290.3 7 O 35.8 833 10.7 904.5 1,329.9 1,229.6 1,080.3 ,58.9 75.7 934.2 Private commercial banks 341.1 268.0 245.3 265.3 253.9 239.6 221.8 170.6 56.5 60.1 96.3 325.2 Central Bank 110.3 107.4 125.0 136.8 132.8 133.1 78.4 16.1 2.0 - - _ CORA 8.4 55.7 io8.T 138.6 203.1 251.7 293.8 145.7 37.2 10.0 - _ INDAP 40.2 37.8 43.3 56.6 64.4 53.1 104.6 67.2 67.9 111.9 93.2 100.8 CORFO 63.8 97.0 95.5 92.8 92.1 78.4 39.7 38.4 4.4 79.9 51.5 69.5 IANSA/COMARSA 25.4 51.0 54.4 69.5 91.7 79.4 49.7 19.5 9.8 127.6 59.7 47.0 IFICOOP - 0.4 4.7 6.5 7.5 11.0 9.7 4.4 2.0 0.2 26.6 93.7 Source: AID Sector Overview, op. cit.; ODEPA Table 7 13: CHTLE - EXPORTS OP' AGRICULTURAL, FISHERIES, AND) AGROTNDtlSTRIAL PRODUCTS (ex. E'orestry products), 1960-1976 (STTC classification, mlillions of U.S. dollars) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ , _ _ _ _ _ _ _ _ _ . _ _ _-- - - - - - - - - - - - - -_ Average i946- 1951- 1956- 196o- 1929 1933 1939 1950 195v5 1960 1964 1965 1966 1967 1968-- 1969 -1970- 1971- 1972 1973- 1974- 1975 1976 AgricultiLrai 16.3 1().1 17.9 35.4t 3-2.8 26.9 2S.3 21.8 19.7 .10.8 24.o 24.6 30-1 32.8 18.2 21.5 49.2 76.4 111.0 Pield, orchard and galrdeni crops 13.2 5.2 12.2 26.2 20.0 17.1 i6.6 15.0 i1.6 12.3 16.4 14.8 22.4 27~.8 17.2 20.1 43.3 5;9.? 86.2 '-ereals (5.4) (1.0) (2.4) (9.2) (4.8) (2.2) (1.0) (0.1) (0.2) ( - ) (0.2) (0.5) (0.6) (0.8) (0.4) (0.4) (0.3) (2.5) (1.0) Beans (2.7) (0.4) (1.9) (6.5) (4.5) (3.5) (3.5) (2.3) (1.4) (2.2) (2.1) (1.2) (2.6) (6.7) (3.6) (2.9) (14.6) (8.1) (6.2) Lentils (1.2) (1.0O) (2.0) (2.4) (2.6) (3.8) (3.5) (0.9) (0.5) (0.1) (o.6) (o.4) (1.9) (1.7) (0.5) (0.6) (5.2) (4.1) (3.8) Onions and garlic (1.9) (1.] .) (1.8) (1.7) (2.2) (2.2) (2.4) (2.1) (1.1) (2.1) (2.7) (2.6) (4.4) (3.i) (0.2) (1.9) (2.8) (2.2) (8.4) Fresh fruits (1.2) (1.1) (2.6) (3.3) (3.9) (4.4) (5.8) (8.8) (7.9) (7.0) (9.8) (9.9) (11.8) (13.5) (12.2) (14.0) (19.4) (37.7) (53.8) Seeds, fibers and other (0.9) (0.4) (1.6) (3.1) (2.0) (1.0) (0.4) (0.5) (0.5) (0.9) (1.0) (0.2) (0.2) (2.0) (0.3) (0.3) (1.0) (-,.2) (13.0) Animal products 3.1 4.9 7.9 9.2 12.8 9.8 8.7 6.8 8.1 6.5 7.6 9.& 7.7 5.0 1.0 1.4 5.9 16.7 24.8 Sheep wool (0.0) (3.0) (5-7) (6.9, (10.7) (7.8) (7.1) (5.5) (6.8) (5.2) (6.0) (7.9) (6.4) (3.6) (0.0) (0.0) (3.7) (8.4) 13.3 W^ax and honey (O.4) (0.1) (0.2) (0,5) (0.8) (0.9) (0.9) (0.5) (0.6) (°.5) (0.8) (O.?) (o.4) (0.5) (o.6) (0.8) (1.0) (1.9) (2.1) Live animals (0.0) (0.0) (0.1) (0.1) - - (0.3) (0.4) (0.4) (0.5) (W.6) (0.7) (0.5) (0.4) (0.4) (0.5) (0.3) (0.7) (1.0) Heir and bristles (0.5) (O.0) (0.2) (0.2) (0.3) (0.2) (0.3) (0.2) (0.2) (0.1) (0.1) (0.3) (0.2) (0.1) (0.0) (0.0) (0.2) (0.1) (0.3) llides and skins (uncured) (2.1) (1.6) (1.6) (1.5) (1.0) (0.9) (0.2) (0.2) (0.1) (0.2) (0.1) (0.2) (0.2) (0.4) (O,0) (0.1) (0.7) (1.8) (4.6) t Other (0.0) (0.1) (0.1) (0.0) (0.0) (0.0) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (-) (3.8) (3.5)r Fisheries 0.3 0.7 1.0 3.5 o.6 1.1 1.4 1.3 1.4 1.5 4.7 6.o 6.9 Algae~~~~~~~~~~~~~~~~~~~~~~~~~ 03 0 d .7 1-.O 3 .5 0. i; =1 .3 1.5 FE6 Fresh f'ish & other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 Agroin~dustry 15.5 18.7 37.6 25.5 30.7 30.8 30.5 45.7 30.9 24.4 58.8 105.7 117.0 Agricultural -6.6 6.3 6.4 5.7 5.5 6. 61 5.6461. 263. Meat & byproducts (3.0) (1.0) (1.4) (1.2) (0.3) (0.7) (1.7) (0.9) (0.9) (1.3) (0.4) (0.3) (0.2) (0.2) (0.0) (0.0) (0.5) (0.8) (2.3) Canned & preserved fruit (0.9) (1.8) (1.1) (1.1) (O.8) (0.9) (1.2) (0.5) (1.0) (0.2) (1.5) (2.0) (4.9) Dried fruit (1.3) (0.7) (0.6) (0.5) (0.9) (0.6) (0.9) (1.6) (0.6) (1.2) (2.6) (2.4) (3.7) Bran (0.7) (1.2) (1.6) (0.9) (0.3) (0.2) (0.3) (0.0) (0.0) (-) (0.0) (2.2) (5.8) Malted barley (0.6) (1.1) (1.1) (1.3) (1.6) (o.8) (1.1) (1.3) (1.6) (-) (2.5) (6.9) (5.3) Bottled wine (-) (0.3) (0.7) (1.9) (1.3) (1.4) (0.3) (0.5) (0.5) (0.5) (0.8) (i.i) (1.5) (1.4) (2.1) (2.8) (3.7) (3.7) (6.7) Other beverages (°-4) (0-3) (0-4) (0-3) (0-3) (°-4) (°-3) (O 4)1 (°-°) (0.1) (0.1) (0.2) (0.3) Other agricultural (0.1) (0.1) (0.1) (0.5) (o.6) (1.2) (0.5) (0.7) (0.3) (0.3) (1.9) (44.4) (4.1) Fisheries 95 12.1 31.3 19.1 25.0 25.3 24.), 39.6 215.3 19.8 47.0 43.1 83.9 P'ishmeal (7-5) (8.4) (25.5) (13.3) (18.4) (17.9) (15.5) (28.5) (18.0) (13.6) (35.2) (29.2) (61.1) Flrozen seafood (1.5) (3.2) (5.5) (5.6) (6.3) (6.1) (6.2) (8.0) (3.0) (1.8 (3.8) (l2.9) (19.9) Canned & preserved fish (0.5) (0.5) (0.3) (0.2) (0.3) (1.3) (2.8) (3.1) (4.3) (4.4) (8.o) (1.0) (2.9) TOTAI, 41.i 41.2 58.3 47.8 55.3 56.5 62.0 79.8 50.5 47.4 112.7 188.1 234.9 Source: 1929-1960 = Ministry of Agriculture, La Agricultura Chilena en elqiqei,91-1955, Santiago 1957; and L!a AZrjcultura Chilerlaen el (Lun unio, 1956-1970, Santiapo, 1963 1960-1976 = Central Bank of Chile Table 7.14: CHILE - IMPORTS OF AGRICULTURAL, FISHERIES, AND AGROINDUSTRIAL PRODUCTS (ex. Forestry products), CIF (SITC classification, millions of U.S. dollars) Average 1962-64 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 Capital goods (livestock) o.6 2.1 2.5 6.2 1.6 2.5 8.2 6.7 3.4 8.9 3.2 Consumer goods 34.5 40.2 53.3 52.4 51.8 55.9 53.9 88.5 180.4 180.1 70.9 Agriculture and livestock 3.6 3.2 5.1 8.0 9.2 13.3 10.7 16.4 49.1 7.2 7.6 Processed foods 30.4 36.7 47.8 44.2 42.2 42.2 42.8 71.9 131.1 172.8 63.1 Beverages 0.5 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 Intermediate goods 100.2 97.1 105.3 115.4 111.8 109.3 84.7 103.7 158.0 336.4 374.6 Agriculture and livestock 78.7 75.9 93.2 101.8 106.3 91.3 76.8 91.0 145.7 290.1 314.5 Fisheries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Processed foods 21.5 21.2 12.1 13.6 5.5 18.0 7.8 12.7 12.3 46.3 60.1 TOTAL 135.3 139.4 161.1 174.0 165.2 167.7 146.8 198.9 341.8 525.4 448.7 Source: Central Bank of Chile Table 7.15: CHILE - AVERAGE PRICES TO PRODUCER OF SELECTED COMMODITIES DURING MARKETING SEASON, 1965-1977 (Pesos of December 1974) -/ Commodity Unit 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 Wheat Pesos/mt 78 82 80 79 83 82 83 59 23 138 183 203 195 Oats " 65 84 80 50 51 78 78 64 81 95 64 110 114 Barley " 75 85 77 60 75 83 81 60 77 117 111 198 152 Rye 66 71 70 66 68 71 72 51 19 91 79 86 Corn 71 78 78 71 64 66 91 63 112 98 110 149 122 Rice 64 95 86 91 90 95 98 64 44 142 229 271 201 Beans " 238 237 218 131 217 365 34o 228 254 186 446 721 394 Lentils 119 226 298 235 241 235 288 309 382 318 353 604 41o Chickpeas o 138 172 173 i43 207 226 234 178 226 251 222 582 416 Peas 34 28 85 127 209 199 205 161 171 154 157 271 Potatoes 48 48 40 40 29 31 34 39 91 29 52 100 68 Sugar beets 16 18 19 20 20 21 21 13 12 23 39 43 28 Sunflower seeds " 133 126 126 121 137 130 146 101 58 195 3o8 318 253 Rapeseeds 138 14o 128 134 149 140 151 log 123 180 294 301 269 t Wines Pesos/1,000 lts 133 104 100 93 90 99 129 91 135 285 216 251 222 o Beef Pesos/mt 591 568 591 652 795 844 794 641 492 1,039 650 735 1,370 0 Mutton " 611 625 650 635 745 811 1,240 770 506 726 426 565 1,135 Pork 536 549 723 702 699 744 822 556 440 651 542 687 1,342 Poultry 941 918 866 952 962 881 857 666 666 1,185 980 1,162 1,406 Milk Pesos/1,000 lts 64 79 87 89 91 90 91 59 72 96 139 151 200 Eggs Pesos/1,000 units 37 41 38 39 44 44 43 48 50 40 43 60 53 Wool Pesos/mt 925 840 783 674 7o6 764 732 667 501 1,122 610 835 1,422 a/ Original data were deflated by official CPI and were converted here to IBRD adjusted CPI for years 1971-77. Source: ODEPA Table 7.15a: CIIL - INDEX OF l-AlCES TO P.RODUCER O SELECTED COMIMODITIES, 1965-1977 (1970 = 100) Commodity 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 Wheat 95 100 97 96 101 100 101 72 28 168 223 248 238 Oats 83 107 102 64 65 100 100 81 103 121 82 141 146 Barley 90 102 93 72 90 100 98 72 92 141 134 239 183 Rye 93 100 98 93 95 100 101 72 27 128 111 121 Corn 108 120 118 108 98 100 139 96 171 149 167 226 185 Rice 68 101 91 96 95 100 103 67 46 149 241 285 212 Beans 65 65 60 36 60 100 93 62 70 51 122 198 108 Lentils 51 96 127 100 103 100 123 131 163 136 150 257 174 Chickpeas 61 76 76 63 91 100 103 79 100 94 83 219 156 Peas 17 14 43 64 105 100 103 81 86 77 79 136 Potatoes 156 155 128 129 92 100 110 127 294 94 168 323 219 Sugar beets 77 86 91 92 95 100 97 62 56 107 186 205 133 Sunflower seeds 102 97 98 93 106 100 112 78 44 150 237 245 195 Rapeseeds 99 100 92 96 107 100 108 78 40 129 210 215 192 Wines 133 104 100 93 90 100 130 91 136 288 218 254 224 Beef 70 67 70 77 94 100 94 76 58 123 77 87 162 1 Mutton 75 77 80 78 92 100 153 95 62 90 53 70 140 r Pork 72 74 97 94 94 100 111 75 59 88 73 92 180 H Poultry 107 104 98 108 109 100 97 76 76 134 111 132 160 Milk 71 88 97 99 102 100 101 66 81 107 154 168 222 Eggs 83 92 85 89 99 100 96 108 112 91 98 136 120 Wool 121 110 103 88 92 100 96 87 66 147 80 109 186 Weighted average - crops 2 96 103 98 94 95 100 104 80 84 136 190 240 202 a/ Weights from Table 7.5 i/ Excluding rye and peas. Source: Table 7.15 Table 7.16: CHILE - RELATIVE PRICES TO PRODUJCEA OF AGRICULTURAL COMMODITIES, 1965-197? - (Price of wheat = i00) Product Unit 1965 1966 _967 1968 1969 1970 1971 11 7 1973 1974 1975 1976 _ 977 Wheat Pesos/mt 100 100 100 100 100 100 100 100 100 100 100 100 100 Oats 83 103 100 64 61 96 95 109 349 69 35 54 58 Barley 96 104 97 76 91 101 99 102 331 85 61 98 78 Rye 85 87 87 84 82 87 87 87 82 66 43 42 n.a Corn 91 96 97 90 77 80 110 107 484 71 80 73 63 Rice 82 117 108 115 109 115 118 109 188 103 125 134 103 Beans 306 290 273 166 262 445 411 389 1,098 134 244 355 202 Lentils 152 277 374 297 291 286 349 526 1,651 230 193 298 210 Chickpeas 177 210 217 181 249 276 284 303 978 181 121 287 213 Peas 44 34 106 161 252 242 249 273 737 112 86 134 n.a. Potatoes 62 59 50 51 34 38 41 67 393 26 28 49 35 Sugar beets 21 22 24 25 24 26 25 22 51 16 21 21 14 Sunflower seeds 170 153 159 153 165 158 176 172 249 141 168 157 130 Rapeseeds 177 172 161 170 180 170 183 186 240 130 161 148 138 Wines Pesos/1,000 lts 170 127 125 117 108 121 156 154 585 206 118 124 114 Beef Pesos/mt 758 694 742 824 959 1,028 962 1,091 2,123 752 355 362 703 Mutton 785 764 816 802 898 988 1,501 1,311 2,183 526 233 278 582 Pork 688 671 910 887 843 907 995 947 1,898 471 296 338 688 Poultry 1,208 1,122 1,087 1,203 1,161 1,074 1,037 1,135 2,874 858 536 572 721 Milk Pesos/1,000 lts 82 97 109 112 110 109 110 101 312 70 76 74 103 Eggs Pesos/1,000 47 50 47 50 53 54 52 82 214 29 24 30 27 Wool Pesos/mt 1,188 1,027 983 852 852 930 885 1,136 2.165 812 333 411 729 a/ Prices prevailing during marketing season. L/ Deflated by IBRD adjusted CPI. Original data were deflated by official CPT,; adjustment from 1971 on was calculated by mission. Source: Table 7.15 Table 7.16a: CHILE - INDICES OF AGRICULTURAL COMMODITY PRICE RATIOS TO THE WHEAT PRICE, 1965-1976 a/ (1965 = 100) Product 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 _1976 1977 Oats 100 124 1]20 77 73 116 114 131] 420 83 42 65 70 Barley 100 1o8 101 79 95 105 103 106 345 89 64 102 81 Rye 100 102 102 99 96 102 102 102 96 78 51 49 n.a. Corn 100 105 107 99 85 88 121 118 532 78 66 80 69 Rice 100 143 132 140 133 140 144 133 229 126 152 163 126 Beans 100 95 89 54 86 145 134 127 359 44 80 116 66 Lentils 100 182 246 195 191 188 230 346 1,086 151 127 196 138 Chickpeas 100 119 123 102 141 156 160 171 553 102 68 162 120 Peas 100 77 241 366 573 550 566 620 1,675 255 195 305 n.a. Potatoes 100 95 81 82 55 61 66 ilO 654 42 47 79 56 Sugar beets 100 105 114 119 114 124 119 105 243 76 100 100 67 Sunflower seeds 100 90 94 90 97 93 104 101 146 83 99 92 76 Rapeseeds 100 97 91 96 102 96 103 105 136 73 91 84 78 Wines 100 75 74 69 64 71 92 91 344 118 69 73 67 Beef 100 92 98 109 127 136 127 144 280 99 47 48 93 Mutton 100 97 104 102 114 126 191 167 278 67 30 35 74 Pork 100 98 132 129 123 132 145 138 276 68 43 49 100 Poultry 100 93 90 100 96 89 86 94 238 71 44 47 60 Milk 100 118 133 137 134 133 134 123 380 85 93 90 126 Eggs 100 106 100 106 113 115 111 174 455 62 51 64 57 Wool 100 86 83 72 72 78 74 96 182 68 28 35 61 , Prices prevailing during marketing season. Source: Table 7.16 - 454 - Table 7.17 CHILE - DOMESTIC PRICES OF SELECTED FERTILIZERS, ANNUAL AVERAGES 1961-1977 (December 1969 pesos/metric ton) - Super- Sodium Potassium Phosphate Year Crystal 14% Urea 25% 1961-64 (average) .372 .427 - 1965 .407 .476 - 1966 .450 .540 - - 1967 - .536 .987 .548 1968 - .571 1.058 .433 1969 .478 .598 .897 .514 1970 .498 .694 .836 .617 1971 .369 .515 .644 .562 1972 .18o .252 - .287 1973 .698 .883 .739 .400 1974 1.346 1.726 2.652 1.411 1975 1.032 1.609 3.100 1.318 1976 .802 1.309 1.814 .820 1977 .753 1.104 1.526 .595 a/ Deflated by IBRD adjusted CPI. p/ Preliminary. Source: ODEPA - 455 - Table 7-17a: CHILE - INDICES OF SELECTED REAL FERTILIZER AND SEED PRICEa-! (1968 = 100) Fertilizers Sodium b Potassium Super Seeds Year Crystal- 14% Urea Phosphate Wheat Corn 1961 1962 72 66 1963 81 77 1964 86 81 1965 88 83 100 125 1966 97 95 110 105 1967 - 94 93 127 102 1o4 1968 - 100 100 100 100 100 1969 103 122 85 119 109 101 1970 107 105 79 142 113 106 1971 8o 90 61 130 98 94 1972 39 44 - 66 50 50 1973 150 155 70 92 58 29 1974 290 302 251 326 137 - 1975 222 282 293 304 265 119 1976 173 229 171 189 341 146 1977 9/ 162 193 144 137 267 a/ Deflated by adjusted CPI. b/ Averages of years 1966 and 1969=100. D/ Preliminary. Source: Table 7.17 and ODEPA Table 7.18: CHILE - DESCRIPTION OF SAMPLE FOR SECOND ICIRA STUDY OF LAND REFORM BENEFICIARIES Estates Distributed Oct. 1973 - Dec. 1974 Estates Distributed during 1975 Total Universe Sample Universe Sample Universe Sample No. of No. of No. of No. of No. of No. of No. of No. of No. of No. of No. of No. of Region Estates UAFs Estates UAFsa/ Estates UAFsL/ Estates UAFsa/ Estates UAFsL/ Estates UAFsa/ IV 23 635 3 9 27 502 4 10 50 1,137 7 19 V 24 637 4 18 90 1,573 14 37 114 2,210 18 55 Gr. Santiago 31 798 5 12 199 3,049 30 94 230 3,847 35 106 VI 45 1,117 7 32 127 1,937 19 48 172 3,054 26 80 VII 26 1,003 4 26 303 4,827 45 92 329 5,830 49 118 VIII 13 485 2 9 74 1,282 11 30 87 1,767 13 39 IX 11 391 2 12 55 1,066 8 20 66 1,457 10 32 X - - - - 155 1,834 23 50 155 1,834 23 50 Total b/ 173 5,o66 27 118 1,030 16,070 154 381 1,203 21,136 181 499 a! Family farm units assigned and titled. b/ Does not include 11 estates divided into 117 family farms in Region I; no land was distributed in Regions II, III, XI and XII during the period covered. Source: ICIRA, An6lisis de la situaci6n de los Asignatarios de Tierras a diciembre de 1976 (20 diagnostico), Santiago, noviembre de 1977 - 457 - Table 7.19: CHILE - SITUATION OF FORMER ASENTADOS OF SAMPLED ESTATES Total former asentados 4,123 Assigned land from same estate 2,614 Not assigned land from same estate 1,509 Assigned land from other estate 117 Not assigned land 728 Working as agricultural laborer or sharecropper (476) Working other land as owner, renter, or family worker (107) Working in Minimum Employment Program ( 47) Unemployed ( 32) Deceased or retired ( 21) Other ( 45) Situation unknown 664 Source: See Table 7.18 - 458 - Table 7.20: CHILE - ORIGIN OF TITLE RECIPIENTS OF LAND FROM SAMPLED ESTATES Total Titled Recipients 3,178 Former asentados on same estate 2,614 Beneficiaries from outside estate 564 Asentados from other estate (377) Former administrators, foremen, or custodians of estate ( 85) Sharecroppers and farm laborers ( 66) Professionals and white-collar workers ( 27) Landowners ( 9) Source: See Table 7.18 - 459 - Table 7.21: CHILE - LAND USE BY SAMPLED REFORMED SECTOR FARMERS, CROP YEAR 1976/77 (Percent) Individual Farmer Farmers Associations Total Garden crops 18.3 3.5 12.0 Wheat 8.8 13.7 10.9 Industrial crops 3.6 7.5 5.3 Orchards and vineyards 3.3 o.4 2.1 Vegetables 3.2 0.5 2.1 Improved pasture 2.4 2.5 2.4 Other cereals 2.1 3.4 2.6 Other crops 2.2 5.3 3.5 Natural pasture 40.7 52.1 45.6 Abandoned 6.7 4.6 5.8 Unusable 8.7 6.5 7.8 Totals 100.0 100.0 100.0 Source: See Table 7.18 - 46o - Table 7.22: CHILE - MARKETINH CHANNELS USED BY SAMPLED REFORMED SECTOR FARMERS,- BY TYPE OF CROP, CROP YEAR 1975/76 (Percent) Garden Crops Industrial Fruits and Marketing Channel Cereals and Vegetables Crops Vineyards On-farm sale to private merchant 17.1 64.8 4.5 47.6 Off-farm sale to private merchant 11.8 23.9 6.8 23.8 Agroindustrial enterprise 57.9 - 84.1 - State enterprise 6.6 1.4 4.5- Cooperative 6.6 3.5 - 28.6 Exporting firm - 6.3 - - Totals 100.0 100.0 100.0 100.0 Source: See Table 7.18 - 461 - Table 7.23. CHILE - EQUIPMENT OWNED BY SAMPLED REFORMED SECTOR FARMERS Percent of Farmers Who Own Farmers Working Farmers Working Equipment Individually in Association Total None 17.5 32.3 19.5 Simple tools only 6.9 10.8 7.4 Above plus animal- powered equipment 51.2 38.5 49.5 Above plus machinery 22.8 4.6 20.4 Unknown 1.6 13.8 3.2 Total 100.0 100.0 100.0 Source: See Table 7.18 - 462 - Table 7.24: CHILE - USE OF INPUTS BY SAMPLED REFORMED SECTOR FARMERS, CROP YEAR, 1976/77 (Percent that used inputs) Individual Farmer Land Use Inputs Farmers Associations Cereals Fertilizer 81.8 90.9 Pesticides 76.4 90.9 Commercial seeds 62.2 84.8 Garden crops, industrial crops, and vegetables Fertilizer 71.1 77.7 Pesticides 44.7 55.6 Commercial seeds 61.o 50.0 Orchards and vineyards Fertilizer 61.7 50.0 Pesticides 76.7 100.0 Pastures Fertilizer 3.5 18.1 Pesticides 1.0 15.1 Commercial seeds 80.0 50.0 Livestock Concentrated feed 2.2 Veterinary products 32.9 52.6 Source: See Table 7.18 - 463 - Table 7.25: CHILE - EXPERIENCE OF SAMPLED REFORMED SECTOR FARMERS WITH CREDIT, CROP YEAR 1976/77 (Percent) Individual Farmer Farmers Associations Sought credit 69.1 81.0 Obtained in total 62.0 76.2 Obtained in part 3.9 2.4 Failed to obtain 1.8 2.4 Response unknown 1.4 - Did not seek credit because: 30.9 19.0 Did not need 16.6 Too costly 4.4 2.4 In default on prior loans 2.8 - Preferred to sell animals or other possessions 1.2 Procedural difficulties or delays 0.2 - Other reasons 3.7 2.4 No reason given 2.1 - Source: See Table 7.18 Table 7.26: CHILE - AREA FORESTED BY PRIVATE AND PUBLIC SECTORS, BY REGION, 1970-1976 (Hectares) R E G I 0 N S a/ III- I II IV v M.A.- VI VII VIII IX X XI XII Total Area Planted By CONAF: 1970 - - - - - 6,080 869 - - - - - 6,949 1971 - 5,000 4,283 4,522 2,005 837 - - 16,647 1972 . _ - 723 270 2,104 3,433 11,438 3,180 3,278 360 - 24,786 1973 - - 240 1,624 84 2,396 6,464 11,106 3,857 1,095 550 - 27,416 1974 _ - 283 1,751 535 3,087 6,365 13,401 3,886 2,643 3,220 - 35,171 1975 - - 83 1,273 1,121 2,424 7,600 15,119 6,770 5,483 4,200 - 44,073 1976 30 - 610 1,474 2,963 12,650 6,652 7,355 10,327 10,192 1,807 - 44,570 Area Planted By Private Sector: 1974 - - - 125 - 15 2,800 15,154 2,549 409 - - 21,052 1975 - - 63 282 - - 2,692 29,004 4,345 2,130 5 - 38,521 1976 - _ 44 587 - - 4,233 37,750 7,623 3,352 54 - 46,642 Total Area Planted: 1974 - - 283 1,876 535 3,102 9,165 28,556 6,435 3,052 3,220 - 56,223 1975 - - 146 1,555 1,121 2,424 10,294 44,123 11,115 7,613 4,205 - 82,594 1976 30 - 654 2,061 2,963 12,650 10,885 45,105 17,950 13,544 1,869 - 93,212 a/ The provincial composition of the several Regions is as follows: I-Tarapac6; II-Antofagasta; III-Atacama; IV-Coquimbo; V-Aconcagua, Valparaiso; VI-O'Higgins, Colchagua; VII-Curico, Talca, Maule, Linares; VIII-Nuble, Concepci6n, Arauico, Bio-Bio; IX-Malleco, Cautfn; X-Valdivia, Osorno, Llanquihue, Chilo6; XI-Aysen; XII-Magallanes. b/ Metropolitan Area of Santiago. Source: CONAF - 465 - Table 7.27: CHILE - ESTIMATED NET ADDITIONS TO STOCK OF PINUS RADIATA, 1970-1976 (Hectares) Gross Area Gross Area Adjusted Gross Net Additions Planted - Planted Area Planted Lost to/ - Pinus Radiata Year All Species imiz Radiata a/ fPlmmu Raliata& k/Fire - (4) - (5) 1970 23,446 21,101 16,881 2,818 14,063 1971 28,046 25,241 20,193 3,831 16,362 1972 31,042 27,938 22,351 1,952 20,399 1973 30,313 27,282 21,825 1,878 19,947 1974 56,223 50,601 40,480 480 40,000 1975 82,594 74,335 59,468 4,553 54,915 1976 107,703 96,933 77,546 949 76,597 a/ Assumes that 90 percent of plantings were of Pinus Radiata. b/ Assumes that 20 percent of gross area was unplantable because of steep inclines, ravines, roads, etc. c/ Based on data from the Agricultural and Livestock Service (SAG) and CONAF. Source: Emil Jones and Bert Husch, "The Present Status of Pinus Radiata Plantation in Chile," Chile Forestal, No. 21, May 1977. Table 7.28: CHILE - E6TIIMATED AREA OF PINU6 RADIATA PLANTATION AVAILABLE FOR EXPLOITATION BY AGE OF TREES, 1976 (Hectares) Age of Available for Exploitable Area in 1976 Trees Years plantings a lantingsb Estirnated Exploitation Cumulative Exploitation d High Estimate Low Estimate (Years) Planted Before 1965- Since 1965-/ Fire Losses (3) + (4) - (5) Assumption A - ' Assumption (6) - (8) (6) - (9) 0-5 19'72-76 221,670 6,092 215,578 - _ 215,578 215,578 6-10 1967-71 84,549 15,231 69,318 - _ 69,318 69,318 11-15 1962-66 29,947 31,650 7,615 53,982 - - 53,982 53,982 16-20 1957-61 59,874 1,523 58,351 - 5,835 58,351 52,516 21-25 1952-56 66,452 - 66,452 33,226 49,839 33,226 16,613 26-30 1947-51 46,664 - 46,664 37,331 41,998 9,333 4,666 31-35 1942-46 13,637 - 13,637 12,273 13,637 1,364 - 35+ Before 1941 3,,45 - 3,345 3,345 3,345 - - TUTALS 441,152 011,673 a/ Estimated from inventory data. b/ Estimated from data on new plantings, less adjustment for roads, ravines, etc. Assumes no trees were cut before age 20; the assumed cutting rate for trees in older age groups are: 20 to 25 - 50 percent; 26 to ,0 - 80 percent; 31 to 35 - 90 percent; above 35 - 100 percent. d/ Assumes no tress were cut before age 16; the assurned cutting rates of trees in other age groups are: 16 to 20; 10 percenit; 21 to 25 - 75 percent; 26 to 90 - 90 percent; 31 anid above - 100 percent. Source: Emil Jones and Bert Husch, op. cit. Table 7.29: CHILE - PRODUCTION OF SAWNWOOD BY MAJOR VARIETIES, 1964-1976 (Thousands of board inches) 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975L/ 1976p-/ Alamo 1,410 1,290 1,550 1,158 1,401 1,200 1,294 1,266 1,713 1,487 389 358 Coihue 4,064 3,082 3,204 2,273 2,304 2,107 1,993 2,124 2,461 2,600 2,340 2,148 Eucalyptus 648 1,o16 1,022 600 913 823 438 738 1,278 379 300 Laurel 790 857 781 590 641 788 577 931 681 950 1,889 Lenga 635 745 625 1,064 916 1,302 1,197 636 1,754 2,114 750 1 Pino Insigne 19,934 20,616 24,519 19,860 22,109 22,573 27,063 31,107 31,176 26,725 46,ooo (Radiata pine) Rauli 3,550 1,964 1,295 1,619 2,920 2,537 2,423 811 1,592 1,350 657 Roble 2,887 4,o80 2,695 2,369 2,722 1,862 2,183 2,057 1,967 2,044 1,697 Tepa 1,870 2,199 2,115 1,824 1,287 2,141 1,818 1,701 1,544 2,375 1,098 Other 8,020 7,259 7,222 4,711 4,083 4,221 3,377 3,014 3,051 3,751 3,880 Total 43,808 43,108 45,028 36,068 39,296 39,554 42,363 44,385 47,217 43,775 59,000 47,061 57,620 pl Preliminary. Sources: INE, FAO resident mission Table 7.30: CHILE - PRODUCTION, FOREIGN TRADE AND APPARIEIT CONSUMPTION OF WOOD PULP, 1965 to 1976 (Tlhousand metric tons) a/ 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 Mechanical Pulp Production 102.4 112.3 103.0 106.9 110.6 114.8 112.3 102.3 108.2 119.0 78.7 -- Imports -- -- 0.3 0.1 0.5 1.3 0.1 0.0 0.5 0.0 -- -_ Exports -- -- -- -- -- -- -- 0.2 -- 1.4 2.6 -- Apparent consumption 102.4 112.3 103.3 107.0 111.1 116.1 112.4 102.2 108.7 117.7 76.1 __ Chemical Wood iPulp Production 96.6 198.5 204.4 231.2 219.1 210.7 233.1 242.8 242.0 313.8 325.8 -- Imports 0.5 -- 2.3 3.5 2.4 0.2 6.2 6.0 3.9 2.2 -- -- Exports 18.2 59.4 76.7 118.2 121.1 105.3 109.3 120.7 97.3 179.1 174.8 292.1 Apparent consumption 78.9 139.1 130.0 116.4 100.4 105.6 130.0 128.1 148.7 136.8 -- -- Total, Wood Pulp Production 199.0 310.8 307.4 338.o 329.7 325.5 345.4 345.1 350.2 472.8 404.5 450.0 m Imports 0.5 -- 2.6 3.6 2.9 1.5 6.3 6.1 4.4 2.2 -- -- Exports 18.2 59.4 76.7 118.2 121.1 105.3 109.3 120.9 97.3 180.5 177.4 236.0 Apparent consumption 181.3 251.4 233.3 223.4 211.5 221.7 242.4 230.3 257.4 254.5 -- 214.0 Provisional figures. Sources: 1965 to 1968: FAO Development of forest industries in Latin America, E/CN.12/858/Rev. 1 1969 to 1975: Instituto Forestal and foreign trade yearbooks 1976: estimated Table 7.31: CHILE - i'RODUCTION, FOREIGN TRADE AND APPARENT CONSUMNiTION OF PAPER AND PAPERBOARDS, 1965 to 1976 (Thousand metric tons) 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 Newsprint Production 96.6 112.0 106.1 115.2 118.4 118.2 111.2 94.7 105.1 118.2 119.7 Imports 5.2 6.5 1.6 1.1 0.7 0.5 0.5 0.0 0.0 - Exports 61.4 64.7 66.9 61.1 71.9 78.5 63.9 34.0 32.7 77.5 78-5 81.8 Apparent consumption 40.4 53.8 40.9 55.2 47.1 40.4 47.8 60.7 72.4 40.7 Printing & Writing Production 27.5 54.2 36.9 28.9 26.8 28.2 40.7/ 54.1 44.9 86.4 76.0 Imports 1.4 2.4 5.2 5-7 7.9 7.9 6.3 7.5 3.2 1.3 Exports - - o.6 - - 0.0 0.0 0.0 - 2.5 2.7 Apparent consumption 28.9 36.7 41.5 34.5 34.7 36.1 47.0 61.6 48.1 85.1 Other Paper & Paperboard s Production 62.3 69.6 84.4 81.8 102.2 116.1 125.8 123.2 101.1 102.4 69.8 1 Imports 2.2 3.5 2.0 3.9 2.5 8.5 5.6 3.0 7.7 3.6 Exports 0.0 1.8 14.3 10.8 14.0 18.2 15.9 12.5 10.8 14.3 13.8 Apparent consumption 64.5 71.3 72.1 74.9 90.7 106.5 114.4 113.6 98.o 91.7 Total, Paper & Paperboard Production 176.4 215.8 227.4 225.9 247.4 262.5 277.7 272.0 251.1 307.0 265.5 274.0 Imports 8.7 12.4 8.8 10.6 11.1 16.9 11.3 10.5 10.9 4.9 4.3 7.0 Exports 61.4 66.5 81.7 71.8 85.9 96.5 79.9 46.6 43.5 94.3 94.8 106.0 Apparent consumption 133.7 161.8 154.5 164.7 172.5 183.0 209.2 235.9 218.5 217.6 175.0 175.0 2/ Estimated on the basis of information for eleven months. Sources: 1965 to 1968: FAO . Development of Forest Industries in Latin America, E/CN.12/858/Rev.l 1969 to 1975: FAO. Instituto Eorestal, and Foreign Trade Yearbook Table 7.32: CHIILE - EXPOXTS OF FOBEST PRODUCTS, 1961-1977 (Millions of US dollars) 10)61-b4 Product (Average) 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 doapbark 0.4 0.2 0.3 0.4 0.3 0.4 1.0 2.3 0.3 o.6 2.2 3.4 0.4 0.6 Sawnwood and panels 2.4 3.6 4.0 2.9 4.1 7.7 8.9 7.0 3.0 4.6 13.1 25.2 29.3 70.4 Pine (0.5) (1.7) (0.8) (0.8) (1.1) (2.7) (5.7) (3.8) (1.9) (2.5) (9.7) (21.5) (20.9) (54.6) Other (1.9) (1.9) (3.2) (2.1) (3.0) (5.0) (5.2) (3.2) (1.1) (2.1) (3.4) (3.7) ( 8.4) (15.8) laper (incl. newsprint) 4.2 7.3 7.9 8.4 7.2 8.4 9.6 8.4 5.0 5.4 25.2 25.8 33.1 33.6 Pulp 2.6 2.5 8.1 11.0 13.3 15.3 16.4 17.0 17.4+ 20.8 78.0 57.9 88.3 85.5 Cardboard - - 1.0 3.5 3.0 4.0 5.4 5.3 4.4 3.6 7.1 7.0 8.9 9.8 Other 0.2 0.1 0.3 0.7 0.3 0.5 o.4 2.5 1.5 1.4 1.4 4.3 3.3 3.3 Total 9.8 13.7 21.6 26.9 28.2 36.3 41.7 42.5 31.6 36.4 127.0 125.6 163.3 203.2 Source: Central Bank Table 7.33: CHILE - PROJECTED EXPORTS OF FOREST-BASED PRODUCTS IN 1996 (Millions of U.S. dollars at 1976 prices) Domestic Projected Log Wood Available for Consump- Consump- Equivalent Total Wood Export Product d/ Product for tion tion of (2) Available, 1996E-/ High Low Export b/ e/ Export Value Product 1976 1996-/'(Million m3)7/High Low (4)-(3) (5)-(3) High Low High Low Sawnwood 1.5 4.8 9.6 9.9 6.5 4.95 3.25 320 210 (million m3) Pulp 214 685 3.1 9.9 6.5 1.52 1.00 450 295 (thousand mt) Paper 175 560 2.0 o_ _ .67 0.44 250 160 (thousand mt) Totals 14.7 34.5 27.6 19.8 12.9 1,020 665 a/ Assumes a 6 percent average annual rate of increase. 3 b/ Assumes 50 percent wastage in sawmills and a constant coefficient of 4.5 m of wood per ton of pulp. c/ Total from Table F.ll. d/ Distribution assumes that half goes to sawnwood and half to pulp and paper. e/ Assumes pulp and paper exported in same ratios as in 1976. Table 7.34: CHILE - ANNUAL CATCH OF FISH AND OTHER SEAFOOD, BY MAJOR SPECIES, 1955-1976 (Thousand metric tons - live weight) 1955-59 1960-64 1965-69 (Ave.) (Ave.) (Ave.) 1970 1971 1972 1973 1974 1975 1976 P Total 222.8 666.2 1,126.6 1,209.4 14506.0 817.5 691.0 1,158.2 929.5 1,264.2 Hake 99.4 88.3 66.0 66.9 46.5 43.1 32.4 29.5 Jack mackerel 19.9 112.0 158.4 87.0 121.6 194.4 261.2 323.1 Sardine 88.9 68.1 174.7 131.7 187.5 398.8 231.8 314.6 Anchoveta 801.0 782.9 960.9 367.9 191.8 383.4 239.8 413.0 Other saltwater fish 38.5 29.7 22.4 35.7 31.1 28.3 39.0 66.5 Squat lobster (langostino) 18.9 40.4 37.6 33.1 25.3 27.5 35.9 56.1 Other crustaceans 12.3 3.6 2.7 5.9 12.0 9.7 10.4 7.6 Miscellaneous mollusks 25.8 38.0 41.3 47.2 40.2 38.8 43.5 20.0 Other seafoods 21.9 46.4 42.0 42.1 35.0 34.2 35.5 33.7 p/ Preliminary. Source: FAO Yearbook of Fishery Statistics Table 7.35: CHILE - FISHERIES EXPORTS, 1960-1977 (Millions of US dollars) 1960-64 1965-69 (Ave.) (Ave.) 1970 1971 1972 1973 1974 1975 1976 1977 Unprocessed 0.3 1.4 1.4 1.3 1.4 1.5 4.7 5.9 6.9 8.5 Seaweeds 0.3 1.4 1.4 1.3 1.4 1.5 4.7 5.8 6.1 7.2 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.8 1.3 Processed 9.5 22.5 24.5 39.6 25.3 19.8 47.0 o41.2 83.8 119.4 Fishmeal 7.5 16.7 15.5 28.5 18.0 13.6 35.2 25.3 61.1 86.5 Frozen seafoods 1.5 5.3 6.2 8.o 3.0 1.8 3.8 7.3 19.9 26.2 Fish preserves 0.5 0.5 2.8 3.1 4.3 4.4 8.o 8.6 2.8 6.7 Total 9.8 23.9 25.9 40.9 26.7 21.3 51.7 47.1 90.7 127.9 - (Percent of non-copper (5.6) (9.7) (9.5) (13.8) (11.6) (8.4) (9.9) (6.7) (10.8) (12.8) exports) Source: Central Bank - 474 - VIII. OTHER SECTORS - 475 - Table 8.1: CHILE - PRODUCTION OF COPPER, 1900-1976 (1,000 mt of fine copper) Large a Small and Share of World Year Mines a Medium MinesX/ Total Output (%) c/ 1900-1909 (ave.) 32 1910-1919 (ave.) 62 1920-1929 (ave.) 191 1930-1939 (ave.) 260 1940-1949 418 20 438 21 - 1950 345 18 363 15 1951 360 21 381 15 1952 374 35 409 16 1953 325 38 363 14 1954 323 41 364 14 1955 391 42 433 15 1956 444 44 488 16 1957 435 45 480 15 1958 419 46 465 15 1959 497 48 545 17 1960 479 53 532 14 1961 481 65 547 14 1962 510 76 586 15 1963 507 94 601 15 1964 528 94 622 15 1965 479 105 585 14 1966 525 100 625 14 1967 536 124 660 16 1968 519 138 657 14 1969 540 148 688 14 1970 541 151 692 13 1971 571 137 708 14 1972 593 124 717 13 1973 615 120 735 12 1974 763 139 902 15 1975 682 146 828 15 1976 854 158 1,012 16 1977 897 159 1,o56 - 1978 882 167 1,049 a/ Includes Chuquicamata, El Salvador, El Teniente, Ex6tica, and Andina. b/ Exports. c/ Excludes centrally-planned economies. d/ 1945-49. Source: Corporaci6n del Cobre; Metallgesellschaft - 476 - Table 8.2 CHILE - LARGE MINE PRODUCTION BY MINE, 1940-1977 (1,000 mt of fine copper) Chuqui- Potrerillos- El camata El Salvador Teniente Ex6tica Andina Year (1915) (1927) (1912) (1970) (1970) Total 1940 151.0 73.1 109.2 333.2 1941 216.8 94.3 131.7 442.9 1942 225.7 90.9 146.8 463.4 1943 238.0 86.7 149.0 473.8 1944 241.2 74.9 158.5 474.6 1945 237.6 63.8 149.6 451.0 1946 210.4 63.1 85.0 358.6 1947 221.0 59.1 125.6 405.7 1948 208.0 67.8 149.0 424.9 1949 175.1 48.9 126.6 350.7 1950 156.3 45.8 143.3 343.3 1951 163.5 41.1 155.4 360.0 1952 159.2 46.8 167.7 373.6 1953 156.8 40.9 127.3 325.0 1954 186.2 38.3 98.1 322.6 1955 209.3 40.5 141.3 391.1 1956 241.3 39.2 163.2 443.7 1957 239.0 39.3 156.7 434.9 1958 212.8 32.6 173.1 418.5 1959 278.0 54.7 164.3 497.1 1960 231.1 78.8 169.2 479.2 1961 249.7 72.6 158.9 481.1 1962 275.8 82.5 152.0 510.2 1963 274.8 88.2 144.4 507.4 1964 288.1 76.5 163.1 527.6 1965 252.7 74.1 152.4 479.2 1966 303.5 76.8 144.6 524.9 1967 276.9 78.0 181.5 536.4 1968 278.9 86.2 154.1 519.3 1969 283.4 77.1 179.9 54o.4 1970 263.0 93.0 176.6 1.9 6.o 54o.5 1971 250.2 84.9 147.3 35.3 53.6 571.3 1972 234.3 82.9 190.3 31.2 53.9 592.6 1973 265.3 84.o 178.1 31.8 56.1 615.3 1974 356.8 80.0 225.5 32.2 68.4 762.9 1975 304.6 81.3 234.0 - 62.4 682.3 1976 445.5 82.7 268.8 - 56.9 853.0 1977 896.2 Note: Dates in parentheses indicate first year of production. Source: CODELCO Table 8.3: CHILE - PRODUCTION OF COPPER BY TYPE, 1940-1977- / (1,000 mt of fine copper) Refined Copper Electro- Three Fire Concen- Total Year lytic Stars- Refined Total Blister trate Cement Ore Slag Prodcition 1940-1944 (ave.) 244 122 - 367 71 - - - - 438 1945-1949 (ave.) 227 99 - 326 73 - - - - 398 1950 156 125 - 281 64 - - - - 345 1951 164 135 - 299 61 - - - - 360 1952 151 157 - 308 66 - - - 374 1953 90 121 - 211 114 - - - - 325 1954 110 68 - 178 145 - - - - 323 1955 128 113 - 241 150 - - - - 391 1956 140 101 - 241 203 - - - - 444 1957 155 66 - 221 215 - - - - 435 1958 128 60 - 188 231 - - - - 419 1959 177 83 - 260 237 - - - - 497 1960 147 78 1 226 280 21 4 1 - 532 1961 154 62 10 226 297 16 6 1 - 546 1962 180 66 17 263 295 19 8 1 - 586 1963 179 62 18 259 297 29 12 4 - 601 1964 178 79 21 278 309 23 12 1 - 622 1965 191 77 20 289 268 10 17 0 - 584 1966 258 74 25 357 238 14 16 1 - 625 1967 262 70 21 353 277 15 13 1 - 660 1968 266 57 27 350 273 17 15 2 - 657 1969 304 69 27 400 248 19 18 3 - 688 1970 311 65 28 404 243 30 12 3 - 692 1971 324 48 26 398 221 79 6 4 - 708 1972 364 74 24 461 169 71 8 3 4 717 1973 337 55 23 415 175 110 18 1 17 735 1974 426 85 27 538 186 128 16 2 32 902 1975 410 101 24 535 189 87 12 - 5 828 1976 490 117 25 632 224 130 18 - 0 1,005 1977 676 212 16oN '----- 1,056 a/ 1940-59 includes Large Mines only; small and medium mine production (exports) are included thereafter. b/ Refers to copper refined at Chuquicamiata, Potrerillos, and Ventanas by a combination of firing and electrolysis. Source: CODELCO Table 8.4 CHILE - COPPER DELIVERIES TO CHILEAN MANUFACTURING INDUSTRY, 1960-1977 (Thousands of metric tons) Total Domestic Consumption Used in Manufacture of Exports Electro- Three Electro- Three Electro- Three Total lytic Stars Total lytic Stars Total lytic Stars 1960 13.0 8.4 4.6 8.3 5.1 3.2 4.7 3.3 1.4 1961 12.3 8.9 3.4 8.2 5.9 2.3 4.1 3.0 1.1 1962 13.3 8.3 5.0 9.7 5.0 4.7 3.6 3.3 0.3 1963 16.2 10.5 5.7 13.0 7.6 5.4 3.2 2.9 0.3 1964 65.2 36.9 28.3 13.2 8.4 4.8 52.0 28.5 23.5 1965 72.9 42.5 30.4 10.6 7.8 2.8 62.3 34.7 27.6 1966 39.7 35.4 4.3 10.7 8.8 1.9 29.0 26.6 2.4 1967 17.2 13.5 3.7 8.6 5.1 3.5 8.6 8.4 0.2 1 1968 22.8 19.6 3.2 11.8 9.0 2.8 11.0 10.6 0.4 1969 19.7 14.0 5.7 11.5 7.3 4.2 8.2 6.7 1.5 1970 20.6 16.0 4.6 11.8 8.o 3.8 8.8 8.o o.8 1971 26.7 19.4 7.3 15.9 10.8 5.1 1o.8 8.6 2.2 1972 36.3 26.4 9.9 19.6 11.6 8.0 16.7 14.8 1.9 1973 34.2 26.8 7.4 18.3 13.6 4.7 15.9 13.2 2.7 1974 29.4 19.5 9.9 12.1 7.2 4.9 17.3 12.3 5.0 1975 26.8 21.5 5.3 4.5 3.6 0.9 22.3 17.9 4.4 1976 46.3 41.2 5.1 6.5 6.1 0.4 39.8 35.1 4.7 1977 48.4 Source: CODELCO Table 8.,: CHILE - COPPER EXPORTS, BY TYPE AND DESTINATION - 1960-1976 (Thousands of metric tons) _ _ 1960 1965 196-6 -T 1968 1969 1970 1971 1972 1973 1974 1975 1976 Total Copper Exports 512.8 518.7 582.9 631.8 635.9 656.4 668.8 684.o 630.8 656.5 858.2 787.8 981.9 I. Electrolytic Copper 13384 149.5 221.2 276.2 296.7 340.1 347.9 369.5 316.9 319.8 386.1 389.3 454.8 Western Europe 1 3 7.8 . 127.2 7 213.5 225.2 261.0 7277.7 217.7 Y17i72 202.4 2498.1 T2.1 European Community i:13 109.5 185.5 184.4 193.5 229.2 258.0 297.6 180.4 157.0 178.7 213.1 223.8 (Germany) (2 .') (63.7) (85.4) (70.3) (80.0) (82.1) (108.6) (104.1) (79.0) (59.5) (58.9) (74.1) (56.6) (France) )21; 4) (13.2) (15.6) (27.4) (21.4) (31.7) (27.7) (31.1) (15.8) (15.5) (30.3) (31.3) (31.1) (Italy) (11.6) (14.0) (17.9) (35.1) (32.3) (44.4) (46.6) (51.1) (39.2) (36.9) (43.8) (41.6) (56.6) (U.K.) (23.6) (17.0) (44.9) (49.5) (57.6) (58.8) (53.9) (50.6) (39.4) (42.4) (40.8) (53.0) (48.7) Japan - 7.7 17.0 23.2 22.2 17.8 29.3 29.4 21.3 50.6 32.1 32.1 United States o.6 12.3 20.4 25.9 25.6 23.5 13.1 16.6 30.1 38.5 34.6 16.0 25.0 China, People's Republic - - - - - 8.3 15.0 20.0 16.0 5.8 - Centrally-Planned Economies - - - - - - 1.3 10.0 19.1 17.1 21.4 11.0 Latin America - 9.0 6.5 19.8 22.7 33.4 29.4 34.4 30.1 36.7 65.4 62.6 133.0 (Argentina) (3.3) (5.1) (14.1) (16.0) (23.3) (19.9) (25.6) (23.7) (25.6) (26.9) (24.0) (14.2) (Brazil) (5.7) (1.4) (5.7) (6.7) (10.0) (9.5) (8.8) (6.4) (9.8) (36.3) (38.6) (118.8) Other - - - - - - 1.9 0.6 - - 3.3 7.6 II. Fire Refined :-l, 67.3 95.8 85.1 81.0 88.1 92.1 65.3 89.1 68.o 101.7 114.9 139.9 WesteKrnEurope 73.6 53.3 8 5.1- 76 72.7 V7 59.3 70.9 55.0 72.3 .T O 9 European Community 73.5 51.2 77.5 68.1 60.9 70.7 74.7 52.7 64.5 53.2 65.8 74.6 62.8 (Germany) (15.3) (9.0) (14.1) (11.9) (13.1) (13.9) (16.7) (11.9) (18.4) (18.9) (27.4) (28.6) (28.1) (0rance) (0.2) (4.5) (19.8) (12.7) (12.5) (19.3) (22.2) (15.8) (16.2) (4.8) (4.4) (13.7) (10.6) (Italy) (1o 5) (10.4) (21.6) (18.5) (16.5) (19.1) (18.2) (12.5) (14.6) (9.0) (19.2) (14.1) (14.7) (U.K.) (43-3) (27.0) (21.9) (18.4) (17.5) (17.2) (16.4) (11.3) (11.2) (15.8) (12.8) (13.1) (7.3) United States 1.1 - 0.1 3.1 1.4 - 1.0 -10.5 3.5 9.5 10.9 38.6 Latin America - 10.0 5.9 5.3 6.6 6.4 6.3 6.o 6.1 9.5 16.9 19.5 29.8 Other _ 4.o 4.7 5.1 0.3 - - - 1.6 - 3.0 2.0 3.3 III. Blister .972.3 274.1 235.1 240.7 224.4 188.0 190.1 170.3 149.9 159.5 214.5 179.8 231.0 Western Europe 89.4 -9-3 72.3 1 21.1 72.6 75.o 72.0 9 47 *780.2 83B 135.3 15973 European Community 838 91.6 67.0 112.1 64.3 64.o 66.1 86.7 66.5 54.6 65.2 108.4 122.1 (Germany) (4-;, 9) (46.7) (20.8) (45.9) (18.6) (25.1) (28.4) (37.8) (30.9) (25.7) (23.1) (53.0) (83.2) (Italy) (2. 4) t-) (0.8) (1.4) (1.4) (1.8) (1.9) (2.1) (O.7) ?-) (4.4) (2.1) (1.6) (U.K.) (4i. 5) (38.4) (32.5) (33.6) (35.6) (36.2) (28.3) (39.5) (31.4) (24.3) (33.5) (38.8) (30.1) Japan _ 1.5 - 17.7 26.0 30.9 31.9 14.1 13.0 16.3 - 9.2 United States 183.1 180.3 161.3 119.6 134.1 87,0 87.2 35.2 24.9 16.3 61.6 26.5 35.6 China, People's Republic - - - - 8.0 30.4 35.5 25.5 8.o 22.9 Centrally-Plarned Economies - - - - -0.5 - 14.5 20.9 10.0 5.0 Other - - - - - - - - - 7.4 IV. Ores and Concentrates P7. 2 27.8 30.8 29.8 33.8 40.2 38.7 78.9 74.9 109.2 155.9 103.8 156.2 Western Europe 6.1 10.7 12.8 10.6 9T 2X 22.9 22.3 29.34 .1 32 367 52.8 European Community 5.& 10.1 11.9 6.2 13.6 15.1 16.8 16.9 16.7 20.4 21.6 19.4 28.1 (Germany) (5.8) (9.9) (11.8) (6.1) (13.6) (15.0) (15.4) (12.9) (15.5) (15.2) (18.2) (15.0) (22.4) Japan 9.2 14.8 14.5 17.3 12.2 13.0 14.5 51.6 37.1 58.9 58.6 54.7 57.7 United States 10.9 0.9 0.6 0.3 - - - - 0.1 0.5 - - - Other 1.0 1.4 2.9 1.6 2.2 o.4 1.3 5.0 3.6 20.0 63.1 11.5 45.7 Source: CODELCO - 480 - Table 8.6: CHILE - A'VERAGE ANNUAL PRICE OF COPPER- 1950-1978 (U.S. cents per pound) Constant 1975 Cents ;t Current Price Chile b Chile Year LME- N.Y.-/ (CIF) LME -/ N.Y. (CIF) 1950 22.4 21.2 61.4 58.3 1951 27.5 24.2 63.0 55.4 1952 32.4 24.2 34.2 73.0 54.6 77.0 1953 30.1 28.8 34.7 70.7 67.6 81.5 1954 31.1 29.7 29.9 74.5 71.3 71.7 1955 43.9 37.5 38.8 114.6 97.9 101.3 1956 41.1 41.8 40.3 103.5 105.3 101.5 1957 27.4 29.6 27.2 66.7 72.0 66.2 1958 24.7 25.8 24.4 60.0 62.6 59.2 1959 29.7 31.2 29.7 72.3 75.9 72.3 1960 30.8 32.1 30.8 73.5 76.6 73.5 1961 28.7 29.9 28.7 67.8 70.7 67.8 1962 29.3 30.6 29.3 69.3 72.3 69.3 1963 29.3 30.6 29.3 68.9 72.0 68.9 1964 43.9 32.0 31.7 101.6 74.1 73.4 1965 58.5 35.0 36.1 131.8 78.8 81.3 1966 69.4 36.2 54.2 154.6 80.6 120.7 1967 51.6 38.2 49.6 113.2 83.8 108.8 1968 56.3 41.9 53.3 131.5 97.9 124.5 1969 66.5 47.6 66.6 153.9 110.2 154.2 1970 64.1 57.7 64.1 133.5 120.2 133.5 1971 49.0 51.5 49.3 94.2 99.0 94.8 1972 48.6 50.6 48.6 84.5 88.0 84.5 1973 80.9 58.9 80.9 116.7 85.0 116.7 1974 93.4 76.7 93.4 107.7 88.5 107.7 1975 56.1 63.6 56.1 56.1 63.6 56.1 1976 63.5 68.8 63.5 62.9 68.1 62.9 1977 59.4 - 59.4 53.6 _ 53.6 1978 61.9 - 61.9 46.5 46.5 a/ Electrolytic wirebar. b/ London Metal Exchange. c/ New York market. d/ Deflated by IBRD Index of Unit Values (CIF) of Manufactured Exports from Developed to Developing Countries. Note that this deflator is slightly different from that used in Table 9.8. Source: LME and NY prices from IBRD, Commodity Trade and Price Trends (1977 edition), Report No. EC-166/77, Washington, 1977; Chile prices 1952-1959 from Recardo Ffrench-Davis (op. cit.); Chile prices since 1960 from CODELCO - 481 - Table 8.7: CHILE - EXCHANGE RATE FOR LOCAL EXPENDITURES OF LARGE COPPER COMPANIES, 1931-1975 (Escudos per U.S. dollar) Nominal Exchange Rates a/ Average Other Legal Copper Exports Rate (1) (2) (1) i (3) 1931-51 0.019 n.a. 0.030 n.a. 0.63 1952 0.029 0.113 o.o66 0.26. o.44 1953 0.044 0.110 0.076 0.40 0.58 1954 o.o66 0.123 0.104 0.54 o.63 1955 0.125 0.205 0.181 0.61 o.69 1956 0.369 0.441 0.351 o.84 1.05 1957 0.620 0.621 o.624 1.00 0.99 1958 0.788 0.789 0.715 1.00 1.10 1959 1.045 1.o47 1.049 1.00 1.00 1960 1.049 1051 1.049 1.00 1.00 1961 1.049 1.051 1.049 1.00 1.00 1962 1.142 1.142 1.153 1.00 0.99 1963 1.872 1.998 1.871 0.94 1.00 1964 2.372 2.796 2.418 o.85 o.98 1965 3.128 3.337 3.237 0.94 0.97 1966 3.955 4.081 4.o0o 0.97 0.99 1967 5.031 5.132 5.030 0.98 0.99 1968 6.787 6.923 6.860 o.98 0.99 1969 8.974 9.153 9.040 0.98 0.99 1970 11.552 11.783 11.830 0.98 0.98 1971 12.40o 13.470 0.92 1972 17.550 21.870 0.80 1973 Jan.-Sept. 31.491 58.770 0.54 Oct.-Dec. 117.333 405.180 0.29 1974 661.425 863.650 0.77 1975 4903.0 4903.0 1.00 a/ Annual averages. From 1948 to 1955, local investment expenditures of the copper companies were given a preferred rate relative to other production costs. Source: Behrman, op. cit., Table A.7, Ffrench-Davis, o. cit., Table 42 Table 8.8: PURCHASING POWER OF COPPER EXPORTS AND CHILE'S RETAINED VALUE OF GRAN MINERIA OUTPUT, 1952-1970 (Millions of U.S. dollars at prices of 1969)a/ Copper Exports Real Small Retained Value Copperb/ Gran and c/ Local d/ Price - Minerla Medium Mines Total Taxes - Costs - Total 1952 24.6 185.4 24.4 209.8 109.4 32.1 141.5 1953 26.1 137.8 16.8 154.6 82.1 35.J7 117.8 1954 22.0 160.0 15.2 175.2 79.5 33.7 113.2 1955 39. 4 336.9 29.1 366.o 186.2 50.4 236.6 1956 40.0 328.5 33.4 361.9 141.5 67.2 208.7 1957 26.L 229.9 24.3 254.2 74.3 80.6 154.9 1958 24.7 197.4 21.2 218.6 55.0 76.4 131.4 1959 30.5 288.3 28.5 316.8 89.9 102.7 192.6 1960 31.6 299.4 32.6 332.0 90.5 119.7 210.2 1961 30.0 281.2 39.8 321.0 79.3 122.5 201.8 1962 30.7 300.1 49.6 349.7 89.0 132.8 221.8 1963 30.1 294.3 56.5 350.7 96.3 116.3 212.6 1964 31.7 320.2 78.7 398.9 122.8 119.7 242.5 1965 35. 358.8 120.4 479.2 134.7 143.2 277.9 1966 53.2 505.0 117.9 622.9 221.4 163.4 384.8 1967 48.? 521.4 128.0 649.4 209.1 182.5 391.6 1968 54.4 557.5 151.0 708.5 205.6 222.4 428.0 1969 66.6 726.4 205.7 932.1 357.8 262.0 619.8 1970 58.9 620.4 163.7 784.1 275.1 242.4 - 517.5 - a/ All deflations are by IBRD index of Chile import prices (see Table 9.4). b/ CIF prices received by Gran Minerla del Cobre. c/ Includes exchange rate differential, Central Bank earnings on copper sales, profits to state-owned shares, as well as taxes on profits, etc.; does not include import duties. d/ Includes dollar expenditures in Chile and duties on imported inputs. e/ Does not include dollar expenditures in Chile. Sources: CODELCO; Banco Central de Chile; Ricardo Ffrench-Davis, "La Importancia del Cobre en la Economa Chilena," Table 4. Table 8.8a: CHILE - INDEX OF PURCHASING POWER OF COPPER EXPORTS AND RETAINED VALUE, 1952-1970 (1965 = 100) Copper Exports Real Small Retained Value Copper Gran and Local Price Mineria Medium Mines Total Taxes Costs Total 1952 68.7 51.7 20.3 43.8 81.2 22.4 50.9 1953 72.9 38.4 14.0 32.3 61.0 24.9 42.4 1954 61.5 44.6 12.6 36.6 59.0 23.5 40.7 1955 110.1 93.9 24.2 76.4 138.2 35.2 85.1 1956 111.7 91.6 27.7 75.5 105.0 46.9 75.1 1957 74.9 64.1 20.2 53.0 55.2 56.3 55.7 1958 69.0 55.0 17.6 45.6 40.8 53.4 47.3 1959 85.2 80.4 23.7 66.1 66.7 71.7 69.3 1960 88.3 83.4 27.1 69.3 67.2 83.6 75.6 1961 83.8 78.4 33.1 67.0 58.9 85.5 72.6 1962 85.8 83.6 41.2 73.0 66.1 92.7 79.8 1963 84.1 82.0 46.9 73.2 71.5 81.2 76.5 1964 88.5 89.2 65.4 83.2 91.2 83.6 87.3 1965 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1966 148.6 140.7 97.9 130.0 164.4 114.1 138.5 1967 136.3 145.3 106.3 135.5 155.2 127.4 140.9 1968 152.0 155.4 125.4 147.9 152.6 155.3 154.0 1969 186.0 202.5 170.8 194.5 265.6 183.0 a/ 223.0 1970 164.5 172.9 136.0 163.6 204.2 169.3 - 186.2 - Average annual rate of change 1952-1969 (%) 5.6 8.4 9.2 7.2 9.1 a/ Does not include dollar expenditures in Chile. Source: Table 8.8 Table 8.8b: CHILE - YEAR-TO-YEAR CHANGES OF PURCHASING POWER OF COPPER EXPORTS AND RETAINED VALUE, 1952-1970 (Percent) Copper Exports. Real Small and Retained Value Copper Gran Medium Local Price Minera Mines Total Taxes Costs Total 1953 + 6.1 -25.7 -31.2 -26.4 -25.0 +11.2 -16.7 1954 -15.7 +16.1 - 9.6 +13.3 - 3.2 - 5.6 - 3.9 1955 +79.1 +110.6 +91.4 +108.9 +134.2 +49.6 +109.0 1956 + 1.5 - 2.5 +14.8 - 1.2 -24.0 +33.3 -11.8 1957 -33.0 -30.1 -27.3 -29.8 -47.5 +19.9 -25.8 1958 - 7.8 -14.2 -12.8 -24.1 -26.0 - 5.2 -15.2 1959 +23.5 +46.o +34.4 +44.9 +63.5 +34.4 +46.6 1960 + 3.6 + 3.8 +14.4 + 4.8 + 0.7 +16.6 + 9.1 1961 - 5.1 - 6.1 +22.1 - 3.4 -12.4 + 2.3 - 4.0 1962 + 2.3 + 6.7 +24.6 + 5.9 +12.2 + 8.4 + 9.9 1963 - 2.0 - 1.9 +13.9 + 0.3 + 8.2 -12.4 - 4.1 1964 + 5.3 + 8.8 +39.3 +13.7 +27.5 + 2.9 +14.1 1965 +12.9 +12.0 +53.0 +20.1 + 9.7 +19.6 +14.6 1966 +48.6 +40.7 - 2.1 +30.0 +64.4 +14.1 +38.5 1967 - 8.3 + 3.2 + 8.6 + 4.3 - 5.6 +11.7 + 1.8 1968 +11.5 + 6.9 +18.0 + 9.1 - 1.7 +21.9 + 9.3 1969 +22.4 +30.3 +36.2 +31.6 +74.0 +17.8 +44.8 1970 -11.6 -14.6 -20.2 -25.9 -23.1 n.a. n.a. Average annual % change 16.7 21.1 26.3 22.9 31.3 16.9 22.3 a3 (absolute value) a/ 1952-1969. Source: Table 8.8 - 485 - Table 8.9: CHILE'S RETAINED SHARE OF GROSS CIF VALUE OF COPPER PRODUCTION, BY SOURCE, 1925-1970 (Percent) Local Fiscal / Exchange RatE/ Operating c/ Year Revenues Differential- Expenditures- Total 1925 4.9 - 33.1 38.1 1930 5.1 - 4o.9 46.o 1935 8.2 - 24.8 33.0 1940 15.2 - 24.8 4o.o 1945 16.9 - 41.2 58.0 1950 27.3 18.6 24.1 70.0 1952 39.7 16.0 16.3 72.0 1953 32.4 18.8 22.3 73.5 1954 34.8 15.7 21.4 71.9 1955 47.6 6.9 14.8 69.2 1956 37.8 3.4 19.5 60.7 1957 27.7 0.0 30.0 57.7 1958 23.6 0.0 32.7 56.3 1959 25.9 0.0 29.6 55.6 1960 25.5 0.1 33.7 59.2 1961 25.2 0.1 39.0 64.3 1962 25.5 0.0 37.9 63.4 1963 26.0 2.0 33.9 61.9 1964 27.1 5.1 31.4 63.6 1965 29.9 2.5 34.5 66.9 1966 38.7 0.8 29.2 68.7 1967 34.4 o.6 30.6 65.6 1968 30.9 o.6 34.1 65.5 1969 42.3 o.6 31.4 74.3 1970 39.5 0.7 35.4 d/ 75.6 d/ a/ Includes taxes on income, over-price, and share of profits accruing to government. Does not include import duties. b/ Before 1950, included in local operating expenditures. Differential calculated on basis of the exchange rate applied to general exports. c/ Includes dollar expenditures in Chile and import duties. Also includes exchange rate differential before 1950. d/ Does not include local dollar expenditures. Sources: Data for 1925-1950 are calculated from information in Clark W. Reynolds, "Development Problems of an Export Economy: The Case of Chile and Copper," in Markos Mamalakis and Clark Reynolds, Essays on the Chilean Economy, Irwin, 1965; Data on exchange rate differential for 1950 from Theodore H. Moran, Multinational Corporations and the Politics of Dependence: Copper in Chile, Princeton University Press, 1974; Data underlying calculations for 1952-1970 from Ricardo Ffrench-Davis, "La Importancia del Cobre en la Economfa Chilena," in Ricardo Ffrench-Davis and Ernesto Tironi, El Cobre en el Desarrollo Nacional, CEPLAN, Santiago, 1974. Table 8.10: CHILE - EMPLOYMENT IN THE LARGE MINING SECTOR, 1960-1977 (Average number of persons per year) Total Chuquicamata-/ Salvador Teniente Andina Central Office 1960 17,444 6,816 3,650 6,978 1961 18,654 6,990 4,335 7,309 1962 17,690 7,013 3,777 6,900 1963 18,249 7,137 3,914 7,198 1964 18,887 7,206 4,017 7,664 1965 19,346 7,252 4,240 7,854 1966 19,067 7,288 4,409 7,370 1967 20,769 8,o90 4,677 8,002 1968 22,338 8,353 4,730 9,255 1969 22,981 8,373 4,742 9,866 1970 23,697 8,711 4,882 10,104 1971 26,127 9,357 5,112 10,491 1,167 1972 29,169 10,013 5,496 11,959 1,701 m 1973 31,484 10,839 5,929 12,695 2,021 1974 32,902 11,428 6,242 12,921 2,311 1975 31,597 10,617 5,877 12,731 2,372 1976 31,157 10,355 5,678 12,228 2,298 538 1977 (Feb.) 30,987 10,232 5,641 12,213 2,285 616 j Includes Exotica. Source: 1960-1974 CODELCO; 1975-1977 Ministry of Finance Table 8.11: CHILE - LABOR PRODUCTIVITY AT LARGE COPPER MINES, 1960-1976 (Average annual output per worker in metric tons of copper content) Total Chuquicamata-/ Salvador Andina Teniente 1960 27.46 33.91 21.58 24.25 1961 25.79 35.71 16.66 21.74 1962 28.84 39.32 21.83 22.02 1963 27.80 38.50 22.53 20.05 1964 27.93 39.97 19.03 21.27 1965 24.73 34.84 17.33 19.39 1966 27.52 41.64 17.41 19.61 1967 25.82 34.22 16.67 22.68 1968 23.24 33.39 18.21 16.65 1969 23.50 33.83 16.25 18.22 1970 22.81 30.41 19.05 17.49 1971 21.86 30.50 16.60 45.91 14.03 1972 20.31 26.51 15.08 31.72 15.91 1973 19.54 27.40 14.17 27.74 14.03 1974 23.18 34.03 12.81 29.58 17.45 1975 21.59 28.69 13.83 26.31 18.38 1976 27.41 43.03 14.58 24.75 21.99 2/ Includes Exotica. Source: CODELCO Table 8.12: CHILE - NON-COPPER MINING PRODUCTION, 1963-1977 (Thousands of metric tons) Calcium Sodium Iron Coal Molybdenum Nitrate Iodine Manganese Carbonate Sulfate 1963 8,510 1,786 3 1,136 2,158 47 1964 9,888 1,782 4 1,173 2,161 20 1965 12,131 1,680 4 1,158 2,280 17 1966 12,222 1,652 5 1,063 2,931 18 2,238 1967 10,784 1,496 5 871 2,216 15 1,911 1968 11,916 1,631 4 679 1,964 24 1,776 1969 11,534 1,704 5 782 2,449 24 2,304 52 1970 11,265 1,510 6 674 2,250 27 2,091 31 o 1971 11,228 1,626 6 830 2,564 24 2,088 45 1972 8,640 1,457 6 706 2,101 16 1,989 41 1973 9,416 1,390 5 796 2,168 15 1,848 36 1974 10,297 1,520 10 738 2,273 29 2,659 32 1975 11,007 1,515 9 726 1,962 20 1,577 23 1976 10,055 1,300 11 619 1,259 18 1,794 28 1977 7,756 1,310 11 564 1,852 21 1,599 30 p/ Preliminary. Source: Central Bank Page 1 of 6 pages Table 8.13: CIIILE - STRUCTURE 0O MANUFACTURING, 1967 Gross No. of Total Motor Motor Capacity Value Value- Estab isbh7 Employ- Capacity Per Worker of Output Added Industry/No. of Workers ments - Percent meat Percent (RP) Percent (5) (3) (Eo Million) Percent (E Million) Percent Processed foods (ex. beverages) 2,284 100.0 59,150 100.0 171,565 100.0 2.9 4,690.1 100.0 1 589.5 100.0 5- 9 910 59 5,872 9.9 7,39 4 3 1.2 333.5 7.1 7 4 10- 19 711 31.1 9,666 16.3 12,654 7.4 1.3 537.0 11.4 141.4 8.9 20- 49 451 19.7 13,021 22.0 25,734 15.0 2.0 1,163.8 24.8 291.1 18.3 50- 99 109 4.8 7,353 12.4 21,350 12.4 2.9 770.1 16.4 204.5 12.9 100-199 62 2.7 8,931 15.1 32,894 19.2 3.7 640.5 13.7 242.0 15.2 200-499 35 1.5 10,943 18.5 42,185 24.6 3.9 922.8 19.7 550.4 34.6 500-999 6 0.3 3,364 5.7 29,443 17.2 8.8 322.4 6.9 87.4 5.5 1,000 and over 0 - - - - - - - - - - beverages 1,037 100.0 13,601 100.0 639 97 1O.O 2.9 8 100.0 495.4 100.0 5- 9 662 T3 2,291 1 6. 8 9,636 2 W 4.27 89. 31.1 6 T3 10- 19 225 21.7 1,966 14.5 5,462 13.7 2.8 121.0 12.1 43.0 8.7 20- 49 95 9.2 2,291 16.8 6,341 15.9 2.8 215.0 21.4 95.3 19.2 50- 99 31 3.0 2,115 15.6 5,236 13.1 2.5 177.1 17.6 95.6 19.3 100-199 16 1.5 2,053 15.1 6,o44 15.1 2.9 148.1 14.8 66.6 13.4 200-499 6 0.6 1,626 12.0 6,484 16.2 4.0 119.4 11.9 64.1 12.9 500-999 2 0.2 1,259 9.3 774 1.9 0.6 133.4 13.3 99.7 20.1 1,000 and over 0 - - - - - - - - - - Tobacco 4 100.0 1,501 100.0 1,278 100.0 0.9 337.2 100.0 257.3 100.0 5- 9 0 - - - _ _ - _ _ _ _ 10- 15 0 - - - - - - - - - - 20- 49 1 25.0 20 1.3 1 0.1 0.1 o.6 0.2 0.5 0.2 50- 99 0 - - - - - - - - - - 100-199 0 - - - - - - - - - - 200-499 2 50.0 547 36.4 150 11.7 0.3 48.1 14.3 37.7 14.7 500-999 1 25.0 934 62.2 1,127 88.2 1.2 288.5 85.6 219.0 85.1 1,000 and over 0 - - - - - - - - - - Textiles 805 100.0 48,073 100.0 103,599 100.0 2.2 1838 5 100.0 992.5 100.0 5- 9 23 0 1,599 3.3 1,105 1.1 0.7 3 2.1 1 1.7 10- 19 185 23.0 2,560 5.3 4,754 4.6 1.9 79.8 4.3 37.6 3.8 20- 49 212 26.3 6,565 13.7 9,033 8.7 1.4 247.5 13.5 118.0 11.9 50- 99 88 10.9 6,034 12.6 7,576 7.3 1.3 221.9 12.1 112.9 11.4 100-199 36 4.5 5,065 10.5 12,523 12.1 2.5 196.4 10.7 103.0 10.4 200-499 30 3.7 9,037 18.8 17,772 17.2 2.0 332.8 18.1 192.6 19.4 500-999 9 1.1 6,273 13.0 13,876 13.4 2.2 270.5 14.7 163.7 16.5 1,000 and over 7 o.9 10,940 22.8 36,920 35.6 3.4 450.7 24.5 247.8 25.0 Clothing (ex. shoes) 721 100.0 18,566 100.0 7,491 100.0 o.4 626.9 100.0 287.0 100.0 5- 9 -7 7 2,190 11.8 371 5.o 0.2 6 1.3 9.8 9.1 10- 19 192 26.6 2,644 14.2 981 13.1 0.4 67.0 10.7 26.8 9.3 20- 49 122 16.9 3,680 19.8 694 9.3 0.2 117.3 18.7 47.9 16.7 90- 99 38 5.3 2,636 14.2 720 9.6 0.3 94.9 15.1 40.5 14.1 100-199 23 3.2 3,256 17.5 1,398 18.7 0.4 116.8 18.6 60.7 21.2 200-499 7 1.0 2,119 11.4 3,017 40.3 1.4 84.1 13.4 44.o 15.3 500-999 3 0.4 2,041 11.0 310 4.1 0.2. 85.5 13.6 41.1 14.3 1, 000 and over 0 - - - - - - - - Page 2 of 6 pages Table 8.l3: CHILE - STRUCTURE OF MANUFACTURING, 1967 - Gross No. of Total Motor Motor Capacity Value Value- Establi Pc7 Employ- Capacity Per Worker of Output Added Industry/Nto. of Workers ments Percent ment Percent (HP) _Percent (5) ; (3) (Eo Million) Percent (Eo Million)_ Percent Leather Goods _6 100.0 5,056 100.0 18,192 100.0 3.6 244.1 100.0 106.2 100.0 5- 9 61 36.5 415 8.50 2 T702 3 3 3. T 3.6 10-19 +3 25.7 622 12.3 1,886 10.4 3.0 19.9 8.1 9.6 9.0 20- 49 39 23.4 1,256 24.8 3,586 19.7 2.9 50.3 20.6 15.7 14.7 50- 99 13 7.8 840 16.6 4,292 23.6 5.1 41.9 17.2 17.2 16.2 100-199 7 4.2 951 18.8 4,129 22.7 4.3 54.2 22.2 27.1 25.5 200-499 4 2.4 572 19.2 3,797 20.9 3.9 69.7 28.6 32.9 31.0 500-999 0- - - - - - - - - - 1,000 and over 0 - - - - - - - - - Shoes (ex. rubber or plastic) 342 100.0 13,694 1OO.O 9,449 100.0 0.7 389.5 100.0 213.6 100.0 5- 9 120 35.1 v 5.7 T0 0.5 12.2 3.1 5.5 10- 19 102 29.8 1,386 10.1 969 10.3 0.7 28.0 7.2 11.7 5.5 20- 49 64 18.7 1,861 13.6 1,027 10.9 0.6 41.6 10.7 18.7 8.8 50- 99 27 7.9 1,84+1 13.4 1,663 17.6 0.9 46.6 12.0 24.9 11.7 100-199 12 3.5 1,714 12.5 877 9.3 0.5 43.2 11.1 23.4 11.0 200-499 15 4.4 4,478 32.7 3,725 39.4 o.8 140.3 36.0 83.3 39.0 500-999 1 0.3 581 4.2 267 2.8 0.5 21.6 5.5 11.4 5.3 1,000 and over 1 0.3 1,049 7.7 558 5.9 0.5 56.o 14.4 34.7 16.2 Wood Products (ex. furnitulre) 2,376 100.0 27,285 100.0 87,337 100.0 3.2 566.4 100.0 287.4 100.0 5- 9 l,S°to 55.1 3,710 T13. 18,037 20.7 T 49.3 8.7 - 4.o 10- 19 672 28.3 4,823 17.7 19,058 21.8 4.0 120.1 21.2 60.2 20.9 20- 49 291 12.2 5,792 21.2 19,074 21.8 3.3 139.0 24.5 67.1 23.3 50- 99 58 2.4 3,655 13.4 11,446 13.1 3.1 93.8 16.6 46.6 16.2 100-199 28 1.2 3,724 13.6 11,009 12.6 3.0 85.1 15.0 41L.9 15.6 200-499 17 0.7 5,856 14.3 7,190 8.2 1.8 61.9 10.9 33-1 11.5 500-999 1 0.0 540 2.0 0 - - 4.6 0.8 3.1 1.1 1,000 and over 1 0.0 1,141 4.2 1,523 1.7 1.3 12.6 2.2 8.2 2.9 Furniture (nonnetal) 488 100.0 8 958 100.0 10 915 100.0 1.3 176.5 100.0 99.7 100.0 5- 9 275 1 i766 20.6 1 T3 1.1 25.2 VZ 13.5 13. 10- 19 116 23.8 i,944 18.0 2,116 19.4 1.4 27.3 15.5 14.3 14.3 20- 49 69 14.1 1,941 22.7 2,277 20.9 1.2 38.9 22.1 19.1 19.2 50- 99 15 3.1 1,043 12.2 1,278 11.7 1.2 24.7g 13.7 13.7 13.7 100-199 11 2.3 1,577 18.4 2,009 18.4 1.3 31.3 17.8 20.4 20.5 200-499 2 o.4 687 8.0 1,267 11.6 1.8 29.0 16.4 18.7 18.8 500-999 0 - - - - - - - - - - 1,000 and over 0 - - - - - - - - - - Paper and Paper Products 86 100.0 5,679 100.0 143,569 100.0 25.3 476.6 100.0 240.2 100.0 5- 9 13 15.1 97 1.7 200 0.1 2.1 1.1 0.2 57y 0.2 10- 19 32 37.2 446 7.9 896 o.6 2.0 14.5 3.0 8.9 3.7 20- 49 22 25.6 661 11.6 1,645 1.1 2.5 19.6 4.1 10.2 4.2 50- 99 11 12.8 786 13.8 9,175 6.4 11.7 74.1 15.5 28.1 11.7 100-199 3 3.5 388 6.8 S,639 2.5 9.'+ 42.9 9.0 26.8 11.2 200-499 2 2.3 632 11.1 58,832 27.0 61.4 62.9 13.2 36.1 15.0 500-999 2 2.3 1,240 21.8 61,500 42.8 49.6 124.1 26.0 53.5 22.3 1,000 and over 1 1.2 1,429 25.2 27,682 19.3 19.4 137.5 28.8 76.0 31.6 Page 3 of 6 pages Table 8.13; CHILE - STRUCTURE OF MANUFACTURING, 1967-/ Gross No. of Total Motor Motor Capacity Value Value- Establish Employ- Capacity Per Worker 8f Output Added Industry/No. of Workers ments a Percent ment Percent (HP) Percent (5); (3) (E Million) Percent (E Million) Percent Yrinting and Publishing 427 100.0 11,412 100.0 i8_io 100.0 i.6 426.7 100.0 266.9 100.0 5- 9 223 52.2 1,417 12.4 0 5.2 0.7 44 =.0 77*7 1 0. 10- 19 95 22.2 1,305 11.4 898 4.8 0.7 36.8 8.6 23.5 8.8 20- 49 67 15.7 1,966 17.2 1,834 9.8 0.9 64.7 15.2 40.0 15.0 50- 99 20 4.7 1, 439 12.6 1,571 8.4 1.1 57.9 13.6 35.2 13.2 100-199 14 3.3 2,238 19.6 5,738 30./ 2.6 85.9 20.1 55.1 20.6 200-499 6 1.4 1,693 14.8 3,909 20.9 2.3 59.S 13.9 38.7 14.5 500-999 2 0.5 1,354 11.9 3,780 20.2 2.8 77.9 18.3 47.3 17.7 1,000 and over 0 - - Industrial Chemicals 102 100. 5,69 100.0 31,033 100.0 5.5 359.1 100.0 202.7 100.0 5- 9 24 23.5 170 3.0 5~31 _7 77.7 1 . 8 T- 1 5 50- 9g2.. : 10- 19 , 3 22.5 327 5.7 3,60) 12._ 11.6 28.9 .75 20- 49 33 32.4 1,073 18.9 5,012 16.2 4.7 75.3 21.0 41.9 20.7 50- 99 * 13 12.7 906 15.9 3,941 12.7 4.3 68.8 19.1 39.9 19.7 100-199 S 4.9 705 12.4 1,507 4.9 2.1 39.4 11.0 12.9 6.4 200-499 2 2.0 671 11.8 6,527 21.0 9.7 30.2 8.4 11.7 5.8 500-999 1 1.0 755 13.3 7,122 23.0 9.4 34.2 9.5 21.8 10.8 1,000 and over 1 1.0 1,083 19.0 2,590 8.f 2.4 75.7 21.1 56.2 27.7 Other Chemical Products 238 100.0 12 385 100.0 19,61o 100.0 1.6 822.5 100.0 465.2 100.0 5- 9 62 260 3.4 521 2.7 1.3 17.4 2.1 9.4 2.0 10- 19 57 24.0 780 6.3 1,402 7.1 1.8 45.8 5.6 21.4 4.6 20- 49 58 24.4 1,790 14.S 2,884 14.7 1.6 117.9 14.3 62.6 13.5 50- 99 31 13.0 2,436 19.7 3,085 15.7 1.3 150.3 18.3 92.0 19.8 100-199 18 7.6 2,466 19.9 3,710 18.9 1.5 207.8 25.3 119.3 25.6 200-499 9 3.8 2,607 21.0 4,742 24.2 1.8 146.3 17.8 93.2 20.0 500-999 3 1.3 1,891 15.3 3,261 16.6 1.7 136.9 16.6 67.3 14.5 1,000 and over 0 Petroleum Refining 12 100.0 2,020 10.0 21,124 100.0 10.5 575.1 100.0 158.2 100.0 5- 9 0 ---- ----- 10- 19 1 8.3 10 0.5 89 0.4 8.9 7.6 1.3 3.9 2.5 20- 49 5 41.7 217 10.7 6,409 30.3 29.5 95.5 16.6 48.6 30.7 50- 99 3 25.0 186 9.2 435 2.1 2.3 23.0 4.0 12.5 7.9 100-199 - - - - 200-499 0 - - - - _ _ _ _ _ _ 500-999 1 8.3 572 28.3 10,191 48.2 1'7.8 161.9 28.2 37.5 23.7 1,000 and over 2 16.7 1,035 51.2 4,000 18.9 3.9 287.2 49.9 55.7 35.2 Petroleum and Coal Derivatives 6 100.0 364 100.0 1,554 100.0 4.3 74.2 100.0 21.7 100.0 5- 9 1 if.7/ 9 2.5 1 1.2 2.0 0.5 0.6 0.3 1.2 10- 19 1 16.7 10 2.7 83 5.3 8.3 1.5 2.1 0.8 3.6 20- 49 2 33.3 73 20.1 297 19.1 4.1 6.o 8.1 3.2 14.7 50- 99 1 16.7 72 19.8 245 15.8 3.4 4.3 5.8 3.1 14.1 100-199 0 - - - - _ _ _ _ _ _ 200-499 1 16.7 200 54.9 911 58.6 4.6 61.9 83-3 14.4 66.4 500-999 0 - - _ - _ _ _ _ _ _ 1,000 and over O Page 4 of 6 pages Table 8.13: CHILE - STRUCTURE OF MANUFACTURING, 1967 a/ Gross No. of Total Motor Motor Capacity Value Value- Establisg7 Employ- Capacity Per Worker of Output Added Industry/No. of Workers ments - Percent ment Percent (HP) Percent (5): (3) (E Million) Percent (E Million) Percent Rubber Products 77 100.0 -,964 100.0 10,492 100.0 2.6 262.7 100.0 156.0 100.0 5- 9 40.1 230 5 77 36 -3.5 4.0 1. 2 .1 10- 19 18 23.4 244 6.2 884 8.4 3.6 7.4 2.8 4.0 2.6 20- 49 9 11.7 286 7.2 1,041 9 9 3.6 9.1 3.5 4.7 3.0 50- 99 8 10.4 559 14.1 943 9.0 1.7 16.0 6.1 9.5 6.1 100-199 2 2.6 297 7.5 1,165 11.1 3.9 10.8 4.1 6.8 4.3 200-499 0 - - - - - - - - _ _ 500-999 3 3.9 2,348 59.2 6,095 58.1 2.6 215.4 82.0 128.9 82.6 1,000 and over 0 - - - - - Plastics 11 100.0 5,381 100.0 11,736 100.0 2.2 222.1 100.0 131.1 100.0 5- 9 24 20.5 175 3.3 -7 1.7 -77 -T77 -.7 T 1.4 10- 19 26 22.2 354 6.6 711 6.1 2.0 13.6 6.1 6.8 5.2 20- 49 42 35.9 1,290 24.0 1,953 16.6 1.5 51.9 23.4 28.4 21.7 50- 99 13 11.1 953 17.7 1,351 11.5 1.4 35.6 16.0 22.0 16.8 100-199 7 6.o 1,037 19.3 4,579 39.0 4.4 58.o 26.1 35.5 27.1 200-499 5 4.3 1,572 29.2 2,948 25.1 1.9 59.3 26.7 36.4 27.8 500-999 0 - - - - - - - _ 1,000 and over 0 - - - - - - - - - - Objects of Clay, China and Porcelain 20 100.0 2,539 100.0 5,339 100.0 2.1 62.3 100.0 45.8 100.0 5- 9 T - 1.2 22 0. . 7 0.11 0.2 O.zf s 10- 19 7 35.0 99 3.9 65 1.2 0.7 1.1 1.8 0.8 1.7 20- 49 5 25.0 164 6.5 27? 5.2 1.7 7.6 12.3 4.3 9.3 50- 99 1 5.° 80 3.2 126 2.4 1.6 2.1 3.4 1.9 14.1 100-199 0 200-499 0 - _ _ _ _ _ - _ 500-999 1 5.° 699 27.5 1,771 33.2 2.5 14.4 23.2 10.2 22.2 1,000 and over 1 5.0 1,466 57.7 3,078 57.7 2.1 36.8 59.0 28.5 62.3 Glass and Glass Products 71 100.0 4,945 100.0 9,415 100.0 1.9 137.3 100.0 84.1 100.0 5_. 9 43.7 - 3Td 7 0 3.6 2.7 1.6 2.0 10- 19 12 16.9 150 3.0 120 1.3 o.8 2.4 1.7 1.3 1.6 20- 49 5 7.0 132 2.7 60 0.6 0.5 3.8 2.8 1.6 1.9 50- 99 10 14.1 599 12.1 640 6.8 1.1 17.1 12.5 6.7 8.0 100-199 7 9.9 1,271 25.7 3,679 39.1 2.9 34.8 25.3 22.9 27.3 200-499 4 5.6 1,207 24.4 1,631 17.3 1.4 35.1 25.6 28.1 33.4 500-999 2 2.8 1,400 28.3 3,215 34.1 2.3 40.5 29.5 21.8 25.9 1,000 and over 0 - - - - Other Nonmetallic Minerals Products 254 100.0 8,092 100.0 45,117 100.0 5.6 342.5 100.0 185.1 100.0 5- 9106 417.7 - 0 -.4 0 1-.4 9 9.0 2.6 4.9 2 6 10- 19 66 26.0 836 10.3 1,647 3.7 2.0 15.2 4.4 9.0 4.9 20- 49 53 20.9 1,524 18.8 2,774 6.1 1.8 31.2 9.1 17.3 9.3 50- 99 18 7.1 1,264 15.6 3,556 7.9 2.8 47.0 13.7 25.7 13.9 100-199 5 2.0 588 7.3 1,814 4.0 3.1 25.9 7.6 14.8 8.0 200-499 3 1.2 692 8.6 7,523 16.7 10.9 32.7 9.5 23.3 12.6 500-999 3 1.2 2,508 31.0 27,163 60.2 10.8 181.5 53.0 90.3 48.8 1,000 and over 0 Page 5 of 6 pages Table 8.13: CH]LE - STRUCTURE OF MANUFACTURING, 1967 ?/ Gross No. of Total Motor Motor Capacity Value Value- Establish Employ- Capacity Per Worker of Output Added Industry/No. of Workers ments h7 Percent ment Percent (HP) Percent (5) ; (3) (E0 Million) Percent (E0 Million) Percent Basic Iron and Steel 63 100.0 11,158 100.0 195,748 100.0 17.5 703.7 100.0 530.2 100.0 5- 9 10 15.9 72 o 0.7 .6 -r6 U 7.4 . = 10- 19 11 17.5 147 1.3 326 0.2 2.2 5.2 0.7 2.5 0.8 20- 49 23 36.5 692 6.2 4,636 2.4 6.7 37.1 5.3 15.5 4 .7 50- 99 4 6.3 270 2.4 1,592 0.8 5.9 46.2 6.6 21.5 6.5 100-199 8 12.7 1,119 10.0 6,343 3.2 5.7 46. 6.6 27.5 8.3 200-499 4 6.3 1,655 14.8 8,097 4.1 4.9 128.8 18.3 47.6 14.'4 500-999 1 1.6 540 4-.8 1,70o 0.9 3.1 17.1 2.4 10.0 3.0 1,000 and over 2 3.2 6,663 59.7 172,918 88.3 26.0 421.7 59.9 204.8 62.0 Basic Nonferrous Metals 36 100.0 5,905 100.0 53,394 1O0.O 9.0 3,892.7 100.0 1,282.3 100.0 5- 9 10 27.8 3 1.1 102 0.2 fl00 09 0 .1 10- 19 5 15.9 67 1.1 49 0.1 0.7 1.3 0.0 0.8 0.1 20- 49 5 13.9 167 2.8 321 o.6 1.9 8.1 0.2 3.9 0.3 50- 99 3 8.3 227 3.8 390 0.7 1.7 12.5 0.3 6.5 0.5 100-199 4 11.1 656 11.1 3,739 7.0 5.7 146.8 3.8 49.2 3.8 200-499 5 13.9 1,671 28.3 16,525 30.9 9.9 1,573.7 40.4 496.7 38.7 500-999 2 5.6 915 15.5 8,260 15.5 9.0 1,554./ 39.9 546.0 42.6 1,000 and over 2 5.6 2,139 36.2 24,008 45.0 11.2 593.9 15.3 178.2 13.9 Metal Goods (ex. machinery & equipment) 803 vro.o 25,728 100.0 43,473 100.0 1.7 814.6 lOO.0 4s4.s 100.0 5- 9 34+1 42.5 2 16 84 2, 201 5.71 Tt -3. _43 T7TT _3T8 10- 19 193 24.0 2 681 10.4 4,071 9.4 1.5 67.4 8.3 33.5 7.4 20- 49 169 21.0 5,i41 20.0 7,099 16.3 1.4 138.8 17.0 75.5 16.6 50- 99 43 5.4 3,067 11.9 5,330 12.3 1.7 127.7 15.7 70.0 15.4 100-199 34 4.2 4,646 18.1 9,611 22.1 2.1 165.4 20.3 87.0 19.1 200-499 21 2.6 5,618 21.8 12,341 28.4 2.2 202.8 a4.9 118.6 26.1 500-999 0 - - - - - - _ - _ _ 1,000 and over 2 0.2 2,403 9.3 2,820 6.5 1.2 77.9 9.6 52.7 11.6 Machinery and Esuisment (Nonelectric) 351 100.0 16,725 100.0 53,246 100.0 3.2 574.5 100.0 357.0 100.0 5- 9 113 32.2 73W 4.4 1,109 2.1 1.5 TT. 2.2 7.2 2.0 10- 19 82 23.4 1,154 6.9 1,910 3.6 1.7 29.7 5.2 16.2 4.5 20- 49 87 24.8 2,690 16.1 5,484 10.3 2.0 108.8 18.9 68.1 19.1 50- 99 43 12.3 3,078 18.4 6,lo0 11.5 2.0 103.7 18.1 68.2 19.1 100-199 13 3.7 1,761 10.5 2,479 4.7 1.4 50.5 8.8 34.2 9.6 200-499 7 2.0 2,106 12.6 10,695 20.1 5.1 71.2 12.4 44.7 12.5 500-999 4 1.1 2,760 16.5 4,831 9.1 1.8 94.6 16.5 55.6 15.6 1,000 and over 2 o.6 2,442 14.6 20,638 38.8 8.5 103.5 18.0 62.8 17.6 Electrical Machin-cry enr Ajpliaccee 113 100.0 8.156 100.0 16.016 100.0 2.0 51 4 lo.O 371.3 100.0 5- 9 27 23.9 177 2.2 153 1.0 0.9 4.9 0.9 2.7 0.9 10- 19 19 16.8 264 3.2 349 2.2 1.3 8.8 1.7 4.6 1.4 20- 49 30 26.5 833 10.2 1,058 6.6 1.3 46.5 9.0 23.6 7.4 50- 99 12 10.6 816 10.0 968 6.0 1.2 32.9 6.3 22.7 7.2 100-199 12 10.6 1,571 19.3 2,767 17.3 1.8 107.6 20.7 67.5 21.3 200-499 12 10.6 3,986 48.9 3,1ll 19.4 0.8 268.2 51.7 173.6 54.7 500-999 1 0.9 >90 6.2 7,6i0 47.5 i'.O 50.5 9.7 2.3 7.0 1,000 and over 0 - Page 6 of 6 pages Taebi 8.13: CHILE - STRUCTURE OF MANUFACTURING, 1967-/ Gross No. of Total Motor Motor Capacity Value Value- Establish Employ- Capacity Per Worker of Output Added Industry/No. of Workers ments Percent ment Percent (HP) Percent (5); (3) (E Million) Percent IE_ Million) Percent Transport M4ateriel 222 100.0 22,604 100.0 41,610 100.0 1.8 929.0 100.0 317.3 100.0 5- 9 50 22.5 330 0.2 ---: 1.5 1.9 10.7 1 .2 - 2 10-19 v8 26.1 813 3.6 825 2.0 1.0 24.3 2.6 13.6 2.2 20- 49 51 23.0 1,528 6.8 2,814 6.8 1.8 45.2 4.9 28.1 4.6 50- 99 2 9.9 1,539 6.8 2,453 5.9 1.6 70.5 7.6 40.9 6.7 100-199 14 6.3 1,754 7.8 2,4i4 5.8 1.4 106.8 11.5 52.3 8.6 200-499 19 8.6 5,592 24.7 9,839 23.6 1.8 468.9 50.5 301.2 49.7 500-999 2 O.5 1,169 5.2 1 3590 3.3 1.2 18.2 2.0 15.0 2.5 1,000 and over 6 2.7 9,879 43.7 21,232 51.0 2.1 184.5 19.9 149.1 24.6 Professional Equipment Instruments 35 100.0 1,104 100.0 1,283 100.0 1.2 38.2 100.0 22.3 100.0 5_ 9 13 37.1 d74 .7- 79 =. t f37 y.8 d=7.) r.P 10- 19 2 5.7 31 2.8 24 1.9 0.8 0.7 1.9 0.5 2.2 20- 49 15 42.9 493 44.7 388 30.2 0.8 16.4 42.8 9.1 40.7 50- 99 3 8.6 178 16.1 735 57.3 4.1 8.1 21.3 4.8 21.6 100-199 2 5.7 318 28.8 107 8.3 0.3 9.2 24.2 5.4 24.3 200-499 0 - - - - - - - - - - 500-999 0 - - - - - - - - - - 1,000 and over 0 - - - - - - - - Other Manufactures 211 100.0 4,059 100.0 3,635 100.0 0.9 100.2 100.0 60.7 100.0 w 5- 9 55.9 719 T777 -76 - . l 0-. 711.3 136 10.4 r 10- 19 55 26.1 764 18.8 442 12.2 0. 16.6 10.2 16.8 20- 49 20 9.5 621 15.3 468 12.9 0.8 17.7 17.7 11.7 19.3 50- 99 11 5.2 748 18.4 466 12.8 0.6 20.4 20.4 12.5 20.6 100-199 6 2.8 779 19.2 1,123 30.9 1.4 23.3 23.3 14.3 23.6 200-499 1 0.5 428 10.5 840 23.1 2.0 10.9 10.9 5.6 9.2 500-999 0 - - - - - - - - - 1, 00 and over 0 - - - - - Total Manufacturina 11468 100.0 '2,4 100.0 1.175,871 100.0 3.3 21206.6 100.0 9X716.3 100.0 5- 9 ,11t 44.6 276,31 7.5 47,500 7.0 7 789.3 3.7 288. 3.0 10- 19 3,009 26.2 35,700 10.1 66,474 5.7 1.9 1,329.2 6.3 522.3 5.4 20- 49 2,045 17.8 57,768 16.3 114,221 9.7 2.0 2,915.0 13.7 1,171.8 12.1 50- 99 649 5.7 44,724 12.7 96,663 8.2 2.2 2,389.2 11.3 1,079.7 11.1 100-199 349 3.0 48,865 13.8 125,297 10.7 2.6 2,476.9 11.7 1,219.8 12.6 200-499 219 1.9 64,635 18.3 214,o58 18.2 3.3 5,020.6 23.7 2,526.6 26.0 500-999 51 0.4 33,652 9.5 193,691 16.5 5.8 3,848.4 18.1 1,752.8 18.0 1,000 and over 28 0.2 41,669 11.8 317,567 27.0 7.6 2,437.9 11.5 1,154.9 11.9 Refers only to establishments employing 5 or more persons. An establishment is defined as a single economic unit--factory, shop, etc.--dedicated to the production of a particular good or homogeneous group of goods (in accordance with SITC categories) at a single location and under a single administrative control. An enterprise may be composed of more than one establishment at the same or at different locations. Source: INE, IV Censo Naciosnal de Manufacturas, Toms Tercero, Santiago, April 1971 - 495 - Table 8.14: CHILE - REGIONAL DISTRIBUTION OF MANUFACTURING ACTIVITY, 1967 (Percent) No. of Gross Establish- Employ- Value of Value of Value- Region/Province ments ment Fixed Assets Production Added I Tarapac6 1.7 2.6 3.8 3.7 5.1 -II Antofagasta 1.3 2.0 3.4 9.2 7.5 III Atacama 0.7 0.5 1.0 2.9 1.9 Coquimbo 1.9 1.2 O.14 0.5 0.9 IV Aconcagua 1.5 1.1 0.4 0.7 o.6 Valparaiso 7.0 9.0 12.2 11.9 11.1 V Santiago 45.7 58.4 38.0 44.6 49.6 VI O'Higgins 3.1 1.5 4.5 6.8 5.9 Colchagua 1.5 0.7 0.5 0.7 0.8 VII Curic6 1.3 0.4 0.3 0.3 0.2 Talca 2.7 1.5 2.5 1.6 1.2 Maule 1.1 O.4 0.2 0.2 0.2 Linares 2.5 0.8 4.4 0.8 o.6 VIII Nuble 3.2 1.2 2.0 0.9 0.7 Concepci6n 4.7 9.8 14.5 7.8 8.1 Arauco 0.8 0.2 0.1 0.1 0.1 Bio-Bio 2.0 1.2 6.1 1.6 1.4 Malleco 1.4 0.7 0.3 o.4 0.2 IX Cautin 3.7 1.5 0.7 0.8 o.6 X Valdivia 4.4 2.6 1.7 1.3 1.4 Osorno 2.6 0.9 o.8 1.1 0.7 XI Llanquihue 2.6 1.0 1.1 0.9 0.8 Chiloe 0.9 0.2 0.1 0.1 0.1 Aysen 0.7 0.1 0.0 0.1 0.1 XII Magallanes 1.0 o.6 0.8 o.6 0.4 Total Country 100.0 100.0 100.0 100.0 100.0 Source: INE, IV Censo de Manufacturas, Tomo Tercero - 496 - Page 1 of 3 Table 8.15: RATES OF EFFECTIVE PROTECTION, SELECTED PRODUCTS, 1967 (percent) Effective Sector/Product Protection Rate Agriculture Sunflower seeds -39 Potatoes -21 Pork -18 Rapeseeds -13 Wheat -11 Beef 4 Corn 13 Poultry 39 Processed Foods and Beverages Canned fruits and vegetables 33 Canned peaches 81 Sardines in oil 20 Tuna in oil 38 Natural salmon 47 Wheat flour 0 Milled rice 524 Sugar 1078 Spaghetti -5 Vegetable oil 1830 Wine (bottled) -21 Beer -25 Cigarettes -13 Textiles Combed wool fabric 63 Carded wool fabric 83 Polyester yarn 140 Combed wool yarn 152 Dyed linen 547 Carded wool yarn 821 Cotton thread (retail) 1641 Shoes and Clothing Ladies' shoes 26 Children's shoes 32 Sewn men's shoes 33 Glued men's shoes 46 Men's shirts -35 Men's jackets -5 Men's suits 1 Men's pants 33 - 497 Table 8.15: Page 2 of 3 Forest Products Sawnwood -4 Common furniture -5 Paper, cardboard and pulp 95 Calf leather 18 Tires 304 Chemical Products Anti-corrosion paints 85 Oil-based paint 103 Enamel paint 102 Latex paint 113 Tooghpaste -62 Cosmetics and perfumes 42 Petroleum and Coal Products Refined petroleum 900 Carbides 1380 Non-metallic Mineral Products Plane, cathedral and mosaic glass 3500 Porcelain bathroom supplies -6 Porcelain table service 18 Glazed, tiles 46 Electric insulators (ceramic) 56 Cement and lime 29 Cement sheets, rippled -46 Cement sheets, plane -17 T-5 pressure pipes -15 Cement moldings 12 Basic Metals Cast iron 35 Flat steel bars 34 Metal Products Liquid gas cylinder, 15 kg 61 Nuts and bolts 9 Water heater 80 4-burner stove 117 Non-electrical Machinery Eccentric press, 20 t 58 Winch (1.5 mm x 180 mm) 59 8-speed drill 102 Electrical Machinery 5HP, 1,500 rpm engine 701 2HP, 1,500 rpm engine 780 Television set, 23 in. 113 Radio 607 - 498 - Table 8.25: Page 3 of 3 Record player 1400 Household food mixer 116 Refrigerator, 9 cu. ft. 121 Vacuum cleaner 132 Refrigerator, 6 cu. ft. 190 Washing machine 580 Transport Equipment Barges, 370 t -14 Bicycles 555 Overall average 217 Source: Sergio de la Cuadra, "Towards a New Trade Policy for Chile". U.S. Agency for International Development, (mimeo), Santiago, 1971. Table 8.16: CHILE - MONTHLYINDEX OF INDUSTRIAL PRODUCTION (INE), 1970-1978 (Average 1968 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 95.0 92.9 111.4 108.8 112.7 90.9 78.1 83.4 84.4 February 80.3 81.4 97.1 98.5 90.4 73.0 61.5 66.2 68.9 March 105.8 113.1 127.6 131.6 121.3 95.9 86.2 95.2 101.7 April 108.0 109.4 125.4 115.8 117.9 98.5 85.4 92.8 103.1 May 101.8 119.2 126.5 118.7 122.2 84.8 82.4 93.7 111.0 June 110.9 121.8 127.4 116.3 112.9 73.7 84.8 96.7 107.2 July 115.7 124.7 128.3 120.8 117.6 69.0 85.0 93.8 100.5 August 110.3 129.3 130.6 110.9 112.8 65.2 89.2 101.3 104.1 September 100.3 130.6 119.1 91.7 100.2 71.6 84.8 102.6 102.1 October 106.8 129.3 118.6 138.0 120.8 85.0 91.8 99.5 108.9 November 106.0 138.6 126.4 131.7 117.3 80.4 95.3 100.0 107.5 December 107.6 141.3 132.6 125.2 102.1 86.o 97.5 99.8 101.7 Annual Average 104.0 119.3 122.6 117.3 112.9 81.2 85.2 93.8 100.1 Year-to-Year Change (%) -0.3 +14.7 +2.8 -4.3 -3.7 -28.1 +4.9 +10.1 +6.7 Source: INE Table 8.17: CHILE - INE INDEX OF INDUSTRIAL PRODUCTION BY SUBSECTORS, 1969-1978 (1968=10o) Weight 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 Foodstuffs 15.10 99.1 99.6 107.7 105.9 102.0 108.5 101.8 106.1 102.3 103.9 Beverages 4.16 94.0 91.1 114.9 123.3 134.3 92.2 87.2 100.5 120.6 129.8 Tobacco 3.18 103.5 97.7 123.1 126.3 131.3 139.4 120.8 131.3 140.9 146.2 Textiles 9.68 1o4.o 96.o 110.1 113.1 101.5 98.3 62.4 61.5 67.9 73.3 Shoes and clothing 6.81 108.5 104.8 118.9 123.5 117.1 105.1 86.8 74.4 87.9 85.2 Wood Ind. excluding furniture 4.37 107.0 108.1 131.7 146.7 93.1 89.2 54.4 79.5 86.6 74.6 Furniture and wooden accessories 1.49 96.2 113.4 109.1 155.6 120.8 113.7 61.8 72.2 59.8 58.5 Cellulose, paper and paper products 2.55 94.7 88.3 91.8 90.1 104.5 114.9 101.0 109.2 124.8 120.2 Printing and publishing 3.30 110.5 109.5 173.8 126.4 96.o 64.6 55.6 57.8 54.6 56.8 Leather, leather products (ex. shoes) 1.36 96.8 103.9 119.7 90.0 85.8 74.5 70.6 65.8 57.5 64.1 , Rubber products 2.51 103.9 111.0 135.5 138.8 127.5 124.7 35.8 77.2 99.3 7 8.c Chemicals and chemical ° products 9.62 112.2 120.9 144.o 150.4 147.6 129.1 79.7 87.9 110.7 109.6 Petroleum and coal derivatives 0.87 107.7 1o5.4 128.6 138.5 129.6 128.3 110.9 115.1 119.5 136.2 Nonmetallic minerals products 3.86 108.7 102.9 120.9 123.2 126.5 136.1 76.1 79.1 87.3 96.3 Basic metals industries 9.59 109.3 108.0 116.7 124.2 119.7 131.6 119.8 118.2 122.0 144.5 Metal products except machinery and trans. equipment 5.70 102.2 98.6 109.1 117.8 121.4 111.0 59.7 63.9 67.7 97.6 Nonelectric machinery 2.38 108.5 94.2 126.3 151.5 189.3 112.5 77.4 104.3 145.2 77.6 Electrial appliances and accessories 4.88 100.1 99.5 113.3 104.2 89.1 105.2 75.8 65.3 72.7 Transportation materiel 5.76 105.6 127.0 111.9 120.3 130.8 129.2 50.0 36.8 59.2 99.4 Misc. manufacturing 2.83 97.9 81.0 108.6 123.1 119.6 134.0 63.6 88.5 79.4 84.4 General Index 100.0 104.3 104.0 119.3 122.6 117.3 112.9 81.2 85.2 93.8 101.1 Source: INE Table 8.18: CHILE - MONTHLY INDEX OF INDUSTRIAL PRODUCTION (SOFOFA), 1970-1978 (Average 1969=100) Month 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 98.6 94.2 111.6 101.6 107.8 88.5 82.5 91.4 94.9 February 85.3 79.1 88.5 83.8 83.9 76.0 73.8 74.7 83.3 March 105.6 112.2 123.7 120.8 115.9 96.2 96.9 108.8 112.8 April 106.3 108.0 121.6 108.1 116.6 100.2 96.1 105.3 114.4 May 98.4 111.7 124.4 110.7 120.0 90.5 93.5 106.9 121.8 June 109.8 121.5 124.5 106.3 111.4 80.7 96.2 110.7 122.1 July 111.9 119.4 125.8 112.3 119.4 75.1 95.7 104.8 August 108.7 120.3 124.6 109.7 114.1 71.8 100.5 110.2 September 97.8 122.7 113.3 84.3 102.6 75.4 97.4 111.4 October 99.7 122.2 113.6 135.3 118.7 91.6 102.4 107.1 November 107.6 131.4 120.7 126.3 114.7 84.8 102.6 109.3 December 112.2 1i84.1 119.2 120.1 108.4 89.0 107.7 110.5 Annual average 103.5 114.7 117.6 109.9 111.1 85.0 95.4 104.2 Year-to-year change (%) +10.8 +2.5 -6.5 +1.1 -23-5 +12.2 +9.2 Source: Sociedad de Fomento Fabril - 5c1 - Lable 8.19: CEILE - SCFOFA MONTHLY 1iDEX OF INDUSTRIAL PRODUCTION BY SUBSECTORAL AGGREGATES, 1970-1978 (Average 1969=100) Arr.ual Subsect-rul Aggregate/Year JoanuarJ ebruary March April May June July Aug-t September October Noveaber December Overage Coanumer Nandurablan: 1970 104.5 1971 117.8 _972 116.6 1973 105.7 82.1 121.9 109.4 115.9 115.2 118.6 107.4 82.5 131.7 119.1 111.0 110.0 1974 97.3 81.3 110.6 108.5 111.5 103.2 111.1 103.4 93.9 116.7 111.6 103.3 iO4.3 1975 80.2 68.7 90.9 100.0 89.0 79.2 76.1 69.0 78.0 98.6 90.5 94.4 84.6 1976 78.9 69.2 102.7 ioo.6 97.1 94.6 97.5 104.9 97.5 99.6 103.8 108.2 96.2 1977 87.4 63.6 102.8 104.0 109.1 110.5 100.7 109.2 110.5 102.5 106.1 112.7 ioi.6 1975 9-8 76.4 119.6 110.2 119.8 Canmomer D-rablee: 1970 115.6 1971 141.2 1972 128.3 1973 96.4 62.4 128.3 119.8 123.7 1o8.6 129.6 113.3 76.1 140.4 124.2 112.1 111.2 1974 87.6 64.7 126.5 128.2 133.6 135.0 145.1 144.1 120.4 140.4 135.1 125.2 123.9 1975 98.5 52.5 111.0 118.4 105.7 90.0 88.6 80.7 74.2 94.6 78.5 64.6 88.1 1976 7808 52.2 83.6 75.7 69.3 84.o 81.4 75.8 64.2 76.4 86.0 83.3 75.9 1977 79.0 50.7 82.2 82.3 94.7 95.3 85.8 86.5 88.7 84.5 8o.2 79.6 82.5 1978 39.8 35.7 107.8 108.7 124.3 Tranapart Maternel: 1970 100.0 19,1 91.4 1972 105.9 1973 62.8 43.5 90.9 75.3 86.7 67.6 57.4 53.2 53.8 101.2 91.9 75.1 71.6 1974 95.6 42.7 77.1 75.3 97.3 76.4 66.9 62.9 68.i 69.6 59.7 81.5 72.8 1975 75.2 48.2 65.2 63.1 55.0 41.7 40.1 38.1 42.5 58.6 61.0 53.9 53.6 1976 50.0 38.7 45.9 43.6 36.7 43.7 39.1 51.1 50.3 58.1 59.5 70.2 49.6 1977 54.1 38.3 56.2 64.3 57.3 60.4 65.9 62.5 70.2 66.3 77.4 64.8 61.5 1970 60.8 46.6 84.9 80.1 87.6 Interemdiate load. for -Idu-try: 1970 100.6 1971 111.1 1972 115.5 1973 98.2 101.9 121.5 98.4 92.2 90.6 104.3 125.7 98.6 144.7 142.4 145.3 113.8 1974 124.9 109.7 130.5 138.8 141.7 132.4 145.8 146.4 132.4 136.9 129.9 126.7 132.9 1975 121.5 114.2 126.6 124.5 106.9 107.6 104.9 107.2 1o0.4 114.3 107.7 115.9 113.1 1976 117.4 112.6 128.2 129.2 131.6 133.3 127.3 130.2 134.1 142.0 135.3 144.9 130., 1977 124.9 121.3 i4'.9 138.1 136.9 140.6 140.1 144.0 145.6 147.5 145.7 142.0 139.0 1978 132.2 126.5 137.5 146.1 147.2 IOter-ediate GOodn for Conatructi-a 1970 104.1 1971 113.2 1972 123.5 1973 110.1 82.1 122.5 111.7 116.1 115.5 121.2 120.1 89.0 142.7 144.0 138.1 117.0 1974 119.4 84.2 132.0 126.2 126.o 112.8 118.0 108.6 95.9 112.1 119.9 106.0 113.4 1975 86.0 53.5 81.0 0o.4 77.0 69.9 48.4 48.3 5o.4 58.6 56.2 61.4 65.1 1976 58.5 59.1 74.5 73.4 70.7 86.6 81.1 85.9 85.3 88.1 81.7 89.8 77.5 1977 74.7 66.8 97.1 96.2 90.3 98.8 96.1 100.7 100.0 93.9 100.4 105.0 93.4 1978 84.4 81.5 114.1 113.4 121.0 Nbocellnneooo NMonf-ctures: 1970 97.2 1971 105.9 1972 120.5 1973 106.7 97.6 125.9 133.8 124.7 110.6 112.3 101.0 81.o 140.2 124.9 113.8 114.4 1974 ii4.4 80.5 102.6 110.5 104.0 i08.4 116.4 110.9 98.5 112.6 109.5 98.7 1o5.6 1975 67.6 76.7 81.0 83.3 86.o 57.8 50.4 50.1 49.7 69.o 63.4 73.3 67.4 1976 72.3 71.1 Si.i 79.2 75.8 82.1 02.4 81.5 85.o 94.0 91.0 86.6 81.8 1977 90.7 75.8 135.1 93.7 92.1 104.5 94.9 99.0 95.6 98.1 96.2 88.3 96.4 ipoS 84.8 79.9 95.6 86.7 100.9 Courc: Soc-iedd do Fomento PoFbrl Table 8.20: CHILE - SOFOFA INDICES OF INDUSTRIAL PRODUCTION BY SUBSECTORS, 1970-1977 (1969 = 100) Weights 1970 1971 1972 1973 1974 1975 1976 1977 Food products 16.3 109.7 115.4 106.8 lo0.4 104.2 92.6 108.6 109.5 Beverages 5.1 101.7 125.3 127.0 110.8 92.0 88.1 109. 0 124.7 Tobacco 2.6 97.4 119.4 122.5 127.4 135.1 117.1 127.1 136.6 Textiles 10.2 106.6 120.4 125.3 119.2 100.1 68.7 71.6 81.0 Clothing 2.9 97.5 110.7 117.3 106.8 93.5 72.1 61.2 70.9 Leather products (ex. shoes) 1.1 96.5 102.2 96.2 88.1 85.8 76.9 69.9 79.4 Shoes 1.8 91.5 116.9 119.6 117.1 98.1 64.2 70.0 70.8 Wood and cork 3.0 111.3 120.5 148.8 132.2 109.1 63.3 98.7 128.7 Furniture and accessories 1.0 107.8 121.0 116.1 116.4 84.5 68.8 78.2 79.7 Paper md products 2.1 98.2 101.0 97.9 90.9 97.3 89.7 99.9 106.1 Printing and publishing 2.7 95.1 98.8 144.3 141.9 106.7 68.9 68.5 92.3 Industrial chemicals 2.7 105.3 110.6 112.0 105.8 96.7 52.6 58.0 59.3 Other chemical products 4.8 100.6 119.6 119.7 117.3 123.5 87.0 113.1 109.8 Petroleum refining 1.6 96.2 123.7 132.0 123.7 126.7 104.4 110.8 117.8 o Petroleum derivatives 0.2 91.8 108.8 106.7 108.4 96.3 55.5 65.4 74.4 Rubber products 1.6 113.3 133.1 132.3 124.4 120.4 44.6 76.0 98.8 Plastic products 1.3 86.0 105.6 119.1 102.1 111.1 59.8 81.2 88.1 Ceramics and brick products 0.5 94.5 99.6 106.8 105.2 110.5 69.2 64.i 72.9 Glass products 0.8 90.4 106.0 119.3 136.4 109.8 54.3 101.5 132.3 Other non-metallic mineral 1.9 96.6 108.7 105.6 100.1 117.6 60.8 56.5 63.8 products Basic iron and steel 3.4 95.3 103.9 98.1 87.3 94.6 75.8 61.0 69.6 Basic non-ferrous metals 13.1 101.7 111.6 118.8 122.8 151.6 136.8 166.9 177.1 Metal products 4.3 108.3 111.6 120.2 114.3 112.1 67.7 68.1 79.3 Nonelectric machinery 3.2 98.2 115.4 122.4 113.8 120.5 79.9 67.8 58.7 Electric equipment 1.0 90.5 111.4 115.3 116.8 155.1 70.8 80.9 96.5 Electronic equipment 2.0 148.1 196.3 146.3 106.9 142.4 118.5 74.7 83.2 Domestic electric appliances 1.8 110.5 126.5 119.0 111.6 109.3 69.o 87.3 123.8 Transport materiel 6.2 100.4 91.4 105.9 71.6 72.8 53.6 49.6 61.5 Professional and scientific 0.2 100.4 106.8 94.4 70.9 97.0 56.8 51.7 66.2 equipment Other manufactures 0.6 83.1 82.1 72.5 87.1 81.3 62.9 105.9 101.8 Total 100.0 103.5 114.7 117.6 L09.9 111.1 85.0 95.4 104.2 Source: Sociedad de Fomento Fabril Table 8.21: CHILE - INDEX OF INDUSTRIAL SALES (SOFOFA), 1970- 1978 (Average 1969 = 100) Product Groups Intermediates General Consumer Consumer Transport Intermediates for Miscellaneous Year/Quarter Index Nondurables Durables Materiel for Industry Construction Manfactures 1970 (average) 99.7 97.5 115.0 102.6 99.2 1o0.4 95.6 1971 ( " ) 114.0 116.1 140.7 91.0 110.9 118.4 105.4 1972 ( " ) 116.7 115.8 128.9 90.4 117.3 123.2 118.5 1973 ( " ) 106.1 103.5 108.9 70.8 113.4 116.6 109.5 1974 ( ) 107.7 99.4 114.0 75.5 134.3 112.3 98.4 1975 I 90.6 83.7 100.9 60.1 120.2 85.4 74.6 84.6 86.4 88.5 48.1 108.7 66.4 66.3 III 79.0 80.8 91.2 45.8 125.1 58.0 58.0 IV 89.2 92.9 87.3 60.9 115.1 65.2 65.2 (average) 85.9 86.o 92.0 53.8 117.3 67.8 64.8 1976 I 82.7 81.7 64.7 43.8 117.6 66.4 70.1 II 90.7 87.7 73.7 35.5 132.2 75.8 80.2 III 93.5 90.7 81.0 49.8 130.5 78.7 79.8 IV 99.7 96.2 77.3 60.5 140.4 82.5 88.4 (average) 91.9 89.5 74.3 47.3 130.2 76.6 79.5 1977 I 91.0 85.7 65.8 35.3 128.2 81.1 101.5 II 103.0 100.6 87.9 57.2 139.0 96.4 82.8 III 102.1 97.9 82.3 60.4 142.4 89.3 88.3 IV 107.7 105.5 80.7 66.4 145.0 97.5 91.5 (average) 101.0 97.4 79.2 54.8 138.6 91.1 91.0 1978 I 99.3 98.2 71.9 61.2 132.2 90.5 86.9 Source: SOFOFA - 505- Table 8.22: CHILE - SOFOFA INDEX OF PHYSICAL SALES BY MANUFACTURING SUBSECTOR, 1970-1977 (1969 = 100) Ihdustry 1970 1971 1972 1973 1974 1975 1976 1977 Consumer Goods 97.0 115.0 116.7 104.8 97.6 83.0 88.0 95.1 Processed foods 100.4 116.9 108.9 98.9 101.8 94.5 101.1 101.6 Beverages 95.7 118.6 123.5 107.8 85.3 89.9 102.4 121.5 Tobacco 98.5 120.1 121.4 128.7 133.7 123.4 125.4 132.7 Textiles 93.2 114.7 118.0 97.0 89.8 66.6 67.8 76.5 Clothing 96.9 112.3 115.4 102.3 93.9 69.5 60.1 68.8 Shoes 96.7 113.8 119.2 115.4 96.2 63.2 67.4 72.4 Furniture and accessories 108.4 131.2 125.0 113.2 83.0 69.8 85.5 77.6 Brick and clay products 87.8 112.9 107.6 106.3 113.4 63.7 65.5 78.7 Printing and publishing 92.3 97.9 149.0 138.4 101.5 64.9 64.9 87.1 Other manufacturing 83.0 82.6 77.5 B4.9 76.9 59.1 115.9 124.0 Intermeditate Goods 99.7 113.3 117.4 110.7 119.0 91.6 104.6 117.4 Leather products (ex. shoes) 97.6 114.7 95.0 92.3 86.5 70.4 69.4 77.2 Other chemical products 98.7 116.4 126.9 113.0 115.9 95.8 94.o 114.3 Domestic elec. appliances 105.9 132.4 121.2 107.1 108.0 84.o 85.0 127.4 Industrial chemicals 102.7 117.7 117.2 97.9 104.5 54.2 56.5 58.6 Petroleum refining 99.4 121.6 130.2 121.5 126.9 108.0 108.8 113.5 Petroleum derivatives 95.5 105.7 100.8 106.6 107.0 62.6 66.o 73.2 Basic iron and steel 87.9 103.1 104.8 87.1 94.8 69.1 62.0 68.8 Nonferrous basic metals 101.4 110.4 119.2 122.4 152.0 136.7 166.7 177.3 Wood and cork 89.2 99.4 119.6 107.7 77.5 57.2 82.5 106.3 Glass 95.4 108.0 111.7 126.8 103.3 67.4 85.5 117.3 Other nonmetallic minerals 91.1 111.0 102.0 97.5 109.4 57.0 55.4 68.4 Metal products 114.8 126.4 130.0 122.3 120.3 70.2 73.3 85.7 Paper goods 101.0 102.3 91.4 86.8 94.7 79.6 103.3 100.2 Rubber products 101.1 128.9 120.7 113.1 98.8 55.9 70.2 86.4 Plastics 89.8 107.4 117.9 97.5 108.0 55.3 75.6 81.6 Professional scientific 113.4 106.3 101.6 80.8 96.0 60.3 56.0 71.4 equipment Machinery and Transpor Equipment 109.4 118.1 113.5 93.8 104.5 75.6 61.5 63.1 Nonelectric machinery 106.6 123.9 129.4 116.0 120.9 85.9 74.2 61.2 Electronic equipment 136.9 175.0 136.5 99.0 108.4 109.1 65.0 64.4 Transport materiel 102.6 91.0 90.4 70.8 75.5 53.8 47.3 54.8 Electric equipment 105.0 153.4 159.8 154.9 224.4 110.5 102.7 117.2 General Index 99.7 114.0 116.7 106.1 107.7 85.9 91.9 101.0 Source: SOFOFA Table 8.23: CHILE - UTILIZATION OF PRODUCTIVE CAPACITY, BY MANUFACTURING SUBSECTORS, 1969-1977 (Percent) 1969 1970 1971 1972 1973 1976 1977 Processed foods 64.2 63.2 66.1 64.1 61.8 61.9 62.4 Beverages 46.9 45.5 57.4 61.6 67.1 49.5 56.6 Tobacco 69.9 66.o 83.2 85.3 88.7 88.7 95.4 Textiles 85.5 78.9 90.5 93.0 83.5 50.4 57-0 Clothing and shoes 72.2 69.7 79.1 82.2 77.9 48.8 53.7 Wood products 63.5 64.2 43.8 87.1 55.3 47.2 61.5 Furniture and accessories 38.6 54.5 89.1 62.4 48.5 29.0 29.6 Paper and pulp 76.9 77.3 78.2 64.9 65.2 82.0 87.1 Printing and publishing 56.7 56.2 72.5 64.8 49.2 31.4 42.3 Leather goods 62.9 68.6 79-1 59.5 56.7 50.0 56.8 Rubber products 63.0 67.3 82.1 84.1 77.3 46.8 60.8 Chemicals 65.6 70.7 84.2 88.0 86.3 51.5 50.9 Petroleum derivatives 82.9 78.8 95.0 84.2 77.8 70.7 75.7 Nonmetallic minerals 75.1 70.0 81.1 81.8 80.7 50.0 57.4 Basic metals 65.6 64.8 70.0 74.6 71.8 61.3 66.o Metal products 77.5 74.7 82.7 89.3 92.0 47.9 55.8 Nonelectric machinery 49.o 42.6 57.1 68.5 85.5 47.1 4O.8 Electric appliances 79.5 79.0 90.0 82.8 70.8 51.9 64.6 Transport materiel 58.7 70.6 62.3 66.9 72.8 26.0 32.2 Miscellaneous industry 50.7 41.9 56.2 63.7 61.9 45.9 47.8 Total 67.2 66.6 75.6 77.0 73.1 56.o 61.2 Source: CORFO ; mission estimates based on physical production indices Table 8.24: CHILE - COMPOSITION OF INDUSTRIAL EXPORTS (Millions of US dollars) Industries 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 Total exports 469.7 465.4 500.7 504.0 592.1 684.o 866.5 873.2 910.9 1,171.9 1,111.7 996.8 847.4 1,310.5 2,238.9 1,535.3 2,082.6 2,190.3 Total manuf. exporto 39 ° 44.9 36.9 38.4 83.2 103.3 116.4 83.7 91.2 100.9 124 . A 139-8 103.0 102.7 308.2 39s.o 520.1 627.6 Consumption goods 8.8 10.4 15.5 18.0 26.0 20.8 40.0 28.6 _4. 34.8 35.0 49. 32.7 25.9 61.2 115.2 140.8 196.6 Food processing 7.5 9.0 13.3 15.5 23.5 17.9 367 24.7 29.6 29.3 .7 21.5 56.0 102.1 110.0 169.1 Beverages 0.3 o.4 0.5 1.1 1.0 0.8 0.9 0.8 1.1 1.5 1.8 1.8 2.1 2.9 3.8 4.5 7.0 7.9 Tobacco -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Textiles & clothing 0.2 0.1 0.1 0.1 0.2 0.1 0.1 0.0 0.0 0.0 0.1 0.2 0.0 0.2 0.1 3.8 -- -- Furniture -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Printing O.1 0.1 0.1 0.4 0.5 0.8 0.9 1.8 2.2 1.9 1.8 1.2 o.6 0.5 0.5 2.2 2.9 2.8 Others 0.7 . 8 1.5 0.9 0.8 1.2 1.4 1.3 1.1 2.1 2.6 2.4 1.2 0.8 0.8 2.6 20.9 16.8 Intermediate goods 28.6 28.7 19.8 18.5 73.7 77.4 69.1 50.9 48.9 54.9 72.7 79.8 62.2 67.3 233.1 2 7 321.8 383.1 Wood 1.7 2.9 2.2 1.7 7 3.6 2.o 2.9 T 7.7 8 .9 7.0 3-0 4 .6 13.1 24.9 29.3 70.4 Pulp and paper 5.6 8.6 6.5 5.7 6.6 9.8 17.0 22.9 23.5 27.8 31.5 30.8 26.9 29.8 110.4 97.3 133.0 131.6 Leather and rubber 0.9 1.1 0.8 1.2 1.3 1.0 1.1 1.1 1.1 1.6 1.0 0.1 0.0 0.0 1.3 3.4 -- -- Chemicals 2.2 2.8 3.6 2.0 3.1 3.0 4.3 2.4 3.8 4.2 6.9 10.7 7.9 3.9 31.6 27.6 50.3 65.5 Petroleum derivatives 0.7 0.8 0.6 1.1 1.7 0.9 0.8 1.2 0.9 0.7 o.4 0.9 2.8 0.7 19.9 14.2 14.3 12.4 Nonmetallic minerals 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.0 0.2 1.0 0.5 0.1 0.0 0.0 0.3 4.1 -- -- Basic metals 17.5 12.5 6.1 6.8 38.4 59.0 41.7 20.4 15.3 11.9 23.5 30.2 21.6 28.3 56.5 85.8 94.9 103.2 Capital goods 1.6 _ 5.8 1.6 1.9 3.5 5.2 7.3 4.2 8.3 11.2 16.3 10.5 8.1 9.5 13.9 22.5 57.5 47.9 Metallic products and machinery 1.3 0.9 0.8 1.1 1.0 1.4 1.9 1.8 2.9 3.8 5.5 3.9 3.9 6.7 8.2 17.1 49.0 31.9 Electrical apparatus 0.2 o.6 0.2 o.4 1.0 o.6 3.7 o.6 0.6 1.7 2.2 1.8 1.3 o.8 1.1 2.6 3.6 4.7 Transport equipment 0.0 0.1 0.1 0.5 0.1 0.1 o.4 1.1 4.1 5.1 5.3 3.6 2.8 1.9 4.6 2.7 4.9 11.3 Used equipment 0.1 4.2 0.5 0.1 1.4 3.1 1.3 0.7 0.7 o.6 3.3 1.2 0.1 0.1 0.0 0.1 -- -- a/ Includes 50.9 million of noncommercial exports. Source: Central Bank - 508 - Page 1 of 3 Table 8.25: THE HUNDRED LARGEST CHILEAN NONFINANCIAL ENTERPRISES, 1976 (Millions of U.S. dollars of December 1976) -/ Profit or (Loss) Total Net during Fiscal Ranking Enterprise Assets Sales Worth Year *1 CODELCO 2,041.9 1,177.9 1,416.5 178.6 *2 ENDESA 864.4 98.4 612.3 56.o *3 CHILECTRA 761.8 112.0 666.3 16.1 *4 CAP 722.0 202.8 350.6 ( 5.7) *5 ENAP 643.9 522.8 458.1 (24.5) *6 EMPORCHI 554.8 36.5 544.2 ( 1.8) *7 Cia. Telefonos de Chile 454.7 57.5 406.1 ( 2.3) *8 Ferrocarriles del Estado 346.2 54.7 319.6 (15.0) *9 IANSA 272.5 113.0 176.7 (21.4) *10 ENAMI 259.8 148.0 209.1 9.5 11 Papeles y Cartones 160.7 146.4 96.6 6.2 *12 Soc. Const. Est. Hospitalarios 150.8 0.3 143.1 0.0 13 COPEC 142.5 284.2 122.1 ( 0.2) *14 SOQUIMICH b 132.4 61.3 40.8 (16.5) *1_5 Celulosa Constitucion - 125.3 - 4o.o - *16 ECA 124.4 176.2 1.1 (23.2) *17 ENTEL-CHILE 98.7 26.9 60.4 10.1 *18 Minera Disputada 90.5 57.1 51.9 ( 1.5) 19 Sudamericana de Vapores 90.4 114.3 72.2 6.9 c/ *20 ENACAR 88.9 42.7 2.5 (21.3) *21 LAN-CHILE 85.1 81.3 19.7 (14.0) 22 d/ Celulosa Arauco 84.9 54.5 39.6 6.6 *23 CORFO-INSA 82.9 55.6 37.8 (10.1) 24 Mantos Blancos 73.5 41.5 58.7 8.0 *25 Soc. Const. Est. Educacionales 68.6 1.5 64.4 0.1 26 Cia. Tecno-Industrial (CTI) 68.3 31.1 26.6 ( 7.5) 27 Cia. Chilena de Tabacos 58.8 39.1 e/ 48.9 ( 2.3) 28 Electricidad Industrial 58.7 23.1 55.6 o.6 29 d/ Forestal Arauco Ltda. 56.8 12.3 43.5 1.0 30 CRAV 56.6 24.6 27.9 ( 0.4) 31 Cervecerias Unidas 54.6 44.3 e/ 34.0 3.1 32 INFORSA 53.3 32.4 38.0 3.9 *33 EMPREMAR 51.9 43.0 46.1 3.2 34 Compania Industrial 51.2 24.7 27.0 0.4 *35 Ind. Nac. del Cemento (INACESA) 50.1 5.3 28.7 1.5 36 MADECO 48.o 62.7 17.6 0.8 *37 Cia. Chilena de Navegacion 47.9 42.3 15.7 1.7 Interoceanica 38 YARUR S.A. 47.0 20.3 27.8 ( 1.8) 39 ESSO-Chile Petrolera 46.6 133.7 32.6 4.5 40 Gildemeister 44.5 28.2 13.5 ( 1.0) - 509 - Page 2 of 3 Table 8.25: THE HUNDRED LARGEST CHILEAN NONFINANCIAL ENTERPRISES, 1976 (Millions of U.S. dollars of December 1976) L/ Profit or (Loss) Total Net during Fiscal Ranking Enterprise Assets Sales Worth Year *41 E.T.C. del Estado 43.2 13.3 38.3 (38.6) 42 SODIMAC 43.1 57.3 14.4 ( 0.3) 43 CHIPRODAL 4o.5 62.4 25.2 0.3 *44 CONAF 37.1 0.9 f/ 36.3 ( 7.7) 45 Indus Level 35.6 50.3 30.7 1.8 46 Cia. Sudamericana de Fosfatos (COSAF)35.5 8.1 20.8 ( 0.3) *47 Petroquimica Chilena 35.2 15.3 17.4 2.1 48 Petroquimica DOW 33.5 33.3 18.3 1.8 49 CIC 32.0 11.5 30.1 ( 3.7) 50 Pizarreno 31.0 16-.1 20.9 0.2 51 SUMAR 30.4 30.4 20.8 ( 0.5) 52 Shell-Distribuidora 29.3 121.9 20.4 ( 0.9) 53 Firestone 28.8 8.9 16.6 ( 4.1) 54 EPERVA 27.7 22.2 25.5 9.3 55 Forestal S.A. 27.5 11.8 18.5 0.4 56 COIA 27.3 12.9 14.2 2.5 *57 SOCOAGRO 27.2 14.3 12.7 ( 1.8) 58 CAROZZI 26.0 20.4 6.9 ( o.8) 59 Soc. de Renta Urbana Pasaje Matte LI 25.1 0.9 23.6 0.9 60 SONAP 24.1 14.4 10.1 1.6 h/*61 Cemento Melon 24.0 9.9 16.2 0.4 62 Cia. Minera Valparaiso 23.8 2.0 22.6 1.0 63 El Mercurio S.A.P. 23.1 30.8 8.4 0.7 64 Armat Metalurgica 21.9 24.6 8.2 1.3 65 Lucchetti 21.5 18.3 10.3 ( 0.3) *66 Soc. Austral de Electricidad 20.9 5.6 18.7 0.2 67 PANAL 20.0 23.8 2.6 0.7 68 SINDELEN 20.0 9.1 14.9 ( 4.2) 69 Philips-Chilena 19.8 20.6 8.6 1.0 70 Tejidos Caupolican 18.1 15.9 6.2 ( 2.6) 71 Vina Concha y Toro 17.7 12.3 13.5 1.3 72 Pesquera Indo 17.3 19.5 15.7 6.3 73 Pesquera Coloso 17.2 26.2 7.2 6.7 74 Wagner Stein 16.9 12.3 3.7 ( 0.1) *75 CORMECANICA 16.8 4.0 3.9 1.6 76 ELECMETAL 16.5 5.6 11.7 o.6 77 Shell-Industria Quimica 16.4 17.6 15.9 ( 1.2) 78 Ind. Quimicas Generales 16.0 9.6 11.8 ( 0.8) 79 INCHALAM 15.8 16.4 12.3 1.1 *80 FRONTEL 15.6 3.1 12.0 0.1 - 510 - Page 3 of 3 Table 8.25: THE HUNDRED LARGEST CHILEAN NONFINANCIAL ENTERPRISES, 1976 (Millions of U.S. dollars of December 1976) -/ Profit or (Loss) Total Net during Fiscal Ranking Enterprise Assets Sales Worth Year 81 Cemento Polpaico 15.6 13.0 9.5 0.2 82 IBM-Chile S.A.C. 15.3 22.4 8.7 2.4 *83 Automotriz Arica 14.6 8.2 8.9 5.9 *84 Emp. de Viv. Econ. Prefabr. el Belloto Ltda. 14.3 3.1 12.6 0.1 85 Fiat-Chile 14.3 11.6 7.8 0.1 86 Fiap-Tome 14.2 7.8 7.7 ( 1.2) 87 CATECU S.A. 14.1 27.5 5.2 ( 0.5) 88 FANALOZA 14.1 10.5 5.7 ( 1.8) 89 Maderas y Sinteticos Masisa 14.1 5.8 8.5 0.5 *90 IRT-Colorado 14.0 18.9 5.8 0.5 91 DINAC 14.0 12.3 5.2 ( 0.9) 92 Soc. El Tattersall 13.9 9.1 3.6 0.1 93 Automotores Franco-Chilena 13.7 15.3 4.8 2.1 94 Maderas Cholguan 13.6 4.7 12.4 ( 0.4) 95 Pesquera Guanaye 13.4 19.7 7.2 3.9 96 Forestal, Constr. y Comercial del Pacifico Sur 13.3 0.9 10.7 ( 0.2) 97 Cristal-Chile 12.8 11.4 9.1 o.6 98 Naviera Interoceangas 12.8 9.3 7.5 3.1 99 Cia. Ind. Met. Cimet 12.4 2.9 8.1 ( 0.5) 100 McKay 12.3 10.8 6.6 ( 1.3) * Znterprises with more than 50 percent state ownership. a/ Peso data deflated by official CPI and converted to dollars at rate of 17.42 pesos = US$1.00. b/ Not yet operating in 1976. c/ Before taxes. d/ Former state enterprises divested to private sector in late 1976 or early 1977. e/ Sales net of tax. f/ Includes only sales of wood and miscellaneous sales. g/ Enterprise in process of liquidation. h/ Repossessed from private sector during 1977. Source: Colocadora Nacional de Valores, Informe Econ6mico, No. 18, September 1977 Table 8.26: CHILE - ENIRGY SUPPLY, CONVERSION AND DSfAN54, 1975 (Thousands of tons of petrole- m eqoi-ale-t-gTPs) PRIMARY fNEflGr SIPILY NET OUTPUT, E10ERGY CONVERSION IACILITIE F__ INAL DONECTIC DEMAND4_ BALANCE ENAP- Cotton & Poblic Induatrial Gas bNET R-aidettial Industry Tatol Doomstic hat Magallaneo C.oo.psii6 Ehectoic hleotrioity M-osf-Ot-ritgW Tatol PRODUCT Co-neroial, Oraspo-taniot & Miaiog Coasumption Trodsotlas Importi Total ElSooto fboerisa Utilitia G.eaeratit 0Y0P0RT$ Publi Oervice CRUDE UIL 115US/ 25 3723 - 41 -38352 0 U -3837 -150 NATURAL CAL Wrt-/ 69850/ 0 6982 _4321t-/ U 0 U -4324 2658 Da U 3024 O -3N24 n.s. O -17 -10 0 0.0. 66 0 0 66 0.0. PETO6IEJUM PRODUCTS $8 649 55 -429 -U 3472 87 894 1377 1124- 359 -21L0 Automobil] goaalis 1l 930 U 0 U 941 40 0 927 0 927 -Us Aniotian goA ui-c 0U 13 U U U 13 0 0 15 0 15 I2 Dometitc keronene 1 333 U A 0 334 0 370 ° 32 402 -68 Jct fuol 0 99 O0 U U 99 0 O o 0 100 -l1 OieaeI Enel 0 831 -'~' -7k 0 722 U 205 423 509 757 3-75 FP s oils 0 1126 -15 -35h>" 0 759 U 12 1i1 705 827 - 68 1PSG 488 228 -ogl. -ogl. -19 497 117 434 0 28 462 - 12 Ooofa,t-a'sd gnu2/ U 0 69 69 0 35 0 18 69 0 Naphtha U 34 0 0 -51 3 0 0 0 3 3 0 Von.u. O-yt- funi 0 01 U U U 14 G) 3 1 C) 1 U 0 15 U ?Un 140 30 1 Oth6 r -ou-fu-la 0 7 0 U 0 7 G 0.0. n.a. n.a. na. 0.0. CA01. 1015flT I0Sp 1123 0 0 -169 0 -21 -190 ° 5 72 51", 591 342 wATER POWER 1651 U 1601 0 0 -1451 -219 0 -lU50 0 1 hLECLI'UAPUY ---- ---- ---- -LO?/ -11 1669 680 npgl. 2328 -I 668 28g,P 1380 2330 -1 WOOl) n.-. .a. s.o. U U O -17 C -17 n.u. 0.0. n.a. e.. 0.0. 0.0. 'PUTAL 7P9) LPG 634 685 735 778 738 779 Gasolines and Naphthas 1,948 1,943 1,759 1,563 1,301 1,262 Kerosenes 658 755 763 647 522 592 Diesel Fuel 906 909 918 1,032 987 1,011 HFO 5 and 6 1,833 1,826 1,662 1,730 1,298 1,441 Natural Gas (Millions of m3) 19 4o 65 97 108 121 Coal (Thousands of mt) 1,976 1,629 1,630 1,656 1,312 a. Used for Thermal Generation Diesel Fuel-/ 137 132 98 110 137 HFO 5 and 6 -/ 762 743 680 609 399 Natural Gas 29 32 n.a. 31 32 Coal 534 359 519 378 262 b. Direct Consumption Diesel Fuel 769 777 820 922 850 HFO 5 and 6 1,071 1,083 982 1,111 899 Natural Gas n.a. 8 n.a. 66 76 Coal 1,442 1,270 1,111 1,278 1,050 2. Direct Consumption Ratios to GDP LPG 26 28 31 31 33 34 Gasolines and Naphthas 80 80 75 63 59 55 Kerosenes 27 31 32 26 24 26 Diesel Fuel 32 32 35 37 39 HFO 5 and 6 44 44 42 45 41 Natural Gas - 0.3 n.a. 2.7 3.4 Coal 59 52 47 51 48 3. Electri?ity Consumption (GWh)- 8,524 8,934 8,766 9,297 8,732 9,276 (Ratio to GDP) 349 366 372 374 396 404 a/ Assumes specific gravity = .84 b/ Assumes specific gravity = .95 c/ Including plant and transmission losses. - 519 - Table 8.33: CHILE - FUEL CONSUMPTION PROJECTIONS 1977 1978 1979 1980 1981 1982 1983 1984 1985 1. GDP (Millions of 1965 pesos) 24939 26435 28021 29703 31485 33374 35376 37499 39749 2. Direct consumption ratios LPG 35 34 34 34 34 34 34 34 34 Gasolines and naphthas 55 54 53 52 51 51 50 50 50 Kerosenes 28 28 28 28 28 28 28 28 28 Diesel fuel 44 46 46 46 46 46 46 46 46 Fuel oils 44 44 43 43 42 42 41 41 40 Natural gas 4.0 4.2 4.6 4.8 4.8 4.8 4.8 4.8 4.8 Coal 52 53 54 55 56 57 58 59 60 Electricity 414 424 434 444 454 464 474 484 494 3. Direct consumption.'a/ LPG 863 899 953 1010 1070 1135 1203 1275 1351 Gasolines and naphthas 1372 1427 1485 1545 1606 1702 1769 1875 1987 Kerosenes 698 740 785 832 882 934 991 1050 1113 Diesel fuel 1097 1216 1289 1366 1448 1535 1627 1725 1828 Fuel oils 1097 1163 1205 1277 1322 1402 1450 1537 1590 Natural gas 100 1ll 129 143 151 160 170 180 191 Coal 1297 1401 1513 1634 1763 1902 2052 2212 2385 Electricity 10325 11208 12161 13188 14294 15486 16768 18150 19636 4. Electric utilities consumption-/ Diesel fuel 137 137 137 137 137 137 137 137 137 Fuel oils 547 555 439 650 691 749 796 731 688 Natural gas 32 32 32 32 32 32 32 32 32 Coal 641 821 1286 1419 1447 1486 1889 1854 1833 d! 5. Total consumotion- LPG 863 899 953 1010 1070 1135 1203 1275 1351 Gasolines and naphthas 1372 1427 1485 1545 1606 1702 1769 1875 1987 Kerosenes 698 740 785 832 882 934 991 1050 1113 Diesel fuel 1234 1353 1426 1503 1585 1672 1764 1862 1965 Fuel oils 1644 1718 1644 1927 2013 2151 2246 2268 2278 (Subtotal: gasolines through fuel oils) (4948) (5238) (5340) (5807) (6086) (6459) (6770) (7055) (7343) Natural gas 132 143 161 175 183 192 202 212 223 Coal 1938 2222 2799 3053 3210 3383 3941 4066 4218 Memo item: SINAP projections LPG 790 830 878 932 981 1053 1125 1206 1286 Gasolines 1150 1200 1250 1370 1490 1585 1690 1800 1920 Kerosenes 587 627 642 674 699 724 752 778 8o6 Diesel fuel 1167 1223 1192 1267 1343 1414 1495 1589 1682 Fuel oils 1590 1674 1537 1621 1710 1727 1834 1935 1836 (subtotal: gasolines through fuel oils) (4494) (4724) (4621) (4932) (5242) (5454) (5771) (6102) (6244) a/ Units: Liquid petroleum fuels - thousand cubic meters; coal - thousand metric tons; natural gas - million cubic meters. b/ Line 1 times line 2. c/ From Table 8.32. T/ Line 3 plus line 4. Table 8.34: CHILE - THERMAL-ELECTRIC GENERATION FUEL CONSUMPTION PROJECTIONS 1977 1978 1979 1980 1981 1982 1983 1984 1985 1. Total generation (GWh)-a 10325 11208 12161 13188 14294 15486 16768 18150 19636 2. Hydro generation (GWh)-/ 6185 6536 6535 6535 7435 8335 8335 10015 11695 1975 levelg 6 6135 6135 6135 6135 7135 -1 Antuco - - - - 900 1800 1800 1800 1800 Alto Polcura 50 4oo 400 400 4ho 400 400 1400 1400 Colbun-Machicura I - - - - - - - 1680 3360 3. Thermal generation (GWh)-/ 4140 4672 5626 6653 6859 7151 8433 8135 7941 Wood and LPG 140 41405 -10 T; 140 140 1140 1140 140 Diesel and natural gas 500 500 500 500 500 500 500 500 500 Coal (Ventanar II) 800 1290 1290 1290 1290 1290 1290 1290 1290 Coal (Tocopilla) - - 907 907 907 907 1537 1537 1537 Coal (other) 1012 1028 1435 1811 1890 2001 2508 2411 2352 Fuel oil 1688 1714 1354 2005 2132 2313 2458 2257 2122 \n 4. Fuel consumption 6 3 LPG (lom) 1 1 1 1 1 1 1 1 1l Diesel fuel (103m3) 137 137 137 137 137 137 137 137 137 Natural gas (106m3) 32 32 32 32 32 32 32 32 32 Coal (103T) 641 821 1286 1419 1447 1486 1889 1854 1833 Fuel oil (l03m3) 547 555 439 650 691 749 796 731 688 a/ From Table 8.32, line 3. b/ ENDESA projections. c/ Line 1 minus line 2. Source: ENDESA, Mission estimates. Table 8.35: CHILE - ENAP PROJECTIONS OF OIL PRODUCTION AND IMPORTS (In thousands of cubic meters) LPG Crude Oil 1/ Demand LPG Total Off-Shore Product Total Growth Rate Year Domestic Imports Domestic Program Imports Imports Demand (%) 1977 316 _ 1,300 - 4,032 - 5,435 9.5 1978 311 - 1,250 - 4,380 - 5,716 5.2 1979 361 - 1,500 320 4,024 - 5,664 -0.9 3/ 1980 397 14 1,800 865 4,o64 - 6,043 6.7 1981 394 52 1,800 1,255 4,432 - 6,429 6.4 1982 391 127 1,900 880 4,557 - 6,717 4.5 1 1983 388 202 1,900 615 4,902 7,120 6.0 H 1984 385 286 2,000 430 5,000 152 7,543 5,9 1985 382 368 2,000 300 5,000 537 7,783 3.2-/ 1/ Refinery yields given as 96%. 2/ Excludes LPG derived from crude oil. 3/ Assumes conversion of major oil-burning units to coal in these years. Without such conversions, grovth rates would be 4.2% in 1979 and 9.8% in 1985. 4/ Yield projected from Straits of Magellan. Source: ENAP Table 8.36: CHILE - OIL SUPPLY PROJECTTONS 1977 1978 1979 1980 1981 1982 1983 1984 1985 l. Consumption-/ Gasolines and naphtha 1372 1427 1485 1545 1606 1702 1769 1875 1987 Kerosenes and diesel fuel 1932 2093 2211 2335 240 2606 2755 2912 3078 Fuel oils 1644 1718 1644 1927 2013 2151 2246 2268 2278 Total 4948 5238 5340 5807 6086 6459 6770 7055 7343 2. Crude oil refined-/ 5926 6273 6395 6954 7000 7000 7000 7000 7000 3. Domestic production-/ 1132- / 1250 1500 1800 1800 1goo 1900 2000 2000 4 . Crude oil imports-/ 4794 5023 4895 5154 5200 5100 5100 5000 5000 5. Product imports - - - - 241 614 925 1210 1498 6. LPG balance Refineries (8% of crude) 547 502 512 556 560 560 560 56o 560 Magallanes (ENAP) 316 311 361 397 394 391 388 385 382 Domestic Supply 863- 813 873 953 954 951 948 945 942 7. Demand" 863 899 953 1010 1070 1135 1203 1275 1351 8. LPG Imports a h/ - 86 80 57 116 184 255 330 409 a/ Actual b/ From Table 8.32, line 5. c/ .835 times line 1. d/ From Table 8.34. e/ Line 2 minus line 3. .835 x (line 1 - 7000) (.835 g/ From Table 8.32, line 5. h/ Line 6 minus line 7. Table 8.37: CHILE - OIL IMPORT PROJECTIONS IMPORTS 1977 1978 1979 1980 1981 1982 1983 1984 1985 (Thousands of cubic meters) Crude oil-/ 4794 5023 4895 5154 5200 5100 5100 5000 5000 LPG-/ -- 86 80 57 116 184 255 330 409 Other products- -- -- -- -- 241 614 925 1210 1498 (Millions of US dollars) Crude oil 407.0 426.5 415.6 437.6 441.5 433.0 433.0 424.5 424.5 LPG -- 10.2 9.5 6.8 13.8 21.9 30.3 39.2 48.6 Other products -- -- -- -- 28.3 72.2 108.8 142.3 176.2 Total 407.0 436.7 425.1 444.4 483.6 527.1 572.1 606.0 649.3 a! From Table 8. 35, line 4. b/ From Table 8. 35, line 8. c/ From Table 8. 35, line 5. - 524 - Table 8.38: NUMBER OF TRANSPORT VEHICLES - HIGHWAY, RAIL AND AIR, 1971-1975 1970 1971 1972 1973 1974 1975 Highway Vehicles 383,716 415 291 431,811 446,708 472,852 Passenger 209,683 231,864 240,726 251,017 271,280 Private cars & stat. wagons 171,025 193,468 204,729 216,122 237,174 Taxis 22,889 22,623 20,518 19,213 18,543 Buses 1' 15,769 15,773 15,479 15,682 15,563 Cargo Vehicles 135,692 142,568 746,231 149,642 153,145 Other Motorized Vehicles 3,341 9 44,854 48427 Farm Vehicles 57,634 59,587 63,592 71,173 70,°94 Animal Traction Vehicles 48,116 48,706 49,952 55,641 55,328 Tractors 9,518 10,881 13,640 15,532 15,576 Airplanes 21 20 20 17 Boeing 707 2 2 3 7 Boeing 727 2 3 3 4 HS-748 (Avro) 9 9 9 9 Caravelle 6R 3 3 3 - DC-3 5 3 2 - Rail Vehicles 17,953 171701 Locomotives 776 769 Steam 332 323 Electric 128 131 Diesel 316 315 Self-Propelled Cars 54 51 Electric 33 32 Diesel 21 19 Passenger Coaches 818 815 Cargo Cars 16,30 16, . Includes trucks, panel trucks and pick-ups. Breakdown available for 1975 includes 73,914 trucks and 79,222 panels and pick-ups. / Carriers belonging to LAN-Chile. Source: Ministry of Transport, Department of Planning and Chilean National Airlines Table 8.39: CHILE - NATIONAL CARGO MOVEMENT BY MODE OF TRANSPORT, 1968-1976 (Thousands of metric tons) 1968 1969 1970 1971 1972 1974 1974 1975 1976 Rail n.d. n.d. n.d. n.d. 19,904 21,357 22,769 19,878 n.d. State 13,316 13,536 13,967 14,112 (12,338) (12,389) (12,848) (11,066) 10,768 Private n.d. n.d. n.d. n.d. (7,514) (8,873) (9,891) (8,792) n.d. Coastal Shipping 4,631 4,782 4,633 4,561 4,795 5,294 6,234 4,901 5,214 Highways- 12,445 12,861 14,255 15,898 14,903 11,511 11,445 9,343 n.d. Air 15 16 15 15 16 14 10 7 7 Pipelines 2,194 2,546 2,767 2,923 2,927 2,884 2,751 2,460 2,733 (SONACOL) I T 0 T A L _ _ _ _ 42,545 41,o6o 43,209 36,589 - 1/ Estimate based on AADT and its composition as toll stations around Santiago. Assumes: (1) load factors as follows: 1968-1972 60%; 1973-1975 50%; and (2) metropolitan area covered by toll stations accounts for 60% of AADT. n.d. = no data Source: ODEPLAN, Ministry of Transport, and mission estimates - 526 - Table 8.40: CHILE - NATIONAL PASSENGER MOVEMENT BY MODE OF TRANSPORT, 1970-1975 (Thousands of Passengers) 1970 1971 1972 1973 1974 1975 Rail 21,165#- 20,692-/ 24,966 28,321 26,990 20,622 Buses-/ 17,410 21,460 19,937 16,160 14,989 14,132- Air 430 558 613 585 380 306 T o t a 1 39,005 42,710 45,516 45,o66 42,359 35,060 1/ State Railways only for 1970 and 1971. Includes private railways from 1972 on. 2 Includes only inter-urban and rural traffic; excludes urban traffic. 3/ Estimated on the basis of the first semester's movement. Source: ODEPLAN - 527 - Table 8.41: CHILE - HIGHWAY VEHICLE FLEET 1968-1975 AND TRUCK CAPACITY (1975) Automobiles and Servicel/ Year Station Wagons Buses Vehicles Trucks Total 1968 130,228 12,614 57,211 54,463 254,557 1969 150,853 13,384 61,522 60,544 286,303 1970 176,066 15,956 71,293 71,293 334,618 1971 193,914 15,769 73,643 73,642 356,368 1972 216,091 15,773 77,778 77,778 387,360 1973 225,247 15,479 80,649 80,648 402,023 1974 235,335 15,682 83,429 83,429 417,875 1975 255,717 15,563 77,669 71,987 412,823 Distribution of Truck Capacity, 1975: Capacity in Tons Number Percent 1.0 - 4.9 14,370 20 5.0 - 7.4 30,895 43 7.5 - 9.9 15,088 21 Over 10 11,496 16 71,849 100 Annual Average Growth Rate (Percent): 1968 - 1975 -- 10.2 1971 - 1975 -- 3.7 1/ Includes vans, four-wheel drive vehicles, ambulances, pick-ups, garbage and water trucks. Source: Luis Erazo y Asociados Informe Final Pr6stamo 558-CH, 1977 Table 8.42: GROWTH OF THE HIGHWAY SYSTEM, 1970-1977 (kilometers) 1970 1971 1972 1973 1974 1975 1976 1977 Concrete 3,284 3,400 3,412 - 3,804 3,444 3,614 3,611 3,697 Asphalt 4,450 4,963 5,118 5,217 5,417 5,415 5,398 5,552 Stabilized Gravel 25,302 25,605 26,472 28,760 28,798 31,590 32,263 32,956 Natural Gravel or Earth 13,522 13,683 13,254 14,062 12,470 17,503 19,120 18,521 SUB-TOTAL 46,558 47,652 48,258 51,444 50,129 58,122 60,392 60,726 OD Track 14,042 14,427 15,398 14,624 19,987 17,197 15,418 14,174 l Total 60,600 62,079 63,656 66,o69 70,116 75,319 75,810 74,900 Source: Ministry of Public Works; and Luis Erazo y Asociados Informe Final Prgstamo 558-CH, 1977 - 529 - Table 8.43: CHILE - ANNUAL AVERAGE DAILY TRAFFIC BY TOLL STATION, 1968-1977 (No. of vehicles) Toll Station 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 Lagunillas 802 907 1,012 1,176 1,o45 911 790 608 594 486 Chacabuco 665 642 619 730 960 1,121 1,128 994 1,132 1,229 Lampa 2,964 2,929 3,184 3,504 3,357 2,949 2,719 2,221 2,135 2,302 Zapata 3,110 3,256 4,051 5,589 5,461 5,293 4,683 3,538 3,546 4,014 Pomaire 3,919 3,687 3,945 4,419 4,384 4,169 3,695 3,131 3,169 3,554 Angostura 4,788 5,260 5,741 6,549 6,471 6,302 5,755 4,696 4,670 5,274 Perquilauquen 1,600 1,750 1,901 2,123 2,098 1,936 1,717 1,534 1,458 _ TOTAL 17,848 18,431 20,426 24,090 23,776 22,681 20,487 16,722 16,704 18,527 Annual % Change - + 3.2% +10.8% +17.9% - 1.3% - 4.6% - 9.7% -18.4% - C.o% +10.9% Composition of Vehicles (Percent) Passenger Cars n.d. n.d. 60 63 65 66 63 n.d. 59 60 Buses n.d. n.d. 10 9 8 6 8 n.d. 11 11 Two-Axle Trucks n.d. n.d. 25 23 22 22 22 n.d. 19 19 Three-Axle Trucks n.d. n.d. 2 2 2 2 3 n.d. 4 4 Four-Axle Trucks n.d. n.d. 3 3 3 3 3 n.d. 6 6 Source IEA y Asociados, Informe Final Pr6stamo 558 CH, 1977; Ministry of Transport, Boletin Estadistico, 1970/74. n.d. = no data Table 8.44: CHILE - ESTIMATED ROAD USER CHARGES, 1970-1976 (Millions of 1976 US dollars) 1970 1971 1972 1973 1974 1975 1976 Vehicle Registration Fees 7.3 9.4 11.5 9.5 7.3 8.6 6.5 Tolls 4.0 4.0 2.8 1.5 4.8 11.2 11.5 Import Duties 4.6 4.0 11.8 19.7 29.9 50.0-1/ 100.0-/ Fuel Taxes 38.5 38.7 39.8 50.6 156.0 205.6 240.0o Total 54.4 56.1 65.9 81.3 198.0 275.4 358.0 ° 1/ Estimate Source: Controller General of the Republic Table 8.45: CHILE - SOURCES AND USES OF PUBLIC HIGHWAYS EXPENDITURES, 1970-1976 (Millions of 1976 US dollars) 1970 1971 1972 1973 1974 1975 1976 Sources of Funds: Central Budget Funds ) 165.4 47.7 36.2 68.3 66.9 52.5 51.3 Regional Budget Allocations ) - 16.9 13.0 Highway Tolls 4.o 4.o 2.8 1.5 4.8 11.2 11.5 Foreign Borrowings 8.5 5.0 8.6 5.7 2.7 3.0 2.6 Total Funds 80.8 75.9 63.9 58.5 172.9 68.8 63.3 Expenditures: Investment in Roads 58.8 49.6 26.7 22.4 122.4 39.1 35.9 Maintenance!/ 10.6 15.5 17.8 17.8 36.8 21.3 19.9 Debt Service 2.0 2.5 3.5 4.0 5.2 5.2 5.6 Other (Studies, Equipment, etc.) 9.4 8.3 15.9 14.3 8.5 3.2 1.9 Total Expenditures 80.8 75.9 63.9 58.5 172.9 68.8 63.3 a/ Excludes allowances for depreciation of equipment. Source: Ministry of Public Works - 532 - Table 8.46: CHILE - HIGHWAY VEHICLE FUEL CONSUMPTION, 1968-1976 (Millions of US Gallons) Year Gasoline Diesel Total 1968 364.84 203.16 568.00 1969 4o4.o6 218.22 622.28 1970 437.34 227.54 664.88 1971 485.58 242.36 727.94 1972 479.82 242.09 721.91 1973 431.04 202.83 633.87 1974 391.82 221.47 613.29 1975 317.74 216.19 533.93 1976 313.19 233.18 546.37 Annual Rate of Growth 1968-1976 = -0.5% (Total for gasoline and diesel) Source: - Ministries of Mining and Public Works Table 8.47: CHILE - RAILROAD OPERATING STATISTICS, 1969-1977 1969 1970 1971 1972 1973 1974 1975 1976 1977p- (Millions of Pesos of December 1969) Revenues 636.4 567.5 580.7 439.3 434.4 692.1 483.0 458.7 530.5 Passenger 145.1 151.1 162.1 144.4 102.7 1663 162.0 155.1 131.9 Cargo 428.1 366.6 369.2 268.2 299.7 494.9 287.6 282.4 322.8 Other 63.2 49.8 49.3 26.7 32.1 30.9 33.4 21.3 75.8 Expenses 876.5 1035.6 1351.4 867.3 608.6 1101.3 782.7 764.5 614.4 Personnel 642.8 776.8 967.6 729.5 468.4 683.2 503.6 494.1 375.4 Remunerations (413.6) (492.6) (616.6) (514.0) (339.5) (428.4) (283.0) (245.9) (na) Pensions and social security (229.2) (284.2) (351.0) (215.5) (128.9) (254.8) (220.6) (248.2) (na) Materials 164.0 198.5 250.7 85.6 96.9 364.6 203.8 156.2 152.7 Interest 32.0 37.4 108.9 39.3 31.9 13.2 30.5 18.6 4.5 Other 37.7 22.9 24.3 12.9 11.4 40.3 44.8 95.6 81.8 Loss before depreciation 240.1 468.1 770.7 428.0 174.2 409.2 299.7 305.8 83.9 Cargo traffic (Millions of ton-km) 2174 2096 2251 2158 2157 1923 1468 1657 Cargo revenue per ton- km (Dec 1969 pesos) .197 .175 .164 .124 .138 .257 .195 .171 Passenger traffic (Millions of pass.-km) 2209 2253 2480 3030 3463 2875 2095 2199 Passenger revenue per pass. -km (Dec 1969 pesos) .o66 .o67 .o65 .o48 .030 .058 .077 .066 p/ Projected Source: FFCCE; Mission estimates Table 8.48: CHILE- INTERNATIONAL CARGO MOVEMENT THROUGH CHILEAN PORTS, 1970-1976 (Millions of tons) 1970 1971 1972 1973 1974 1975 1976 Ports Administered by EMPORCHI International Commerce 2.49 2.64 2.76 3.23 3.30 2.83 3.72 Loaded 0.93 1.o8 0.75 0.76 1.25 1.32 1.98 Unloaded 1.56 1.56 2.01 2.47 2.05 1.51 1.74 Transit 0.18 0.29 0.29 0.21 0.33 0.41 0.33 Loaded 0.09 0.12 0.12 0.13 0.12 0.13 0.14 Unloaded 0.09 0.17 0.17 0.08 0.21 0.28 0.19 Privately Owned Ports 13.86 15.45 n.a. 13.84 15.12 13.54 n.a. Loaded 11.00 11.49 9.49 11.13 10.51 Unloaded 2.86 3.96 4.35 3.99 3.04 T 0 T A L 16.53 18.38 17.28 18.75 16.78 1/ Privately owned ports are dedicated mainly to minerals and petroleum. Source: Ministry of Transport and EMPORCHI Table 8.49: CHILE - TRAFFIC HANDLED BY EMPORCHI PORTS, 1970-1977 (Thousands of metric tons) 1970 1971 1972 1973 1974 1975 1976 1977 Imports 1,563 1,562 2,012 2,468 2,045 1,505 1,743 1,647 Exports 933 1,081 753 759 1,247 1,319 1,977 2,566 Coastal 1,095 1,182 964 1,046 1,245 883 911 917 Transit 178 290 295 206 323 404 333 405 Total 3,769 4,115 4,024 4,479 4,860 4,111 4,964 5,535 By Port: Arica 237 257 222 160 252 247 215 Iquique 133 160 1o6 171 343 192 274 Antofagasta 628 712 643 698 911 747 802 Coquimbo 78 103 117 189 58 41 44 Valparaiso 1,408 1,488 1,430 1,383 1,479 1,187 1,226 San Antonio 849 834 942 1,169 920 939 1,344 Talcahuano N/A N/A N/A N/A N/A 275 344 San Vincente 202 218 243 296 501 288 511 Puerto Mott 88 109 134 225 198 122 128 Cuaca Buco 51 64 58 59 56 46 69 Punta Arenas 142 151 144 124 137 97 90 Source: Empresa Portuaria de Chile Table 8.50: COASTAL SHIPPING BY TYPE OF CARGO, 1968-1975 (Thousands of metric tons) Total for General Solid Bulk Liquid Bulk Coal Total Ports Cargo Cargo Cargo All Ports Administered by EMPORCHI 1968 348 1,304 2,282 696 4,630 1,347 1969 297 1,187 2,762 536 4,782 1,132 1970 251 1,313 2,448 620 4,632 1,095 1971 276 1,382 2,418 484 4,56o 1,182 1972 247 1,271 3,0o44 233 4,795 964 1973 265 1,315 3,319 396 5,295 1,044 1974 298 1,814 3,617 5o4 6,233 1,246 1975 144 1,350 3,007 401 4,902 881 Source: Asociacion Nacional de Armadores Table 8.51: CHILE - NATIONAL AND INTERNATIONAL AIRLINES TRAFFIC, 1970-1976 P a s s e n g e r s C a r g o National International National International Year Passenger Passenger Passengers km Passengers km Tons Ton-km Tons Ton-km (thousand) (million) (thousand) (million) (thousand)(million) (thousand)(million) 1970 430 431 145 437 15 24 20 24 1971 541 559 156 595 15 24 16 26 1972 563 613 136 570 16 26 21 34 1973 510 584 127 563 14 22 19 37 1974 342 380 200 842 10 15 15 44 1975 318 401 227 914 7 12 12 47 1976 284 375 225 884 7 12 15 66 Source: Ministry of Transport - 538 - Table 8.52: CHILE - HOUSING STARTS - PUBLIC AND PRIVATE SECTORS, 1965-77 Public Percent of Private Percent of Year Sector Total Sector Total Total 1964 6,938 37 11,838 63 18,776 1965 36,486 72 13,861 28 50,347 1966 13,433 51 13,132 49 26,565 1967 28,285 67 14,191 33 42,476 1968 32,730 65 17,728 35 50,458 1969 14,46o 42 20,286 58 34,746 1970 5,914 25 17,792 75 23,706 1971 76,079 87 10,893 13 86,969 1972 20,312 60 13,752 40 34,o64 1973 20,877 59 14,484 41 35,361 1974 3,297 16 17,084 84 20,381 1975 3,758 23 12,740 b/ 77 16,498 1976 24,022 68 11,519 - 32 35,538 1977 14,057 60 9,456 40 23,513 Annual Av. 21,474 60 14,196 40 35,670 a/ Private sector housing permits in 60 municipalities believed to account for more than 90 percent of total construction. b/ Sample raised to 80 municipalities. Source: INE - 539 - IX. PRICES - 540 - Table 9.1: CONSUMER PRICE INDEX, END OF YEAR, 1951-1970 (December 1969=100) be~r dTdex I Change 1951 0,675 1952 Q ,818 21.2 1953 1,22 49.8 1954 1,94 58.7 1955 3,67 88.7 1956 5,30 44.6 1957 6. 56 23.7 1958 8,18 24,6 1959 10,88 33.1 1960 11.47 5.4. 1961 12,55 .9,4 1962 16414 28,6 1963 23,54 45.9 1964 33,05 40.4 1965 42,07 27.3 1966 49.61 17.9 1967 60,47 21.9 1968 77,34 27,9 1969 100l 0 29,3 1970 134,9 34.9 Sources; Ricardo FXren.ch-Davis, op, cit,; INE, - 541 - Table 9.2: CONSUMER AND WHOLESALE PRICE INDICES, ANNUAL AVERAGES 1951-1970 (December 1969=100) Consumer Prices Wholesale Prices Year Index % Change Index % Change 1951 o.648 o.643 1952 0.789 21.8 0.800 24.4 1953 0.994 26.0 0.986 23.2 1954 1.58 59.0 1.54 56.2 1955 2.79 76.6 2.75 78.6 1956 4.59 64.5 4.53 64.7 1957 5.94 29.4 6.29 38.9 1958 7.43 25.1 7.97 26.7 1959 10.33 39.0 10.63 33.4 1960 11.51 11.4 11.20 5.4 1961 12.35 7.3 11.29 0.8 1962 14.o6 13.8 12.22 8.2 1963 20.60 46.5 18.79 53.8 1964 30.33 47.2 28.29 50.6 1965 39.08 28.8 35.18 24.4 1966 48.01 22.9 43.23 22.9 1967 56.72 18.1 51.58 19.3 1968 71.83 26.6 67.32 30.5 1969 93.84 30.6 91.89 36.5 1970 124.4 32.6 125.0 36.0 Source: Ricardo Ffrench-Davis, Politicas Economicas en Chile: 1952-1970, CEPLAN, Santiago, 1973. Table 9-3a: CHILE - IBRD ADJUSTED CONSUMER PRICE INDEX, 1970-1978 (December 1969 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 106.8 136.9 4,218 20,035 85,709 225,204 353,396 February 112.2 137.8 5,251 23,341 94,366 238,266 361,877 March 116.2 139.5 228.2 1,070 5,996 28,289 107,105 252,800 372,372 April 119.0 143.0 6,912 34,173 119,851 264,682 382,054 May 121.5 147.0 7,511 39,641 131,596 274,740 390,077 June 123.9 150.0 297.1 2,100 9,073 47,49o 147,783 283,806 398,028 July 126.3 10,120 51,907 160,935 294,875 408,208 August 129.5 11,221 56,530 169,787 304,900 419,729 September 132.9 175.0 391.7 2,400 12,660 61,747 182,691 316,182 431,886 October 134.1 2,703 15,056 66,934 194,931 329,461 439,919 November 134.9 3,469 16,516 72,423 202,338 336,709 445,716 December 134.9 206.9 731.9 3,696 17,590 77,565 212,657 347,147 452,307 Annual Average 124.4 167.8 412.2 2,316 10,177 48,339 150,812 289,064 404,839 Percent Change 34.9 145.6 461.9 339.4 375.0 212.0 91.7 40.1 December - December Change (%) 34.9 53.4 253.7 405.0 375.9 341.0 174.2 63.2 30.3 Source: IBRD Report No. 966-CH, December 24, 1975; INE Table 9.3b: CHILE - IMPLICIT UC ADJUSTED CONSUMER PRICE INDEX, 1970-1978 (December 1969 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 197d January 107.1 142.6 191.2 628 4,546 21,598 92,362 242,686 381,397 February 112.8 144.2 206.4 661 5,660 25,161 101,691 256,761 390,492 March 117.2 146.6 219.8 706 6,464 30,495 115,419 272,424 401,909 April 120.4 150.7 231.8 817 7,453 36,838 129,154 285,228 412,401 May 123.3 155.3 243.8 998 8,101 42,733 141,811 296,066 421,018 June 126.1 159.0 257.2 1,215 9,786 51,194 159,254 305,836 429,398 July 128.9 159.9 273.2 1,398 10,912 55,955 173,428 317,764 439,723 August 132.6 162.3 337.0 1,643 12,101 60,935 182,966 328,568 452,535 w September 136.5 164.6 471.3 1,916 13,650 66,541 196,872 340,725 465,388 October 138.1 167.8 473.3 3,592 16,230 72,130 210,062 355,036 474,007 November 139.3 172.6 509.2 3,804 17,805 78,o45 218,045 362,846 480,362 December 139.9 178.0 556.o 3,984 18,962 83,586 229,165 374,095 487,522 Annual Average 126.9 158.6 326.3 1,789 10,972 52,101 162,519 311,503 436,346 Percent Change 35.3 25.0 105.7 448.3 513.3 374.9 211.9 91.7 40.1 December - December Change (%) 39.9 27.2 212.4 616.5 375.9 340.8 174.2 63.2 30.3 Source: Mission estimates derived from real wage data presented in various issues of Comentarios Sobre la Situacion Econ6mica and other publications of the Department of Economics of the University of Chile. Table 9.3c: CHILE - OFFICIAL CONSUMER PRICE INDEX, 1970-1978 (December 1969 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 106.8 136.9 171 479 3,012 14,308 61,189 160,859 252,757 February 112.2 137.8 182 499 3,750 16,669 67,369 170,230 258,814 March 116.2 139.5 187 530 4,282 20,203 76,464 180,620 266,320 April 119.0 143.0 198 584 4,937 24,405 85,563 189,109 273,245 May 121.5 147.0 206 697 5,367 28,310 93,948 196,34o 278,983 June 123.9 150.0 210 806 6,483 33,915 105,504 202,879 284,670 July 126.3 150.4 220 929 7,229 37,069 114,893 210,800 291,950 August 129.5 152.0 269 1,088 8,017 40,368 121,213 217,966 300,190 September 132.9 153.6 329 1,271 9,043 44,082 130,425 226,096 308,885 October 134.1 156.2 379 2,384 10,752 47,785 139,163 235,592 314,630 November 134.9 160.4 401 2,520 11,795 51,704 144,451 240,772 318,720 December 134.9 164.8 434 2,640 12,562 55,374 151,866 248,288 323,501 Annual Average 124.4 149.3 265.5 1,202 7,269 34,510 107,645 206,630 289,389 Percent Change 20.1 77.8 352.8 504.7 374.8 211.9 92.0 40.1 December - December Change (%) 34.9 22.1 163.4 508.1 375.9 340.8 174.2 63.5 30.3 Source: INE Table 9.4: CHILE - WiHOLESALE PRICE INDEX, 1965-1978 (December 1969 = loo) Annual Percent Dec.-Dec. Years Average Chan/ge Change Jan. Feb. March April May June July Aug. Dept. Oct. Nov. Dec. 1965 35.18 1966 43.23 22.9 1967 51.58 19.3 1968 67.32 -30.5 33.1 1969 91.89 36.5 39.4 1970 125.0 36.o 33.7 108.8 115.0 117.2 120.8 123.3 125.3 127.5 130.7 132.3 132.7 133.2 133.7 1971 147.5 18.0 21.4 137.6 137.9 140.2 141.9 144.5 146.6 147.3 149.1 150.8 155.4 156.8 162.4 1972 250.8 70.0 143.3 170.8 180.1 386.1 196.8 201.9 207.6 212.1 253.7 305.2 340.6 360.3 395.1 1973 1,534 511.6 1,147.1 440 456 492 506 600 653 729 805 948 3,244 4,625 4,927 1974 17,313 1,028.6 570.6 6,723 7,917 8,833 10,673 11,324 14,242 17,776 19,462 22,314 25,267 30,186 33,044 1975 100,767 482.0 410.9 39,821 46,olo 52,722 66,458 77,260 93,o62 107,558 118,284 130,223 146,530 162,454 168,822 3976 323,621 221.2 151.5 191,117 212,843 234,252 260,357 297,079 329,079 353,743 373,397 397,870 403,365 405,780 424,572 1977 602,080 86.o 65.0 453,116 494,771 533,786 563,275 585,659 603,499 622,354 645,425 656,918 674,322 691,066 700,678 1978 860,735 42.9 38.9 715,905 743,959 776,600 805.494 829,209 852,661 871,615 903,321 933,095 953,623 970,265 973,027 Source: Instituto Nacional de Estadfsticas - 546 - Table 9.5: CHILE - INDEX OF WHOLESALE PRICES BY SECTORS, ANNUAL AVERAGES, 1960-1978 (1970 = 100) Domestic Products General Imported Year Index Agricultural Mining Industry Total Products 1960 9.0 8.5 10.7 8.1 8.4 10.3 1961 9.0 8.5 10.6 8.2 8.5 10.5 1962 9.8 9.6 11.0 8.9 9.3 10.9 1963 15.0 13.8 16.6 13.3 13.7 18.3 1964 22.6 21.0 23.3 20.4 20.8 27.2 1965 28.1 28.8 34.2 26.1 27.8 29.1 1966 34.6 36.2 42.6 33.4 35.2 32.9 1967 41.2 41.9 49.3 41.1 42.1 39.1 1968 53.8 52.2 60.0 53.7 53.7 54.2 1969 73.5 73.6 77.5 72.8 73.2 74.4 1970 100.0 100.0 100.0 100.0 100.0 100.0 1971 117.9 125.5 132.7 113.9 116.7 122.2 1972 200.5 261.9 228.1 189.4 203.4 190.8 1973 1,225.8 1,435.8 1,367.2 1,145.7 1,204.8 1,298.4 1974 13,838 10,627 21,924 12,250 12,372 18,824 1975 80,532 70,907 126,899 63,826 72,505 102,752 1976 258,618 245,286 370,218 201,398 236,459 309,859 1977 481,158 439,731 641,378 377,234 432,261 619,175 1978 687,813 592,272 969,260 576,090 626,896 835,116 Source: INE Table 9.6: IMPLICIT GDP DEFLATORS BY SECTOR, 1966-1977 (1965 = 100) 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 GDP at Market Prices 130.4 167.2 307.9 427.3 528.0 978.7 5,155 38,849 190,802 638,600 1287,894 Agriculture, Forestry and Fishing 116.5 144.4 156.3 236.1 345.6 452.4 807.8 4,497 25,821 111,157 531,722 1306,843 Mining 149.8 177.5 239.5 371.0 444.6 378.9 824.5 4,840 34,786 140,808 419,478 545,218 Manufacturing 124.3 165.5 238.1 331.6 478.8 525.8 920.6 5,309 38,020 201,503 690,937 1274,444 Construction 133.0 159.0 201.3 261.3 353.6 537.1 1,130.9 4,193 29,347 129,690 472,957 982,271 Electricity, Gas, Water and Sanitary Services 127.7 147.3 206.1 320.4 432.9 437.8 566.1 1,231 16,845 115,429 496,218 977,627 Transport, Storage and Communications 141.0 186.3 241.2 331.1 430.7 524.4 1,077.7 5,106 35,663 173,431 541,331 1118,838 Wholesale and Retail Commerce 130.9 170.9 209.5 285.9 397.8 510.6 1,070.2 6,227 55,222 311,637 966,511 1828,226 Banking, Insurance and Real Estate 128.9 167.0 227.3 306.6 425.3 524.8 682.1 5,287 42,362 190,933 658,792 1641,619 Housing 124.1 154.5 197.7 253.2 321.1 431.3 616.4 3,162 20,695 98,259 315,745 585,874 Public Administration and Defense 138.4 175.3 233.4 317.2 541.1 799.7 1,579.1 6,204 41,594 196,435 643,419 1540,410 Services 134.2 181.9 240.1 340.3 483.1 747.8 1,297.5 5,528 44,373 194,434 675,717 1540,488 Source: Calculated from Tables 2.1 and 2.2 Table 9.6a: RATIO OF IMPLICIT SECTORAL DEFLATORS TO OVERALL GDP DEFLATOR, 1966-1977 1966 1967 1968 1969 11970 1971 1972 1973 1974 1975 1976 1977 Agriculture, Forestry and Fishing .89 .86 .71 .77 .81 .86 .83 .87 .66 .58 .83 1.01 Mining 1.15 1.06 1.09 1.20 1.04 .72 .84 .94 .90 .74 .66 .42 Manufacturing .95 .99 1.05 1.08 1.12 1.00 .94 1.03 .98 1.06 1.08 .99 Construction 1.02 .95 .92 .85 .83 1.02 1.16 .81 .76 .68 .74 .76 Electricity, etc. .98 .88 .94 1.04 1.01 .83 .58 .24 .43 .60 .78 .76 Transport, etc. 1.08 1.11 1.10 1.08 1.01 .99 1.10 .99 .92 .91 .85 .87 Wholesale and Retail Commerce 1.00 1.02 .96 .93 .93 .97 1.09 1.21 1.42 1.63 1.51 1.42 Banking, etc. .99 1.00 1.04 1.00 1.00 .99 .70 1.03 1.09 1.00 1.03 1.27 Housing .95 .92 .90 .82 .75 .82 .63 .61 .53 .51 .49 .45 Public Administration and Defense 1.06 1.05 1.07 1.03 1.27 1.51 1.61 1.20 1.07 1.03 1.01 1.20 Services 1.03 1.09 1.10 1.11 1.13 1.42 1.33 1.07 1.14 1.02 1.06 1.20 GDP 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Source: Table 9.6 C. ~Table 9.7: IMPLICIT GDP DEFLATORS BY EXPENDITURE CATEGORY, 1966-1977 (1965 = 100) Expenditure 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 Consumption 126.1 164.9 214.7 295.2 417.4 523.9 958.4 4,877 38,083 206,294 678,574 1381,472 a/ Personal (124.8) (163.4) (212.6) (292.4) (406.7) (499.5) (911.5) (4,870) (38,002) (211,080) (697,828) (141.0,539)-a1 General Government (135.0) (174.9) (228.7) (313.9) (486.8) (684.2) (1,268.9) (4,916) (38,534) (180,168) (582,045) (1216,211) Gross Domnestic Investment 129.7 161.9 211.7 288.4 389.7 487.1 993.5 5,557 37,787 142,199 467,928 n.a. Fixed Investment (130.8) (161.9) (212.0) (291.4) (390.5) (486.7) (991.5) (5,699) (37,213) (181,210) (570,537) (1085,878) Change in Inventories (124.0) (162.8) (207.4) (264.3) (383.3) (491.7) (1,037.7) (3,604) (46,142) (328,546) (897,091) a/ Exports 146.3 173.0 231.3 374.1 478.3 467.0 886.5 5,765 43,835 208,970 640,009 1062,436 Imports 119.6 153.3 198.2 277.9 377.6 413.5 808.2 4,358 38,409 271,011 800,205 1354,300 GDP at Market Prices 130.3 167.2 218.9 307.9 427.3 528.0 978.7 5,155 38,849 190,802 638,600 1287,894 a/ inventory change is included in personal consumption in 1977. Source: Tables 2.3 and 2.4 - 550 - Table 9.8: IBRD INDEX OF CHILE IMPORT PRICES, 1955-1977 (1969 = 100). Year Index 1955 98.6 1956 100.7 1957 101.6 1958 98.6 1959 97.4 1960 97 4 1961 95.8 1962 95*3 1963 97-4 1964 100.0 1965 100.9 1966 101.9 1967 101.6 1968 97.9 1969 100.0 1970 108.9 1971 114.0 1972 124.7 1973 163.8 1974 227.3 1975 233.6 1976 247.7 1977 286.4 1978 310.8 a/ Calculated from IBRD price indices for manufactured exports (SITC 5-8) of developed countries, agricultural commodities, 34 commodities excluding petroleum, and petroleum with the weights 0.6, 0.2, 0.1, and 0.1, respectively. Source: IBRD, Memo of October 21, 1977, entitled "Commodity Price Forecasts - Mid-Year Updating," Table 4; Monthly Commodity Price Data and Memo of April 12, 1979, entitled "Annual Review of Commodity Price Forecasts;" and mission estimates - 551 - a/ Table 9.9: CHILE - MINIMUM WAGES AND SALARIES, 1953-1970 (Current escudos) Vital Agricultural Minimum Salary Minimum Wage d/ SMA/SV SM/SV Year (Sv) - wage (SMA) c/ (SMT) - (%) (%) 1952 72.84 - _ _ 1953 90.60 _e/ _ e/ 1954 139.20 36.53 _ 26 1955 220.80 54.76 _ 25 - 1956 323.47 81.38 146.00 25 45 1957 421.03 109.55 189.80 26 45 1958 505.24 135.53 233.60 27 46 1959 690.60 203.80 321.20 30 47 1960 690.60 247.47 321.20 36 47 1961 86o.o4 293.83 411.72 34 48 1962 970.92 339.45 464.28 34 48 1963 1,239.84 444.94 592.76 36 48 1964 1,802.76 662.48 861.40 37 48 1965 2,495.04 1,043.17 1,191.36 42 48 1966 3,141.24 1,421.31 1,497.96 45 48 1967 3,675.24 1,752.00 1,752.00 48 48 1968 4,480.08 2,135.62 2,135.62 48 48 1969 5,730.00 2,731.29 2,731.29 48 48 1970 7,404.00 4,380.00 4,380.00 59 59 a/ The SV is legally a monthly rate, while the SMA and SM are hourly rates. The numbers shown are annualized weighted averages of the respective minima prevailing during the year. b/ Sueldo vital for industry and commerce, Department of Santiago. c/ Salario mnimo agrcola for Province of Santiago. The SMA for 1959 is adjusted for introduction of the semana corrida (literally, the "continuous week") by which a person working six days is paid for seven. Workers in industry and commerce had enjoyed this benefit since 1948. d/ Salario minimo for industry and commerce nationwide. e/ Did not exist for entire year. Source: Ricardo Ffrench-Davis (op. cit.), Table 71 - 552 - Table 9.9a: CHILE - REAL MINIMUM WAGES AND SALARIES, 1953-1970a! (Escudos of December 1969) Year SV SMA SM 1952 9,048 1953 8,979 - 1954 8,oog 2,102 1955 7,251 1,798 - 1956 6,810 1,713 3,074 1957 6,656 1,732 3,000 1958 6,657 1,786 3,078 1959 6,563 1,937 3,052 1960 5,881 2,108 2,735 1961 6,802 2,324 3,256 1962 6,742 2,357 3,324 1963 5,968 2,142 2,853 1964 5,945 2,185 2,840 1965 6,386 2,670 3,049 1966 6,543 2,961 3,120 1967 6,480 3,089 3,089 1968 6,238 2,973 2,973 1969 6,lo6 2,911 2,911 1970 5,954 3,522 3,522 a/ Average nominal rates shown in Table 9.9 deflated by CPI. - 553 - Table 9.10: CHILE - FAMILY ALLOWANCES PER DEPENDENT BY MAJOR FUNDS, 1952-1970 (Current escudos) Net Annual Equivalent a/ SSS/EMPART CEPP/EMPART Year SSS CEPP EMPART (%) (%) 1952 _ 7.44 9.60 - 78 1953 - 7.94 lo.8o - 74 1954 2.19 11.88 15.72 14 76 1955 8.11 18.84 24.60 33 77 1956 15.60 38.40 40.56 38 95 1957 21.87 53.88 60.00 36 90 1958 23.23 56.40 76.80 30 73 1959 33.63 67.20 95.82 35 70 1960 33.63 67.20 109.56 31 63 1961 38.84 77.28 126.72 31 63 1962 39.49 78.49 128.70 31 61 1963 45.08 88.92 157.20 29 57 1964 58.94 132.o6 222.o6 27 59 1965 114.43 180.00 310.80 37 58 1966 159.51 234.00 404.52 39 59 1967 208.05 288.00 512.52 41 56 1968 260.06 348.oo 648.oo 40 53 1969 346.75 444.oo 925.02 37 48 1970 520.12 816.00 1,237.02 42 66 a/ In several years, retroactive adjustments or bonuses were declared late in the year, and in the case of EMPART an additional end-of-year distribution was made when the account out of which family allowances were paid was found to be in surplus. In these cases, the amounts received were divided among the year received and the year when the benefits were accrued. Source: Ricardo Ffrench-Davis (op. cit.), Table 72 - 554 - Table 9.10a: CHILE - REAL FAMILY ALLOWANCES PER DEPENDENT PER YEAR, 1952-1970 (Escudos of December 1969) Net Annual Equivalent - Year SSS CEPP EMPART 1952 924 1,193 1953 - 787 1,070 1954 126 684 904 1955 266 619 808 1956 328 808 854 1957 346 852 948 1958 306 743 1,012 1959 320 639 911 1960 286 589 933 1961 307 627 1,002 1962 274 545 894 1963 217 428 757 1964 194 435 732 1965 293 461 795 1966 332 487 843 1967 367 508 904 1968 362 468 902 1969 370 473 986 1970 418 656 994 a/ See note, Table9.9 Source: Ricardb Ffrench.-Davis, (op. cit.) - 555 - Table 9.11: CHILE - MINIMUM WAGES AND SALARIES, BY MONTH OF ADJUSTMENT, 1969-78 (Current escudos/pesos)./ Vital Minimum Minimum Salary Wage b/ Income Year Month (per Month) (per Month)- (per Month) 1969 January 477.50 224.49 1970 January 617.41 360.00 1971 January 832.98 600.00 1972 January 1,017.00 900.00 October 2,033.92 1,900.80 1973 March (3,270.54) -' (3,056.49)-c October 12,000 1974 January 18,000 May 29,000 July 39,000 October 48,400 December 64,900 1975 March 106,400d/ June 182,200 September 225,680 December 288.90 1976 March 381.35 April 431.35 June 599.58 September 755.47 December 891.45 1977 March 1,150.08 May 1,196.08 July 1,411.37 December 1,665.42 1978 January 2,000.00 March 2,160.00 July 2,376.00 December 2,661.12 a/ Data through September 1975 are given in escudos; subsequent data are in pesos (1 peso = 1,000 escudos). b/ Daily rate multiplied by 30. c/ Includes 60.8 percent general wage and salary adjustment. d/ Includes E0 20,000. Note: Data for 1976-78 are only for the month when an adjustment was made. Source: INE Table 9.12a: CHILE - REAL MINIMUM WAGE, 1970-78 (DEFLATED BY IBRD ADJUSTED CPI) (Escudos per month,-/ prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 337.08 438.28 420.56 224.95 426.74 323.93 337.07 395.65 565.94 February 320.86 435.41 407.24 198.62 342.79 278.05 306.15 373.96 552.64 March 309.81 430.11 394.39 285.65 300.20 376.12 356.05 454.94 580.07 April 302.52 419.58 358-57 216.31 260.42 311.36 359.91 434.51 565-37 May 296.30 4o8.16 328.47 173.96 386.10 268.41 327-78 435.35 553.74 June 290.56 4oo.oo 302.93 145.55 319.63 383.66 405.72 421.44 542.68 July 285.04 379.75 274.39 138.93 385.38 351.01 372.56 478.63 582.06 a August 277-99 361.45 250.00 132.89 347.56 322.31 353.14 462.90 566.o8 September 270.88 342.86 229.77 127.35 308.o6 365.49 413.52 446.38 550-15 October 268.46 324.32 376.40 443.95 321.47 337.17 387.56 428.39 540.10 November 266.86 306.12 307.57 345.92 293.05 311.61 373.37 419.17 533.08 December 266.86 290.00 259.74 324.68 368.96 372.46 419.20 479.74 588.34 Average 291.10 378.00 325.84 229.90 338.36 333.47 367.67 435.92 560.02 a/ Daily rate multiplied by 30. Table 9.12b: CHILE - REAL MINIMU14 WAGE, 1970- 78 (DEFLATED BY UC ADJUSTED CPI) (Escudos per month,- prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 336.13 420.76 470.71 302.58 395.92 300.46 312.99 367.33 524.39 February 319.15 416.09 436.05 287.69 318.06 257.83 284.41 347-19 512.17 March 307.17 409.28 409.46 432.75 278.50 348.86 330.64 422.17 537.44 April 299.00 398.14 388.27 374.29 241.52 287.96 334.22 403.21 523.76 May 291.97 386.35 369.16 306.23 358.05 249.08 304.27 403.99 513.04 June 285.49 377.36 349.92 251.56 296.38 356.13 376.49 391.09 503.03 July 279.29 375.23 329.43 218.62 357.43 325.82 345.72 444.16 540.34 August 271.49 369.69 267.06 186.04 322.32 299.18 327.70 429.55 525.04 < September 263.74 364.52 215.67 159.51 285.74 339.27 383.74 414.23 510.54 October 260.68 357.57 40o.61 334.06 298.26 312.95 359.64 397.53 501.26 November 258.44 347.62 373.29 315.50 271.87 289.28 346.47 388.97 494.63 December 257.33 337.08 341.87 301.20 342.31 345.77 389.00 445.19 545.82 Average 285.82 379.97 362.71 289.17 313.86 309.38 341.27 4o4.55 519.28 a/ Daily rate multiplied by 30. Table 9.12c: CHILE - REAL MINIMUM WAGE, 1970-78 (DEFLATED BY OFFICIAL CPI) (Escudos per month,-/ prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 337.08 438.28 526.32 396.83 597.61 453.59 472.17 554.18 791.27 February 320.86 435.41 494.51 380.92 480.00 389.35 428.86 523.67 772.76 March 309.81 430.11 481.28 576.70 420.36 526.65 498.76 636.74 811.06 April 302.52 419.58 454.55 523.37 364.59 435.98 504.17 608.16 790.50 May 296.30 408.16 436.89 438.52 540.34 375.99 459.17 609.19 774.24 June 290.56 4oo.00 428.57 379.22 447.32 537.43 568.30 589.55 758.77' July 285.o4 398.94 409.09 329.01 539.49 491.71 521.86 669.53 813.84, August 277.99 394.74 334.57 280.93 486.47 451.49 494.65 647.52 791.50 September 270.88 390.62 273.56 240.48 431.27 511.99 579.24 624.23 769.22 October 268.46 384.12 501.53 503.36 450.15 472.31 542.87 599-07 755.17 November 266.86 374.06 474.01 476.19 410.34 436.52 522.99 586.19 745.48 December 266.86 364.08 437.97 454.55 516.64 521.75 587.00 670.76 822.56 Average 291.10 403.18 437.74 415.01 473.71 467.o6 515.00 609.90 783.03 a/ Daily rate multiplied by 30. Table 9.13a: CHILE - INDEX OF REAL MINIMUM WAGE, 1970-78 (DEFLATED BY IBRD ADJUSTED CPI) (Average 1970 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 116 151 144 77 147 111 116 136 194 February 110 150 140 68 118 96 105 128 190 March 106 148 135 98 103 129 122 156 199 April 104 144 123 74 89 107 124 149 194 May 102 140 113 60 133 92 113 150 190 June 100 137 104 50 110 132 139 145 186 , July 98 130 94 48 132 121 128 164 200 August 95 124 86 46 119 111 121 159 194 September 93 118 79 44 106 126 142 153 190 October 92 111 129 153 110 116 133 147 186 November 92 105 106 119 101 107 128 144 183 December 92 100 89 112 127 128 144 165 202 Average 100 130 112 79 116 115 126 150 192 Table 9.13b: CHILE - INDEX OF REAL MINIMUM WAGE, 197o-78 (DEFLATED BY UC ADJUSTED CPI) (Average 1970 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 118 147 165 1o6 139 105 110 129 183 February 112 146 153 101 111 90 100 121 179 March 107 143 143 151 97 122 116 148 188 April 105 139 136 131 85 101 117 141 183 May 102 135 129 107 125 87 106 141 179 June 100 132 122 88 104 125 132 137 176 1 \J1 July 98 131 115 76 125 114 121 155 189 ° August 95 129 93 65 113 105 115 150 184 September 92 128 75 56 100 119 134 145 179 October 91 125 141 117 104 109 126 139 175 November 90 122 131 110 95 101 121 136 173 December 90 118 120 105 120 121 136 156 191 Average 100 133 127 101 110 108 119 142 182 Table 9.13c: CHILE - INDEX OF REAL MINIMUM WAGE, 1970-78 (DEFLATED BY OFFICIAL CPI) (Average 1970 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 116 151 181 136 205 156 162 190 272 February 110 150 170 131 165 134 147 180 265 March 106 148 165 198 144 181 171 219 279 April 104 144 156 180 125 150 173 209 272 May 102 140 150 151 186 129 158 209 266 June 100 137 147 130 154 185 195 203 261 July 98 137 141 113 185 169 179 230 280 On August 95 136 115 97 167 155 170 222 272 H September 93 134 94 83 148 176 199 214 264 October 92 132 172 173 155 162 186 206 259 November 92 128 163 164 141 150 180 201 255 December 92 125 150 156 177 179 202 230 283 Average 100 139 150 143 163 160 177 210 269 Table 9.14a: CHILE - REAL MINIMUM SALARY, 1970-78 (DEFLATED BY IBRD ADJUSTED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 578.10 608.46 475.23 240.70 426.74 323-93 337.07 395.65 565.94 February 550.28 604.48 46o.18 212.53 342-79 278.05 306.15 373.96 552.64 March 531-33 597.12 445.66 305.66 300.20 376.12 356.05 454.94 580.07 April 518.83 582.50 405.18 231.46 260.42 311.36 359.91 434.51 565-37 May 508.16 566.65 371.17 186.14 386.10 268.41 327.78 435.35 553.74 June 498.31 555.32 342.31 155.74 319.63 383.66 405.72 421.44 542.68 July 488.84 527.20 310.06 148.66 385.38 351.01 372.56 478.63 5b2.06 a August 476.76 501.80 282.50 142.20 347.56 322.31 353.14 462.90 566.o8 September 464.57 475-99 259.64 136.27 308.06 365.49 413.52 446.38 550.15 October 460.41 450.26 402.76 443.95 321.47 337.17 387.56 428.39 540.10 November 457.68 424.99 329.11 345.92 293.05 311.61 373.37 419.17 533.08 December 457.68 402.60 277.90 324.68 368.96 372.46 419.20 479.74 588.34 Average 499.25 524.78 363.47 239.49 338.36 333.47 367.67 435.92 560.02 Table 9.14 b: CHILE - REAL MINIMUM SALARY, 1970-78 (DEFLATED BY UC ADJUSTED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 576.48 584.14 531.90 323.77 395.92 300.46 312.99 367.33 524.39 February 547.35 577.66 492.73 307.84 318.06 257.83 284.41 347.19 512.17 March 526.80 568.20 462.69 463.05 278.50 348.86 330.64 422.17 537.44 April 512.80 552.74 438.74 4oo.51 241.52 287.96 334.22 403.21 523.76 May 500.74 536-37 417.15 327.68 358.05 249.08 304.27 403.99 513.04 June 489.62 523.89 395.41 269.18 296.38 356.13 376-49 391.09 503.03 July 478.98 520.94 372.25 233.93 357.43 325.82 345.72 444.16 540.34 O August 465.62 513.23 301.78 199.07 322.32 299.18 327.70 429.55 525.04 September 452.32 5o6.06 243.71 170.68 285.74 339.27 383.74 414.23 510.54 October 447.07 496.41 429.73 334.06 298.26 312.95 359.64 397.53 501.26 November 443.22 482.61 399.43 315.50 271.87 289.28 346.47 388.97 494.63 December 441.32 467.97 365.81 301.20 342.31 345-77 389.00 445.19 545.82 Average 490.19 527.52 404.28 303.87 313.86 309.38 341.27 404.55 519.28 Table 9.14c: CHILE - REAL MINIMUM SALARY, 1970-78 (DEFLATED BY OFFICIAL CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 1976 January 578.10 608.46 594.74 424.62 597.61 453.59 472.17 554.18 791.27 February 550.28 604.48 558.79 407.60 480.00 389.35 428.86 523.67 772.76 March 531.33 597.12 543.85 617.08 420.36 526.65 498.76 636.74 811.06 April 518.83 582.50 513.64 560.02 364.59 435.98 504.17 608.16 790.50 May 5o8.16 566.65 493.69 469.23 540.34 375.99 459.17 609.19 774.24 June 498.31 555.32 484.29 405.77 447.32 537.43 568.30 589.55 758.77 July 488.84 553,84 462.27 352.05 539.49 491.71 521.86 669.53 813.84 , August 476.76 548.01 378.07 300.60 486.47 451.49 494.65 647.52 791.50 September 464.57 542.30 309.12 257.32 431.27 511.99 579.24 624.23 769.22 October 46o.41 533.28 536.65 503.36 450.15 472.31 542.87 599.07 755.17 November 457.68 519.31 507.21 476.19 410.34 436.52 522.99 586.19 745.48 December 457.68 505.45 468.65 454.55 516.64 521.75 587.00 670.76 822.56 Average 499.25 559.73 487.58 435.70 473.71 467.o6 515.00 609.90 783.03 Table 9.15a: CHILE - INDEX OF REAL MINIMUM SALARY, 1970-78 (DEFLATED BY IBRD ADJUSTED CPI) (Average 1970 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 116 122 95 48 85 65 68 79 113 February 110 121 92 43 69 56 61 75 107 March 106 120 89 61 60 75 71 91 116 April 104 117 81 46 52 62 72 87 113 May 102 114 74 37 77 54 66 87 111 June 100 111 69 31 64 77 81 84 109 July 98 106 62 30 77 70 75 96 117 August 95 101 57 28 70 65 71 93 113 September 93 95 52 27 62 73 83 89 110 October 92 90 81 89 64 68 78 86 108 November 92 85 66 69 59 62 75 84 107 December 92 81 56 65 74 75 84 96 118 Average 100 105 73 48 68 67 74 87 112 Table 9.15b: CHILE - INDEX OF REAL MINIMUM SALARY, 1970-78 (DEFLATED BY UC ADJUSTED CPI) (Average 1970 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 118 119 109 66 81 61 64 75 107 February 112 118 101 63 65 53 58 71 104 March 107 116 94 94 57 71 67 86 110 April 105 113 90 82 49 59 68 82 107 May 102 109 85 67 73 51 62 82 105 June 100 107 81 55 60 73 77 80 103 July 98 106 76 48 73 66 71 91 110 August 95 105 62 41 66 61 67 88 107 ON September 92 103 50 35 58 69 78 85 104 October 91 101 88 68 61 64 73 8i 102 November 90 98 81 64 55 59 71 79 101 December 90 95 75 61 70 71 79 91 111 Average 100 108 82 62 64 63 70 83 106 Table 9.15c: CHILE - INDEX OF REAL MINIMUM SALARY, 1970-78 (DEFLATED BY OFFICIAL CPI) (Average 1970 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 116 122 119 85 - 120 91 95 1ll 158 February 110 121 112 82 96 78 86 105 155 March 1o6 120 109 124 84 105 100 128 162 April 104 117 103 112 73 87 101 122 158 May 102 114 99 94 108 75 92 122 155 June 100 111 97 81 90 108 114 118 152 July 98 111 93 71 108 98 105 134 163 August 95 110 76 60 97 90 99 130 159 Z September 93 109 62 52 86 103 116 125 154 October 92 107 107 101 90 95 109 120 151 November 92 1o4 102 95 82 87 105 117 149 December 92 101 94 91 103 105 118 134 165 Average 100 112 98 87 95 94 103 122 157 - 568 - Page 1 of 2 Table 9.16: CHILE - RECEIPTS OF MINIMUM-INCOME BLUE-COLLAR WORKER,-/ 1968-1977 (Escudos per month) Month of Trans- Adjustment Minimum portation Other or Wage b/ Family / Allow- Bonuses, w/ Year Bonus or Income Allowance - ance etc. Total- 1968 January 175.50 74.83 - - 250.33 1969 January 224.50 99.75 - - 324.25 1970 January 360.00 149.62 - - 509.62 1971 January 600.00 299.25 - - 899.25 1972 January 900.00 413.98 - - 1,313.98 October 1,900.80 829.92 - - 2,730.72 1973 March 3,056.49 d/ 829.92 - - 3,886.41 October 12,000 e/ 3,150 720 - 15,870.00 November 12,000 3,150 720 3,056.49 fl 18,926.49 December 12,000 3,150 720 13,056.49 _/ 28,926.49 1974 January 18,000 6,300 720 - 25,020 February 18,000 6,300 1,700 7,700 h/ 33,700 May 29,000 14,000 5,000 - 48,ooo June 29,000 14,000 5,000 10,000 i/ 58,000 July 39,000 17,500 5,000 - 61,500 September 39,000 17,500 5,000 22,500 i/ 84,ooo October 48,400 21,700 6,200 15,000 k/ 91,300 November 48,400 21,700 6,200 -240 1/ 76,060 December 64,900 32,900 8,400 18,270 m/ 124,470 1975 January 64,900 32,900 8,400 -3,630 n/ 102,570 February 64,900 32,900 8,400 - 106,200 March 86,400 44,100 11,200 20,000 o/ 161,700 April 86,400 44,100 11,200 20,000 P/ 161,700 May 86,400 44,100 11,200 20,000 J/ 161,700 June 182,000 75,600 19,200 -10,000 r/ 266,800 July 182,000 75,600 19,200 -10,000 r/ 266,800 August 182,000 75,600 19,200 - 276,800 September 225,680 93,800 23,200 - 342,680 December 288,900 120,050 30,590 - 5/ 439,540 sl 1976 March 381,350 158,480 40,380 - 580,210 April 431,350_L/ 158,480 40,380 - 630,210 June 599,580 220,290 56,130 876,ooo September 755,470 277,550 70,720 1,103,740 December 891,450 327,495 83,450 450,000 u/ 1,752,395 1977 March 1,150,080 389,725 99,310 - 1,639,115 May 1,196,080 389,725 99,310 - 1,605,115 July 1,411,370 459,865 117,190 - 1,988,425 November 1,411,370 459,865 117,190 450,000 v/ 2,438,425 December 1,665,420 542,640 138,200 450,000 v/ 2,796,260 a/ The average worker is assumed to have 3.5 dependents. b/ Minimum daily wage multiplied by 30 (for period before October 1973 when replaced by minimum monthly income). c/ Allowance per dependent multiplied by 3.5. d/ Includes 60.8 percent general wage increase. - 569 - Table 9.16 Page 2 of 2 e/ In October 1973, a minimum income for all workers replaced the sueldo vital and salario mlnimo. f/ Bonus equivalent to wage of April 1973. 0 ,/' Repeats November bonus plus Christmas bonus of E 10,000. h/ Bonus of E02,200 per dependent paid in February, March and April i/ One-time only bonus of E 010,000 per worker. 0 i/ One-time only bonus of E 5,000 per worker and per dependent. k/ A E015,000 advance paid in October to be deducted in equal installments from November and December earnings. 1/ Includes an advance paid in November equivalent to 15 percent of the October 1974 wage, less the first installment due on the October advance. The November advance was to be deducted in equal installments from earnings in December and Janaury. m/ Includes Christmas bonus of E 8,400 per dependent, less the second installment repayment of the October advance and the first installment repayment of the November advance. n/ Second installment repayment of November 1974 advance. o/ Bonus of E 020 ,000 paid to lower-wage workers (workers whose earnings totaled less than E 150,000 after regular March adjustment). p/ E 20,000 bonus paid all workers. q/ Advance of E 20,000 paid in May, repayable from June and July earnings. r/ Repayment of May advance. s/ Does not include Christmas bonus (for lack of information). t/ Special 13.1 percent adjustment declared for low-wage workers. u/ Christmas bonus of 100 pesos per worker and per dependent. v/ Bonus of 100 pesos per worker and per dependent. w/ Does not include meal allowance which is compulsory only for public sector employees. Table 9.17a: CHILE - REAL iECEIPTS OF MINIMUM-INCOME BLUE-COLLAR WORKER, 1970-1977 (DEFLATED BY IBRD ADJUSTED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 January 477.17 656.87 614.o0 323.16 593-17 511.95 512.83 646.58 February 454.21 652.58 594.56 285.34 641.78 454.99 465.78 6114.3 March 438.57 644.62 575.80 363.22 562.04 571.60 541.72 648.38 April 428.25 628.85 523.50 275.05 487.56 473.18 525.83 619.28 May 419.44 611.73 479-55 221.20 639.06 407.91 478.90 613.35 June 411.32 599.50 442.27 185.07 639.26 561.80 592.76 593.76 July 403.50 569.15 4oo.6o 176.66 607.71 514.00 544.32 674.33 4 0 August 393-53 541.72 364.99 168.97 548.o8 489.65 515.94 652.16 September 383.46 513.86 335.46 161.93 663.51 554.97 604.16 628.89 October 380.03 486.08 540.74 587.13 6o6.40 511.97 566.22 603.54 November 377.78 458.80 441.86 545.59 460.52 473.16 545.50 724.19 December 377.78 434.63 373.10 782.64 707.62 566.67 -/ 824.05 805.50 Average 412.09 566.53 473.87 339.66 596.39 507.65 - 554.29 651.76 a/ Does not include Christmas bonus. Source: Table 9.14 Table 9-17b: CHILE - REAL RECEIPTS OF MINIMUM-INCOME BLUE-COLLAR WORKER, 1970-1977 (DEFLATED BY UC ADJUSTED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 January 475.84 630.61 687.23 434.69 550.33 474.86 476.20 600.00 February 451.79 623.61 636.62 413.31 595.48 421.90 432.71 567.11 March 434.83 613.40 597.81 550.25 521.41 530.17 503.05 6o0.68 April 423.27 596.72 566.86 475.93 452.17 437.63 488.30 574.67 May 413.32 579.04 538.96 389.38 592.64 378.54 444.55 569.17 June 404.14 565.57 510.88 319.87 592.78 521.49 550.06 550.99 July 395.36 562.38 480.96 277.98 563.65 477.11 505.11 625.76 August 384.33 554.07 389.91 236.56 508.27 454.51 478.78 605.18 September 373.35 546.32 314.88 202.82 615.43 515.15 560.64 583.59 October 369.02 535.91 576-95 441.79 562.63 475.19 525.44 560.06 November 365.84 521.00 536.28 497.61 427.23 439.25 50620 672.03 December 364.27 505.20 491.14 726.07 656.51 526.06 - 764.69 747.47 Average 404.61 569.49 527-37 413.86 553.21 470.99 519.64 6o4.81 a/ Does not include Christmas bonus. Source: Table 9.14 - 572 - Page 1 of 2 Table 9.18 CHILE - RECEIPTS OF MINIMUM-INCOME WHITE-COLLAR WORKER,-/ 1969-1977 (Escudos per month) Month of Trans- Adjustment portation Other or Minimum Family b Allow- Bonuses, Year Bonus Salary Allowance - ance etc. Total- 1969 January 477.50 270.10 - - 747.60 1970 January 617.41 388.50 - - 1,005.91 1971 January 832.89 560.00 - - 1,392.89 1972 January 1,016.96 805.00 - - 1,821.96 October 2,033.92 1,610.00 - - 3,643.92 1973 March 3,270.54 - 1,610.00 - - 4,880.54 October 12,000 e/ 3,150 720 - 15,870.00 November 12,000 3,150 720 3,056.49 f/ 18,926.49 December 12,000 3,150 720 13,056.49 i/ 28,926.49 1974 January 18,000 6,300 720 - 25,020 February 18,000 6,300 1,700 7,700 h/ 33,700 May 29,000 14,o00 5,000 - 48,ooo June 29,000 14,000 5,000 10,000 i/ 58,000 July 39,000 17,500 5,000 - 61,500 September 39,000 17,500 5,000 22,500 1/ 84,0oo October 48,400 21,700 6,200 15,000 k/ 91,300 November 48,400 21,700 6,200 -240 1/ 76,060 December 64,900 32,900 8,400 18,270 m/ 124,470 1975 January 64,900 32,900 8,400 -3,630 n/ 102,570 February 64,900 32,900 8,400 - 106,200 March 86,400 44,100 11,200 20,000 o/ 161,700 April 86,400 44,100 11,200 20,000 / 161,700 May 86,400 44,100 11,200 20,000 p 161,700 June 182,000 75,600 19,200 -10,000 r/ 266,800 July 182,000 75,600 19,200 -10.000 r/ 266,800 August 182,000 75,600 19,200 - 276,800 September 225,680 93,800 23,200 - 342,680 December 288,900 120,050 30,590 - s/ 439,540 sl 1976 March 381,350 158,480 40,380 - 580,210 April 431,350 t/ 158,480 40,380 - 630,210 June 599,580 220,290 56,130 - September 755,470 277,550 70,720 - 1,103,740 December 891,450 327,495 83,450 450,0OO u/ 1.752.395 1977 March 1,150,080 389,725 99,310 - 1,639,115 May 1,196,080 389,725 99,310 _ 1,685,115 July 1,411,370 459,865 117,190 - 1,988,425 November 1,411,370 459,865 117,190 45o,ooo v/ 2,438,425 December 1,665,420 542,640 138,200 450,000 v/ 2,796,260 a/ The average worker is assumed to have 3.5 dependents. b/ Allowance per dependent multiplied by 3.5 c/ Does not include meal allowance which is only compulsory for public sector. d/ Includes 60.8 percent general wage increase. - 573 - Table 9.18 Page 2 of 2 e/ In October 1973, a minimum income for all workers replaced the sueldo vital and salario minimo. f/ Bonus equivalent to wage of April 1973. g/ Repeats November bonus plus Christmas bonus of E 10,000. h/ Bonus of E 2,200 per dependent paid in February, March and April. i/ One-time only bonus of E010,000 per worker. i/ One-time only bonus of E 5,000 per worker and per dependent. k/ A E015,000 advance paid in October to be deducted in equal installments from November and December earnings. 1/ Includes an advance paid in November equivalent to 15 percent of the October 1974 wage, less the first installment due on the October advance. The November advance was to be deducted in equal installments from earnings in December and January. m/ Includes Christmas bonus of E 8,400 per dependent, less the second installment repayment of the October advance and the first installment repayment of the November advance. n/ Second installment repayment of November 1974 advance. o/ Bonus E020,000 paid to lower-wage workers (workers whose earnings totaled less than E 150,000 after regular March adjustment). p/ E 20,000 bonus paid all workers. q/ Advance of E 20,000 paid in May, repayable from June and July earnings. r/ Repayment of May advance s/ Does not include Christmas bonus (for lack of information). t/ Special 13.1 percent adjustment declared for low-wage workers. u/ Christmas bonus of 100 pesos per worker and per dependent. v/ Bonus of 100 pesos per worker and per dependent. Table 9.19a: CHILE - REAL RECEIPTS OF MINIMUM-INCOME WHITE-COLLAR WORKER, 1970-1977 (DEFLATED BY IBRD ADJUSTED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 January 941.86 1,017.45 851.38 431.23 593.17 511.95 512.83 646.58 February 896.53 1,010.81 824.42 380.76 641.78 454.99 465.78 611.13 March 865.67 998.49 798.40 456.13 562.04 571.60 541.72 648.38 April 845.30 974.05 725.88 345.40 487.56 473.18 525.83 619.28 May 827.91 947.54 664.95 277.78 639.o6 407.91 478.90 613.35 June 811.87 928.59 613.25 232.41 639.26 561.80 592.76 593.76 July 796.44 881.58 555.48 221.84 607.71 514.00 544.31 674.33 August 776.76 839.09 506.10 212.20 548.08 489.65 515.88 652.16 September 756.89 795.94 465.14 203.36 663.51 554.97 604.16 628.89 October 750.12 752.91 721.57 587.13 606.40 511.97 566.22 603.54 November 745.67 710.66 589.63 545.59 460.52 473.16 545.50 724.19 December 745.67 673.22 497.87 782.64 707.62 566.67 - 824.05 805.50 Average 813.39 877.53 651.17 389.71 596.39 507.65 554.29 651.76 a/ Does not include Christmas bonus in 1975. Source: Table 9.16 Table 9.19b: CHILE - REAL RECEIPTS OF MINIMUM-INCOME WHITE-COLLAR WORKER, 1970-1977 (DEFLATED BY UC ADJUSTED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 January 939.23 976.78 952.91 580.06 550.33 474.86 476.20 600.00 February 891.76 965.94 882.73 551.52 595.48 421.90 432.71 567.11 March 858.28 950.13 828.92 691.00 521.41 530.17 503.05 601.68 April 835.47 924.28 786.01 597.67 452.17 437.63 488.30 574.67 May 815.82 896.90 747.32 488.98 592.64 378.54 444.55 569.17 June 797.71 876.03 708.38 401.69 592.78 521.49 550.06 550.99 July 780.38 871.10 666.90 349.08 563.65 477.11 505.11 625.76 August 758.60 858.22 540.64 297.07 508.27 454.51 478.78 605.18 September 736.93 846.23 436.61 254.70 615.43 515.15 560.64 583.59 October 728.39 830.09 769.90 441.79 562.63 475.19 525.44 560.o6 November 722.12 807.00 715.62 497.61 427.23 439.25 506.20 672.03 December 719.02 782.52 655.38 726.07 656.51 526.o6 -/ 76,4.69 747.47 Average 798.64 882.10 724.28 489.77 553.21 470.99 a/ 519.64 6o4.81 a/ Does not include Christmas bonus in 1975. Source: Table 9.16 - 576 - Table 9.20: CHILE - NOMINAL AVERAGE WAGE AND SALARY INDICES, 1959-1978 (April 1969 = 100) Sectoral Indices Aggregate Indices Government Wages Public Central Autonomous Year/Month Wages Salaries and Salaries Mining Manufacturing Utilities Government Agencies 1959 April 6.6 6.9 6.8 5.2 6.6 4.6 6.8 8.4 1960 April n.a. n.a. 7.8 n.a. n.a. n.a. n.a. n.a. 1961 April n.a. n.a. 9.0 n.a. n.a. n.a. n.a. n.a. 1962 April n.a. n.a. 10.2 n.a. n.a. n.a. n.a. n.a. 1963 April 13 3 14.5 13.9 11.9 13.9 11.1 14.2 15.6 1964 April 18.7 18.4 18.6 16.4 20.7 16.0 16.3 18.9 1965 April 28.6 28.5 28.6 24.9 29.6 22.1 26.1 32.7 1966 April 39.3 38.5 38.9 32.5 42.6 34.9 34.7 40.7 1967 April 54.1 56.4 55.3 52.9 54.7 50.9 57.3 57.3 1968 April 71.3 62.0 66.6 71.0 72.0 61.2 59.4 64.9 1969 April 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1970 January 125.4 131.4 128.4 134.4 125.4 118.5 133.5 129.4 April 138.7 148.8 143.8 138.1 140.4 122.3 157.8 148.5 July 151.6 156.7 154.1 141.6 152.3 155.2 161.4 157.5 October 168.3 163.3 165.8 194.9 159.2 155.7 165.1 165.1 1971 January 182.9 185.0 183.9 218.4 176.4 166.6 170.7 194.1 April 210.9 229.0 220.1 229.0 207.3 201.1 234.6 230.6 July 233.9 243.4 238.7 243.6 227.6 219.2 241.5 257.1 October 250.0 253.5 251.8 256.0 256.3 236.3 245.0 252.2 1972 January 284.4 276.7 280.5 289.9 286.6 239.0 242.6 306.1 April 317.4 300.1 308.7 278.7 327.7 318.5 262.5 324.0 July 349.3 342.7 346.0 290.4 362.3 324.4 371.3 336.8 October 562.8 551.4 557.1 431.8 618.9 425.8 514.0 593.0 1973 January 801.4 729.9 765.2 788.8 803.9 791.0 670.9 715.0 April 919.1 787.4 852.4 796.7 987.8 786.6 760.8 760.8 July 1,328 1,130 1,228 979.2 1,439 912.1 1,240 1,111 October 1,699 1,307 1,501 1,471 1,821 1,108 1,235 1,497 1974 January 4,336 4,009 4,170 2,876 5,070 3,656 4,987 2,978 April 5,590 5,429 5,508 L,499 6,359 4,302 6,167 4,590 July 9,657 9,610 9,633 9,362 10,316 7,337 11,919 7,776 October 12,775 13,550 13,167 11,197 14,029 9,659 16,758 11,260 1975 January 17,597 19,602 18,612 16,464 19,611 14,345 23,733 15,727 April 27,347 28,963 28,165 27,631 29,098 19,290 36,643 23,579 July 43,191 48,435 45,846 43,875 45,713 34,978 61,995 38,645 October 56,814 60,393 58,626 57,315 61,191 44,410 73,787 48,640 1976 January 74,875 79,097 77,012 73,040 82,764 60,253 93,547 63,124 April 105,130 109,406 107,294 103,161 116,085 81,541 129,094 87,728 July 150,803 153,255 152,042 147,643 167,025 112,059 184,637 119,530 October 198,848 198,661 198,750 203,100 218,419 142,211 239,193 153,958 1977 January 248,885 255,817 252,391 261,911 275,015 172,144 305,611 198,339 April 301,298 311,623 306,522 314,507 332,987 203,671 374,766 243,216 July 363,065 385,263 374,299 361,696 404,003 243,957 468,531 305,425 October 379,735 394,602 387,243 380,260 429,740 249,792 471,840 304,923 1975 tui Lary 44o,377 470,oc 4)°),47 41b,2O1 513,916 301,125 .. April 500,55j 519,579 510,171 479,779 573,001 326,670 .. July 569,566 581,276 575,449 511,191 657,045 417,848 .. Octonber S97,682 595,945 596,456 S55,894 687,571 4353307 Source: INE Table 9.21: CHILE - INDICES OF REAL WAGES AND SALARIES, 1959- 1978 (April 1969 = 100) ak/ #/ -1 I IBRD Deflator UC Deflator Official Deflator ~ Wages and tWages and Wages end Year/Month Wages Salaries Salaries Wages Salaries Salaries Wages Salaries Salaries 1959 April 60.0 62.? 61.8 1960 n.a. n.a. 63.6 1961 n.a. n.a. 68.4 1962 " n.a. n.a. 68.1 1963 " 60.6 66.1 63.3 1964 57.9 56.9 57.5 1965 68.7 68.4 68.7 1966 76.8 77.8 76.0 1967 89.5 93.3 91.5 1968 93.1 81.0 87.0 1969 100.0 100.0 100.0 1970 Jan. 109.9 115.1 112.5 110.2 115.5 112.8 April 108.1 116.0 112.1 109.4 117.3 113.4 July 110.4 114.0 112.3 112.6 116.4 114.6 Oct. 114.4 111.0 112.7 117.8 114.3 116.0 1971 Jan. 125.4 126.8 126.1 120.4 121.7 121.0 125.4 126.8 126.1 April 138.4 150.3 144.4 131.3 142.6 137.1 138.4 150.3 144.4 July 138.9 144.6 141.8 137.3 142.8 140.1 145.9 151.9 148.9 Oct. 126.8 128.6 127.7 139.8 141.8 140.8 150.2 152.3 151.3 1972 Jart. 1Z4.7 121.3 123.0 139.6 135.8 137.7 156.1 151.8 153.9 April 118.7 112.2 115.4 128.5 121.5 125.0 150.4 142.2 146.3 July 99.9 98.0 99.0 120.0 117.7 118.8 149.0 146.2 147.6 Oct. 104.6 102.5 103.5 111.6 109.3 110.5 139.3 136.5 137.9 1973 Jan. 89.0 81.1 85.0 119.7 109.0 114.3 157.0 143.0 149.9 April 61.0 52.3 56.6 105.6 90.5 98.o 147.7 126.5 137.0 July 56.6 48.2 52.4 89.1 75.8 82.4 134.1 114.1 124.0 Oct. 59.0 45.4 52.1 44.4 34.1 39.2 66.9 51.4 59.1 1974 Jan. 96.5 89.2 92.8 89.5 82.7 86.1 135.1 124.9 129.9 April 75.9 73.7 74.8 70.4 68.4 69.4 106.3 103.2 104.7 July 89.5 89.1 89.3 83.1 82.6 82.8 125.4 124.7 125.0 Oct. 79.6 84.5 82.1 73.9 78.4 76.1 111.5 118.3 114.9 1975 Jan. 82.4 91.8 87.2 76.4 85.2 80.9 115.4 128.6 122.1 April 75.1 79.5 77.3 69.5 73.6 71.5 105.2 111.4 108.3 July 78.1 87.6 82.9 72.5 81.3 76.9 109.4 122.7 116.1 Oct. 79.7 84.7 82.3 73.9 78.6 76.4 111.6 118.6 115.2 1976 Jan. 82.0 86.6 84.3 76.1 80.4 78.3 114.8 121.3 118.1 April 82.3 85.7 84.o 76.4 79.5 78.0 115.3 120.0 117.7 July 87.9 89.4 88.7 81.6 82.9 82.3 123.2 125.2 124.2 Oct. 95.7 95.6 95.7 88.9 88.8 88.8 134.1 134.0 134.0 1977 Jan. 103.7 106.5 105.1 96.2 98.9 97.6 145.2 149.2 147.3 April 106.8 110.4 108.6 99.1 102.5 100.8 149.6 154.7 152.2 July 115.5 122.5 119.1 107.1 113.6 110.4 161.8 171.7 166.8 Oct. 108.1 112.3 110.3 100.3 104.1 102.2 151.5 157.4 154.5 1978 Jan. 119.3 124.0 121.8 110.7 114.9 112.8 167.3 173.8 170.6 April 122.8 127.6 125.3 114.0 118.3 116.1 172.1 178.8 175.5 July 130.9 133.6 132.3 121.5 124.0 122.8 183.1 186.8 185.0 Oct. 127.5 127.1 127.2 110.1 118.0 118.1 178.3 177.7 177.9 2/ Adjusted OPI, Appendix Table 9.3a. I/ Implicit University of Chile price index, Appendix Table 9.3b. j Official CPI, Appendix Table 9.3c. Source: Table 9.20 - 578 - X. OTHER STATISTICS Table 10.1 : CHILE - DISTRIBUTION OF INCOME AMONG RECIPIENTS, BY SOCIOECONOMIC CHARACTERISTICS, 1967` (Percent) D E C I L E S Gini Characteristics 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th Coefficient Blue-collar employees 2.6 4.2 5.1 6.2 7.2 8.9 10.3 12.7 15.5 27.4 0.36 Agricultural 3.3 5.4 6.5 7.1 8.1 9.6 10.2 12.4 14.6 22.8 0.28 Industrial 3.3 5.0 6.2 7.1 8.2 9.2 10.4 11.9 14.5 24.3 0.36 Service 2.6 3.8 4.6 5.4 6.6 7.9 9.8 12.3 16.2 30.9 o.44 White-collar employees 2.5 4.1 4.6 5.5 6.5 7.8 9.1 11.2 15.3 33.6 0.42 Independent workers 1.1 2.2 3.0 4.1 5.0 6.8 8.4 11.0 16.5 41.8 0.54 Employers 1.8 3.0 4.3 5-5 6.2 8.7 9.9 12.1 16.9 31.7 0.40o Urban Areas 1.5 2.6 3.7 4.7 5.9 6.9 8.7 11.3 16.1 38.4 o.48 Rural Areas 1.9 3.3 3.9 4.8 5.9 6.7 8.2 10.6 14.2 40.7 o.48 Men 1.6 2.6 3.5 4.5 5.7 6.8 8.4 10.9 15.9 40.4 0.50 Women 1.5 2.5 3.2 3.9 5.2 6.7 9.1 11.9 17.9 38.1 0.50 TOTAL POPULATION 1.5 2.5 3.3 4.4 5.4 6.9 8.5 11.1 16.3 40.2 0.52 a/ Distribution of disposable personal money income (i.e., after taxes and social security contributions) among active members of the labor force (i.e., excludes pensioners and retiers). Also does not include incomes in kind. Source: Isabel Heskia, "La Distribuci6n del Ingreso en Chile," CEPLAN, Documento No. 31, Noviembre de 1973. - 580 - Table 10.2: CHILE -DISTRIBUTION OF INCOME RECIPIENTS ABOVE AND BELOW MEDIAN, BY SOCIOECONOMIC CHARACTERISTICS, 1967 (Percent) Lower Upper Total Characteristics 50 Percent 50 Percent Population Occupational Category: Employers 2.7 97.3 100.0 Independent workers 52.4 47.6 100.0 White-collar employees 11.1 88.9 100.0 Blue-collar employees 72.7 27.3 100.0 Sector of Economic Activity: Agriculture 80.4 19.6 100.0 Industry 41.7 58.3 100.0 Services 40.9 59.1 100.0 Rural/Urban: Rural 75.3 24.7 100.0 Urban 39.7 60.3 100.0 Sex: Men 46.4 53.6 100.0 Women 64.o 36.0 100.0 Education: Primary or less 53.4 46.6 100.0 Secondary 51.3 48.7 100.0 Higher 5.6 94.4 100.0 Age: 12-25 years 70.0 30.0 100.0 26-55 years 42.0 58.o 100.0 56 years and over 53.2 46.8 100.0 Source: Isabel Heskia, op. cit., Table 3 - 581 - Table 10.3: CHILE - CHARACTERISTICS OF LOWER 50 PERCENT OF INCOME RECIPIENTS, 1967 (Percent) Proportion of Proportion Characteristics Lower 50% Total Population Occupational Category: 100.0 100.0 Employers 0.1 1.6 Independent workers 24.1 23.3 White-collar employees 5.7 26.3 Blue-collar employess 70.1 48.8 Sector of Economic Activity: 100.0 100.0 Agriculture 38.4 24.2 Industry 25.6 31.1 Services 36.0 44.7 Rural/Urban: 100.0 100.0 Rural 45.9 30.9 Urban 54.1 69.1 Sex: 100.0 100.0 Men 69.o 75.5 Women 31.0 24.5 Education: 100.0 100.0 Primary or less 68.0 64.7 Secondary 31.6 31.2 Higher O.4 4.1 Age: 100.0 100.0 12-25 years 37.1 26.9 26-55 years 52.0 62.7 56 years and over 10.9 10.4 Source: Isabel Heskia, op. cit., Table 2 Table 10.4 CHILE - DISTRIBUTION OF INCOME BY HOUSEHOLDS, 1968 a! Decile Boundaries Mean Share of From To Income Total Income Deciles (escudos) (escudos) (percent) 1 1 209 130.99 1.5 2 201 296 254.15 2.9 3 297 391 340.05 3.9 4 392 485 439.36 5.1 5 486 587 533.48 6.2 6 588 737 657.82 7.65 7 738 904 816.68 9.5 8 905 1,164 1,023.82 11.9 9 1,165 1,784 1,427.01 16.5 10 1,785 3,005.68 34.8 Total Population 862.90 100.0 a/ Distribution of before-tax incomes, including social security contributions, all cash incomes, the estimated value of incomes in kind, consumption of own production (except food), and all transfer payments. Source: UN-ECLA/IBRD, Proyecto Sobre Medici6n y Analisis de la Distribuci6n del Ingreso en Paises de America Latina: Chile (mimeo), Documento E/CEPAL/L.115/5, Noviembre 1974 Table 10.5 : CHILE - HOUSEHOLD INCOME DISTRIBUTION BY ECONOMIC SECTOR OF PRINCIPAL INCOME EARNER, 1968 (Percent of households) Monthly Income Construc- Electric'py Transpoq, From To Agriculture Mining Manufacturing tion etc.-' Commerce etc.- Services Unspecified Total (Distribution of sectors among income classes) 0 372 51.2 10.1 1.3 24.4 10.9 16.o 11.3 14.8 38.9 27.7 373 746 31.8 42.9 39.6 42.0 25.7 26.6 32.7 27.2 22.4 31.6 747 1,119 9.9 20.7 20.7 20.0 18.8 21.8 26.3 22.0 11.6 17.6 1,120 1,492 3.5 7.7 8.4 5.8 10.9 11.4 10.4 10.6 4.6 7.4 1,493 1,865 1.4 6.3 4.6 2.6 6.9 6.9 6.5 8.0 3.0 4.5 1,866 2,238 0.7 4.6 2.6 1.6 5.0 5.2 5.1 5.1 2.0 2.9 2,239 2,984 o.6 3.4 2.7 1.3 6.9 3.7 4.4 5.3 1.7 2.7 2,985 3,730 0.4 1.7 1.0 0.8 4.0 3.7 1.2 3.3 0.7 1.5 3,731 0.4 2.2 2.0 1.4 10.9 3.9 2.0 3.6 1.2 2.0 Unknown 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.9 2.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 (Distribution of income classes among sectors) °3 0 372 41.4 0.8 12.4 6.4 0.2 7.2 2.9 8.o 20.7 100.0 373 746 22.5 3.1 23.7 9.6 0.4 10.0 7.3 12.9 10.5 100.0 747 1,119 12.6 2.7 22.2 8.3 o.6 14.7 10.6 18.6 9.7 100.0 1,120 1,492 10.7 2.4 21.6 5.7 o.8 18.3 10.0 21.4 9.2 100.0 1,493 1,865 6.8 3.2 19.4 4.3 0.9 18.3 10.4 26.8 9.9 100.0 1,866 2,238 5.5 3.5 17.0 3.9 0.9 20.8 12.4 25.6 10.1 100.0 2,239 2,984 5.3 2.8 19.3 3.7 1.4 16.5 11.8 29.7 9.3 100.0 2,985 3,730 5.7 2.5 12.2 3.9 1.4 29.0 5.7 33.0 6.8 100.0 3,731 4.4 2.5 19.3 5.2 3.0 23.2 7.1 27.0 8.7 100.0 Unknown 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 100.0 Total 22.53 189 7.3 0.5 l l. 7.1 14.7 100.0 / Electricity, gas, water and sanitary services. / Transport, storage and communications. Source: UN-ECLA/IBRD, op. cit. Table 10.6: CHILE - HOUSEHOLD INCOME DISTRIBUTION BY OCCUPATIONAL CLASSIFICATION, 1968 (Percent of households) Monthly Income Occupational Classification From To Self- White-Collar Manual Total (Escudos) Employers Employed Employees Workers Passives-/ Rentiers Others Population (Distribution of occupations among income classes) 0 372 2.8 43.0 3.4 30.4 46.2 44.5 23.7 28.3 373 746 4.2 26.2 25.3 45.9 25.1 25.2 47.4 32-3 747 1,119 12.8 14.1 26.7 16.7 15.0 12.0 9.2 18.0 1,120 1,492 7.5 7.0 13.8 4.4 5.4 5.8 0.0 7.5 1,493 1,865 13.8 3.9 9.0 1.7 2.7 4.7 7.9 4.6 1,866 2,238 16.8 1.8 6.8 0.5 2.5 2.4 0.0 3.0 2,239 2,984 13.8 1.7 6.7 0.3 1.3 3.1 0.0 2.7 2,985 3,730 8.5 1.3 3.6 0.1 0.5 1.0 6.6 1.6 3,731 20.0 0.9 4.7 0.O 1.4 1.3 5.3 2.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 (Distribution of income classes among occupations) m 0 372 0.2 38.8 2.9 37.3 12.6 7.9 o.4 100.0 373 746 0.3 20.7 19.2 49.3 6.o 3.9 o.6 100.0 747 1,119 1.6 20.0 36.3 32.2 6.4 3.3 0.2 100.0 1,120 1,492 2.2 23.7 44.6 20.1 5.5 3.8 0.0 100.0 1,493 1,865 6.7 21.9 48.4 12.7 4.5 5.1 0.7 l0u.0 1,866 2,238 12.4 15.3 55.7 6.1 6.5 4.1 0.0 100.0 2,239 2,984 11.1 16.2 60.1 3.2 3.6 5.7 0.0 100.0 2,985 3,730 12.1 21.4 56.8 2.1 2.5 3.2 1.8 100.0 3,731 21.7 11.7 56.5 0.5 5.2 3.3 1.1 100.0 Total 2.2 25.5 24.5 34.7 7.7 5.0 0.4 100.0 i/ Retired or disabled workers on pension. Source: UN-ECLA/IBRD, op. cit. Table 9.3a: CHILE - IBRD ADJUSTED CONSUMER PRICE INDEX, 1970-1978 (December 1969 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 106.8 136.9 4,218 20,035 85,709 225,204 353,396 February 112.2 137.8 5,251 23,341 94,366 238,266 361,877 March 116.2 139.5 228.2 1,070 5,996 28,289 107,105 252,800 372,372 April 119.0 143.0 6,912 34,173 119,851 264,682 382,054 May 121.5 147.0 7,511 39,641 131,596 274,740 390,077 June 123.9 150.0 297.1 2,100 9,073 47,490 147,783 283,806 398,028 July 126.3 10,120 51,907 160,935 294,875 408,206 August 129.5 11,221 56,530 169,787 304,900 419,729 September 132.9 175.0 391.7 2,400 12,660 61,747 182,691 316,182 431,886 October 134.1 2,703 15,056 66,934 194,931 329,461 439,919 November 134.9 3,469 16,516 72,423 202,338 336,709 445,716 December 134.9 206.9 731.9 3,696 17,590 77,565 212,657 347,147 452,307 Annual Average 124.4 167.8 412.2 2,316 10,177 48,339 150,812 289,o64 4o4,839 Percent Change 34.9 145.6 461.9 339.4 375.0 212.0 91.7 4o.1 December - December Change (%) 34.9 53.4 253.7 405.0 375.9 341.0 174.2 63.2 30.3 Source: IBRD Report No. 966-CH, December 24, 1975; INE Table 9.3b: CHILE - IMPLICIT UC ADJUSTED CONSUMER PRICE INDEX, 1970-1978 (December 1969 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1975 January 107.1 142.6 191.2 628 4,546 21,598 92,362 242,686 381,397 February 112.8 144.2 206.4 661 5,660 25,161 101,691 256,761 390,492 March 117.2 146.6 219.8 706 6,464 30,495 115,419 272,424 401,909 April 120.4 150.7 231.8 817 7,453 36,838 129,154 285,228 412,401 May 123.3 155.3 243.8 998 8,101 42,733 141,811 296,066 421,018 June 126.1 159.0 257.2 1,215 9,786 51,194 159,254 305,836 429,398 July 128.9 159.9 273.2 1,398 10,912 55,955 173,428 317,764 439,723 August 132.6 162.3 337.0 1,643 12,101 60,935 182,966 328,568 452,535 ' September 136.5 164.6 471.3 1,916 13,650 66,541 196,872 340,725 465,388 October 138.1 167.8 473.3 3,592 16,230 72,130 210,062 355,036 474,007 November 139.3 172.6 509.2 3,804 17,805 78,045 218,045 362,846 480,362 December 139.9 178.0 556.0 3,984 18,962 83,586 229,165 374,095 487,522 Annual Average 126.9 158.6 326.3 1,789 10,972 52,101 162,519 311,503 436,346 Percent Change 35.3 25.0 105.7 448.3 513.3 374.9 211.9 91.7 40.1 December - December Change (%) 39.9 27.2 212.4 616.5 375.9 340.8 174.2 63.2 30.3 Source: Mission estimates derived from real wage data presented in various issues of Comentarios Sobre la Situaci6n Economica and other publications of the Department of Economics of the University of Chile. Table 9.3c: CHILE - OFFICIAL CONSUMER PRICE INDEX, 1970-1978 (December 1969 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 106.8 136.9 171 479 3,012 14,308 61,189 160,859 252,757 February 112.2 137.8 182 499 3,750 16,669 67,369 170,230 258,814 March 116.2 139.5 187 530 4,282 20,203 76,464 180,620 266,320 April 119.0 143.0 198 584 4,937 24,405 85,563 189,109 273,245 May 121.5 147.0 206 697 5,367 28,310 93,948 196,340 278,983 June 123.9 150.0 210 806 6,483 33,915 105,504 202,879 284,670 July 126.3 150.4 220 929 7,229 37,069 114,893 210,800 291,950 August 129.5 152.0 269 1,088 8,017 40,368 121,213 217,966 300,190 September 132.9 153.6 329 1,271 9,043 44,082 130,425 226,096 308,885 October 134.1 156.2 379 2,384 10,752 47,785 139,163 235,592 314,630 November 134.9 i60.4 401 2,520 11,795 51,704 144,451 240,772 318,720 December 134.9 164.8 434 2,640 12,562 55,374 151,866 248,288 323,501 Annual Average 124.4 149.3 265.5 1,202 7,269 34,510 107,645 206,630 289,389 Percent Change 20.1 77.8 352.8 504.7 374.8 211.9 92.0 40.1 December - December Change (%) 34.9 22.1 163.4 508.1 375.9 340.8 174.2 63.5 30.3 Source: INE Table 9.4: CIIILE - WIIOLESALE PRICE INDEX, 1965-1978 (December 1969 = 100) Annual Percent Dec.-Dec. Years Average Change Change Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec. 1965 35.18 1966 43.23 22.9 1967 51.58 19.3 1968 67.32 30.5 33.1 1969 91.89 36.5 39.4 1970 125.0 36.o 33.7 108.8 115.0 117.2 120.8 123.3 125.3 127.5 130.7 132.3 132.7 133.2 133.7 1971 147.5 18.0 21.4 137.6 137.9 140.2 l41.9 i44.5 146.6 147.3 149.1 150.8 155.4 156.8 162.4 1972 250.8 70.0 143.3 170.8 180.1 186.1 196.8 201.9 207.6 212.1 253.7 305.2 340.6 360.3 395.1 1973 1,534 511.6 1,147.1 44o 456 492 506 600 653 729 805 948 3,244 4,625 4,927 1974 17,313 1,028.6 570.6 6,723 7,917 8,833 10,673 11,324 14,242 17,776 19,462 22,314 25,267 30,186 33,044 1975 100,767 482.0 410.9 39,821 46,010 52,722 66,458 77,260 93,062 107,558 118,284 130,223 146,530 162,454 168,822 1976 323,621 221.2 151.5 191,117 212,843 234,252 260,357 297,079 329,079 353,743 373,397 397,870 403,365 405,780 424,572 1977 602,080 86.o 65.o 453,116 494,771 533,786 563,275 585,659 603,499 622,354 645,425 656,918 674,322 691,066 700,678 1978 86W,'5 4?2.9 38.9 715,905 743,959 776,600 805.494 829,209 852,661 871,615 903_321 933,095 953,623 970,265 973,027 Source: Instituito Nacionai de Estadisticas - 546 - Table 9.5: CHILE - INDEX OF WHOLESALE PRICES BY SECTORS, ANNUAL AVERAGES, 1960-1978 (1970 = 100) Domestic Products General Imported Year Index Agricultural Mining Industry Total Products 1960 9.0 8.5 10.7 8.1 8.4 10.3 1961 9.0 8.5 10.6 8.2 8.5 10.5 1962 9.8 9.6 11.0 8.9 9.3 10.9 1963 15.0 13.8 16.6 13.3 13.7 18.3 1964 22.6 21.0 23.3 20.4 20.8 27.2 1965 28.1 28.8 34.2 26.1 27.8 29.1 1966 34.6 36.2 42.6 33.4 35.2 32.9 1967 41.2 41.9 49.3 41.1 42.1 39.1 1968 53.8 52.2 60.0 53.7 53.7 54.2 1969 73.5 73.6 77.5 72.8 73.2 74.4 1970 100.0 100.0 100.0 100.0 100.0 100.0 1971 117.9 125.5 132.7 113.9 116.7 122.2 1972 200.5 261.9 228.1 189.4 203.4 190.8 1973 1,225.8 1,435.8 1,367.2 1,145.7 1,204.8 1,298.4 1974 13,838 10,627 21,924 12,250 12,372 18,824 1975 80,532 70,907 126,899 63,826 72,505 102,752 1976 258,618 245,286 370,218 201,398 236,459 309,859 1977 481,158 439,731 641,378 377,234 432,261 619,175 1978 687,813 592,272 969,260 576,090 626,896 835,116 Source: INE Table 9.6: IMPLICIT GDP DEFLATORS BY SECTOR, 1966-1977 (1965 = 100) 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 GDP at Market Prices 130.4 167.2 28.9 307.9 427.3 528.0 978.7 5,155 38,849 190,802 638,600 1287,894 Agriculture, Forestry and Fishing 116.5 144.4 156.3 236.1 345.6 452.4 807.8 4,497 25,821 111,157 531,722 1306,843 Mining 149.8 177.5 239.5 371.0 444.6 378.9 824.5 4,840 34,786 140,808 419,478 545,2l8 Manufacturing 124.3 165.5 238.1 331.6 478.8 525.8 920.6 5,309 38,020 201,503 690,937 1274,444 Construction 133.0 159.0 201.3 261.3 353.6 537.1 1,130.9 4,193 29,347 129,690 472,957 982,271 Electricity, Gas, Water and Sanitary Services 127.7 147.3 206.1 320.4 432.9 437.8 566.1 1,231 16,845 115,429 496,218 977,627 Transport, Storage and Communications 141.0 186.3 241.2 331.1 430.7 524.4 1,077.7 5,106 35,663 173,431 541,331 1118,838 Wholesale and Retail Commerce 130.9 170.9 209.5 285.9 397.8 510.6 1,070.2 6,227 55,222 311,637 966,511 1828,226 Banking, Insurance and Real Estate 128.9 167.0 227.3 306.6 425.3 524.8 682.1 5,287 42,362 190,933 658,792 1641,619 Housing 124.1 154.5 197.7 253.2 321.1 431.3 616.4 3,162 20,695 98,259 315,745 585,874 Public Administration and Defense 138.4 175.3 233.4 317.2 541.1 799.7 1,579.1 6,204 41,594 196,435 643,419 1540,410 Services 134.2 181.9 240.1 340.3 483.1 747.8 1,297.5 5,528 44,373 194,434 675,717 1540,488 Source: Calculated from Tables 2.1 and 2.2 Table 9.6a: RATIO OF IMPLICIT SECTORAL DEFLATORS TO OVERALL GDP DEFLATOR, 1966-1977 1966 1967 1968 1969 11970 1971 1972 1973 1974 1975 1976 1977 Agriculture, Forestry and Fishing .89 .86 .71 .77 .81 .86 .83 .87 .66 .58 .83 1.01 Mining 1.15 1.06 1.09 1.20 1.04 .72 .84 .94 .90 .74 .66 .42 Manufacturing .95 .99 1.09 1.08 1.12 1.00 .94 1.03 .98 1.06 1.08 .99 Construction 1.02 .95 .92 .85 .83 1.02 1.16 .81 .76 .68 .74 .76 Electricity, etc. .98 .88 .94 1.04 1.01 .83 .58 .24 .43 .60 .78 .76 Transport, etc. 1.08 1.11 1.10 1.08 1.01 .99 1.10 .99 .92 .91 .85 .87 Wholesale and Retail Commerce 1.00 1.02 .96 .93 .93 .97 1.09 1.21 1.42 1.63 1.51 1.42 Banking, etc. .99 1.00 1.04 1.00 1.00 .99 .70 1.03 1.09 1.00 1.03 1.27 Housing .95 .92 .90 .82 .75 .82 .63 .61 .53 .51 .49 .45 Public Administration and Defense 1.06 1.05 1.07 1.03 1.27 1.51 1.61 1.20 1.07 1.03 1.01 1.20 Services 1.03 1.09 1.10 1.11 1.13 1.42 1.33 1.07 1.14 1.02 1.06 1.20 GDP 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Source: Table 9.6 Table 9.7: IMPLICIT GDP DEFLATORS BY EXPENDITURE CATEGORY, 1966-1977 (1965 = 100) Expenditure 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 Consumption 126.1 164.9 214.7 295.2 417.4 523.9 958.4 4,877 38,083 206,294 678,574 1381,472 a/ Personal (124.8) (163.4) (212.6) (292.4) (406.7) (499.5) (911.5) (4,870) (38,002) (211,080) (697,828) (1410,539) a/ General Government (135.0) (174.9) (228.7) (313.9) (486.8) (684.2) (1,268.9) (4,916) (38,534) (180,168) (582,045) (1216,211) Gross Domestic Investment 129.7 161.9 211.7 288.4 389.7 487.1 993.5 5,557 37,787 142,199 467,928 n.a. Fixed Investment (130.8) (161.9) (212.0) (291.4) (390.5) (486.7) (991.5) (5,699) (37,213) (181,210) (570,537) (1085,878) Change in Inventories (124.0) (162.8) (207.4) (264.3) (383.3) (491.7) (1,037.7) (3,604) (46,142) (328,546) (897,091) a/ Exports 146.3 173.0 231.3 374.1 478.3 467.0 886.5 5,765 43,835 208,970 640,009 1062,436 Imports 119.6 153.3 198.2 277.9 377.6 413.5 808.2 4,358 38,409 271,011 800,205 1354,300 GDP at Market Prices 130.3 167.2 218.9 307.9 427.3 528.0 978.7 5,155 38,849 190,802 638,600 1287,894 a/ Inventory change is included in personal consumption in 1977. Source: Tables 2.3 and 2.4 n0 - 550 - Table 9.8: IBRD INDEX OF CHILE IMPORT PRICES, 1955-1977 a! (1969 = 100) Year Index 1955 98.6 1956 100.7 1957 101.6 1958 98.6 1959 97.4 1960 97.4 1961 95.8 1962 95.3 1963 97.4 1964 100.0 1965 100.9 1966 101.9 1967 lol.6 1968 97.9 1969 100.0 1970 io8.9 1971 114.0 1972 124.7 1973 163.8 1974 227.3 1975 233.6 1976 247.7 1977 286.4 1978 310.8 a/ Calculated from IBRD price indices for manufactured exports (SITC 5-8) of developed countries, agricultural commodities, 34 commodities excluding petroleum, and petroleum with the weights 0.6, 0.2, 0.1, and 0.1, respectively. Source: IBRD, Memo of October 21, 1977, entitled "Commodity Price Forecasts - Mid-Year Updating," Table 4; Monthly Commodity Price Data and Memo of April 12, 1979, entitled "Annual Review of Commodity Price Forecasts;" and mission estimates - 551 - a! Table 9.9: CHILE - MINIMUM WAGES AND SALARIES, 1953-1970 (Current escudos) Vital Agricultural Minimum Salary Minimum Wage d SMA/SV SM/SV Year (SV) - wage (SMA) c (SMI) - (%) (%) 1952 72.84 - _ _ 1953 90.60 _e/ _ e/ 1954 139.20 36.53 _ 26 1955 220.80 54.76 _ 25 - 1956 323.47 81.38 146.oo 25 45 1957 421.03 109.55 189.80 26 45 1958 505.24 135.53 233.60 27 46 1959 690.60 203.80 321.20 30 47 1960 690.60 247.47 321.20 36 47 1961 860.04 293.83 411.72 34 48 1962 970.92 339.45 464.28 34 48 1963 1,239.84 444.94 592.76 36 48 1964 1,802.76 662.48 861.40 37 48 1965 2,495.04 1,043.17 1,191.36 42 48 1966 3,141.24 1,421.31 1,497.96 45 48 1967 3,675.24 1,752.00 1,752.00 48 48 1968 4,480.08 2,135.62 2,135.62 48 48 1969 5,730.00 2,731.29 2,731.29 48 48 1970 7,404.00 4,380.00 4,380.00 59 59 a/ The SV is legally a monthly rate, while the SMA and SM are hourly rates. The numbers shown are annualized weighted averages of the respective minima prevailing during the year. b/ Sueldo vital for industry and commerce, Department of Santiago. c/ Salario minimo agrcola for Province of Santiago. The SMA for 1959 is adjusted for introduction of the semana corrida (literally, the "continuous week") by which a person working six days is paid for seven. Workers in industry and commerce had enjoyed this benefit since 1948. d/ Salario minimo for industry and commerce nationwide. e/ Did not exist for entire year. Source: Ricardo Ffrench-Davis (op. cit.), Table 71 - 552 - Table 9.9a: CHILE - REAL MINIMUM WAGES AND SALARIES, 1953-1970- (Escudos of December 1969) Year SV SMA SM 1952 9,048 1953 8,979 1954 8,oo9 2,102 1955 7,251 1,798 1956 6,810 1,713 3,074 1957 6,656 1,732 3,000 1958 6,657 1,786 3,078 1959 6,563 1,937 3,052 1960 5,881 2,108 2,735 1961 6,802 2,324 3,256 1962 6,742 2,357 3,324 1963 5,968 2,142 2,853 1964 5,945 2,185 2,840 1965 6,386 2,670 3,049 1966 6,543 2,961 3,120 1967 6,480 3,089 3,089 1968 6,238 2,973 2,973 1969 6,l06 2,911 2,911 1970 5,954 3,522 3,522 a/ Average nominal rates shown in Table 9.9 deflated by CPI. - 553 - Table 9.10: CHILE - FAMILY ALLOWANCES PER DEPENDENT BY MAJOR FUNDS, 1952-1970 (Current escudos) Net Annual Equivalent a/ SSS/EMPART CEPP/EMPART Year SSS CEPP EMPART (%) (%) 1952 _ 7.44 9.60 - 78 1953 - 7.94 10.80 - 74 1954 2.19 11.88 15.72 14 76 1955 8.11 18.84 24.60 33 77 1956 15.60 38.40 40.56 38 95 1957 21.87 53.88 6o.oo 36 90 1958 23.23 56.40 76.80 30 73 1959 33.63 67.20 95.82 35 70 1960 33.63 67.20 109.56 31 63 1961 38.84 77.28 126.72 31 63 1962 39.49 78.49 128.70 31 61 1963 45.o8 88.92 157.20 29 57 1964 58.94 132.o6 222.o6 27 59 1965 114.43 180.00 310.80 37 58 1966 159.51 234.00 404.52 39 59 1967 208.05 288.00 512.52 41 56 1968 260.o6 348.00 648.oo 40 53 1969 346.75 444.oo 925.02 37 48 1970 520.12 816.00 1,237.02 42 66 a/ In several years, retroactive adjustments or bonuses were declared late in the year, and in the case of EMPART an additional end-of-year distribution was made when the account out of which family allowances were paid was found to be in surplus. In these cases, the amounts received were divided among the year received and the year when the benefits were accrued. Source: Ricardo Ffrench-Davis (op. cit.), Table 72 - 554 - Table 9.10a: CHILE - REAL FAMILY ALLOWANCES PER DEPENDENT PER YEAR, 1952-1970 (Escudos of December 1969) Net Annual Equivalent -! Year SSS CEPP EMPART 1952 924 1,193 1953 - 787 1,070 1954 126 684 904 1955 266 619 808 1956 328 808 854 1957 346 852 948 1958 306 743 1,012 1959 320 639 911 1960 286 589 933 1961 307 627 1,002 1962 274 545 894 1963 217 428 757 1964 194 435 732 1965 293 461 795 1966 332 487 843 1967 367 508 904 1968 362 468 902 1969 370 473 986 1970 418 656 994 a/ See note, Table9.9 Source: Ricardt Ffrenck-Davis, cit.) - 555 - Table 9.11: CHILE - MINIMUM WAGES AND SALARIES, BY MONTH OF ADJUSTMENT, 1969-78 (Current escudos/pesos)-/ Vital Minimum Minimum Salary Wage b/ Income Year Month (per Month) (per Month)- (per Month) 1969 January 477.50 224.49 1970 January 617.41 360.00 1971 January 832.98 600.00 1972 January 1,017.00 900.00 October 2,033.92 1,900.80 1973 March (3,270.54)c- (3,056.49)c- October 12,000 1974 January 18,000 May 29,000 July 39,000 October 48,400 December 64,goo 1975 March 1o6,4oo00 June 182,200 September 225,680 December 288.90 1976 March 381.35 April 431.35 June 599.58 September 755.47 December 891.45 1977 March 1,150.08 May 1,196.08 July 1,411.37 December 1,665.42 1978 January 2,000.00 March 2,160.00 July 2,376.oo December 2,661.12 a/ Data through September 1975 are given in escudos; subsequent data are in pesos (1 peso = 1,000 escudos). b/ Daily rate multiplied by 30. c/ Includes 60.8 percent general wage and salary adjustment. d/ Includes E0 20,000. Note: Data for 1976-78 are only for the month when an adjustment was made. Source: INE Table 9.12a: CHILE - REAL MINIMUM WAGE, 1970-78 (DEFLATED BY IBRD ADJUSTED CPI) (Escudos per month,-/ prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 ,97R January 337.08 438.28 420.56 224.95 426.74 323.93 337.07 395.65 565.94 February 320.86 435.41 407.24 198.62 342.79 278.05 306.15 373.96 552.64 March 309.81 430.11 394.39 285.65 300.20 376.12 356-05 454.94 580.07 April 302.52 419.58 358.57 216.31 260.42 311.36 359.91 434.51 565-37 May 296.30 408.16 328.47 173.96 386.10 268.41 327-78 435.35 553.74 June 290.56 400.oo 302.93 145.55 319.63 383.66 405.72 421.44 542.66 July 285.04 379.75 274.39 138.93 385.38 351.01 372.56 478.63 582.06 a August 277.99 361.45 250.00 132.89 347.56 322.31 353.14 462.90 566.o8 September 270.88 342.86 229.77 127.35 308.06 365.49 413.52 446.38 550.15 October 268.46 324.32 376.40 443.95 321.47 337.17 387.56 428.39 540.10 November 266.86 306.12 307.57 345.92 293.05 311.61 373.37 419.17 533.08 December 266.86 290.00 259.74 324.68 368.96 372.46 419.20 479.74 588.34 Average 291.10 378.00 325.84 229.90 338.36 333.47 367.67 435.92 560.02 a/ Daily rate multiplied by 30. Table 9.12b: CHILE - REAL MINIMT24 WAGE, 1970- 78 (DEFLATED BY UC ADJUSTED CPI) (Escudos per month,-/ prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 336.13 420.76 470.71 302.58 395.92 300.46 312.99 367.33 524.39 February 319.15 416.09 436.05 287.69 318.06 257.83 284.41 347.19 512.17 March 307.17 409.28 409.46 432.75 278.50' 348.86 330.64 422.17 537.44 April 299.00 398.14 388.27 374.29 241.52 287.96 334.22 403.21 523.76 May 291.97 386.35 369.16 306.23 358.05 249.08 304.27 403.99 513.04 June 285.49 377.36 349.92 251.56 296.38 356.13 376.49 391.09 503.03 July 279.29 375.23 329.43 218.62 357.43 325.82 345.72 444.16 540.34 August 271.49 369.69 267.06 186.04 322.32 299.18 327.70 429.55 525.04 September 263.74 364.52 215.67 159.51 285.74 339.27 383.74 414.23 510.54 October 260.68 357.57 401.61 334.06 298.26 312.95 359.64 397.53 501.26 November 258.44 347.62 373.29 315.50 271.87 289.28 346.47 388.97 494.63 December 257.33 337.08 341.87 301.20 342.31 345.77 389.00 445.19 545.82 Average 285.82 379.97 362.71 289.17 313.86 309.38 341.27 404.55 519.28 a/ Daily rate multiplied by 30. Table 9.12c: CHILE - REAL MINIMUM WAGE, 1970-78 (DEFLATED BY OFFICIAL CPI) (Escudos per month,-/ prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 337.08 438.28 526.32 396.83 597.61 453.59 472.17 554.18 791.27 February 320.86 435.41 494.51 380.92 480.oo 389.35 428.86 523.67 772.76 March 309.81 430.11 481.28 576.70 420.36 526.65 498.76 636.74 811.06 April 302.52 419.58 454.55 523.37 364.59 435.98 504.17 6o8.16 790.50 May 296.30 4o8.16 436.89 438.52 540.34 375.99 459.17 609.19 774.24 June 290.56 400.00 428.57 379.22 447.32 537.43 568.30 589.55 758.77' July 285.04 398.94 409.09 329.01 539-49 491.71 521.86 669.53 813.84 August 277.99 394.74 334.57 280.93 486.47 451.49 494.65 647.52 791.50 September 270.88 390.62 273.56 240.48 431.27 511.99 579.24 624.23 769.22 October 268.46 384.12 501.53 503.36 450.15 472.31 542.87 599-07 755.17 November 266.86 374.06 474.01 476.19 410.34 436.52 522.99 586.19 745.48 December 266.86 364.08 437.97 454.55 516.64 521.75 587.00 670.76 822.56 Average 291.10 403.18 437.74 415.01 473.71 467.06 515.00 609.90 783.03 a/ Daily rate multiplied by 30. Table 9.13a: CHILE - INDEX OF REAL MINIMUM WAGE, 1970-78 (DEFLATED BY IBRD ADJUSTED CPI) (Average 1970 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 116 151 144 77 147 111 116 136 194 February 110 150 140 68 118 96 105 128 190 March 106 148 135 98 103 129 122 156 199 April 104 144 123 74 89 107 124 149 194 May 102 140 113 60 133 92 113 150 190 June 100 137 104 50 110 132 139 145 186 July 98 130 94 48 132 121 128 164 200 August 95 124 86 46 119 111 121 159 194 September 93 118 79 44 106 126 142 153 190 October 92 111 129 153 110 116 133 147 186 November 92 105 106 119 101 107 128 144 183 December 92 100 89 112 127 128 144 165 202 Average 100 130 112 79 116 115 126 150 192 Table 9.13b: CHILE - INDEX OF REAL MINIMUM WAGE, 1970-78 (DEFLATED BY UC ADJUSTED CPI) (Average 1970 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 118 147 165 106 139 105 110 129 183 February 112 146 153 101 111 90 100 121 179 March 107 143 143 151 97 122 116 148 188 April 105 139 136 131 85 101 117 141 183 May 102 135 129 107 125 87 106 141 179 June 100 132 122 88 io4 125 132 137 176 July 98 131 115 76 125 114 121 155 189 Auguat 95 129 93 65 113 105 115 150 184 September 92 128 75 56 100 119 134 145 179 October 91 125 141 117 104 109 126 139 175 November 90 122 131 110 95 101 121 136 173 December 90 118 120 105 120 121 136 156 191 Average 100 133 127 101 110 108 119 142 182 Table 9.13c: CHILE - INDEX OF REAL MINIMUM WAGE, 1970-78 (DEFLATED BY OFFICIAL CPI) (Average 1970 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 116 151 181 136 205 156 162 190 272 February 110 150 170 131 165 134 147 180 265 March 106 148 165 198 144 181 171 219 279 April 104 144 156 180 125 150 173 209 272 May 102 140 150 151 186 129 158 209 266 June 100 137 147 130 154 185 195 203 261 July 98 137 141 113 185 169 179 230 280 August 95 136 115 97 167 155 170 222 272 w September 93 134 94 83 148 176 199 214 264 October 92 132 172 173 155 162 186 206 259 November 92 128 163 164 141 150 180 201 255 December 92 125 150 156 177 179 202 230 283 Average 100 139 150 143 163 160 177 210 269 Table 9.14a: CHILE - REAL MINIMUM SALARY, 1970-78 (DEFLATED BY IBRD ADJUSTED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 578.10 608.46 475.23 240.70 426.74 323.93 337.07 395.65 565.94 February 550.28 604.48 460.18 212.53 342.79 278.05 306.15 373.96 552.64 March 531.33 597.12 445.66 305.66 300.20 376.12 356.05 454.94 580.07 April 518.83 582.50 405.18 231.46 260.42 311.36 359.91 434.51 565.37 May 508.16 566.65 371.17 186.14 386.10 268.41 327.78 435-35 553.74 June 498.31 555.32 342.31 155.74 319.63 383.66 405.72 421.44 542.68 July 488.84 527.20 310.o6 148.66 385.38 351.01 372.56 478.63 5bj2.0o 6 August 476.76 501.80 282.50 142.20 347.56 322.31 353.14 462.90 566.08 September 464.57 475.99 259.64 136.27 308.06 365.49 413.52 446.38 550.15 October 460.41 450.26 402.76 443.95 321.47 337.17 387.56 428.39 540.10 November 457.68 424.99 329.11 345.92 293.05 311.61 373.37 419.17 533.08 December 457.68 402.60 277.90 324.68 368.96 372.46 419.20 479.74 588.34 Average 499.25 524.78 363.47 239.49 338.36 333.47 367.67 435.92 560.02 Table 9.14 b: CHILE - REAL MINIMUM SALARY, 1970-78 (DEFLATED BY UC ADJUSTED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 576.48 584.14 531.90 323.77 395.92 300.46 312.99 367.33 524.39 February 547.35 577.66 492.73 307.84 318.06 257.83 284.41 347.19 512.17 March 526.80 568.20 462.69 463.05 278.50 348.86 330.64 422.17 537-44 April 512.80 552.74 438.74 400.51 241.52 287.96 334.22 403.21 523.76 May 500.74 536.37 417.15 327.68 358.05 249.08 304.27 403.99 513.04 June 489.62 523.89 395.41 269.18 296.38 356.13 376-49 391.09 503.03 July 478.98 520.94 372.25 233.93 357.43 325.82 345.72 444.16 540.34 O August 465.62 513.23 301.78 199.07 322.32 299.18 327.70 429.55 525.o4 September 452.32 506.06 243.71 170.68 285.74 339.27 383.74 414.23 510.54 October 447.07 496.41 429.73 334.06 298.26 312.95 359.64 397.53 501.26 November 443.22 482.61 399.43 315.50 271.87 289.28 346.47 388.97 494.63 December 441.32 467.97 365.81 301.20 342.31 345.77 389.00 445.19 545.82 Average 490.19 527.52 404.28 303.87 313.86 309.38 341.27 4o4.55 519.28 Table 9.14c: CHILE - REAL MINIMUM SALARY, 1970-78 (DEFLATED BY OFFICIAL CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 1975 January 578.10 608.46 594.74 424.62 597.61 453.59 472.17 554.18 791.27 February 550.28 604.48 558.79 407.60 480.00 389.35 428.86 523.67 772.76 March 531.33 597.12 543.85 617.08 420.36 526.65 498.76 636.74 811.06 April 518.83 582.50 513.64 560.02 364.59 435.98 504.17 608.16 790.50 May 508.16 566.65 493.69 469.23 540.34 375.99 459.17 609.19 774.24 June 498.31 555.32 484.29 405.77 447.32 537.43 568.30 589.55 758.77 July 488.84 553,84 462.27 352.05 539.49 491.71 521.86 669.53 813.84 August 476.76 548.01 378.07 300.60 486.47 451.49 494.65 647.52 791.50 September 464.57 542.30 309.12 257.32 431.27 511.99 579.24 624.23 769.22 October 460.41 533.28 536.65 503.36 450.15 472.31 542.87 599.07 755.17 November 457.68 519.31 507.21 476.19 410.34 436.52 522.99 586.19 745.48 December 457.68 505.45 468.65 454.55 516.64 521.75 587.00 670.76 822.56 Average 499.25 559.73 487.58 435.70 473.71 467.06 515.00 609.90 783.03 Table 9.15a: CHILE - INDEX OF REAL MINIMUM SALARY, 1970-78 (DEFLATED BY IBRD ADJUSTED CPI) (Average 1970 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 116 122 95 48 85 65 68 79 113 February 110 121 92 43 69 56 61 75 107 March 106 120 89 61 6o 75 71 91 116 April 104 117 81 46 52 62 72 87 113 May 102 114 74 37 77 54 66 87 111 June 100 111 69 31 64 77 81 84 109 July 98 106 62 30 77 70 75 96 117 August 95 101 57 28 70 65 71 93 113 September 93 95 52 27 62 73 83 89 110 October 92 90 81 89 64 68 78 86 108 November 92 85 66 69 59 62 75 84 107 December 92 81 56 65 74 75 84 96 118 Average 100 105 73 48 68 67 74 87 112 Table 9.15b: CHILE - INDEX OF REAL MINIMUM SALARY, 1970-78 (DEFLATED BY UC ADJUSTED CPI) (Average 1970 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 118 119 109 66 81 61 64 75 107 February 112 118 101 63 65 53 58 71 104 March 107 116 94 94 57 71 67 86 110 April 105 113 90 82 49 59 68 82 107 May 102 109 85 67 73 51 62 82 105 June 100 107 81 55 60 73 77 80 103 July 98 106 76 48 73 66 71 91 110 August 95 105 62 41 66 61 67 88 107 September 92 103 50 35 58 69 78 85 104 October 91 101 88 68 61 64 73 81 102 November 90 98 81 64 55 59 71 79 101 December 90 95 75 61 70 71 79 91 111 Average 100 108 82 62 64 63 70 83 106 Table 9.15c: CHILE - INDEX OF REAL MINIMUM SALARY, 1970-78 (DEFLATED BY OFFICIAL CPI) (Average 1970 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 January 116 122 119 85 120 91 95 1ll 158 February 110 121 112 82 96 78 86 105 155 March 106 120 109 124 84 105 100 128 162 April 104 117 103 112 73 87 101 122 158 May 102 114 99 94 108 75 92 122 155 June 100 111 97 81 90 108 114 118 152 July 98 111 93 71 108 98 105 134 163 August 95 110 76 60 97 90 99 130 159 September 93 109 62 52 86 103 116 125 154 October 92 107 107 101 90 95 109 120 151 November 92 104 102 95 82 87 105 117 149 December 92 101 94 91 103 105 118 134 165 Average 100 112 98 87 95 94 103 122 157 - 568 - Page 1 of 2 Table 9.16: CHILE - RECEIPTS OF MINIMUM-INCOME BLUE-COLLAR WORKER,-/ 1968-1977 (Escudos per month) Month of Trans- Adjustment Minimum portation Other or Wage b/ Family / Allow- Bonuses, Year Bonus or Income Allowance - ance etc. Total- 1968 January 175.50 74.83 - - 250.33 1969 January 224.50 99.75 - - 324.25 1970 January 360.00 149.62 - - 509.62 1971 January 600.00 299.25 - - 899.25 1972 January 900.00 413.98 - - 1,313.98 October 1,900.80 829.92 - - 2,730.72 1973 March 3,056.49 d/ 829.92 - - 3,886.41 October 12,000 e/ 3,150 720 - 15,870.00 November 12,000 3,150 720 3,056.49 f/ 18,926.49 December 12,000 3,150 720 13,056.49 / 28,926.49 1974 January 18,000 6,300 720 - 25,020 February 18,000 6,300 1,700 7,700 h/ 33,700 May 29,000 14,000 5,000 - 48,ooo June 29,000 14,000 5,000 10,000 i/ 58,000 July 39,000 17,500 5,000 - 61,500 September 39,000 17,500 5,000 22,500 i/ 84,ooo October 48,400 21,700 6,200 15,000 k/ 91,300 November 48,400 21,700 6,200 -240 1/ 76,060 December 64,900 32,900 8,400 18,270 m/ 124,470 1975 January 64,900 32,900 8,400 -3,630 n/ 102,570 February 64,900 32,900 8,400 - 106,200 March 86,400 44,100 11,200 20,000 o/ 161,700 April 86,400 44,100 11,200 20,000 p/ 161,700 May 86,400 44,lo0 11,200 20,000 / 161,700 June 182,000 75,600 19,200 -10,000 r/ 266,800 July 182,000 75,600 19,200 -10,000 r/ 266,800 August 182,000 75,600 19,200 - 276,800 September 225,680 93,800 23,200 - 342,680 December 288,900 120,050 30,590 - s/ 439,540 s/ 1976 March 381,350 158,480 40,380 - 580,210 April 431,350 t/ 158,480 40,380 - 630,210 June 599,580 220,290 56,130 876,ooo September 755,470 277,550 70,720 1,103,740 December 891,450 327,495 83,450 450,000 u/ 1,752,395 1977 March 1,150,o80 389,725 99,310 - 1,639,115 iMnY 1,196,080 389,725 99,310 - 1,605,115 July 1,411,370 459,865 117,190 - 1,988,425 November 1,411,370 459,865 117,190 450,000 v/ 2,438,425 December 1,665,420 542,640 138,200 450,000 v/ 2,796,260 a/ The average worker is assumed to have 3.5 dependents. b/ Minimum daily wage multiplied by 30 (for period before October 1973 when replaced by minimum monthly income). c/ Allowance per dependent multiplied by 3.5. d/ Includes 60.8 percent general wage increase. - 569 - Table 9.16 Page 2 of 2 e/ In October 1973, a minimum income for all workers replaced the sueldo vital and salario minimo. f/ Bonus equivalent to wage of April 1973. 0 LI' Repeats November bonus plus Christmas bonus of E 10,000. h/ Bonus of E 2,200 per dependent paid in February, March and April i/ One-time only bonus of E 10,000 per worker. 0~~~~~~~ i/One-time only bonus of E 5,000 per worker and per dependent. k/ A E 15,000 advance paid in October to be deducted in equal installments from November and December earnings. 1/ Includes an advance paid in November equivalent to 15 percent of the October 1974 wage, less the first installment due on the October advance. The November advance was to be deducted in equal installments from earnings in December and Janaury. mi/ Includes Christmas bonus of E 8,400 per dependent, less the second installment repayment of the October advance and the first installment repayment of the November advance. n/ Second installment repayment of November 1974 advance. o/ Bonus of E 20,000 paid to lower-wage workers (workers whose earnings totaled less than E 150,000 after regular March adjustment). p/ E 20,000 bonus paid all workers. jj Advance of E020,OOO paid in May, repayable from June and July earnings. r/ Repayment of May advance. s/ Does not include Christmas bonus (for lack of information). t/ Special 13.1 percent adjustment declared for low-wage workers. u/ Christnas bonus of 100 pesos per worker and per dependent. v/ Bonus of 100 pesos per worker and per dependent. w/ Does not include meal allowance which is compulsory only for public sector employees. Table 9.17a: CHILE - REAL RECEIPTS OF MINIMUM-INCOME BLUE-COLLAR WORKER, 1970-1977 (DEFLATED BY IBRD ADJUSTED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 January 477.17 656.87 614.01 323.16 593.17 511.95 512.83 646.58 February 454.21 652.58 594.56 285.34 641.78 454.99 465.78 61143 March 438.57 644.62 575.80 363.22 562.04 571.60 541.72 648.38 April 428.25 628.85 523.50 275.05 487.56 473.18 525.83 619.28 May 419.44 611.73 479-55 221.20 639.06 407.91 478.90 613.35 June 411.32 599.50 442.27 185.07 639.26 561.80 592.76 593.76 July 403.50 569.15 400.60 176.66 607.71 514.00 544.32 674.33 August 393-53 541.72 364.99 168.97 548.08 489.65 515.94 652.16 September 383.46 513.86 335.46 161.93 663.51 554.97 604.16 628.89 October 380.03 486.o8 540.74 587.13 606.40 511.97 566.22 603.54 November 377.78 458.80 441.86 545.59 460.52 473.16 545.50 724.19 December 377.78 434.63 373.10 782.64 707.62 566.67 824.05 805.50 Average 412.09 566.53 473.87 339.66 596.39 507.65 554.29 651.76 a/ Does not include Christmas bonus. Source: Table 9.14 Table 9-17b: CHILE - REAL RECEIPTS OF MINIMUM-INCOME BLUE-COLLAR WORKER, 1970-1977 (DEFLATED BY UC ADJUSTED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 January 475.84 630.61 687.23 434.69 550.33 474.86 476.20 600.00 February 451.79 623.61 636.62 413.31 595.48 421.90 432.71 567.11 March 434.83 613.40 597.81 550.25 521.41 530.17 503.05 601.68 April 423.27 596.72 566.86 475.93 452.17 437.63 488.30 574.67 May 413.32 579.04 538.96 389.38 592.64 378.54 444.55 569.17 June 404.14 565-57 510.88 319.87 592.78 521.49 550.06 550.99 July 395.36 562.38 480.96 277.98 563.65 477.11 505.11 625.76 August 384.33 554.07 389.91 236.56 508.27 454.51 478.78 605.18 September 373.35 546.32 314.88 202.82 615.43 515.15 560.64 583.59 October 369.02 535.91 576.95 441.79 562.63 475.19 525.44 560.06 November 365.84 521.00 536.28 497.61 427.23 439.25 50620 672.03 December 364.27 505.20 491.14 726.07 656.51 526.o6 764.69 747.47 Average 404.61 569.49 527.37 413.86 553.21 470.99 519.64 6o4.81 a/ Does not include Christmas bonus. Source: Table 9.14 - 572 - Page 1 of 2 Table 9.18 CHILE - RECEIPTS OF MINIMUM-INCOME WHITE-COLLAR WORKER,-/ 1969-1977 (Escudos per month) Month of Trans- Adjustment portation Other or Minimum Family b Allow- Bonuses, Year Bonus Salary Allowance ance etc. Total- 1969 January 477.50 270.10 - - 747.60 1970 January 617.41 388.50 - - 1,005.91 1971 January 832.89 560.00 - - 1,392.89 1972 January 1,016.96 805.00 - - 1,821.96 October 2,033.92 1,610.00 - - 3,643.92 1973 March 3,270.54 1,61o.0o - - 4,880.54 October 12,000 e/ 3,150 720 - 15,870.00 November 12,000 3,150 720 3,056.49 f/ 18,926.49 December 12,000 3,150 720 13,056.49 g/ 28,926.49 1974 January 18,000 6,300 720 - 25,020 February 18,ooo 6,300 1,700 7,700 h/ 33,700 May 29,000 14,000 5,000 - 48,ooo June 29,000 14,000 5,000 10,000 i/ 58,ooo July 39,000 17,500 5,000 - 61,500 September 39,000 17,500 5,000 22,500 j/ 84,ooo October 48,400 21,700 6,200 15,000 k/ 91,300 November 48,400 21,700 6,200 -240 1/ 76,o60 December 64,900 32,900 8,400 18,270 m/ 124,470 1975 January 64,900 32,900 8,400 -3,630 n/ 102,570 February 64,900 32,900 8,4oo - 106,200 March 86,400 44,100 11,200 20,000 o/ 161,700 April 86,400 44,100 11,200 20,000 / 161,700 May 86,400 44,100 11,200 20,000 j/ 161,700 June 182,000 75,600 19,200 -10,000 r/ 266,800 July 182,000 75,600 19,200 -10.000 r/ 266,800 August 182,000 75,600 19,200 - 276,800 September 225,680 93,800 23,200 - 342,680 December 288,900 120,050 30,590 - s/ 439,540 s/ 1976 March 381,350 158,480 40,380 - 580,210 April 431,350 t/ 158,480 40,380 - 630,210 June 599,580 220,290 56,130 - September 755,470 277,550 70,720 - 1,103,740 December 891,450 327,495 83,450 450,000 u/ 1,752,395 1977 March 1,150,o80 389,725 99,310 - 1,639,115 May 1,196,080 389,725 99,310 - 1,685,115 July 1,411,370 459,865 117,190 - 1,988,425 November 1,411,370 459,865 117.190 450,000 v/ 2,438,425 December 1,665,420 542,640 138,200 450,000 v/ 2,796,260 a/ The average worker is assumed to have 3.5 dependents. b/ Allowance per dependent multiplied by 3.5 c/ Does not include meal allowance which is only compulsory for public sector. d/ Includes 60.8 percent general wage increase. - 573 - Table 9.18 Page 2 of 2 e/ In October 1973, a minimum income for all workers replaced the sueldo vital and salario mlnimo. f/ Bonus equivalent to wage of April 1973. 0 g/ Repeats November bonus plus Christmas bonus of E 10,000. h/ Bonus of E02,200 per dependent paid in February, March and April. i/ One-time only bonus of E 010,000 per worker. 0~~~~~~~ /One-time only bonus of E 5,000 per worker and per dependent. k/ A E 15,000 advance paid in October to be deducted in equal installments from November and December earnings. 1/ Includes an advance paid in November equivalent to 15 percent of the October 1974 wage, less the first installment due on the October advance. The November advance was to be deducted in equal installments from earnings in December and January. m/ Includes Christmas bonus of E08,400 per dependent, less the second installment repayment of the October advance and the first installment repayment of the November advance. n/ Second installment repayment of November 1974 advance. _/ Bonus E020,000 paid to lower-wage workers (workers whose earnings totaled less than E 150,000 after regular March adjustment). pl E 20,000 bonus paid all workers. q! Advance of E020,000 paid in May, repayable from June and July earnings. r/ Repayment of May advance s/ Does not include Christmas bonus (for lack of information). t/ Special 13.1 percent adjustment declared for low-wage workers. u/ Christmas bonus of 100 pesos per worker and per dependent. v/ Bonus of 100 pesos per worker and per dependent. Table 9.19:a CHILE - REAL RECEIPTS OF MINIMUM-INCOME WHITE-COLLAR WORKER, 1970-1977 (DEFLATED BY IBRD ADJUSTED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 January 941.86 1,017.45 851.38 431.23 593.17 511.95 512.83 646.58 February 896.53 1,010.81 824.42 380.76 641.78 454.99 465.78 611.13 March 865.67 998.49 798.40 456.13 562.04 571.60 541.72 648.38 April 845.30 974.05 725.88 345.40 487.56 473.18 525.83 619.28 May 827.91 947.54 664.95 277.78 639.o6 407.91 478.90 613.35 June 811.87 928.59 613.25 232.41 639.26 561.80 592.76 593.76 July 796.44 881.58 555.48 221.84 607.71 514.00 544.31 674.33 August 776.76 839.09 506.10 212.20 548.o8 489.65 515.88 652.16 September 756.89 795.94 465.14 203.36 663.51 554.97 604.16 628.89 October 750.12 752.91 721.57 587.13 606.40 511.97 566.22 603.54 November 745.67 710.66 589.63 545.59 460.52 473.16 545.50 724.19 December 745.67 673.22 497.87 782.64 707.62 566.67 824.05 805.50 Average 813.39 877.53 651.17 389.71 596.39 507.65 554.29 651.76 a/ Does not include Christmas bonus in 1975. Source: Table 9.16 Table 9.19b: CHILE - REAL RECEIPTS OF MINIMUM-INCOME WHITE-COLLAR WORKER, 1970-1977 (DEFLATED BY UC ADJUST1ED CPI) (Escudos per month, prices of December 1969) 1970 1971 1972 1973 1974 1975 1976 1977 January 939.23 976.78 952.91 580.o6 550.33 474.86 476.20 600.00 February 891.76 965.94 882.73 551.52 595.48 421.90 432.71 567.11 March 858.28 950.13 828.92 691.00 521.41 530.17 503.05 6o0.68 April 835.47 924.28 786.01 597.67 452.17 437.63 488.30 574.67 May 815.82 896.90 747.32 488.98 592.64 378.54 444.55 569.17 June 797.71 876.03 708.38 401.69 592.78 521.49 550.O6 550.99 July 780.38 871.10 666.90 349.o8 563.65 477.11 505.11 625.76 August 758.60 858.22 540.64 297.07 508.27 454.51 478.78 605.18 September 736.93 846.23 436.61 254.70 615.43 515.15 560.64 583.59 October 728.39 830.09 769.90 441.79 562.63 475.19 525.44 560.o6 November 722.12 807.00 715.62 497.61 427.23 439.25 506.20 672.03 December 719.02 782.52 655.38 726.07 656.51 526.06 a/ 76,4.69 747.47 Average 798.64 882.10 724.28 489.77 553.21 470.99 a/ 519.64 6o4.81 a/ Does not include Christmas bonus in 1975. Source: Table 9.16 - 576 - Table 9.20: CHILE - NOMINAL AVERAGE WAGE AND SALARY INDICES, 1959-1978 (April 1969 = 100) Sectoral Indices Aggregate Indices Government Wages Public Central Autonomous Year/Month Wages Salaries and Salaries Mining Manufacturing Utilities Government Agencies 1959 April 6.6 6.9 6.8 5.2 6.6 4.6 6.8 8.4 1960 April n.a. n.a. 7.8 n.a. n.a. n.a. n.a. n.a. 1961 April n.a. n.a. 9.0 n.a. n.a. n.a. n.a. n.a. 1962 April n.a. n.a. 10.2 n.a. n.a. n.a. n.a. n.a. 1963 April 13.3 14.5 13.9 11.9 13.9 11.1 14.2 15.6 1964 April 18.7 18.4 18.6 16.4 20.7 16.0 16.3 18.9 1965 April 28.6 28.5 28.6 24.9 29.6 22.1 26.1 32.7 1966 April 39.3 38.5 38.9 32.5 42.6 34.9 34.7 40.7 1967 April 54.1 56.4 55.3 52.9 54.7 50.9 57.3 57.3 1968 April 71.3 62.0 66.6 71.0 72.0 61.2 59.4 64.9 1969 April 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1970 January 125.4 131.4 128.4 134.4 125.4 118.5 133.5 129.4 April 138.7 148.8 143.8 138.1 140.4 122.3 157.8 148.5 July 151.6 156.7 154.1 141.6 152.3 155.2 161.4 157.5 October 168.3 163.3 165.8 194.9 159.2 155.7 165.1 165.1 1971 January 182.9 185.0 183.9 218.4 176.4 166.6 170.7 194.1 April 210.9 229.0 220.1 229.0 207.3 201.1 234.6 230.6 July 233.9 243.4 238.7 243.6 227.6 219.2 241.5 257.1 October 250.0 253.5 251.8 256.0 256.3 236.3 245.0 252.2 1972 January 284.4 276.7 280.5 289.9 286.6 239.0 242.6 306.1 April 317.4 300.1 308.7 278.7 327.7 318.5 262.5 324.C July 349.3 342.7 346.o 290.4 362.3 324.4 371.3 336.8 October 562.8 551.4 557.1 431.8 618.9 425.8 514.0 593.0 1973 January 801.4 729.9 765.2 788.8 803.9 791.0 670.9 715.0 April 919.1 787.4 852.4 796.7 987.8 786.6 760.8 760.8 July 1,328 1,130 1,228 979.2 1,439 912.1 1,240 1,111. October 1,699 1,307 1,501 1,471 1,821 1,108 1,235 1,497 1974 January 4,336 4,009 4,170 2,876 5,070 3,656 4,987 2,978 April 5,590 5,429 5,508 4,499 6,359 4,302 6,167 4,590 July 9,657 9,610 9,633 9,362 10,316 7,337 11,919 7,776 October 12,775 13,550 13,167 11,197 14,029 9,659 16,758 11,260 1975 January 17,597 19,602 18,612 16,464 19,611 14,345 23,733 15,727 April 27,347 28,963 28,165 27,631 29,098 19,290 36,643 23,579 July 43,191 48,435 45,846 43,875 45,713 34,978 61,995 38,645 October 56,814 60,393 58,626 57,315 61,191 44,410 73,787 48,640 1976 January 74,875 79,097 77,012 73,040 82,764 60,253 93,547 63,124 April 105,130 109,406 107,294 103,161 116,085 81,541 129,094 87,728 July 150,803 153,255 152,042 147,643 167,025 112,059 184,637 119,530 October 198,848 198,661 198,750 203,100 218,419 142,211 239,193 153,958 1977 January 248,885 255,817 252,391 261,911 275,015 172,144 305,611 198,339 April 301,298 311,623 306,522 314,507 332,987 203,671 374,766 243,216 July 363,065 385,263 374,299 361,696 404,003 243,957 468,531 305,425 October 379,735 394,602 387,243 380,260 429,740 249,792 471,840 304,923 1973 tuiuary 44O,377 47O,7o2 4)0,0oi( 416,2o1 513,916 301,125 .. April 500,552 519,579 510.171 479,779 573,001 326,670 July 569,566 581,276 575,449 511,191 657,045 417,848 * October 597,682 595,945 596.456 555,894 687,571 435,307 Source: INE T _abl . 9-21: CHILE - INDICES OF REAL WAGES AND SALARIES, 1959- 1978 (April 1969 0 loo) b/ j IBD Deflator UC Deflator Official Deflator Wages and wagea and Wages and Year/Month Wages Salaries Salaries Wages Salaries Salaries Wages Salaries Salaries 1959 April 60.o 62.7 61.8 1960 n.a. n.a. 63.6 1961 n.a. n.a. 68.4 1962 n.a. n.a. 68.1 1963 ' 60.6 66.1 63.3 1964 57.9 56.9 57.5 1965 " 68.7 68.4 68.7 1966 76.8 77.8 76.0 1967 " 89.5 93.3 91.5 1968 " 93.1 81.0 87.0 1969 11 100.0 100.0 100.0 1970 Jan. 109.9 115.1 112.5 110.2 115.5 112.8 April 108.1 116.0 112.1 109.4 117.3 113.4 July 110.4 114.0 112.3 112.6 116.4 114.6 Oct. 114.4 111.0 112.7 117.8 114.3 116.0 1971 Jan. 125.4 126.8 126.1 120.4 121.7 121.0 125.4 126.8 126.1 April 138.4 150.3 144.4 131.3 142.6 137.1 138.4 150.3 144.4 July 138.9 144.6 141.8 137.3 142.8 140.1 145.9 151.9 148.9 Oct. 126.8 128.6 127.7 139.8 141.8 140.8 150.2 152.3 151.3 1972 Jan. 124.7 11.3 123.0 139.6 135.8 137.7 156.1 151.8 153.9 April 118.7 112.2 115.4 128.5 121.5 125.0 150.4 142.2 146.3 July 99.9 98.0 99.0 120.0 117.7 118.8 149.0 146.2 147.6 Oct. 104.6 102.5 103.5 111.6 109.3 110.5 139.3 136.5 137.9 1973 Jan. 89.0 81.1 85.0 119.7 109.0 114.3 157.0 143.0 149.9 April 61.0 52.3 56.6 105.6 90.5 98.0 147.7 126.5 137.0 July 56.6 48.2 52.4 89.1 75.8 82.4 134.1 114.1 124.0 Oct. 59.0 45.4 52.1 44.4 34.1 39.2 66.9 51.4 59.1 1974 Jan. 96.5 89.2 92.8 89.5 82.7 86.1 133.1 124.9 129.9 April 75.9 73.7 74.8 70.4 68.4 69.4 106.3 103.2 104.7 July 89.5 89.1 89.3 83.1 82.6 82.8 125.4 124.7 125.0 Oct. 79.6 84.5 82.1 73.9 78.4 76.1 111.5 118.3 114.9 1975 Jan. 82.4 91.8 87.2 76.4 85.2 80.9 115.4 128.6 122.1 April 75.1 79.5 77.3 69.5 73.6 71.5 105.2 111.4 108.3 July 78.1 87.6 82.9 72.> 81.3 76.9 109.4 122.7 116.1 Oct. 79.7 84.7 82.3 73.9 78.6 76.4 111.6 118.6 115.2 1976 Jan. 82.0 86.6 84.3 76.1 80.4 78.3 114.8 121.3 118.1 April 82.3 85.7 84.0 76.4 79.5 78.o 115.3 120.0 117.7 July 87.9 89.4 88.7 81.6 82.9 82.3 123.2 125.2 124.2 Oct. 95.7 95.6 95.7 88.9 88.8 88.8 134.1 134.0 134.0 1977 Jan. 103.7 106.5 105.1 96.2 98.9 97.6 145.2 149.2 147.3 April 106.8 110.4 108.6 99.1 102.5 100.8 149.6 154.7 152.2 July 115.5 122.5 119.1 107.1 113.6 110.4 161.8 171.7 166.8 Oct. 108.1 112.3 110.3 100.3 104.1 102.2 151.5 157.4 154.5 1978 Jan. 119.3 124.0 121.8 110.7 114.9 112.8 167.3 173.8 170.6 April 122.8 127.6 125.3 ti4.o 118.3 116.1 172.1 1?8.8 175.5 July 130.9 135.6 132.3 121.5 124.0 122.8 183.1 186.8 185.0 Oct. 127.5 127.1 127.2 1i1.3 115.o 118.1 178.3 177.7 177.9 a/ Adjusted GPI, Appendix Table 9.3a. h/ Implicit 'Jniversity of Chile price index, Appendix Table 9.3b. 2/ Official CPI, Appendix Table 9.3c. Source: Table 9.20 - 578 - X. OTHER STATISTICS Table 10.1 : CHILE - DISTRIBUTION OF INCOME AMONG RECIPIENTS, BY SOCIOECONOMIC CHARACTERISTICS, 1967-/ (Percent) D E C I L E S Gini Characteristics 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th Coefficient Blue-collar employees 2.6 4.2 5.1 6.2 7.2 8.9 10.3 12.7 15.5 27.4 0.36 Agricultural 3.3 5.4 6.5 7.1 8.1 9.6 10.2 12.4 14.6 22.8 0.28 Industrial 3.3 5.0 6.2 7.1 8.2 9.2 10.4 11.9 14.5 24.3 0.36 Service 2.6 3.8 4.6 5.4 6.6 7.9 9.8 12.3 16.2 30.9 0.44 White-collar employees 2.5 4.1 4.6 5.5 6.5 7.8 9.1 11.2 15.3 33.6 0.42 Independent workers 1.1 2.2 3.0 4.1 5.0 6.8 8.4 11.0 16.5 41.8 0.54 Employers 1.8 3.0 4.3 5.5 6.2 8.7 9.9 12.1 16.9 31.7 0.40 Urban Areas 1.5 2.6 3.7 4.7 5.9 6.9 8.7 11.3 16.1 38.4 o.48 Rural Areas 1.9 3.3 3.9 4.8 5.9 6.7 8.2 10.6 14.2 40.7 o.48 Men 1.6 2.6 3.5 4.5 5.7 6.8 8.4 10.9 15.9 40.4 0.50 Women 1.5 2.5 3.2 3.9 5.2 6.7 9.1 11.9 17.9 38.1 0.50 TOTAL POPULATION 1.5 2.5 3.3 4.4 5.4 6.9 8.5 11.1 16.3 40.2 0.52 a/ Distribution of disposable personal money income (i.e., after taxes and social security contributions) among active members of the labor force (i.e., excludes pensioners and retiers). Also does not include incomes in kind. Source: Isabel Heskia, "La Distribuci6n del Ingreso en Chile," CEPLAN, Documento No. 31, Noviembre de 1973. - 580 - Table 10.2: CHILE -DISTRIBUTION OF INCOME RECIPIENTS ABOVE AND BELOW MEDIAN, BY SOCIOECONOMIC CHARACTERISTICS, 1967 (Percent) Lower Upper Total Characteristics 50 Percent 50 Percent Population Occupational Category: Employers 2.7 97.3 100.0 Independent workers 52.4 47.6 100.0 White-collar employees 11.1 88.9 100.0 Blue-collar employees 72.7 27.3 100.0 Sector of Economic Activity: Agriculture 8o.4 19.6 100.0 Industry 41.7 58.3 100.0 Services 40.9 59.1 100.0 Rural/Urban: Rural 75.3 2-4.7 100.0 Urban 39.7 60.3 100.0 Sex: Men 46.4 53.6 100.0 Women 64.o 36.0 100.0 Education: Primary or less 53.4 46.6 100.0 Secondary 51.3 48.7 100.0 Higher 5.6 94.4 100.0 Age: 12-25 years 70.0 30.0 100.0 26-55 years 42.0 58.0 100.0 56 years and over 53.2 46.8 100.0 Source: Isabel Heskia, op. cit., Table 3 - 581 - Table 10.3: CHILE - CHARACTERISTICS OF LOWER 50 PERCENT OF INCOME RECIPIENTS, 1967 (Percent) Proportion of Proportion Characteristics Lower 50% Total Population Occupational Category: 100.0 100.0 Employers 0.1 1.6 Independent workers 24.1 23.3 White-collar employees 5.7 26.3 Blue-collar employess 70.1 48.8 Sector of Economic Activity: 100.0 100.0 Agriculture 38.4 24.2 Industry 25.6 31.1 Services 36.0 44.7 Rural/Urban: 100.0 100.0 Rural 45.9 30.9 Urban 54.1 69.1 Sex: 100.0 100.0 Men 69.o 75.5 Women 31.0 24.5 Education: 100.0 100.0 Primary or less 68.o 64.7 Secondary 31.6 31.2 Higher O.4 4.1 Age: 100.0 100.0 12-25 years 37.1 26.9 26-55 years 52.0 62.7 56 years and over 10.9 10.4 Source: Isabel Heskia, op. cit., Table 2 Table 10.4 CHILE - DISTRIBUTION OF INCOME BY HOUSEHOLDS, 1968 a! Decile Boundaries Mean Share of From To Income Total Income Deciles (escudos) (escudos) (percent) 1 1 209 130.99 1.5 2 201 296 254.15 2.9 3 297 391 340.05 3.9 4 392 485 439.36 5.1 5 486 587 533.48 6.2 6 588 737 657.82 7.6 7 738 904 816.68 9.5 8 905 1,164 1,023.82 11.9 9 1,165 1,784 1,427.01 16.5 10 1,785 3,005.68 34.8 Total Population 862.90 100.0 a/ Distribution of before-tax incomes, including social security contributions, all cash incomes, the estimated value of incomes in kind, consumption of own production (except food), and all transfer payments. Source: UN-ECLA/IBRD, Proyecto Sobre Medici6n y Analisis de la Distribucion del Ingreso en Paises de America Latina: Chile (mimeo), Documento E/CEPAL/L.115/5, Noviembre 1974 Table 10.5 CHILE - HOUSEHOLD INCOME DISTRIBUTION BY ECONOMIC SECTOR OF PRINCIPAL INCOME EARNER, 1968 (Percent of households) Monthly Income Construc- ElectriciWy Transpoq, F'rom To Agriculture Mining Manufacturing tion etc.- Commerce etc.- Services Unspecified Total (Distribution of sectors among income classes) 0 372 51.2 10.1 1.3 24.4 10.9 16.8 11.3 14.8 38.9 27.7 373 746 31.8 42.9 39.6 42.0 25.7 26.6 32.7 27.2 22.4 31.6 747 1,119 9.9 20.7 20.7 20.0 18.8 21.8 26.3 22.0 11.6 17.6 1,120 1,492 3.5 7.7 8.4 5.8 10.9 11.4 10.4 10.6 4.6 7.4 1,493 1,865 1.4 6.3 4.6 2.6 6.9 6.9 6.5 8.o 3.0 4.5 1,866 2,238 0.7 4.6 2.6 1.6 5.0 5.2 5.1 5.1 2.0 2.9 2,239 2,984 0.6 3.4 2.7 1.3 6.9 3.7 4.4 5.3 1.7 2.7 2,985 3,730 0.4 1.7 1.0 0.8 4.0 3.7 1.2 3.3 0.7 1.5 3,731 0.4 2.2 2.0 1.4 10.9 3.9 2.0 3.6 1.2 2.0 Unknown 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 13.9 2.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 (Distribution of income classes among sectors) w 0 372 41.4 0.8 12.4 6.4 0.2 7.2 2.9 8.0 20.7 100.0 373 746 22.5 3.1 23.7 9.6 o.4 10.0 7.3 12.9 10.5 100.0 747 1,119 12.6 2.7 22.2 8.3 o.6 14.7 10.6 18.6 9.7 100.0 1,120 1,492 10.7 2.4 21.6 5.7 0.8 18.3 10.0 21.4 9.2 100.0 1,493 1,865 6.8 3.2 19.4 4.3 0.9 18.3 10.4 26.8 9.9 100.0 1,866 2,238 5.5 3.5 17.0 3.9 0.9 20.8 12.4 25.6 10.1 100.0 2,239 2,984 5.3 2.8 19.3 3.7 1.4 16.5 11.8 29.7 9.3 100.0 2,985 3,730 5.7 2.5 12.2 3.9 1.4 29.0 5.7 33.0 6.8 100.0 3,731 4.4 2.5 19.3 5.2 3.0 23.2 7.1 27.0 8.7 100.0 Unknown 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 100.0 Total 22.4 2.3 7.3 0.5 7.1 1 49 17.7 100.0 / Electricity, gas, water and sanitary services. / Transport, storage and communications. Source: UN-ECLA/IBRD, op. cit. Table 10.6: CHILE - HOUSEHOLD INCOME DISTRIBUTION BY OCCUPATIONAL CLASSIFICATION, 1968 (Percent of households) Monthly Income Occupational Classification From To Self- White-Collar Manual a Total (Escudos) Employers Employed Employees Workers Passives- Rentiers Others Population (Distribution of occupations among income classes) 0 372 2.8 43.0 3.4 30.4 46.2 44.5 23.7 28.3 373 746 4.2 26.2 25.3 45.9 25.1 25.2 47.4 32.3 747 1,119 12.8 14.1 26.7 16.7 15.0 12.0 9.2 18.0 1,120 1,492 7.5 7.0 13.8 4.4 5.4 5.8 0.0 7.5 1,493 1,865 13.8 3.9 9.0 1.7 2.7 4.7 7.9 4.6 1,866 2,238 16.8 1.8 6.8 0.5 2.5 2.4 0.0 3.0 2,239 2,984 13.8 1.7 6.7 0.3 1.3 3.1 0.0 2.7 2,985 3,730 8.5 1.3 3.6 0.1 0.5 1.0 6.6 1.6 3,731 20.0 0.9 4.7 0.0 1.4 1.3 5.3 2.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 (Distribution of income classes among occupations) C 0 372 0.2 38.8 2.9 37.3 12.6 7.9 0.4 100.0 373 746 0.3 20.7 19.2 49.3 6.0 3.9 o.6 100.0 747 1,119 1.6 20.0 36.3 32.2 6.4 3.3 0.2 100.0 1,120 1,492 2.2 23.7 44.6 20.1 5.5 3.8 0.0 100.0 1,493 1,865 6.7 21.9 48.4 12.7 4.5 5.1 u.7 lOu.0 1,866 2,238 12.4 15.3 55.7 6.1 6.5 4.1 0.0 100.0 2,239 2,984 11.1 16.2 60.1 3.2 3.6 5.7 0.0 100.0 2,985 3,730 12.1 21.4 56.8 2.1 2.5 3.2 1.8 100.0 3,731 21.7 11.7 56.5 0.5 5.2 3.3 1.1 100.0 Total 2.2 25.5 24.5 34.7 7.7 5.0 0.4 100.0 j Retired or disabled workers on pension. Source: UN-ECLA/IBRD, op. cit. The World Bank Headquarters European Office Tokyo Office U 1818 H Street, N.W. 66, avenue d'Iena Kokusai Building Washington, D.C. 20433, U.S.A. 75116 Paris, France 1-1 Marunouchi 3-chome Telephone (202) 477-1234 Chiyoda-ku, Tokyo 100, Japan CaLble Address INTBAFRAD WASI [NGTONDC