Economics
workers loading nitrate in 1911
Historically, Chile’s economy has been centered on two main exports,
nitrate and copper. Until the 1930’s Chile was the source for
much of the world’s nitrate, which is used in explosives and as an
ingredient in fertilizer. However, in the 1930’s, the demand
for nitrate as an explosive fell off sharply, sending Chile’s economy
into a tailspin during the Great Depression. Today, Chile still exports
a large amount of nitrate to be used in fertilizer, but copper is now the
economy’s most important export. The economy is heavily dependent
on this single export, and the Chilean government is working actively to
diversify the economy.
Santiago’s economy largely rotates around the service industries. The tertiary sector provides the bulk of the city’s jobs, with another large segment of the population employed by the national government.
Chile has a progressive national savings program. Each worker contributes a required percentage of his wage to a retirement account. The contributor can choose between several account management firms, which keeps funds under his control. Money in the account cannot be withdrawn until the contributor reaches retirement age. At that point, he can choose to receive a monthly payment by purchasing an annuity from a private insurer or to withdraw small amounts from the account as need arises. If a contributor has insufficient funds to meet a standard of living set by the Chilean government, the state subsidizes the account. This method of paying for retirement has been examined at great length by other countries. Some have suggested that the United States adopt a Chilean style system to replace Social Security.