UCLA Anderson School of Management

November 21, 2012

Leamer Joins Celebrated Panel to Discuss Soaring Chilean GDP

Five leading economists and Chilean finance minister discuss the future of South American powerhouse

Translated from "Hacienda: PIB per cápita de Chile llegará a los US$19 mil este año," El Mercurio (Chile), October 6, 2012, p. B7. Transcript of original.

Ministry of Finance: Chile's GDP per capita will reach US$ 19,000 this year

The figure is higher than the US$17,974 forecasted by the IMF for 2012. The explanation for this difference comes from the latest census that established approximately 500,000 less Chileans than expected.


Yesterday, around 150 local economists participated in the conference "Chile Hacia el Desarrollo" (Chile towards Development), the third meeting organized by the Minister of Finance at the La Moneda Palace. Among the attendees were Nobel Laureate Economist Robert Merton; Boston University Economist Lawrence Kotlikoff; Edward Glaeser, professor of the Department of Economics at Harvard University; Andreu Mas-Colell, academic at Pompeu Fabra University in Barcelona; Edward Leamer, professor at the University of California; and New York University Economist Nouriel Roubini.

According to those present at the private meeting, the first to speak was the Chilean Minister of Finance, Felipe Larraín, who, at the end of his presentation, announced surprising information: by the end of 2012, adjusting for purchasing power parity, the GDP per capita of Chile will reach US$19,099, higher than the US$17,974 forecasted by the International Monetary Fund (IMF).

This means that the local economy will have the highest GDP per capita in Latin America, surpassing Argentina, and reaching levels of countries such as Croatia and Lithuania. What is the reason for this? There were approximately 500,000 less Chileans in the 2012 Census than the 17 million initially estimated. According to Ministry sources, the calculation was based on the IMF forecast for the Chilean GDP in 2012 (US$316,516 M) and was divided by the 16,572,475 estimated population for this year, as per the National Statistic Institute (INE).

According to a source at the meeting, one of the speakers, Andreu Mas-Colell did not hesitate to comment on the number revealed by Larraín. "I'm going to propose an excellent way to solve the situation in Catalonia by carrying out a census," joked the economist before starting his presentation.

The new calculation brings Chile closer to the US$ 20,000 per capita hurdle – the boundary that divides economies that are considered "developed". By improving a number of social indicators with this level of income, problems such as child malnutrition, tuberculosis and extreme poverty are eradicated. Countries such as United States, Canada, Kuwait and Japan overcame this boundary in 1990, followed by Spain, Israel, Taiwan and New Zealand ten years later.

Prior to the conference, Larraín and the foreign economists held a press conference during which Roubini indicated that Chile is a safe place for foreign investors. The attending economists stated that other issues were also raised at the meeting, such as Chile's use of insurance to adequately protect against the eventual drop in copper.

Hacienda: PIB per cápita de Chile llegará a los US$ 19 mil este año

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