Competitiveness of the Chilean Economy in the Period of Its Liberalization

Liberalization of the Chilean economy from a quarter of a century ago was intended to promote modernization of the economy and mobilization of new stimulators of the economic growth. The economy was to be financed with proceeds from the exports and inflow of foreign capital. The above strategy could succeed if the economic reforms had led to an increase in the competitiveness of the Chilean economy. In the paper, the liberalization process, the transformation of the Chilean exports and its sources, the impact of exchange rate changes on the exports' competitiveness, as well as changes in the Chilean export sector following the Asian crisis, were presented. The analysis confirmed that, in fact, the development of the export sector during the last quarter of a century largely contributed to the Chile's economic success. However, the considerable opening to the world market, with the exports structure showing a great dependence on low processingdegree goods, makes the country's economy extremely vulnerable to external shocks. If the export sector is to remain the most important source of the growth trends, a further increase in its competitiveness will be indispensable, and that will be difficult to achieve without a considerable diversification of the exports. Also, prevention of an excessive currency appreciation is of great importance for the maintenance of an exportdriven growth model.