Chile's Takeoff: Facts, Challenges, Lessons

A major change in policies, economic structure and performance has taken place in Chile during the last two decades. Chile joined the small number of takeoff countries that have been able to break away from stagnation. As a newcomer to the club and its only Latin American member to date, Chile's experience offers lessons in policy design and effectiveness that may be useful to other reforming countries. This paper provides empirical evidence on the crucial role played by macroeconomic stabilization and structural reform in the country's attainment of high rates of saving, investment, and growth, and offers an assessment of future growth prospects. The paper identifies major risks and policy challenges that remain to be addressed to lock in sustained high growth. Final lessons are drawn from Chile's experience for other reforming countries.