How Investing in Chile has Benefited the U.S.

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SANTIAGO, Chile — President Barack Obama encouraged residents of both the U.S. and Chile to see the benefits of the countries working together while speaking in Santiago, Chile in 2011. “I believe that Latin America is more important to the prosperity and security of the United States than ever before. . . And I believe Latin America is only going to become more important to the United States, especially to our economy. . . . In other words, when Latin America is more prosperous, the United States is more prosperous.” 

U.S. and Chile’s Relationship

In 1990, Chile had begun the transition back to a democratic nation after General Pinochet’s 17-year brutal reign. While the U.S. had long been involved in the political and economic affairs of the country, Chile’s return to democracy marked the start of a more mutually beneficial relationship. 

 It began with an increase in aid to Chile. Official development assistance to the Latin American country went from $196 million in 1990 to $489 million in 1993, $233 million of which came from the U.S. About 38 percent of these resources were for supporting social services and reducing poverty. This aid helped drastically reduce the poverty rate in Chile from around 38 percent in 1990 to nearly 7 percent by 2013.

Chile as a Regional Leader

Total aid to Chile had been more than halved from 1996 at $233 million to $114 million in 1999 due to its rapid success. By the late 1990s, countries like Japan, Finland and the U.S. stopped the bilateral sending of aid to Chile. The focus shifted to assisting Chile in becoming a regional leader. This involved the implementation of training, technology and other resources. With the help of these countries and others, Chile had become an influential leader in the region and became involved with projects in Africa and Asia as well.

Within its region, Chile has helped to bring stability in otherwise tumultuous areas. For example, Chile has been “working with the U.S. on citizen security and anti-drug efforts in Central America.” This has included “supporting police reform in Honduras” and assisting with military training in Guatemala. Chile has also been a major actor in Operation Martillo, a multilateral initiative led by the U.S. to cut off illicit trafficking through Central America.

Additionally, aid to Chile has allowed for it to have an increased military presence around the globe. It was active in the reconstruction of Haiti after an earthquake devastated the country in 2010 and has been used for peacekeeping operations from the Indian-Pakistan border to Bosnia-Herzegovina and several places in between. These efforts have helped ease the burden of the U.S. by limiting the need for its presence around the world.

Trade With Chile

After receiving $233 million from the U.S. from 1990 to 1993, Chile only received $1 million in assistance from the U.S. in 2013. This drastic decline occurred as the two countries initiated a more equitable partnership. A bilateral trade agreement in 2003 eliminated 87 percent of tariffs, tripling trade between the two from 2004 to 2012. The U.S. has benefited greatly due to a large trade surplus with Chile. As of 2017, exports to Chile were estimated at $18.2 billion and imports from Chile estimated at $12.3 billion. In 2015, exports to Chile supported roughly 93,000 jobs. 

Although Chile has much more room to grow, it has improved drastically with its poverty rate dropping by more than 30 percent in 30 years. This is in part due to the collaboration between the U.S. and Chile. Moreover, the U.S. has benefited greatly as well through the establishment of a better trade partner. There has been a domestic increase in jobs and money for the country. Establishing Chile as a regional leader has helped the U.S. maintain stability in the region and elsewhere.

Scott Boyce
Photo: Flickr

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