Reading Time: 4 minutesSANTIAGO – For decades, Chile stood out as Latin America’s most reliable destination for foreign direct investment (FDI), capturing as much as $192 billion between 2000 and 2014, or 7.4% of the region’s total net inflows. But since then, the country has endured a substantial erosion of its ability to attract international capital. That may be about to change.
In April, President José Antonio Kast submitted an economic reform to Congress — the Reconstruction and Economic Development (RED) bill — that seeks to modernize the investment regime and encourage both international and local investment as the government aims to boost GDP growth to 4% annually by the end of his administration, double the average annual GDP growth rate reported since 2014. The goal is to reset the investment climate after years of lackluster performance, and the House already passed the proposal, which the Senate will begin discussing today. Kast defended the scope of the reform during his first annual address to the nation held at the National Congress in Valparaiso on Monday.
Reviving the investment environment and redefining its institutional framework presents a challenge: how to rebuild economic dynamism without undermining the regulatory legitimacy gained through social and political reforms of the recent past. This is a political question, not only an economic dilemma.
