The visit last week to Canada by the President of Chile, Sebastian Pinera, is a reminder of how far South America has come in a few decades. Chile is the first and so far only member in that continent of the Organization for Economic Co-operation and Development, an association of developed countries with rigorous admission standards. The growth of Brazil, a much larger country in area and population, is extraordinary, too, but it is not yet in the OECD.
As recently as the 1980s, South America could be considered a perennially floundering continent, with chronic military coups d’états and wasted economic potential – somehow authoritarian and anarchic at the same time. President Pinera told The Globe’s editorial board on Friday that Chile was once “the poorest Spanish colony.” And it had an extremely cruel tyranny after the coup of 1973. Yet there has been a surprising degree of consistency in economic policy, going back to the presidency of Eduardo Frei in the 1960s. In all of Latin America and the Caribbean, Chile now has the highest per-capita GDP, comfortably surpassing even Mexico.
In the 1990s, Chile sought to join to NAFTA. That has not happened, but in 1994, Roy MacLaren, the Canadian trade minister, began free-trade discussions with Chile. The agreement came into effect in 1997, before the equivalent one with the U.S. There is now Canadian investment of $13-billion in Chile, making Canada the third-largest source of investment in the country.
This week, the Chilean government’s rigorous regulatory action concerning Barrick Gold Corp.’s Pascua-Lama project shows how far Chile is from being a stereotypical, desperate, corrupt Third World state.
Chile and Canada have much in common, with economies to a great extent based in commodities (above all copper, in Chile). Their relationship is likely to be increasingly one of equality, rather than largely one-way investment.