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Economy of Chile


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capita household incomes below the poverty line—defined as twice the cost of satisfying a person's minimal nutritional needs—fell from 45.1% in 1987 to 11.5% in 2009, according to government surveys. Critics in Chile, however, argue that true poverty figures are considerably higher than those officially published. (The government constructs the poverty line based on an outdated 1987 household consumption survey, instead of more recent surveys from 1997 or 2007. According to these critics, using data from the 1997 survey increases the poverty rate to 29%.) Using the relative yardstick favoured in many European countries, 27% of Chileans would be poor, according to Juan Carlos Feres of the ECLAC. About 3.8 million people (22% of the population) are (as of November 2011) on government welfare programs, via the "Social Protection Card", which includes the population living in poverty and those at a risk of falling into poverty.

High domestic savings and investment rates helped propel Chile's economy to average growth rates of 8% during the 1990s. The privatized national pension system (AFP) has encouraged domestic investment and contributed to an estimated total domestic savings rate of approximately 21% of GDP.

Total foreign direct investment (FDI) was only $3.4 billion in 2006, up 52% from a poor performance in 2005. However, 80% of FDI continues to go to only four sectors: electricity, gas, water and mining. Much of the jump in FDI in 2006 was also the result of acquisitions and mergers, but has done little to create new employment in Chile
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