Industry and Manufacturing

Chile Table of Contents

The Chilean manufacturing sector experienced strong performance in the 1985-91 period, and the Industrial Development Association (Sociedad de Fomento Fabril--Sofofa) expected a 7 percent to 10 percent increase in industrial output in 1992. (The sector actually grew 12.3 percent during the first three quarters.) Between 1985 and 1991, the manufacturing sector grew at an average annual rate of 6.2 percent, a figure that compared favorably with the average rate for the 1960s of 5.1 percent per annum. However, in spite of the dynamic behavior of manufacturing as a whole, the development of different industries within the sector was uneven. Some industries were able to exploit Chile's comparative advantages, expanding at a rapid pace. In many cases, this expansion was the result of the development of new international markets and of rapidly growing exports. Other industries, however, were victims of drops in relative prices, caused either by trade liberalization or by loss of international buyers, and were forced to reduce their scope of operations.

The major industries of the Chilean economy in the late 1980s and early 1990s were agriculture and food products, textiles and clothing, nonelectrical machinery, transportation equipment, and industrial chemicals. As noted previously, the performance of individual industries was uneven. Although foodstuffs, furniture, and glass products experienced strong expansion, other industries had a lower level of output in 1991 than in 1979.

For decades, wine has been one of Chile's best-known products, and wineries were expected to experience double-digit growth in the 1990s. Exports of wine increased during the 1970s, primarily to the United States, reaching US$31.9 million in 1989. Total wine exports in 1992 were estimated at US$127 million. By that year, Chile had become the third largest exporter of wine to the United States, behind Italy and France.

Not surprisingly, those sectors that had shrunk since the early 1980s, such as footwear and transportation equipment, were those that had been hardest hit by increased foreign competition. However, the firms that finally survived in these sectors did so by adapting to the new external circumstances and by finding ways to rapidly increase productivity. In 1992 the transportation equipment sector was the most dynamic of all, increasing output at an annual rate of 46 percent.

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Source: U.S. Library of Congress