The Maryland Global Leaders Program welcomed the Chilean Finance Minister Thursday, October 10. After a brief introduction from Professor Susan Schwab, Minister Felipe Larraín Bascuñán spoke to a full room about the global economy, emerging markets and Chile’s increasing prominence in the world.
Minister Larraín began his talk by discussing the increasing importance of developing countries in the world economy—within the last 20 years, emerging markets have grown to be 50% of the economy. Chile has been one of the contributors to this trend. Chile has been growing by diversifying exports, creating space for entrepreneurship, improving its credit rating, and reducing unemployment (especially for women).
In another effort in increase growth and free markets, Chile has formed the Pacific Alliance with three other Latin American countries. While it is only two years old, the Alliance has already begun to integrate markets and open trade between the four countries. The goal is to promote growth, development, and competitiveness, in addition to reducing inequality.
Larraín went on to talk about the major threats to a country, like Chile, on the verge of becoming developed. He believes that there are no miracles when it comes to economic development, which comes with steady policies and build up of institutions. The role of government, according the Minister, must be focused on stable monetary policy and a fiscal strategy that creates space for new business and innovation. Currently Chile’s GDP per capita is about 19,000, only about 3,000 away from being considered a developed country. The life expectancy is about 80, higher than in the U.S., which he attributes to healthy eating habits and better wine.
During the question and answer session, the Minister criticized the U.S. Congress for allowing a government shutdown and explained the major threat currently facing the world is a U.S. default on loans. He also touched on how institutions can have a deep effect on policy outcomes, for instance a government shutdown due to Congress’s inability to pass a budget would never happen in Chile due to the structure of laws in place.
The Maryland Global Leaders Program is a joint effort of the Maryland School of Public Policy, and the Office of International Affairs. This event is co-sponsored by the Center for International Business Education and Research at the Smith School of Business, the Center for International and Security Studies at Maryland, and the University of Maryland Department of Economics.