Chile Economic Notes

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У
CORFO
Chile Economic Notes
No. 71 Jan. 11 , 1971
*********************
* CONSTITUTIONAL REFORM PROJECT
Indiana University
* INTERAMERICAN AGRICULTURAL SCIENCE INSTITUTE
AUTOMOTIVE MANUFACTURING REORGANIZATION JAN1 4 1971
ANDEAN PACT BUDGET
Library
* TWENTYFIFTH ANNIVERSARY OF THE DISCOVERY OF OL ******** R ***********
* BRIEFS
CONSTITUTIONAL REFORM PROJECT
President Salvador Allende sent to Congress a project of constitu

tional reform aimed at nationalizing large foreign mining enterprises that
operate in the country , especially in copper . The proposed constitutional
reform establishes the proper mechanisms and general negotiation proce
dures to carry through the nationalization project safeguarding the interest
of the country and providing proper compensation to the present foreign
mining companies . The State would become the exclusive owner of all min
eral deposits and mines, with private industry granted concessionary priv
ileges. The bill aims at establishing the legal basis for, in some instances,
a proper renegotiation of existing sales agreements of private property to
the government .
During a recent public speech , President Allende spoke at length

about the decisive role that the copper mining industry plays in the economic
life of Chile . Because of this , obviously , it was imperative that the govern
ment be in a position to safeguard the national interest. He explained fur
thermore that the proposed constitutional reforms and the nationalization of
the larger copper industries were dictated solely by this spirit and under
no circumstances could be interpreted as an hostile posture towards the
American companies or the American people . The President also stated

that the national income would benefit by an increase estimated at present
of over $ 70 million yearly , with the proposed nationalization measures re
quested from Congress .
The constitutional reform bill sent to Congress will follow theusual
Issued by CORFO Corporación de Fomento de la Producción

80 Pine Street New York , N.Y. 10005 (212 ) 344-9800
.2
parliamentary procedures, requiring approval independently by both cham

bers and afterwards by them jointly .
INTERAMERICAN AGRICULTURAL SCIENCE INSTITUTE
The Instituto Interamericano de Ciencias Agricolas , Interamerican

Agricultural Science Institute, a branch of the Organization of American
States, recently began a program to coordinate agricultural progress in
the entire hemisphere .
The Director of the organization explained what has been achieved

so far in Chile . The most important progress has been made in the fields
of technical training, research and rural development. There are also
agrarian reforms carried out by IIC A representatives to assess and imple

ment the labors of various national institutes and government programs.
In 1969, for example, 42 different projects were carried out by a

total of 656 experts, 581 Chileans and 75 consultants from other nations ,
There was also an exchange program that enabled 20 Chilean professors

to study their specialities in other Latin American universities and 40 for
eign to visit Chilean institutions,
Some of the technical training programs include higher education

studies in Food Science and Technology, Agrarian Economics, and Soil
Fertility . Among plans for the future is a program to create permanent
studies at all of the Chilean universities for graduate work in the fields
of agricultural and forestry sciences ,
Research activities involve study by experts of several countries

with emphasis on the cultivation of corn , wheat, and animal husbandry .
There is also an exchange of work and material by the Agricultural Inves
tigation Institutes of the southern nations.
The Institute concentrates its work towards rural development on

the education of experts in rural planning . It also actively plans and re
searches agrarian reforms.
The most important feature of the IICA is its regional and contin
ental projection which promotes a great degree of Latin American integration .
AUTOMOTIVE MANUFACTURING REORGANIZATION
The Chilean Auto Commission announced that an internationalbid

ding will be opened by the government in order to award contracts for auto
-3 .
mobile manufacture in Chile . A total of three plants are projected to be
opened to handle the production of three types of vehicles : small with up to

1 , 000 c . c ., medium size, up to 1, 800 c . c . and diesel chassis for trucks ,
buses, etc. of 6 to 8 tons.
The decision to limit the number of auto manufacturers was mot
ivated by several factors: the current high prices which would be lowered
by eliminating wide variety of models and concentrating on greater produc
tivity per model, the desire to develop domestic technology in this very
important industry , and the need for a highly efficient national industry so
that trade within the Andean Common Market can be carried on at compet
itive prices .
There are now 11 auto factories operating in Chile . Those that
fail to win contracts at the forthcoming bidding will have until the end of 1972
to stop production .
Contracts will be awarded on the basis of best prices, equipment,

installations , design , and the production estimate. The projected increase
seen by the government would be 100 , 000 vehicles manufactured per year in
1980 as compared to the 20, 000 average at present .
ANDEAN PACT BUDGET
The Commission of the Agreement of Cartagena advanced rapidly

in its discussions regarding 1971 policy for the Andean Sub - region . During
the meetins in Lima, the budget for the coming year was adopted , a total
of $ 1, 430, 000 will be spent this year by the Andean Pact Organization , which
is $ 230 , 000 more than what was budgeted for the year 1970 .
The delegates also approved procedures for the coordination of the

development plans of the five Andean countries. One of the most important
points was the fixing of a common external tariff by the members of the
Andean Common Market . Some 60 % of the 6,000 products reviewed will
be affected by the new tariff. Colombia , Peru and Chile will begin in
January to apply the lowest standing tariff rate and will reduce it by 10 %
annually until it is eliminated at the end of this decade. Bolivia and Ecuador
will begin more gradually and in five years expect to have reached the pres
ent minimum ,
TWENTYFIFTH ANNIVERSARY OF THE DISCOVERY OF OIL
December 29th marked the twentyfifth anniversary of the discov

ery of oil in the area of Springhill in
Tierra del Fuego . This important
-4
event ended two years of intensive work by Corfo following a government

recomendation to search for petroleum in the southern province of Maga
llanes .
By 1949 all the necessary equipment was installed and drilling

began in earnest , Since the initial production of crude oil, a total of 25
million cubic meters have been extracted which , at an average price of
$ 15 per cubic meter , represents $ 375 million . This is the product of
little more than 1, 350 wells .
The success of Corfo in this endeavor prompted the government to

create a separate entity , the Empresa Nacional del Petroleo (ENAP ) to
continue the work of exploring and exploiting Chile's oil resources.
BRIEFS
** Japan has announced that it will renew for another two years the
commercial credit extended to Chile in 1968.' The credit provides $ 8 mil
lion for the purchase of Japanese machinery and equipment. The Japanese
Chancillery Office reported that Chile has made use of one half million
dollars of the amount allowed during the past two years .
** A project for the creation of a Ministry of Marine Affairs will be

submitted to the National Congress with the suggestion that it replace the
present Ministry of Land and Colonization responsibilities in this area .
The purpose of the new Ministry would be to develop fully the

marine resources of the nation and to reorganize the maritime industry .
It would include all the existing organizations related to the field and would
also create new ones such as the National Fishing Council in order to give
special attention to that industry .
** With the pavement of the 40km . from Huara to Alto Chusmiza in

Chile early this year , the Chilean government will begin construction of
the international highway that will unite Iquique, Chile with Oruro , Bolivia .
The projected highway will form part of the route that will eventually run
from the Amazon to the Pacific Ocean .
Latin American integration , social as well as economic, depends

vitally on good, rapid transportation . The governments of Chile and Boli
via , partners in this new venture, feel that what has begun in Iquique will
be an important step foward towards that integration .
***
VT PULLS GUVI PER
ING ROOM
CORFO
No. 72 Jan. 18 , 1971
* MINING EXPLORATION IN LOS PELAMBRES

* CATTLE TO BE PURCHASED FROM HOLLAND
* FIXED PRICES FOR SMALL MINING COMPANIES
* ANDEAN PACT POLICY DECIDED
* BRIEFS
MINING EXPLORATION IN LOS PELAMBRES
The United Nations - ENAMI mining project's preliminary studies

continue successfully at the site of mineral deposits in Los Pelambres ,
near Illapel, Chile .
During the past two summers geochemical and geophysical surveys

as well as general geological exploration have been carried out in the area .
One of the excavations reached 70 meters and 11 others were drilled total.
ling 642.5 meters .
Since the results of these explorations were so promising, a new

project is planned for drilling up to 3 , 000 meters. This operation would
cost some $ 300 , 000 , to be paid by the United Nations. Independently , two
smaller teams financed by the Chilean government, will continue investi
gation . Judging from what has been found so far , it is possible that the
deposits in Los Pelambresmight prove to be a significant addition to
Chile's mineral wealth .
CATTLE TO BE PURCHASED FROM HOLLAND
The Chilean sugar company , Industria Azucarera Nacional, S.A. ,

( IANSA ), a Corfo subsidiary, will purchase 1, 000 head of cattle from
Holland for a total of up to $ 600,000 . The transaction will be financed
with a credit from the Netherlands Investment Bank Developing Countries,
Corfo will make a second loan of E ° 900 , 000 to IANSA to cover the costs
of transportation , feeding, veterinary care and other related expenses in
curred from the time of purchase until the livestock is sold .
INDIANA UNIVERSITY
WHINZO .wii
Issued by CORFO Corporación de Fomento dela Producción LIDARY*

******** RARAS
80 Pine Street New York , N.Y. 10005 (212) 344-9800 RA
-2
The 1, 000 imported cattle will be sold by IANSA to sugar beet
farmers in the Chilean provinces of Ñuble and Llanquihue.
FIXED PRICES FOR SMALL MINING COMPANIES
The fixing of stable prices for minerals and copper products was
announced recently by the executive vice president of ENAMI, the national
mining company , in a speech outlining the company's new policy towards
the smaller mining enterprises .
A fixed price for copper products , one not affected by market ups
and downs ,was a long standing goal of these smaller companies. They will
now be paid in escudos at a set price that will change only when the price
of copper rises more than 10 % . This new measure will help to improve
the difficult task of small scale mining, especially for the " tenant" miners
who only lease the area that they work .
ENAMI is also planning the creation of regional Mining Councils in

order to integrate all phases and all levels of the Chilean mining industry .
ANDEAN PACT POLICY DECIDED
Delegates from the five member countries of the Andean Subregion

al Pact have given final approval to measures regarding foreign investment
in the area .
The foreign investment procedures, which will become effective in

six months are designed to allow gradual absorption of foreign industry by
the participating countries ; Colombia , Peru , Bolivia , Ecuador, and Chile .
The first point made by the delegates is that public service , insurance ,
commercial banking , domestic transportation , advertising , commercial
radio and television , newspapers, magazines, as well as companies dedi

cated to domestic commercialization of products, are areas excluded from
future foreign investment. Also reserved for domestic investment is any
field that can be adequately financed and exploited without foreign capital.
Foreign firms now operating in these fields will have three years
from the effective date of the new statute to sell at least 80 % of their stock
to national buyers . In the case of foreign owned commercialbanks , there
will also be a three year period in which to either stop accepting domestic
deposits or sell 80 % of the bank's stock .
Stocks controlled by national investors can be bought by foreigners

only with proper authorization and with the condition that those stocks are
sold back within ten years .
The delegates to the Lima meetings pointed out that these measures
-3
are meant to protect the development of subregional technology . Contracts

for the handling of foreign brand articles will not contain restrictive clauses
and manufacturers will be entitled to the advantages of the newly liberalized
tariff rates as the foreign firms become national or mixed in their capital
structure .
In order to take advantage of these new tariff rates, foreign firms

should begin the change to national or mixed structure progressively during
the next three years . At the end of that time, they should have transferred
at least 15 % of their capital to national investors and should continue to do

so until 51% has been sold by the end of 15 years in Colombia , Peru, and
Chile and 20 years in Bolivia and Ecuador .
Foreign firms that choose to begin their investment in the near fu

ture must do so within the limits of the 51% -49 % capital structure arrange
ment . Established firms that prefer not to begin the suggested sale of
their stock will be permitted to continue operation but without the benefits
of trade within the Subregional Common Market .
The delegates stated that companies already operating in the Andean

countries will continue to enjoy any privileges that are presently extended
to them as long as these privileges are consistent with the new Subregional
policy .
BRIEFS
** The duty free warehouse in Iquique, Chile (see Economic Notes

No. 70 ) is now in operation and its first transaction was made with Peru .
That country is importing 25 tons of glass that will be brought to Iquique
by the German cargo ship " Batentstein '' . Distribution of the glass will be
made later throughout the southern part of the continent.
Similar operations are planned for the near future with Iquique as
the base for distribution ,
The simplified import system will prove to be a good source of in

come and will certainly stimulate the flow of trade in the Iquique region .
** Chile's State Bank recently awarded a contract for 30 , 000 tons

of fertilizers to the Mexican firm , Guanomex , following a bidding in which
20 international firms participated .
Mexico is now the principal supplier of fertilizers to Chile . The re

cent 30, 000 ton purchase was preceeded by sales of 40 , 000 tons of triple
superphosphate to the Chilean government companies , Agricultural Reform
Corporation and the Institute of Agricultural Development. (see Economic
Notes No. 70 )
-4
The fertilizers will be used for winter plantings in the central and
southern sections of the country . Shipment will be made in January and
February by Mexican vessels and it is expected that they will carry a cargo
of Chilean lumber back to Mexico .
** Bolivia has begun to sell petroleum to Chile on an experimental

basis in an effort to establish fixed markets in its neighbor country . The
Bolivian petroleum company indicated that the object of the preliminary ship
ments is to determine how well Bolivian crude oil can be refined in Chile .
So far two shipments have been made totalling 200, 000 barrels .
** The creation of a National Economic Council was announced re

cently in Santiago by the director of the National Planning Office. The
Council will be formed by representatives of private industry , labor groups ,
and government agencies,
The purpose of the Council will be to examine in detail development

plans and to relate them to the nation's industry . One of the benefits that
this measure will bring about is a better understanding on the part of private
industry of its role in the government's new economic development programs .
** Corfo recently extended three loans to the government Agricultur

al Reform Corporation . These loans, totalling $ 220, 000 and E2, 777, 350,
are for the importation of tractors and for the purchase of domestic and for
eign made sawmill machinery and maintenance equipment.
***
-
GOVT
TPUT
‫نالی‬ ‫دیوانی‬
CORFO
No. 73 February 1, 1971
* PURCHASE OF PRIVATE NATIONAL BANKS STOCK

* LOANS EXTENDED FOR UNIVERSITY IMPROVEMENTS
* TRANS ANDEAN SHIPMENT OF CONTAINERIZED CARGO
* CHEMICAL PRODUCTS TO BE SHIPPED BY RAIL
INDIANA hor
* DEVELOPMENT OF NATIONAL EDIBLE OIL INDUSTRY
* BRIEFS FEbu ‫ارد‬
LIBRARY
PURCHASE OF PRIVATE NATIONAL BANKS STOCK XXXXXXXXX***************
Corfo's Board of Directors approved during their last meeting the

purchase of all the stock from private national banks. The designated pur
chasing agent will be Banco del Estado (State Bank ) . Banco Central ( Cen
tral Bank of Chile ) will extend a special credit line to Corfo in order to
finance these purchases. The loan in the amount of E °400 million will be
repaid within five years .
The president of Chile's Banco del Estado recently announced that

of its
the Banco Israelita , a private national bank , has sold the majority
stock to Corfo . This sale by the bank's stockholders is the first one of its
kind since the government's new financial policy was made known. Corfo
is now responsible for the control of the bank , as it will be in the case of
all future stock purchases .
Government control of the banking system will help to correct

rious discriminatory practices that have hampered in the past someaspects
of the economic development of the country . It will lead to a reorientation
of the granting of credit towards those productive activities which have pri
ority in the planned development of the economy. In this context it will also
distribute financial resources to benefit more evenly the different regions
of Chile .
LOANS EXTENDED FOR UNIVERSITY IMPROVEMENTS
Expansion programs for two Chilean private universities will be

financed in part by loans from the Inter -American Development Bank . The
bank recently extended two loans, one for $ 7 million to the Universidad
Católica and another for $ 4,6 million to the Universidad Austral. These
amounts will defray approximately half the cost of proposed academic and
physical improvements at the Universities. The remaining half will be paid

80 Pine Street New York , N.Y. 10005 (212) 344-9800
-2
by the Universities themselves.
The Universidad Católica will build six more classroom buildings ,
will equip audio visual laboratories and teaching workshops , and will pro
vide for an expanded extension services program , The teaching staff will
be augmented with the hiring of more full time professors as well as visit
ing consultants . In addition , more financial aid will be provided for students .
The Universidad Austral's expansion program , which is quite sim

ilar, also includes the construction of a library and the hiring of special
ized consultants to improve the administrative and curiculum policies.
This joint venture of the Universities and the Inter - American De

velopment Bank will enable more students to receive a better education ,
something vitally necessary to the social and economic progress of Chile.
TRANS ANDEAN SHIPMENT OF CONTAINERIZED CARGO
The Gilbert Flexi- Van Corp. of the United States recently accom
plished the first successful trans Andean shipment of containerized cargo ,
transporting copper ingots from Santiago ,
Chile to Buenos Aires, Argentina.
Six Uni- Flex 20 foot intermodal cargo containers were loaded with copper
ingots in Chile and moved by narrow guage railway across the Andes to
Buenos Aires, where the containers were delivered by truck trailers to
consignees .
Creation of the new service entailed the cooperation of Chilean
National Railways and the Argentine state - owned General Belgrano railroads .
The Chilean railways move the cars to Los Andes where the train is broken
up into four sections for the mountain railroad haul to Las Cuevas at 20, 700
feet above sea level. There they are interchanged to Argentina's General
Belgrano Line, and the small sections then undertake the steep eastern slope
to another mountain station at Polvareda where they are rejoined for the
run to Mendoza on the Argentine foothills .
Previously , in shipments made to the west coast of Latin America ,

containers had to be sent back empty to their points of origin because of dif
ficulty in obtaining return cargo suitable for containerization . This process
was obviously expensive and time consuming .
The containers developed by Gilbert Flexi - Van's subsidiary, Uniflex ,

are quite adaptable to the bulk cargo , such as fishmeal, fertilizers, and ores
that characterize the exports of west coast countries. Their use in intercon
tinental trade will reduce expenses and time loss , much to the advantage of
Latin American commerce .
-3
CHEMICAL PRODUCTS TO BE SHIPPED BY RAIL
Chilean State Railways and the Petroquímica Chilena , S.A., have

made an agreement designed to facilitate transportation of the products of
the Planta de Cloro - Soda in San Vicente .
The agreement gives Chilean State Railways the exclusive right to

transport liquid chlorine , hydrochloric acid , and caustic soda . Rail ship
ment offers the advantages of greater safety in handling the chemical prod
ucts as well as lower cost.
Special tank cars, designed jointly by engineers of both companies,

will be used in accordance with international safety standards. Some of the
tanks have already been built by the Japanese firm Mitsubishi and the Chilean
firm Maestranza Maipú . Another Chilean company , Maestranza IMMAR
of Valdivia , is building the platforms that will be used with the tanks .
In addition , new railway trunk lines will be built in San Vicente for
the use of Petroquímica , as well as Compañía de Acero del Pacífico (Pacif
ic Steel Company ) and other industries established in the future. The total
investment in the new shipping system will be approximately E ° 30 million .
DEVELOPMENT OF NATIONAL EDIBLE OIL INDUSTRY
Chile is once again in a position to meet the demands of domestic

edible oil consumption , thanks to the development of the national edible oil
industry and the incorporation of new raw materials .
The edible oil industry in Chile began in 1930 with two plants in
Viña del Mar that were supplied with cotton seeds and other imported raw
materials . When World War II made such acquisitions difficult , experiments
were begun to determine what crops could be raised in Chile to substitute
satisfactorily .
As a result of these experiments , large plantings of sunflower

were made with excellent results . Later cultivations included safflowers,
turnips, and olives. At the same time, new factories were built in Santiago
and Talca . In 1966-67 the industry began to use soy beans also and with
good results . As a crop that began in 1966 with a yield of only 118 tons, it
reached 615 tons in 1969-70 .
After a general study of the situation, the industry stated that in

the past four years national production of raw materials for oil refinement
supplied 60 % of the total domestic need ; imports furnished the remaining
40 % . These figures also include the 4 % -5 % annual increase in edible oil
consumption in Chile .
-4
In order to eliminate this 40% deficit by developing domestic pro

duction of raw materials , several organizations have begun research pro
grams. Among them are: the Ministry of Agriculture , university schools
of chemistry and pharmacy, various centers for agricultural research
and the Empresa Compradora de Maravilla , S.A. (Sunflower Purchasing Co. )
Their findings are very encouraging . Two varieties that have been
quite successfully developed in the Soviet Union , have also shown outstanding
yields in Chile . It is expected that with these new strains incorporated ,
harvests will soon exceed the heretofore record figures for 1965-66 of 103 ,
166 metric tons . The 1969-70 crop totalled 76 , 810 metric tons .
BRIEFS
** The President of Chile's Banco Central announced that Chile's

balance of payments as of December 31, 1970 reflected a surplus of $ 123
million . The country's exports reached the fairly high level of $ 1, 287, 000
and imports represented $ 1, 208, 000 , for the year 1970 .
** At a recent meeting in Valparaíso it was announced that the
installations in that port city will be enlarged and modernized in the near
future. Valparaíso will be handling an increased volume of goods, Chilean
as well as Argentinean , brought to the port by way of the new trans Andean
highway and to accomodate this increase it is necessary to expand present
facilities. Among the projected improvements are: the completion of a high
way overpass to relieve congested traffic between Valparaíso and Viña del
Mar; a general revamping of the city's traffic system ; the construction of
several new buildings, one of which will probably house the new Ministry
of Marine Affairs (see EN 71) ; and radical changes in the installations of the
port itself.
** Corfo has extended a loan of $ 73 , 100 to the Institute of Fishing

Development to finance the Institute's plans for research and development
of Chile's sea and inland water resources .
** A new fishing port will be constructed in central Chile , probably

in Valparaíso , according to a recent announcement by the Ministry of Land
and Colonization . The undertaking will be financed by credits from the
Soviet Union that were extended in 1966 but until the present have not been
used.
== AL INUM 1 &
-
GOVT PER
OVT PUBLS
JING KOOM
CORFO
No. 74 Feb. 27 , 1971
* ECONOMIC AIMS OF THE GOVERNMENT

* CORFO'S BUDGET FOR 1971
* UNIVERSITY CENTER FOR ANDEAN DEVELOPMENT
* CUBA AND CHILE SIGN TRADE AGREEMENT
* BRIEFS
ECONOMIC AIMS OF THE GOVERNMENT
In a recent speech , Chile's President Salvador Allende reiterated

the economic aims of the nation's new government and outlined some of the
measures that have been taken in the past three months to realize those
aims.
The first objective is to free strategic sections of the economy
from the restrictions of domestic monopolies and foreign control . !! It is
indispensable that the economy serve Chile and the majority of the Chileans'',
as President Allende said . Several steps have already been taken to assure
this objective .
The first steps were towards the nationalization of the copper and
coal industries . In addition , the government has purchased the balance of
the stock of the Compañía de Acero del Pacífico ( the Pacific Steel Co. ).
The second step, taken recently , was the programmed purchase of private
national bank stocks. With this , the government expects to provide a more
equitable distribution of credit in the country . President Allende explained
that the establishment of Development Banks intended to benefit small and

medium scale manufacture , farming , and commerce is being considered .
The third measure taken was the acceleration of the Agrarian Reform Pro
ject whose main objective is the redistribution and improved cultivation of
farm land in Chile . President Allende stated that wherever expropriation
of land is deemed necessary , due to monopolistic control or neglect, it will
be done publicly and within the limits of the law . 528,000 of land in south
ernmost Chile , formerly owned by the Empresa Tierra del Fuego , have al
ready been expropriated. The tract will eventually form part of an agro
industrial complex intended to improve the agricultural yield of the region
***XXX
as well as to explore the possibilities of the petroleum industry in the pro

**
vince of Magallanes .
XXX
INDIANA UNIVERSITY
MAK 8 971
LIBRARY
Issued by CORFO Corporación de Fomento de la Producció*nKR **************
-2
The second aim of the new government is to readjust the direction

of the economy so that it benefits the middle and lower classes. First is
the overall salary adjustment corresponding to the 1970 rise in the cost of
living that was put into effect recently . The second measure involves care
ful control of prices and quality of consumer goods and services. In Decem
ber , the spiraling rise in the cost of living was stopped for the first time
in quite a while , thanks to these and other measures .
The President also outlined a few of the ways in which the govern
ment will attempt to deal with unemployment and at the same time, stim
ulate domestic industry. A large scale housing construction program is

under consideration that will ease the housing shortage for an estimated
90 , 000 families . The program will also have a desirable effect on unem
ployment and production in industries such as; lumber , construction, elec
trical and plumbing equipment, and other construction materials .
The government's third aim is to join the various economic sectors

of the nation in a unified body , better equipped to implement the measures
for economic development. The first step toward realizing this goal was
taken recently with the creation of the National Development Council . The
purpose of the Council is to facilitate communication between the govern
ment and non - governmental sectors and thereby coordinate the efforts of
those sectors in achieving social and economic progress.
The Council will be headed by the President of the Republic and

its members will include the Ministers of Economy, Development, Foreign
Affairs, Reconstruction , National Defense, Finance, Agriculture, Land
and Colonization , Mining, Public Works, Housing , Education , and Public

Health There will also be representatives from Corfo , the Central Bank ,
the Copper Corporation , CORA (the Corporation for Agrarian Reform ), the
Budget Commission , ODEPLAN (the National Planning Agency ), six repre
sentatives of labor groups, six of industrial management, one from the
field of professional education , and two from youth groups.
The responsibility of the Council will be to collaborate with the

President in orientating the process of development . Its members will be
familiar with the objectives of the national economic policy and will assist
in the establishment of norms for the realization of those objectives .
CORFO'S BUDGET FOR 1971
At a recent meeting, Corfo's Board of Directors approved the
Corporation's budget for 1971. The total allotted for this year's transac
tions is Eº2 , 764 , 916,000 and $ 154 , 052, 000 .
This represents a substantial increase over 1970, especially in

escudos , which in last year's budget totalled E ° 1, 713 , 443, 000. Investments
- 3
in foreign currency were reduced 5 , 5 % over last year's amount.
The Board of Directors stated that Corfo's largest expenditures

during 1971 will be for planning and promotion of development programs for
industry, agriculture, mining , energy, hydraulic resources and telecom

munications .
UNIVERSITY CENTER FOR ANDEAN DEVELOPMENT
A new organization for Andean Development, Centro Interuniver

sitario para el Desarrollo Andino ( Interuniversity Center for Andean De
velopment) has been created in Chile . CINDA will be affiliated with the
University of Chile and will function as a consultant for Subregional devel

opment programs.
The purpose of the Center is to participate in the formulation and

projection of programs for Andean solidarity . As an academic organization ,
it will concentrate on investigating social and economic programs involving
Colombia , Ecuador , Peru , Bolivia , and Chile. It will also move from the
ory into practice , actually participating in the realization of those programs.
CINDA will begin work in March with the following plan of action .
First, the Center will make an inventory of the schools, institutions, and
other organizations in the Andean region that have participated in develop
ment programs in order to institute a type of information clearing house.
Second , three seminars are scheduled for the near future with the purpose
of stimulating dialogue regarding development programs in different disci
plines . Third , CINDA will sponsor an academic reevaluation of the Andean
Pact agreement itself and the progress that has been made since its begin
ing . Fourth , the University Center will conduct detailed investigations on
the actual conditions in Andean Pact member countries in such areas as ur
banization , foreign investment, technological exchange, and possible ob
stacles to Subregional integration .
CUBA AND CHILE SIGN TRADE AGREEMENT
Cuba and Chile recently signed an agreement designed to increase

cost effectiveness of trade between the two countries . According to the
terms of the agreement, both Cuba and Chile will provide maximum atten
tion to ships in their ports and will do everything possible to assure the
smooth flow of trade. By increasing the efficiency of merchant marine ex

change , cost will be lowered and consequently more joint commercial ven
tures will be possible for the two nations .
The reciprocal agreement became effective immediately and it is

expected that the first ship to take advantage of it will be a Cuban vessel
due to arrive in Chile soon with a cargo of sugar. Arrangements have al

ready been made to secure a return cargo of Chilean goods such as ;onions,
garlic , and beans.
-4
BRIEFS
** Mr. Alfonso Inostoza, President of Chile's Banco Central, stat

ed recently that he has received encouraging reports from foreign banks
that intend to maintain open credit lines with Chile . Mr. Inostroza men
tioned that among the banks that have informed him of their intention to
" continue ample financial relations" are the Bank of America and National
City Bank ,
** The Banco Continental, one of Chile's 12 most important banks,

has just announced the sale of 57 % of its stock to the government purchas
ing agent, Banco del Estado . The Banco Continental thus joins the Banco
Israelita and the Banco O'Higgins in cooperating with the government plan
to purchase private national bank stock . (see EN 73 )
** A new fully automated factory for the manufacture of dry cell

batteries has just been opened in Iquique. It is expected that during the
first phase of production of the three traditional types of batteries, 24 mil
lion units will be manufactured per year. The factory represents an invest
ment of both domestic and foreign capital, with the special cooperation of
the Chilean firm , Fensa , and the Japanese firm , Hitachi. The plant instal
lations were financed to a large degree by credits extended by Japan and
guaranteed by Corfo .
** The Argentinian firm , La Plata Cereal Co., and the Ministry

of Education of Chile have signed an agreement whereby Chile will purchase
$ 2 , 860, 000 worth of equipment and machinery for use in technical and pro
fessional schools . The purchase will be financed by a credit guaranteed by
Argentina's Banco Central. The agreement also includes provisions for
technical assesment and assistance and scholarship aid as a basis for future
exchange of information between Argentina and Chile .
** The Board of Directors of Corfo approved the purchase by Corfo

of all of the Compañía de Acero del Pacífico ( Pacific Steel Co. ) stock held
privately . The 37 , 420, 133 shares will be purchased for a total of $ 90, 600, 000
which will be paid on a schedule of 3 to 8 years maximum .
** Arica , Chile will soon be joined to the telecommunications net

work of Bolivia . The Bolivian Minister of Public Works and Communications
recently announced that preliminary work has been completed for the pro
ject which will permit direct radiotelephone communication between the two
nations . In Chile , ENTEL (the National Telecommunications Co. ) is in the
process of installing a micro - wave transmission system throughout the
country . It is already in operation in Santiago , La Serena , and Antofagasta

Tocopilla .
- ---
GOVT PU'LS GOVEER
D. W. HOM
CORFO
No. 75 March 5 , 1971
SPEECH GIVEN BY MR . ALFONSO INOSTROZA , PRESIDENT OF THE

CENTRAL BANK OF CHILE , AT THE BANKER'S CLUB IN NEW YORK
FEBRUARY 25 , 1971
I appreciate your having come here today . I believe that in a cor .

dial and friendly atmosphere we will be able to exchange points of view of
mutual interest . And I believe that this is the only way in which can
we
conduct financial relations at an international level.
We are here in New York following a visit to Washington D. C. ,

where we attended the annual consultation meeting of the Interamerican
Committee of the Alliance for Progress, commonly called the " Country
Review " of the Latin American nations . We were very interested in attend
ing this meeting of CIAP precisely because it gave us the opportunity to
analize and discuss in detail the economic program of President Salvador

Allende's government. For three days during the CIAP meetings we have
explained in the greatest possible detail the economic policy that the gov
ernment is following and will follow in the future. In the same manner I
would like to speak with you today regarding the financialpolicy we have
adopted. I want to give you all the information necessary to make this
policy perfectly clear . This is what we have done in CIAP, what we hope
to do here today , and what we want to do at any meeting in which we can
participate . Furthermore, we welcome at any time in our country any
representative of international economic and financial entities , to explain
and discuss there, our point of view and likewise that of our visitors . Our
country and our institutions , especially the Banco Central, are anxious to
receive your visits as well as those of others who are unable to be with us
today . In this spirit , then , I would like to outline some aspects
financial policy .
During the meetings that we attended in Washington we explained

that the fundamental aim that inspires the government's economic policy
is that of bringing about the transformation from one economic system to
another. We have said very plainly that we have begun our journey on the
road towards socialism , a road that is completely Chilean , a road that does
not seek to imitate other systems, a road that is and will be in accordance
with our tradition of democracy and respect of the law .
We are at present confronted with serious problems, especially

INDIANA UNVESTY 22
N.Ardi Jl
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DESEN ************ AAARRR
- 2
with regard to a reactivation of our economy. This is mainly due to the

slow economic development during the past ten years, to the lack of long
range plans to strengthen the weakened condition of the nation , that was
complicated by happenings in the past five months . We are facing prob
lems that we are confident to overcome and to this end we are devoting our
best efforts and the means that are available .
Therefore, the financial policy, the monetary credit policy ,and

the policy for foreign commerce, which are the responsibility of the Banco
Central, are geared towards overcoming the present economic difficulties.
All of our objectives of economic recovery and financial support

are qualified by the basic intention of maintaining monetary stability and
establishing a healthy economic climate that will enable us to eliminate
once and for all the spiraling inflation that has become almost character
istic of Chile. Therefore, our short- range objectives are based on these
fundamentals .
We want to eliminate from our financial system the concentration

that exists in the granting of credits . We want to do away with the exces
sive centralization in the capital of Santiago that exists in the use of
credits . We want to eliminate once and for all the fraudulent practices
that have been observed in the national banking system and that , in one
way or another , have affected Chile's international relations, We want to
increase the number of people that use the banking and financial facilities
available . We want to make these facilities accessible to all of the sectors
that are working for the progress of the nation . We want to implement the
functioning of each bank within the strict limits of organization and solvency .
We want to direct the availability of credits to those activities

that really require it . We do not want credit to be used for speculation
but rather for those activities that are effectively stimulating the produc
tion of goods and services .
Obviously , all of this constitutes a far - reaching task , one that

ur
will require much work and ,especially , a thorough reorganization of o
present financial system . And we do not mean superfici al reforms but a
definitive redirection of the system so that it really is at the service of
the productive effort of the nation .
In this context we have proposed the nationalization of the private

banks in order to eliminate the defects that plague the financial system and
to enable us to attain our new goals .
We have also explained before the CIAP committee in Washington

what our position is in regard to foreign trade . We want to extend and in
vigorate our commercial relations th all countries of the world . We
want this to be mutually benefici motivated by respect for our poli
tical and economic system , e relations to be directly connected

- 3
to an increase in domestic production of goods and services. We want to

join industrial development with an export expansion program , We do
not want to extend our foreign commercial relations in a way that would
require us to abandon the areas in which we have traditionally dealt . We
want to continue our exchange with the sectors that cooperate with us at
present and at the same time extend our relations to include other devel
oping coutries , other socialist nations , and in particular , the other Latin
American countries .
The expansion of our commerce and the development of our ex

ports will become vital elements in our foreign trade policy . For them
we will usemany organizations, commercial agreements , and member
ship in international entities . We plan to stimulate exports through a
system of incentives that will be administered so as to back up the export
We would like to
of goods whose marketable possibilities are difficult .
use the experience of more industrialized nations in our task ; we want to
organize our domestic and international commerce ; we want to make a
thorough study of internationalmarkets . In a nutshell , what we want to
do is put our foreign trade in the best and most modern condition that we
can in order to enter international competition with every possible ad
vantage .
In this context we made it clear to the Alliance for Progress Com

mittee that we intend to continue our participation in the world community
and especially in the international financial organizations . We hope that
we can continue to rely on the availabliity of short - term credit from the
international banking system . We also hope that we can continue to count
on the contribution of private capital investments , especially when the in
vestments are of a technological nature . Our policy with regard to foreign
investment in Chile is clearly outlined in the Andean Pact agreement which
also affects Colombia , Ecuador , Peru , and Bolivia ,
It has been said that Chile does not want the investment of foreign
capital, in fact that she refuses to allow it . This is an error , one that we
have tried to correct in all public statements. The President of the Repub
lic , Dr. Salvador Allende, made it clear from the moment that he took
office and other government officials have done likewise , that Chile's pol
icy regarding the investment of foreign capital is the same policy that is
set forth in the Andean Pact . We would like it to be perfectly understood
that Chile attributes an important role to the investment of foreign capital,

especially when that capital represents technological development. We
believe that the investments made in agreement with the Andean Pact terms
will be an important contribution to Chilean development. Naturally , we
want only the investment that will ultimately contribute to the country's
development and for this reason we have been so careful to explain the
conditions that will determine our acceptance of private investment in
Chile .
-4
We have also said that we intend to continue our membership in
international organizations, especially in those connected with finance.

We also hope that these international organizations continue to cooperate
with us as they have done in the past.
During the final meeting of the CIAP committee we had the sat
isfaction of hearing the declarations of the international agencies that par
ticipated in the meetings . All of them expressed a desire to continue to
collaborate with us and , furthermore, to join with us in trying to discover
the most effective short - term plan to augment our financial dealings .
These international organizations have understood our position

and we hope that the international bankers will also , We went to the CIAP
meetings to explain our policies; not to ask for credits . We are here now
to explain our policies also .
We will continue our participation in the world community , eco
nomically and socially ; we hope to continue to enjoy the financial assist

ance of international organizations and we also hope to continue to deal
with international banks from all over the world .
To fulfill the requirements of the new financial system in Chile

that I outlined before , we have proposed the nationalization of the banks.
At the same time, we have proposed that foreign banks continue to operate
in Chile on the basis of commercial and financial representations and not
as deposit banks .
The representatives of foreign banks seem to have understood

our position and we hope that our relations with them continue to be as
cordial as they have been to date. In this way we hope to have a modified
banking system . Once the private bank is nationalized , we will continue
to operate as we have done in the past and with the same banking institu
tions. There will not be one and only one bank as has been rumored . We
will continue to function with various banking institutions, each of which
will specialize in a different sector of the economy. It is interesting to
note that with all of the banking experience that Chile has had , there is
not one true development bank in the country . The Chilean banks deal in
short- term operations involving little risk . We do not have agressive,
dynamic development banks that deal in long - term operations. Our bank
ing system lacks the means to mobilize savings and other capital in order
to finance development projects. There is one organization , the Corpor
ación de Fomento de la Producción , that is responsible for these aspects
of development, but , naturally , it is a development entity and not a bank .

In this way, our financial system at the moment has a tremendous gap .
We want to integrate a series of development banks at a national and re
gional level in accordance with the regional planning of national policies.
Under these conditions we expect that the bankswill assume a new

role in national affairs , one that, we regret , it did not have for all these
-5
years . The experience of other nations in this regard has been very
helpful for us. Sitting here with me is a distinguished representative of

the Bank of America who gives me cause to remember how the Bank came
into being and how it has truly served the community with a spirit of recog
nition of the fundamental role of the bank . What we want for Chile is a bank
of the same criteria . We could give many other examples of how the banks
in the United States and other countries maintain a position of dynamic

and agressive support that keeps them abreast of the current of economic
events . We want something similar for Chile ; we do not want our banks
to become merely investment companies. The spirit of banking in Chile
needs to be changed . For this reason the government has adopted its pol
icy of nationalization of the private banks. We must modify the general
banking legislation that controls monetary transactions in our country
and also reform the structure of the Banco Central so that it can adapt to
these new needs of the nation ,
Inasmuch as we understand the important role that the private

national bank plays in the immediate reactivation of the economy, we have
proposed the purchase of bank stock that is owned by private individuals .
We have done this as well in the interest of the small investor who at one
time entrusted his savings to stock purchase in the hope that dividends
earned would augment his regular income. Unfortunately , this has not
been the case . On the contrary , not only has he not earned a dividend ;
his original capital investment has actually decreased in value . Such a
situation could not be allowed to continue and for this reason we have
given the option of exchanging private national bank stock , which sells
poorly in the commercialmarket, for Central Bank readjustable bonds,
which pay the highest interest in the country . In this way we intend to
transfer ownership to the State with the cooperation of the Corporación
de Fomento who will act as the government's purchasing agent.
In the course of these events we have had cause for concern due
to the rather irregular transactions made by a few banks. For this reason
the controlling agency of the banking system , the Superintendencia de Ban
cos , has intervened in the cases of the few banks that were carrying on
activities not in accordance with the nation's banking regulations .
I feel that my conversation with you would not be complete if I

did not mention a case that has lent itself to conjecture and distortion
abroad . I am referring to the instance of a bank that illegally contracted
debts with banks in the United States .
A few weeks after I took office in the Banco Central, we discov

ered that this bank had guaranteed $ 7 , 350 , 000 in loans with United States
banks without the required authorization of the Banco Central, without
the authorization of the Superintendencia de Bancos, and without record

ing this transaction in their own books. Allow me to point out to you that
this loan for $ 7 , 350, 000 was obtained for a domestic automobile company
-6
whose total assests did not reach a half million dollars. Not only that,
the loan was guaranteed by a bank whose capital was not even half that
amount, Chilean banking regulations are quite explicit in their limitation
of external credits for domestic industry to 10 % of the assets of the bank

guaranteeing the loan . I am sure that you can judge for yourselves the
magnitude of this transgression of our banking laws.
The Superintendencia de Bancos has intervened in this case and

the necessary records have been sent to the courts where the Banco Cen
tral will press charges for violations of the monetary regulations of the
nation and for having seriously jeopardized the prestige of Chilean credit
abroad .
The bank in question does not have the capital necessary to pay
the notes that will become due and neither does the local automobile com
pany involved. Rather than have these two firms go into bancruptcy , the
case is now being handled by government authorities who will do all that
is possible to maintain the good standing of Chile's credit overseas.
With this I hope to show you that the financial authorities of Chile
will not permit transactions that are not in complete accord with the le
gal system of the nation and above all they will not tolerate any situation
that will put the country's credit in a compromising position . Chile has
always fulfilled her financialobligations scrupulously and will continue to
do so in the future ,
For this reason the Banco Central has informed the authorities
who have intervened in the case of the bank in question that they will do
everything necessary to cancel this debt contracted with the United States
banks. Futhermore, the President of the Republic has also requested
that all feasible measures be taken to resolve this problem satisfactorily .
He also asked that I take this opportunity to express to you his view and
that of the government - which is that Chile will honor her financial ob
ligations in the same way that she has honored them in the past .
There have been a few other instances of infractions of the bank
ing regulations in Chile but fortunately not insofar as our credit abroad or
the solvency of the banks is concerned . They are three or four cases of
relatively technical transgressions and for this reason the situations are
not as serious as the one we have already explained .
In the cases of these banks, government intervention will continue

- 7
only as long as it is necessary to regularize the transactions of the

banks involved . Once they have demonstrated that their activities will
be carried out in accordance with the regulations of the Banco Central,
they will be free to resume operations. However, in the case of the
debts incurred with the United States banks, government intervention
will continue until the debt has been completely cancelled .
In closing I would like to remind you that international banks

can contribute greatly to the development of Chile . We need to finance
our foreign trade . The volume of import and export of goods and ser
vices as well as other transfers of finances reached a total of 2,200
million dollars. At this rate is is obvious that we need quite a lot of
financing . We feel that the international banks can be of great help to
us and we believe that we can count on the cooperation of the foreign
banks along the lines that I have outlined today .
During the past few weeks we have seen signs of interest in

many international banks . I would like to extend to all of you the invi
tation to visit our country and our financial institutions . We are pre
pared to give you all of the information necessary to conduct activities

that will be mutually beneficial. We are willing to explain in further
detail our plans and policies . I, myself , would be happy to welcome
you in my offices in Santiago . Thank you very much .
一
-
GOVT PUBLS
ADI.G.COM uUVI PER
CORFO
No. 76 March 22 , 1971
* EXPANDED ELECTRONICS ENTERPRISE

* NEW MINISTRIES AND DEVELOPMENT PLANS
* NEW COPPER SALES OPERATIONS
* SECTORIAL DEVELOPMENT COMMISSIONS
* DOMESTIC TAXI ASSEMBLY
* PURCHASE OF ADDITIONAL PRIVATE BANKS STOCK
* NATIONAL COMMERCIALIZATION AND DISTRIBUTION COMPANY
* BRIEFS
O A Y
INDI
EXPANDED ELECTRONICS ENTERPRISE Viran 20 g /l

LIBRARY
Negotiations have been recently completed for the transferring

of some of the RCA Chile stock to Corfo . During the past thirty years
the American electronics company and the Chilean development corpora
tion have been partners, with RCA holding 67 % of the stock and Corfo 33% .
A spokesman for RCA explained that Corfo will become the
controlling stockholder in order to implement expansion plans for the

company that will in turn further development plans for the electronics
industry in Chile . The present arrangement calls for RCA having 49%
and Corfo 51% of the stock . The name of the company will be changed
to Industrias Radio y Television S. A. and a new trademark will be used
to identify its products .
This transaction reflects the policy thinking of the government

of Chile regarding foreign investment and is in keeping with the Andean
Pact regulations .
NEW MINISTRIES AND DEVELOPMENT PLANS
In a recent public appearance, President Salvador Allende

announced a few changes in the structure of the Chilean government.
One was the creation of two new cabinet posts, the Ministerio
del Mar (Ministry of Marine Affairs - See EN 71) and the Ministerio de la
Familia (Ministry of Family Affairs). The Ministry of Marine Affairs is
actually comprised of two portfolios, that of the fishing industry and that

-2 .
of maritime transport and port facilities. Its purpose is to coordinate and

develop the fishing industry , to conserve marine flora and fauna , to im
prove conditions of those who earn their living from the sea, to direct and
develop the maritime shipping industry in Chile , and to sponsor research
and technological assistance in these fields .
The Ministry of Family Affairs will be responsible for the inte

gration of the family unit in the social and economic development of the
nation , The President stated that the new Ministry will concentrate on a
series of legislative measures designed to benefit Chilean family life .
In addition it was announced that by next year there will be a

single uniform allotment to supplement the family incomeof Chilean work
ers . There will also be increases in the amounts of pensions , retirement
benefits , and aid to orphans and widows.
After making these announcements , the President also outlined

the six year development plan proposed for the provinces of Valparaíso
and Aconcagua . He explained that this six year plan is designed to convert
the area into a single geographical unit of vital importance to the develop
ment of the nation as a whole . This will be accomplished by accelerating
the process of industrial development in the region. For this purpose
several new plants will be built that will create job opportunities for a
considerable number of workers and technicians . It will be necessary ,
President Allende said , to obtain financial aid from internationalsources
to realize these objectives .
NEW COPPER SALES OPERATIONS
Executive representatives from fifteen countries are at present

meeting in Santiago, Chile with representatives of the Corporación del
Cobre (Codelco ) in order to establish practical and mutually agreeable
systems for the operation, administration, and functioning of the sales
contracts that Codelco will handle as of April 1 . This is the expiration
date of Anaconda Sales Company's contract to manage the sale of copper

produced at Chuquicamata , El Salvador , and La Exótica .
The Copper Corporation will establish a central sales agency

in Santiago which will operate in conjunction with local branch agencies
abroad . The management personnel from these branch agencies will
meet with representatives of Codelco during the present conferences to

discuss the administrative mechanics of present sales contracts, delivery
schedules, shipping and distribution arrangements , invoicing , and collec
tion of payment .
- 3
SECTORIAL DEVELOPMENT COMMISSIONS
Corfo has initiated a program of change in its organization that

will restructure the development agency in order to give greater impetus
to the progress of Chilean industry . The program calls for the establish
ment of Sectorial Development Commissions that will be directly connected
with various fields of the economic sector. As state agencies the Commis
sions will enjoy a certain degree of autonomy to program and finance activ
ities , to carry out research projects , to contract technicalassistance, and
to make policy decisions regarding the industrial development in that par
ticular sector of the economy. They will be directed by the Ministry of
Economy and the Ministry related to that particular sector . Funds to real
ize the projects of each Commission will be allotted by Corfo ; however , the
Commissions will also be authorized to seek financial aid from other sources.
The first four commissions which were recently instituted are,

the Textile and Garment Industries Development Commission , the Lumber ,
Cellulose , and Paper Development Commission , the Leather and Footwear
Industries Development Commission , and the Commission for the Coordin
ation of the Development of Energy . These are important sectors of the
Chilean economy and it is expected that they will benefit considerably from
the more specialized and direct attention of the Sectorial Development Com
missions .
DOMESTIC TAXI ASSEMBLY
Corfo's Automobile Commission has announced that four Chilean
automobile assembly plants will supply the nation with taxis . In the past
the vehicles used for this purpose were imported and the actual retail price
was rather high due to transport costs and high customs duties. According
to Corfo's plan, in the future only 60 % of the necessary parts will be import
ed and those imports will be subject to a lowered duty rate. The cars will
be assembled in Chile and will be sold directly from the factory to the user .
In this way, the Corfo spokesman explained , retail cost will be cut to a
minimum ,
At the same time, the Banco del Estado will extend a special
credit line to finance the purchase of these new taxis .
PURCHASE OF ADDITIONAL PRIVATE BANKS STOCK
Corfo has recently purchased another 30.5 % of the stock of the

Banco Talca, a privately owned and operated Chilean bank . This transac
tion makes Corfo the bank's principal stockholder since the development
agency now owns 58 % of the total stock . Thus the Banco Talca joins the
other Chilean banks, the O'Higgins , the Israelita , the Continental, and the
Nacional del Trabajo , in cooperating with the government program to pur
chase private national bank stock .
-4
More recently it has been announced that 16 % of the shares of the

Banco de Chile have also been acquired . Banco de Chile is the largest
private bank in the country . This purchase was followed by another one ,
that of 85 % of the stock of the Banco Panamericano ,
NATIONAL COMMERCIALIZATION AND DISTRIBUTION COMPANY
The Chilean government has organized a new agency , Empresa

Nacional de Comercialización y Distribución (the National Commercializa
tion and Distribution Company ), that will be formed by Corfo , the Banco
del Estado, and the Empresa de Comercio Agrícola (the Agricultural Com
merce Co. ). Its purpose will be to distribute food products and other man
ufactured goods directly from suppliers to all parts of Chile . Special em
phasis will be placed on distribution to isolated regions of the country and
to low - income sectors .
company will also make recommendations to the Minis

The new
try of Economy regarding technical, financial, and commercial measures
necessary for development projects. At the same time it will be respon
sible for policy decisions affecting supply and distribution . The National
Commercialization and Distribution Company will have a total capital of
E ° 12 million ,
BRIEFS
** The Constitutional Reform proposal which calls for the nation

alization of the copper industry in Chile has been approved in general by the
Chilean House of Representatives . The proposal had been previously ap
proved by the Senate
** The total 1970 production of copper by the large scale mining

concerns reached 540, 443 metric tons. The production in 1969 totalled
540, 174 metric tons .
** Chilean industry will be represented this month by stands at

the International Wine Industry Fair in Mendoza, Argentina, at the VIII In
ternational Exposition in Talca , Chile and at the Spring Fair in Leipzig .
Arrangements are being made for the Chilean contribution to the forthcom
ing International Fair in Japan this fall.
** The governments of Cuba and Chile have signed an agreement

to establish regular commercial air service between Habana and Santiago .
A representative of LAN - Chile , Chile's international airline , said that the
itinerary will probably be Santiago , Lima, Habana , Madrid . The two nations
have also agreed to establish radio and telecommunication service ,
***
GOVT PUBIS GOVT PER
READING ROOM
Excerpts from
the CIAP Meeting
on Chile
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SPECIAL ISSUE
观众戏双
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INDIANA UNIVERSITY
* 欢欢欢欢跃术
MAY 31971
双茶
LIBRARY
SEX SEXXXMARM***********

TABLE OF CONTENTS
page
The CIAP Annual Review of Chile . 1
Statement by Mr. Pedro Vuskovic ,

Minister of Economy 2
Statement by Mr. Alfonso Inostroza ,

President of the Central Bank . 15
Statement by Mr. Kurt Dreckmann ,

Executive Vice - President of Corfo .20
Statement by Mr. Vladimiro Arellano ,

Director of the Budget .32
-1
THE CIAP ANNUAL REVIEW OF CHILE
The establishment of the Inter- American Committee of the Alli
ance for Progress (CIAP ) is closely linked to the history of the efforts
made by the Latin American countries to provide a multilateral basis for
the process of solving the problems of economic and social development.
CIAP is an international commission which represents the interests of the
developing countries before the external financial community and vice
versa . The prime function of CIAP is to determine each country's inter
nal performance and external financial needs, and on that basis to calcu
late for the region as a whole , and for each member , financial availabil
ities and requirements , as well as their distribution . In addition , CIAP
is charged with the study of other " horizontal" problems of the regions,
with a view to making appropriate recommendations on such matters
inflation , external debt, private investment, trade, and agrarian reform .
These functions are carried out through a system of annual country reviews,
each lasting about one week , with the participation of individual country
delegations , representatives of the international financial community , as
well as of several United Nations organs and observers from nonmember
countries .
In accordance with the CIAP policy for an annual review , therefore,

the CIAP subcommittee for Chile recently convened a series of meetings
in Washington DC . The Chilean delegation was headed by : Mr. Pedro
Vuskovic , Minister of Economy; Mr. Alfonso Inostroza , President of the
Central Bank of Chile ; Mr. Orlando Letelier , Ambassador of Chile to the
United States ; Mr. Kurt Dreckmann , Executive Vice - President of Corfo ;
Mr. Vladimiro Arellano, Director of the Budget ; Mr. Pio Garcia of the
Ministry of Economy; Mr. Javier Urrutia , Executive Director of Corfo,
New York ; and Mr. Mario Vergara , Assistant Director of Corfo , New York .
In this special issue of the ECONOMIC NOTES , we are presenting

the statements made by Messrs . Pedro Vuskovic , Alfonso Inostroza , Kurt
Dreckmann , and Vladimiro Arellano during the CIAP meeting. The state
ments by Messrs. Vuskovic and Inostroza are given in full ; those ofMessrs.
Dreckman and Arellano, in a slightly abridged version .
- 2
STATEMENT BY MR . PEDRO VUSKOVIC ,
MINISTER FOR ECONOMIC AFFAIRS ,
DEVELOPMENT AND RECONSTRUCTION
OF THE REPUBLIC OF CHILE
CHILE'S PARTICIPATION IN CIAP
At the end of 1970 , in accordance with its Constitution and its laws,
the people of Chile elected a democratic and revolutionary People's Gov
ernment.
None of the despicable events set in motion to prevent the inaugu

ration of the new Government succeeded in altering the democratic tradi
tion of Chile . None will weaken the determination of the People's Gov -
ernment to complete the Program to which the country has pledged itself.
We have come here to tell you about this Program , its historical
justification , its essential objectives and the ways in which it will be car
ried out. We do so because we want international opinion to be frankly
and directly informed about the Chilean Government's plans and because
we are sure that, by giving an accurate account of what our policies are
seeking to achieve, we can define our economic links with other countries ,
with private organizations and especially with international financing and

technical cooperation agencies , in direct contact with each of the parties
concerned .
It is because we are ready to state unreservedly what we are doing

today and what we propose to do tomorrow that we are participating in
this Sub - Committee of CIAP .
We have not come to negotiate a given loan or a particular opera

tion , nor to talk about matters which can only be settled by strictly nation
al decisions . We have come to describe our background in the hope that
we can evoke an objective understanding of the special nature of the Chile
an experience . This understanding is essential for strengthening and
broadening economic relations on a basis of complete awareness and mu
tual respect .
Nor can our presence here be interpreted as an act of unfettered

allegiance to the principles which in past years gave rise to the so - called
For
Alliance for Progress and the machinery designed to carry it out.
more than a decade , like almost all the other countries of Latin America
and perhaps to a larger extent, Chile experienced a pattern of development

-3
which reflected those principles . We did not find along that path a solu
tion to our great economic and social problems, which continued to pre
vail or to get worse ; hence we are now marking out a different path .
From the outset we have formed part of the international machinery set
up to encourage this kind of experiment; we shall continue to form an
integral part of this machinery , in a constructive spirit, in the hope that

there will exist the necessary will to adapt it, as appropriate , to the
process of change which the Latin American economies must undergo ,

a process which has already started in Chile .
THE HISTORICAL NEED FOR CHANGE :
The views of the People's Government on the national economy,

the objectives of its development policy and its plans for economic lead
ership are determined by the nature of the process of social changewhich
the historical reality of Chile itself has rendered inevitable .
They do not arise from an arbitrary political decision but from

a long process of maturation ; they stem from the objective realization
that other growth policies failed , from the existence of contradictions
and tensions that cannot continue to pile up , from the determination ,
conceived and nurtured in the heart of the Chilean people , to overcome

their frustrations and open up new channels of economic and social pro
gress .
The Government's economic program represents a creative and

original approach to this challenge ; it is designed to give full reign to
the Chileans ' powers of renewal. Hence , the central objective of Gov
ernment policy is to replace the existing economic structure , to put an
end to the domination of the big land-owners and the domestic and for
eign monopoly capitalists , and to start building socialism . We are thus
initiating a process of profound economic and social change and it is in
the context of this historic process that each step in the Government's
Program must be assessed . To accomplish the task which it has set
itself , the country possesses a cultural reserve of values and traditions
of which all Chileans are proud and whose continued existence gives the
Chilean experience a special character which appeals to the interest and
solidarity of all the world's peoples. The Chilean Government does not
intend in any way to dash these hopes.
In this task it is counting on the strength it has acquired by rep
resenting the broad masses of the people , the interests of the working
classes in industry and agriculture, the intermediate ranks of producers,
businessmen , technicians, professionals and officials , its young people
and the men and women who are fighting to ensure that Chile triumphs
over its under - development, consolidates its national independence and
eliminates the injustice of its extreme social inequity .
-4 -
THE MAIN PROBLEMS WHICH HAVE BEEN INHERITED :
For a proper assessment of the nature of the process of structural

change we are initiating and also of the obstacles in its path , wemust re
fer back to the historical patterns of national development and examine the
resulting state of the national economy .
Many of its negative features are certainly to be found in the very

low rate of growth . The average increase in the per capita product in the
la st decade was less than 1.8 per cent per year and since 1967 there has
been practically no growth .
Other disequilibria and problems not solved by the previous system
were reflected in the persistence of acute inflation : the average annual in
creases in the level of domestic prices was almost 28 per cent in the last
decade . In less than fifteen years, Chile tried three anti - inflation programs,
the burden of which was placed on the working masses . These soon proved
equally sterile .
The economic structure was tending more and more to satisfy the
consumption patterns of the high - income groups, forming a few product
ive sectors whose relative buoyancy contrasted with the stagnation in basic
products and articles of popular consumption . The injustice of the nation
al income distribution thus became even more marked ; in 1968 one per cent
of the population possessed 10 per cent of the national income, i.e. a per
capita income 69 times greater than that of the poorest 10 per cent; be
tween 1960 and 1970 the share of manual workers ' wages in total income
declined from 18.4 to 16.2 per cent; and the share of income earned in
Chile by 20 per cent of the poorest families is markedly inferior to the
Latin American average. Obviously , this pattern of income distribution
has been accompanied by a considerable and increasing concentration of
wealth and property .
The speed and characteristics of Chilean development have been

imposed on us to a large extent by the state of external dependence which
has characterized the national economy and which has rapidly become
more marked in recent years . Foreign capital not only dominated the
country's basic resources, mainly copper, but also penetrated deeply in

to the industrial sector ; already in 1968 foreign capital controlled more
than one sixth of the invested capital of the whole manufacturing sector ; of
100 major undertakings, 61 had foreign participation and in 40 this parti
cipation was enough for effective control. All this , combined with the
effects of a policy of increasing foreign indebtedness , was reflected in the

balance - of- payments situation . The withdrawal of foreign currency in the
form of profits on foreign capital increased from $ 58 million in 1950 to
$ 201 million in 1967, a figure representing almost 20 per cent of totalcur
rent income. What is more, payments on foreign capital loans and debt
servicing multiplied more than ten times between 1950 and 1965. Although
they declined in 1966 and 1967 as a result of the re - negotiation of the debt,
-5 .
that only meant postponing them for the future. On assuming power the
new Government inherited commitments for external debt payments and
interest amounting for the six -year period 1971-76 to $ 1, 400 million of
which more than $ 550 million fall due in 1971 and 1972 .
As a result of these and other features of the former regime, the

the economy was seriously disabled and could not provide work for the
growing labor force ; this caused a growing volume of unemployment and
underemployment which reached very high levels . There appeared on an
increasing scale large groups ofmarginal population playing no real part
in the productive effort and the distribution of its results .
This review is not intended to criticize the results of the previous

administration : our real aim is to pinpoint the nature of the problems the
former regime could not overcome, for these problems are the starting
point for defining the new development policy .
In short, the stagnation , the inflation , the inequality , the unemploy

ment and the de - nationalization of the economy were the inevitable result
of the type of capitalist dependency which characterized the Chilean econ
omy and society . The State itself , with its tradition of intervention in
the national economy, acted merely as an accomplice in the processes of
monopolization and dependence inherent in this system .
THE BASIC ECONOMIC OBJECTIVES OF THE PEOPLE'S GOVERNMENT :
The foregoing explains why the new Government's economic pro

gram is designed to transform the traditional structure of capitalist depen
dency and to start to build instead a socialist system with the character
istics and methods which the Chileans themselves wish to impart to it .
With this aim , the People's Government has laid down three main objec
tives .
The first concerns the re - building of the economy in three areas

of ownership - State, mixed , and private O so that the State becomes the
effective center for shaping the economy and planning its development,
The area of State ownership will comprise the existing State enter
prises and those to be established in the future, together with the national
and foreign monopolies which are expropriated, especially in the sector
of our basic resources , banking and.finance, industry , distribution , foreign
trade and all activities strategic for national development.
The mixed area will consist of enterprises combining private , na

tional, and foreign capitalwith State capital. Their administration and
management will be carried out jointly . Their main aim is to associate
State interests and resources with entrepreneurial initiatives and ability
which we want to stimulate and harness for the benefit of Chile .
-6
The area of private ownership will be made up of most of the exist

ing enterprises, which will remain in it and which will merely have to con
form to the laws on private industrial and commercial property . The
People's Government proposes to maintain and develop the conditions ne

cessary for ensuring that these enterprises utilize fully their productive
and employment capacities.
In the second place, the People's Government will conduct a vigor

ous program of income distribution , designed to satisfy the legitimate
demands of the masses and to sustain the development of the economy
according to new patterns of industrialization .
The third objective is to accelerate , deepen and broaden the pro

cess of land reform .
The land tenure system in Chile , even today , is unacceptable not

only because it is extremely unjust for most agricultural workers but also
because it limits the development of agricultural production .
Between 1965 and 1970 the rate of growth of crop production was
2.8 per cent and that of livestock production was 2.4 per cent. The av
erage for the sector as a whole was 2.6 per cent, which contrasts with the
target of 6.3 per cent postulated for the period by the Agricultural Devel
opment Plan of the former Government. After these results , with the
burden of the big estate and the no less extended presence of the small
estate , we must concentrate on cooperative forms of land ownership or
establish State farms, when exceptional circumstances so require, and
involve the organized agricultural workers both in the planning and exe
cution of land reform and in agricultural and forestry development it
self .
These basic objectives constitute a new scheme of economic and

social development, genuinely national and independent, for the exclusive
service of Chile and the bulk of its population .
THE FORMATION OF AREAS OF STATE AND MIXED OWNERSHIP :
In pursuance of these objectives, we have already started form
ing the area of State ownership , since this is an essential factor for the
success of our short- term economic policy . All the moves made in this
direction are in strict conformity with existing legislation .
This is the case with the constitutional reform bill which will lay
the foundations for the nationalization of the big mining companies and
whose consideration in the National Congress is already well advanced .
In the case of other sectors we are making arrangements direct

ly with the private interests concerned . We have thus completed the na
tionalization of the iron and steel industry and we have also incorporated
-7 .
the coal mines into the area of State ownership . Negotiations with other
key industrial sectors are progressing .
So far the legal powers with which the public authorities are in
vested to expropriate non - agricultural undertakings have been used only
exceptionally , to counter the malicious intrigues of certain private inter
ests .
The proposal to nationalize the banking system has received spe

cial consideration . The need to act in this direction has been imperative
not only because private banking has traditionally played an important part
in the process of economic concentration but also because it is urgent to
put into practice new forms of credit policy . Wewere careful to safeguard
the interests of small shareholders, victims in the past of speculative
manoeuvres which reduced the real value of their savings . Before sending
to Congress a bill drafted in general terms, we allowed an option for the
sale of shares to the State, on fair terms, a procedure which is now being
carried out. Meanwhile , we have already begun to reduce substantially the
rates of interest and to work out a credit policy which favors priority ac
tivities and small and medium enterprises.
Also under way are a number of direct negotiations with private

national and foreign interests for the constitution of mixed companies . In
this way we are trying to produce the desired institutional changes and to
lay firmer foundations for a rebuilding of the industrial sector , which
will rationalize national industry and give it a better chance of healthy

development in the future . An example of this process is the policy laid
down for the automobile industry. We hope to organize soon a system of
international bidding in which we are counting on the participation of the
world's main car producers ,
SHORT -TERM ECONOMIC POLICY :
The design and execution of short- term economic policy responds

to the program objectives we have outlined .
One specific and important example is the policy for the readjust
ment of wages and salaries which the Government in carrying out.
The agreement reached between the Government and the Central

Association of Chilean Workers had laid down the principles underlying
these readjustments. The general aim is to increase wages and salaries
by an amount equal to the decline in purchasing power brought about in
1970 by the rise in the cost of living . For the lowest paid workers and
those in some traditionally backward sectors the increases will be greater .
The readjustment policy would be futile , however, if we allowed

the increases to carry over to prices . This would nullify our efforts to
redistribute income and would have inflationary results. We are therefore
-8
striving to keep prices down and have already obtained positive results :
the increase in the cost of living was 06 per cent in November , remained
stable in December and went up 1. 4 per cent in January . In the previous

January it had risen by 6.8 per cent . Besides attaining its basic objective,
this policy has shattered inflationary expectations, which in the past have
themselves constituted an additional cause of strong inflationary pressures.
Of course, a wage policy such as that being applied mustnecessar

ily give rise to tensions in the productive apparatus. However, apart from
the temporary difficulties it causes for undertakings, it is a fact that re
turns on capital in Chile are excessive , even compared with many capital
ist countries. Most of the private producers can absorb the wage increase
out of their profits without raising their prices . The price policy of the
People's Government is clearly intended to reduce the rate of profit per
unit produced . The effects on earnings can be offset only by simultaneous
increases in the levels of productivity and production , achieved precisely
through the greater purchasing power of the workers.
We are aware that within this general situation there are important
differences between sectors and undertakings and that an over - all policy
for wages and salaries could provoke difficulties in certain areas . For
this reason , we have not laid down rigid objectives : on the contrary, the
People's Government is interested in the gradual development of a more
rational system of prices .
The Government obviously realizes that its income distribution plans

and the structural changes in the economy require a rapid and substantial
increase in the levels of economic activity . What is more , the People's
Government feels that only under the economic and political conditions it
is planning can Chile overcome the old limitations and institutional obstacles
and take full advantage of its economic potential, its available productive
capacity and its vast human and natural resources. Only the type of pro
duction relationships inherent in the system limits the development of
Chile's productive forces. The solution of our immediate problems is en
tirely possible when , with the prospect that these relationships will be
changed , the people themselves assume the task of development.
The rising demand brought about by the Government's income re

distribution policy will be accompanied by important moves designed to
sustain and stimulate the productive activities which mustmeet this demand .
We have planned a series of rehabilitation programs mainly in the

areas of housing and public works , whose financing is already covered in
the capital expenditure section of the national budget . These programs
will give real satisfaction to the pressing housing and infrastructuralneeds
of the masses and at the same time will provide a direct means of absorb
ing idle manpower .
-9
With this same aim in view , we plan to accelerate the investment

programs of State enterprises, with emphasis on investments in capital
goods of nationalmanufacture, the strengthening of the strategic sectors
of the economy, regional diversification and infrastructuralprojects. We
are also putting into practice a vigorous program of export incentives.
FOREIGN INVESTMENT :
We are not opposed in any way to the participation of foreign cap

ital in the process we have initiated ; on the contrary , we are interested
in financial assistance which not only increases our capital- forming abil
ity but also helps us to make technological progress and to become more
active participants in scientific and technological development.
We have said repeatedly that we cannot accept the methods of par

ticipation frequently adopted by foreign investors in Chile . We say this
once again , in a positive desire to re - define the basic principles which
will extend this participation in forms which will fully accord with the
fundamental interests of the Chilean people . In general, we honestly
maintain that the treatment granted as a common standard by the signa
tories of the Andean Pact constitutes for us a solid basis which we are
helping to establish and which we are ready to respect fully .
We are confident that talks on foreign investment will be conducted

in each case with the greatest frankness and with mutual understanding .
In the short time that has elapsed since the People's Government took
office our experience in this respect has been negative in some ways and
highly promising in others.
In two particular cases, private firms backed by foreign capital

adopted an attitude which prejudiced the national economy. endangered
job opportunities and openly violated Chilean legislation . We were com
pelled to intervene with certain administrative measures. After this in
tervention and in spite of an international campaign by certain groups
who falsified the facts , we have tried to reach common agreement on fair
solutions and fortunately these are on the point of being worked out .
These events are in contrast with other moves which open up im

portant prospects . For example , senior staff from the headquarters of
one of the most important United States companies which are operating in
Chile in the electronics industry have recently held talks with Chilean
Government officials . They worked out a draft agreement for boosting

the capital of a mixed company, with a majority of Chilean State capital
and an increase in the present investment of the foreign firms. This will
make a substantial contribution to the development of the industry . Aswe
have said , similar moves will be completed in the automobile sector .
-10
THE PARTICIPATION OF THE PRIVATE SECTOR :
A process of change so profound as that planned by the Government

is bound to affect certain interests which formerly benefitted from the grow
ing concentration of wealth and income. However , it will not harm the
great majority of non -monopolistic firms. On the contrary , they will be
given ample chances not only of staying in business but also of growing
stronger .
To encourage their participation , the Government is opening up

various channels through which the opinions and suggestions of the private
sector can be ascertained and suitably appraised , so that they may be taken
into account in governmental decisions on economic policy .
Accordingly , we have established at the highest level a National
Development Council presided over by the President of the Republic him

self . The leaders of the various economic sectors are fully represented .
We are holding regular day - to - day meetings with entrepreneurs from each
industrial sector. From these meetings it is becoming clear that industry
is beginning to appreciate the stimulating effects of rising demand ; that en
trepreneurs are ready to accept the challenge of reducing unit profit mar
gins and increasing the volume of production with a view to achieving better
use of installed capacity , that they are prepared to cooperate in finding
machinery for rationalizing costs ; and that they are flexible enough to ad
just supply to the changes in the pattern of demand implicit in the income
re - distribution policy of the People's Government.
We have also set up new instruments of economic policy which fa

cilitate over - all planning and improved allocation of State resources . The
use of this instrument will give a strong impetus to productive activities .
This has already materialized in important sectors such as footwear, pre
served foods, clothing, domestic sewing machines, railway rolling stock
and equipment, prefabricated houses and building imputs , lathes and machine
tools , tec .
THE PARTICIPATION OF WORKERS :
Our economic policy involves workers 'participation and active

support which in practice assumes different forms. Among these we
would stress their participation in the enterprises incorporated in the area

of State ownership . Here they are assuming new responsibilities which
have already yielded substantial increases in the levels of production and
productivity . This has occurred in coal-mining , the recently nationalized

textile industry , and even in the other undertakings where the State has
had to intervene because of serious conflicts and shortcomings .
Much of the success achieved in the anti- inflationary policy is de

rived from the active participation of the workers.
-11 -
Undoubtedly , one of the outstanding features of the Chilean experi

ence is the social discipline and sense of responsibility now being shown by
the workers, particularly if we remember the magnitude of the problems
they have traditionally faced , the legitimacy of their claims, their long
accumulated frustrations and the fact that they are now playing a decisive
part in the process of profound economic and social changes.
This attitude , characteristic of the urban workers, also extends to

the rural workers, whose desire for the achievement of the land reform
objectives of our Program is as keen as their past frustrations. We should

recall that during the last six years the Government repeatedly promised
the rural workers to carry out a profound and massive program of land
reform , even quoting specific targets such as the number of families which
would benefit . In fact, these promises were far from being fulfilled : by
31 December 1970 little more than 1, 400 farms had been expropriated out
of a total of 5 , 200 ; the benefits of the reform affected 30, 000 persons , only
4 per cent out of a total of 722 , 000 .
The economic and social justification for land reform , linked with
the need to respond to the rural workers' awareness of their rights and
legitimate demands, explain the decision of the People's Government to
push foward rapidly with land reform . In this respect , our actions conform
strictly to existing laws; we are applying with determination the provisions
of a law which was prepared and promulgated by the former Government.
SOME IMMEDIATE OBSTACLES :
We are far from disregarding the difficulties and obstacles which

face us and which we are giving special attention .
We cannot hope that a process of changes such as that initiated in

Chile will be free from obstructions and actions designed to frustrate it .
These actions are not unconnected with the relative delay in achieving a
greater buoyancy in the levels of economic activity .
The events which took place between September 4 and November 4 ,

when economic sabotage was one of the instruments used by the enemies
of the popular movement, have left traces which have not yet been removed .
And similar actions, although less widespread , are still going on .
The same institutional structure of the State apparatus , inherited

from the previous system , does not always facilitate the administration
of a planned economy and gives rise to painful bureaucratic difficulties,
especially for the development of rehabilitation programs, which by their
very nature require great flexibility .
Thus we do not ignore the objective difficulties which face us in

carrying out the Government's Program . We do not ignore the overt and
covert resistance that may be offered by certain foreign interests , the
-12
great nationalmonopolies , the financial oligarchy and the big landowners.

The Government is determined to confront them serenely but with the ne
cessary resolution . For this task it can call on the energy of a whole
people which in the past has given proof of its unshakeable will and which
is giving such proof now in its determination to overcome its underdevel
opment. It also can count on an institutional and democratic tradition ,
which the People's Government is pledged to broaden and deepen .
Perhaps foreigners do not sufficiently appreciate the historical

significance of our experience: as a people we have undertaken enormous
changes within a legal structure designed to meet other interests and re
alities and even so we are ready to change that structure through the
appropriate democratic channels and meanwhile to accept the limitations
it imposes on the more rapid achievement of our objectives .
In the face of this unshakeable decision , the efforts being made

to reverse the kind of revolutionary process initiated in Chile will prove
futile . The President of the Republic himself has had to reject in the
most categorical fashion the slanderous imputations made abroad on the
freedom of the press in our country . These dubious and malevolent ru
mors are disproved by the communications media themselves, by the
statements of the President of the National Press Association and by the
gratitude expressed to the Government by the owners of a publishing en
terprise which transferred part of its assets to the State. This happened
after the Government had exhausted all efforts to help it overcome its long
standing insolvency . Now , thanks to this arrangement, it can continue to
publish news reports and political analyses.
The attitude of the People's Government towards Co - existence in
Chile also extends to its foreign relations .
We are eager to maintain and amplify our economic links with our
traditional partners . We propose to extend them to other countries and
regions, with the intention not of replacing existing relationships but of
forging any economic links which will benefit Chile on the basis of unre
stricted recognition of our sovereignty and our right to self - determination .
We regret that this attitude of ours , defined clearly and confirmed daily
by events , is at times maliciously falsified for the purpose of creating a
climate of hostility which produces equally hostile reactions . We shall
not allow ourselves to be dragged into this game: we shall merely main
tain our objectives with serenity and firmness .
INTERNATIONAL SIGNIFICANCE OF THE CHILEAN EXPERIENCE :
In following the path of socio - economic change which we have
marked out, we are not trying to test new development schemes whose
validity may transcend our frontiers, for this path has many character
istics which are peculiar to Chilean society . In one particular respect,
-13
however, our experience may be of major significance. We refer to the

attitude of other countries and international circles towards Chile .
Ours is the case of a Latin American country which , within the
framework of its traditional institutions, has decided to bring about pro

found changes in its economy and in its internal social relationships . We
also propose to exercise our sovereign right to maintain and initiate eco
nomic links with all countries of the world , without discrimination of any
kind. In these circumstances, we have no reason to suppose that our pol
icy will prejudice our relations with any country .
As we plan the nationalization of copper and make the appropriate

legal moves for this purpose, we are not challenging anybody or preparing
to divert our traditional trade flows to other areas. We are simply re
trieving for the country one of its most important natural resources. We
are placing under Chilean control an activity essential for the national
economy, one from which we derive surpluses that must be used to am

plify and diversify the rest of our internal economy. We are making sure
that we shall retain for use within our territory large - scale resources
which in the past have been sent abroad . We are building a new economic
structure in which the exploitation of copper is no longer a kind of island
within the national economy, an " enclave" , to use the apt expression coin
ed by ECLA .
When we define our attitude towards foreign capital, loans and di

rect investment, we are not proposing to abolish certain financial and eco
nomic links. We are simply exercising our legitimate right to state where
and in what conditions these contributions are of interest to Chile ,
Undoubtedly , world opinion and especially Latin American opinion

is watching this experiment closely . It is interested not only in our do
mestic evolution but also in the international context within which our ex
periment is taking place. In this latter respect, we have a clear defini
tion of what we ourselves must do .
EXTERNAL FINANCIAL AND TECHNICAL COOPERATION :
Our attitude towards international financial and technical assistance
organizations is also based on these principles .
In recent weeks we have welcomed missions from the International

Monetary Fund, the World Bank and the CIAP itself; we have maintained
contacts with the Inter - American Development Bank and we were visited
by the President of ADELA .
To all these visitors we have explained our Program with complete
frankness ; we have put them in touch with the most diverse groups of opin
ion ; and we have given them all available information and background ma
terial so that they can appreciate for themselves the present economic
situation and its prospects.
-
-14
We have informed them again of our Government's decision to

strictly fulfill our financial commitments and of our assumption that all
the operations initiated by the former regime will continue to develop nor
mally , except those to be modified by common agreement.
The President of the Republic himself and senior officials have
repeatedly explained to our visitors the meaning and scope of our econo
mic policy , whic are derived from our unrelenting resolve to complete
the Government's Program ,
We are glad to note that our visitors have shown understanding and
a positive attitude, which already have been translated into specific actions
now under way . We appreciate this all the more because we realize that
our objectives and our policy have created new situations, which at times
do not conform to the traditional operating conditions and methods of cer
tain of these organizations . We tell them frankly - and we repeat it here
that we are ready to explain our economic policy without reservations; but
we cannot subordinate it to any consideration which is alien to our inter
pretations and wishes . For example , we are maintaining a price policy
which is designed to respond to fundamental objectives and a comprehen
sive plan ; we are not prepared to change it in whole or in part in order to
gain access to a given source of external credit .
We base our policy on the assumption that all these organizations

have sufficient powers of flexibility and objectivity to recognize and adapt
themselves to new , historic situations.
Having noted the historic failure of reformism , the Chileans, act

ing as a free and sovereign people , have opted for the revolutionary trans
formation of their economic , political, and social structures . They have
thus initiated an experiment full of constructive possibilities, designed to
constitute a distinct reality in the Latin American concert of nations. To
bring this experiment to a successful conclusion , the people of Chile and
their governmentwill be intransigent in the defense of their national sov
ereignty and their right of self - determination . We are certain that with
this attitude we can maintain and amplify on appropriate bases the financial
and technical cooperation extended to us from abroad .
-15
STATEMENT BY MR . ALFONSO INOSTROZA , PRESIDENT OF THE
CENTRAL BANK OF THE REPUBLIC OF CHILE
MONETARY POLICY
I. INTRODUCTION
The Government of Chile intends to deal with the problem of inflation

on the assumption that it is caused as a result of the basic structure and the pro
duction pattern of the economy. The monetary policy will therefore aim to achieve
thorough utilization of the productive resources of the country as a supporting ele
ment for the overall planning of economic activities . Thus, the purpose of the cre
dit schemes described below will be to increase the production of goods and servi
ces , especially if they supply the needs of the lower - income groups. Within the
framework of these fundamental goals , financial policy will aim to strike a balance
between the total supply of and demand for the country's resources .
Furthermore, the Government proposes to carry out a comprehensive

reform of the banking system , involving the nationalization of the private banking
system as it exists today and the amendment of the statutes of the Central Bank
and the General Law on Banking . The purpose of these changes is to transform
the banking system into an efficient medium for deploying the monetary resources
of the economy, thus fulfilling the Government's over - all intention that monetary
policy in combination with fiscal policy and the policy on foreign trade, internatio
nal exchange, incomes and prices should play its part in ensuring that economic
activities achieve the aims and objectives laid down in the national planning.
II. THE MONETARY SITUATION IN 1970
During 1970 , as in previous years , the Central Bank's Monetary

Policy was to provide the private sector with sufficient money to meet demand .
Since a surplus in the balance of payments was expected and because current ac
count and investment expenditure made it necessary to purchase from the Treasu
ry substantial amounts of foreign exchange, which the Central Bank could not place
in the foreign exchange market , the Is suing Institute imposed a ceiling on credit
facilities for the private sector . Nevertheless , by means of a loop - hole provided
by article 14 of the Foreign Exchange Act , large amounts of additional short - term
credit were obtained from foreign banks, mainly in New York , and recorded at
the Central Bank as " capital transfers" , although the money was used for opera
ting expenses. Apart from placing severe pressure on Chile's international re
serves , these manipulations , which although legal were beyond the control of the
monetary authorities, caused the total money supply at the end of August to reach
the level forecast for the entire year. In September 1970 , after the election vic
tory of the Popular Unity Parties, there was a sharp change in the foreign exchange
position , a general withdrawal by the public of funds deposited with the State Bank
- 16
and commercial banks , which in mid - September reached the figure of 1 , 100
million escudos , and a general decline in economic activity . In consequence ,
the Central Bank considerably expanded its credits to various government bodies
with a view to halting the trend , and the monetary authorities had to support the
commercial banks . In the last three months of 1970 , however , the position im
proved considerably . By the end of the year, the volume ofmoney in circulation
was only 500 million escudos greater than it had been at the end of August, and
a considerable part of that increase could be attributed to the rate of inflation .
Other sectors also recorded improvements . Savings deposits at the State Bank ,
which had dropped to 54 million escudos during September , went up to 664 mil
lion escudos. Term deposits with commercial banks recovered by 76 million
escudos , which did fully compensate for the fall in September of 114 million es
cudos . The position of the Savings and Loan Associations, which had had to bor
row 336 million escudos from the Central Bank to meet net withdrawals by the
public and their own operating expenses , improved more slowly , but by 5 Febru
ary 1971 their net surplus had reached 280 million escudos , and they had paid off
about one- third of their indebtedness to the Central Bank . The best results were
recorded by the Central Bank's Readjustable Savings Certificates , which had a

net increase of 102 million escudos by the end of the year , fully compensating for
the decline of 11 million escudos during September . Altogether , the additional
supply of money resulting from the Central Bank's credit operations was equiva
lent to the increase that had occurred during the first eight months of the year .
It should be pointed out that these various movements of funds took

place when a recession of productive activities was reaching its peak , when pri
vate and public investment was falling and when purchasing power was weakened
by inflation . It should also be noted that they were due primarily to political
factors , which weakened confidence in the system and caused speculative pressu
res . They highlighted the weaknesses of conventionalmonetary and financialme
chanisms and the defects of the private banking system , whose role of financing
economic activity had had to be largely assumed by the State Bank between Sep
tember and December . The present Government reacted to the position by prompt
ly applying conventional regulatory measures , while at the same time redeploying

financial resources in the light of the true state of the economy and its own social
and economic objectives .
III. THE MONETARY PROGRAM FOR 1971
The monetary and credit policy for 1971 has been drawn up in accor
dance with the main policy objectives of the Government, and it is intended to
transform it into a major instrument for achieving those objectives , as well as
for mobilizing all the productive resources of the country and channeling them
into priority areas . In the short term , the Government intends to reactivate the
economy, absorb the unemployed , create new jobs, redistribute income, sharp
ly reduce inflation , carry outmore radical reforms in agriculture and mining ,
and nationalize the banks and the big monopolies engaged in production and dis
tribution . All government bodies and agencies will make vigorous efforts to halt
price increases, which rose by as much as 35 per cent in the last part of 1970 ,
when the money supply rose by 62 per cent. An increase in GNP is anticipated
on the basis of increased mining production , a good harvest in 1970/1971, the
-17
promotion of industry, and public investment in housing and other activities that
will aim to eliminate unemployment and raise economic activity from the low le
vel that it reached in 1970. The 1971 monetary policy aims to stabilize the rate
of exchange and takes account of an expected deficit in the balance of payments
due to a decline in the price of copper and a net outflow of foreign capital. It is
estimated that the demand for money will increase by 47 per cent during the year ,
but by obtaining 1,200 million escudos from the sale of foreign exchange and
3,900 million escudos from the Issuing Institute , the Treasury is expected to
show a surplus of approximately 300 million escudos during the year.
The credit available to the private sector will show a decline during
1971, since the loop -hole in article 14 will be closed and the Government will
control foreign exchange requirements . However , this reduction will be offset
by greater amounts of bank credit through bodies such as the Agricultural Trade
Undertaking ( ECA ), the Agrarian Reform Corporation ( CORA ) and the Institute
for the Development of Agriculture and Cattle -Rearing ( INDAP ). In order to
halt any inbalance between the supply of and demand for monetary resources gen
erally , the Central Bank is determined to take all available present and future
measures to encourage savings. The 1971 estimate for sales of Readjustable
Savings Certificates is double that for 1970, and as a result of the vigorous pro
motion campaign for the Certificates and because the redistribution of incomes
policy will open up a great potentialmarket of small savers , there is a possibi
lity that it will be exceeded . The Central Bank will collaborate with the State
Bank and all other elements of the financial system in its efforts to increase sa
vings .
The Central Bank is now engaged in reviewing credit policy with a

view to reconciling over - all control with the major need to offer a number of
special credit schemes . Under these schemes , credit will be made available to
small and medium - sized manufacturers and growers, which may be used for the
purpose of setting up bulk purchase syndicates , financing the harvests of certain
cash crops, producing industrialized housing , exports and other operations. The
rate of interest for the first six months of 1971 will drop from 24 per cent to 18
per cent, thus reducing total interest costs by a substantial amount. This measure
is expected to reduce production costs and provide credit for businesses that are
short of capital. Even lower rates will be available to small and medium - sized
producers, and firms which enter into production agreements with the Ministry of
Economics .
The purpose of all these institutional changes is to establish a new

banking and financial system that willmake it possible to channel resources into
activities with high priority in national, sectoral and regional plans, and to back
up the changes being carried out in primary activities , industry and ownership
patterns.
IV . STRUCTURAL REFORM OF THE BANKING SYSTEM
Among the various reasons for the Government's plans to reform the
banking system is the high degree of concentration in the private banking sector -
on 30 June 1970 , three banks shared 44. 5 per cent of the total deposits , of which
they lent 44. 3 per cent, and 55. 1 per cent of the profits which severely limits
-18
the impact of the Government's economic policy on production . Other reasons

include the lack of a specialist system to deal with the development of sectoral
and regional economic activities, the lack of investment banks , and the short
term nature of the credit granted. Other factors which influenced the decision
were the growing tendency of private banks to own shares in industrial and tra
ding companies - which is not approved in the General Law on Banking - and
1
the fact that the country's foreign debt position had suffered as a result of cer
tain irregular foreign exchange manipulations. It is also a fact that 1.3 per
cent of the borrowers were in December 1969 benefiting from the use of 45.6
per cent of the total bank credit and that 62 per cent of the borrowers were ob
taining only 8.2 per cent of the credit. Thus, numerous small and medium -
sized producers could obta in little or no bank credit . To make matters worse ,
there was financial discrimination against smaller businesses, which were made
to pay higher rates of interest and sometimes by various devious means more
than the statutory maximum . Moreover , such businesses found it difficult to
obta in credit when they needed it and were likely to be served with foreclosure
proceedings . Another feature of the banking system was that the provinces of
Valparaíso and Santiago ( 70 per cent in September 1970 ) received more than
their fair share of the total credit facilities.
The private banking system tended to provide facilities principally for

the country's major groups, which were able to provide good collateral for short
term loans at rates that were profitable to the lenders. Meanwhile, high priority
sectors of the economy were deprived of finance, and even the spacial credit sche
mes, which in September 1970 represented as much as 43. 6 per cent of all credit ,
were unsuccessful in alleviating the situation . Furthermore , the establishment of
development banks, already provided for in the statutes had been blocked by lack
of credit , and COR FO had not therefore organized itself as an operational bank .
The private banks had concentrated not so much on encouraging greater savings
deposits as on lobbying for policies that would favor them , and as has been proved
by the irregularities that have come to light since the present Government took
power , they were unwilling to implement the instructions of the monetary author .
ities .
In view of the foregoing , the Government became determined to intro

duce reforms and will shortly send to the National Congress a Draft Bill for the
nationalization of domestic and foreign private banks. In the meantime, however ,
it is making a special offer to the small shareholders in the banks , who have not
been responsible for the policies and have lost a substantial part of their initial
investments . It will buy all packets of shares of a total value of less than 10,000
escudos for a sum equivalent to the average price quoted on the stock exchange
during the first six months of 1970. Payment will be made in Readjustable Savings
Certificates repayable on demand . The same terms will apply to packets of shares
in excess of 10,000 escudos , with the proviso that repayment of the Savings Certi
ficates will be staggered over a seven - year period .
Apart from breaking up the monopolistic power of the banks, which had
worked against the economic development of the country and a more equitable dis
tribution of the national product, the Government's control over the banking system
-19
as a whole will enable it to allocate resources in an efficient manner and will
lead to the introduction of specialized services for particular sectors of the

economy as well as to the establishment of a regional bank . By releasing
funds that were previously being channelled into speculative operations, it
will provide credit for small and medium - sized producers and other high pri
ority sectors of the economy. Government control is also necessary in order
to operate the schemes for differential interest rates and will undoubtedly
facilitate the savings campaign that is being organized . Under its amended
status , the Central Bank will continue to be the highest authority in monetary,
credit and financial matters . It will operate exclusively as a government bank
without participation by private interests and will thus strengthen the links
between the economic and social development planning system and the banking ,
monetary and foreign trade system .
V. FOREIGN TRADE POLICY
In the present phase of transition and adjustment from one economic

system to another , the new Government will lay down a number of new policies
with regard to exports , imports , rates of exchange and treatment of foreign
capital. Foreign trade will be partially nationalized by the selective expropri
ation of export and import firms and by the establishment of regulations to gov
ern the private sector's operations in the international market. Efforts willbe
made to rationalize imports through direct control of national producers bymeans

of a consistent and co - ordinated economic policy . In addition , the List of Per
mitted Imports will be re - examined with a view to curtailing it . The import trade
will be nationalized in the case of a number of major items like cotton , tea , and
tobacco which involve large amounts of foreign exchange . Trade agreements
will be concluded with the developing countries and the socialist countries , and
under an agreement already entered into with Cuba , the two countries have un
dertaken to import certain minimum quantities of each other's products . A num
ber of new State agencies will be established to act as intermediaries between
national producers and the world market, and producers will be protected from
fluctuations in world market prices and exchange rates with a guarantee that they
will receive for their products the prevailing domestic price. The policy of per
iodic devaluation , whic was a cause of inflationary pressures , will be abandoned ,
and the nationalization of copper and other basic resources will make available
for investment finance a large additional volume of foreign exchange . External
finance will continue to play its part in the country's development plans, although
domestic efforts to generate capital will be constantly stepped up . Chile will
therefore retain its membership in international credit organizations so as to ob
tain the necessary assistance to carry out its development plans .
At the same time, it will strengthen its economic ties with Latin American
countries under regional agreements such as LAFTA and the Andean Pact.
-20
STATEMENT BY MR . KURT DRECKMANN
EXECUTIVE VICE - PRESIDENT OF THE
CORPORACION DE FOMENTO DE LA PRODUCCION
THE INDUSTRIAL SECTOR :
The Chilean Government, recognizing the dynamic and moderniz

ing role and long -term importance of industry, is giving high priority to
industrial development. In order to obtain a clear understanding of the
reasons underlying the measures which have been proposed for imple
mentation , it is necessary to analyze the state of the industrial sector as
it was inherited by the present Government.
The industrialization pattern followed by Chile has been one of in

dustrialization by import substitution . Largely as a result of the crisis
of the thirties , but also because of a growing awareness of the " need for
industrialization ' , Chile adopted a highly protectionist policy which was
characterized by: (a ) strong protection for ordinary consumer goods, less
protection for durable consumer and intermediate goods, and virtually
no protection for capital goods; (b ) a lack of selectivity within the various
types of goods ; and ( c ) the lack of a comprehensive and coherent industri
alization policy .
These effects were caused by a large number of structural factors

which included : endemic inflation and the policies designed to combat it ;
a failure to formulate a technological development policy ; excessive con
centration of economic power and the monopolistic characteristics of
Chilean industry ; the unfair distribution of income; and a failure to form
ulate policies designed to meet the essential needs of the people . Thus,
as a result of all these factors, import substitution emerged as the nat
ural economic pattern .
Chile's industrial pattern has been characterized by : (a ) an unbal

anced structure of production , in which consumer goods have predomin
ated , capital goods have played a very minor role and durable consumer
goods a relatively important one; (b ) great inefficiency in the use of re
sources, a situation which has been reflected in very unfavorable prices
by comparison with the international market ; (c ) superficial development
without specialization in lines of production and without adequate use of
technology ; (d ) great diversification of enterprises and products , without
the creation of a perfect or averagely competitive market ; (e ) high con
centration of ownership ; (f) high and increasing external dependence ; (g )
failure to meet the most essential needs of the people; (h ) limited suc
cess in solving employment problems; (i ) high regional concentration ;

( j) inadequate State control of development; and (k ) an imbalance in for
eign relations, a situation which has been reflected in low export levels
- 21
and a very high level of imports of more complex goods. All these char
acteristics are inter - related and tend to reinforce one another .
A , Unbalanced Structure of Production
The minor role played by capital goods in the structure of produc

tion has been largely due to such factors as the lack of a deliberate policy
aimed at establishing production of capital goods, which has in turn been
due to external dependence, the limited size of the internal market, the
lack of an aggresive export policy for more complex goods, and techno
logical shortcomings . This situation has been reflected in a tariff policy
which has given capital goods low nominal protection and virtually no, or
negative real protection . The predominance of consumer goods may be
explained by the philosophy underlying the import substitution process .
It was assumed that, because of the stability and volume of demand for
such goods, Chile would achieve self - sufficiency . Similarly , the predom
inance of durable consumer goods may be explained by the greater tariff
protection which they have enjoyed and by a bias in their favor in the prices
policy .
B. Great Inefficiency in the Use of Resources
The inefficient use of resources may be explained to a large ex
tent by excessive protection , a lack of concern for technological develop

ment , the diversity of enterprises and goods, and the limited size of the
internal market, which has not experienced the dynamic effect of exports .
C. Superficial Industrial Development
Superficial industrial development, which is characterized by the

inefficient production of all types of goods without creating " poles " repre
senting specifically national areas of activity , has largely been the result
of protectionism which has been selective by broad categories of goods ,
but has not sought to protect those branches in which Chile would have
natural or acquired advantages.
comparison of Chile's industrial structure with that of more

A
developed countries underlines the need for specialization . In Finland ,
for example , two branches of industrial activity exceed 12.5 per cent of
the industrial product, whereas in Chile no branch of activity exceeds that
percentage .
D. Great Diversification of Enterprises and Products
There are a number of reasons for the great diversity of enter

prises and products in Chile . Chief among them is the fact that the mar
ket is heterogeneous in nature, because of the great inequality in the in
come levels of consumers . This has made it possible for various lines
-22
of production to survive within each type of good . In addition , enterprises

have tended to expand from commercial to industrial activity and to enter
a number of fields of production as a means of acquiring greater stability
and a larger market. Lastly , the great inefficiency which has been allowed
to exist has eliminated the stimuli which should have promoted the use of
economies of scale ,
E. High Concentration of Ownership
The high concentration of ownership of enterprises is not a feature

peculiar to the industrial sector , since the same phenomenon occurs in the
other sectors of the economy. In the vast majority of business companies
and industrial enterprises, more than half the shares are held by a mere
handful of shareholders ,
The fact that industrial enterprises and commercialbanks are also

closely linked by financial interests has given rise to an unfair and uneven
distribution of credit ,
Another more recent example of the concentration of wealth has

been the establishment of " financial consortiums" which operate enterprises
whose activities are dispersed . Their system of operation is to take ad
vantage of the low market value of shares, which in many cases recover
quickly through the sale of certain assets , the use of the technicalreserves
of insurance companies , and other means .
The most serious consequences of these various forms of concen

tration of wealthhave been the monopolistic power which certain minority
groups have managed to acquire, the difficulty in guiding the process of

industrial growth in accordance with social needs , and the unfair distribu
tion of the surpluses generated in the sector .
F. High and Increasing External Dependence
The fact that Chile has been a dependent country is the main reason
for the mismanagement of the foreign investment policy in industry . It is
precisely the widespread and uncontrolled existence of foreign capital in
the industrial sector that has intensified the degree of Chile's over - all ex
ternal dependence .
Foreign capital has played a relatively modest role in financing

industrial development. However , although its direct financial contribu
tion has been small, the effect, in terms of loss of autonomy, has been
extremely serious. In 1967 approximately 17 per cent of paid up capital in

industrial companies was in the hands of foreign enterprises, and in cer
tain branches the percentage wasmuch greater. In the vast majority of
cases even a small percentage of foreign capital can exercise a control
ling interest in a company , since the participation of foreign capital is

-23
concentrated , while that of national capital is dispersed . While foreigners

represent less than 1 per cent of total shareholders and possess 17 per cent
of the paid up capital in the sector , the national private sector controls
paid up capital which is four times greater , but is owned by a hundred times
as many shareholders .
A large portion of foreign ownership of Chilean industry has been

financed by internal credit, development loans , or external credit which
Chile has managed to obtain on much more favorable terms. Foreign cap
ital tends to accentuate the monopolistic characteristics of Chilean industry .
In the vast majority of cases, foreign companies are nothing more

than commercial " pivots''used by the great multinational corporations to
profit from the Chilean market. They therefore display no interest in
making any technical contribution or in developing in depth . Their chief
interest lies in the sale of technology and primary commodities or inputs ,

through which they maximize the profits and power of the parent company .
For this reason the activities of the Chilean branches of the parent
companies are in most cases restricted . Many branches are obliged to
buy intermediate goods from specific sources , to produce only for the in
ternal market, to refrain from exporting , and to pay unjustifiable royalties.
Furthermore, the policy of business companies is formulated on the basis
of multinational criteria , the companies are financed by a very high per
centage of national resources and they tend to control the whole market in
the field in which they operate .
G. Failure to Meet the Essential Needs of the People
Although the consumption pattern is closely related to a number of

variables , such as the distribution of income, the industrial sector can
nevertheless exert a direct influence on demand for the goods which it

produces, a fact which affects its possibilities of growth . Thus , certain
industrial policies contributed to a sharp increase in the consumption of

durable consumer goods during the period 1964-69.
One of the most serious effects of the distorted pattern of consump

tion of industrial goods is the failure to meet the essential needs of the
population . Thus, substantial deficits have occurred in areas such as
housing , foodstuffs , clothing and other industrial goods. The demand for
industrial goods varies enormously according to income level: the most
affluent 5 per cent of the population have a per capita consumption of in
dustrial goods almost six times greater than that of the lower - income lev
els . Over 90 per cent of all transport vehicles produced are purchased
by the most affluent 5 per cent of the population .
---
- 24
H. Limited Success in Solving Employment Problems
Unemployment is one of the most serious problems in the Chilean

economy. It has been estimated that in the greater Santiago area the rate
of unemployment in June 1970 was 22.5 per cent of the total labor force.
The problem has a number of implications . Unemployed or partially

employed persons not only have no opportunity of obtaining regular work ,
but are also alienated from the consumption process . The fact that the
Chilean economy has generated little employment has been due both to its
structural characteristics and to an economic policy which has explicitly
ignored the employment variable within its objectives and has implicitly
tended to aggravate the problem .
544 , 600 people were employed in the industrial sector in 1968 - in

other words, 19 per cent of all employed persons. The increase in employ
ment in the sector has been smaller than the increase in production a
situation which may be explained by the following factors : ( a ) the effect of
generalized growth resulting from technological progress on productivity ;
( b ) the effect of the greater relative dynamism of activities which generate
little employment; and ( c ) the effect of the preference displayed by indus
trial enterprises, including State enterprises, for capital- intensive tech
nologies .
I. High Regional Concentration of Activity
Industrial development has also failed to solve regional problems;

in fact, it has tended to concentrate economic activity in specific areas .
In 1967 over three quarters of the gross geographic product of the indus
trial sector was generated in the provinces of Santiago, Valparaíso , and
Concepción .
J. Inadequate State Control of Development
A significant feature of Chilean industrial development is the limit

ed extent of State control. State enterprises have been managed haphaz
ardly and have not been regarded as an essential element in development.
The program planning capacity of the State is relatively low ; this in
evitably means that industrial investment is largely determined by the

economic prospects envisaged by private enterprise , which tends to ex
pand in the branches which it dominates or which have high short- term
profitability .
No industrial policy as such has ever been formulated and the in

dustrialization process, which has been characterized by superficiality ,
inefficiency, and diversification , has been the result of policies formulated
in other fields, particularly that of foreign trade. It has been assumed
that the primary role of the State is to act as a financing body by supporting
initiatives taken in the private sector with cheap and easy credit .
-25
K , Imbalance in Foreign Relation
As a result of the superficiality and inefficiency of the industrial
sector , as well as the lack of an aggressive trade policy, Chile imports com
plex industrial goods and exports goods which have a low specifically in
dustrial aggregate value and make intensive use of certain natural resources .
THE NEW INDUSTRIAL DEVELOPMENT POLICY :
Because of the very nature of Chilean industrial development, it

will be necessary to undertake far - reaching structural changes which will
make it possible to attain new objectives as part of the global development
policy formulated by the new Government. The new policy will be based
on the liberation of the forces of production which has occurred as a result
of the new socio - political situation , in which the vast majority of the pop
ulation are no longer passive elements in the development process , but
leading actors in , and the supreme justification for , any action taken by
the Government,
In the short term , it will be necessary to reactivate the sector by

using three major stimuli : ( i) the effect of redistribution of income; (ii ) the
implementation of far - reaching programs in the construction sector ; and
( iii ) programs undertaken by State enterprises .
The redistribution of income, which will be achieved largely through

the wage and salary readjustment policy, is expected to stimulate the de
mand for industrial goods , particularly in those branches in which unused
capacity is greatest.
The massive construction programs will have a particularly im

portant effect on the wood , chemical, petroleum products and coal, non
metallic ores, base metals, and metal goods industries .
The basic features of the long -term industrialdevelopment strategy
will include :
(a ) Reorientation and strengthening of State activity ;
(b ) Elimination of excessive regional concentration and concentra
tion of ownership ;
(c ) Reorientation of the supply of industrial goods, in order to meet
the unsatisfied needs of the people ;
(d ) Achievement of autonomous development and a capacity to gen
erate employment;
(e ) Selective orientation of investment resources and an aggressive
foreign trade policy .
-26
A. Reorientation and Strengthening of State Activity
State activity plays an essential part in determining the trend and

tenor of industrial development. The new Government is prepared to pro
mote the establishment of three major areas of ownership - State , joint
State and private , and private - each with clearly defined roles .
Both State and joint State and private enterprises will be subject
to regulations which will ensure the efficient use of the resources of the
community . Most of these enterprises will thus be in a position to gen
erate surpluses, thereby encouraging development financing .
The advantages of the plan are fairly obvious ; on the one hand , it
will guarantee the attainment of social objectives and will eliminate seri
ous shortcomings in the structure of ownership and operation of industrial
enterprises, and , on the other hand , it will ensure participation by the
private sector on a consultative basis in global and sectoral planning, the
normal supply of inputs , the possibility of using national distribution chan
nels , and State assistance in reaching foreign markets .
Together with the need to establish a clear system ofrelationships

between the public and private sectors, there is a need to adapt the appa
ratus of the State to the scale of the new programs which the new Gov
ernment has planned in the industrial field .
The replacement of the old institutional structure by the new must

be undertaken in successive stages . The primary objective is to create
clear and efficient levels for establishing and administering policies , in
dustrial development, control of State enterprises, and production itself .
The whole industrial development process is concieved as a plan

ned process . Planning is regarded as an active, and not merely decora
tive tool, which is present at all levels of activity , particularly at the
higher administrative levels , and which is necessary, to a greater or
lesser extent, in all activities .
Development will no longer be regarded as a process of transferring

State resources to private ownership . It will be regarded as the establish
ment of conditions which will make it possible to develop each area in ac
cordance with a program reflecting the aspirations of the great major
ity of the population . Consequently , certain instruments of general policy

which have proved necessary , but incapable of solving development prob
lems completely, will become relatively less important. On the other
hand , direct instruments of development and of economic planning, such
as production agreements between the State and private enterprise will
acquire great significance. Production agreements have an extremely

important effect on essential goods and make it possible to maintain or
even reduce prices, to exercise strict quality control, and to standardize
products .
-27
Steps have already been taken to stregthen State agencies related
to the industrial sector, particularly CORFO , the Production Development

Corporation . This agency has been given a new structure which will in
crease its ability to formulate investment programs to define and ad
minister policy , and to guide the activities of State enterprises .
In the short time in which it has been in office, the present Gov
ernment has instituted the so - called " Sectorial Development Commissions"

which are responsible for administration of enterprises , policy and pro
graming within a particular branch of activity , budgetary and credit
commitments , and relations with the labor sectors .
State and joint State and private enterprises will have to comply
with any directives and standards that are issued by the Commissions;
this will ensure that State enterprises will have central leadership in the
future .
Steps will also be taken to ensure participation by the workers in

the formulation of initiatives and in the preparation , implementation , and
supervision of the industrial plan .
B. Elimination of Excessive Regional Concentration and Concentration

of Ownership
The new Government's policies will help to reduce the extent of concen
tration of wealth and to eliminate prejudicial relationships between the
centers of finance and industrial enterprises. These policies will put a

permanent end to the monopolistic nature of Chilean industry and will de
stroy those centers of wealth whose activities run counter to the interests
of the community .
Excessive regional concentration will be countered by means of

a forthright industrial decentralization policy aimed at finding an area of
specialization for the various regions of the country and ensuring the max
imum use of the natural and human resources of each region . This policy ,
which will be implemented in conjunction with the regional development
policy and the industrial development policy , will utilize mainly State and
jointly owned enterprises. It will also be necessary to develop light indus
try and the small - scale manufacturing industry , both in order to eliminate
concentration of wealth and to create regional activities , Small - scale in
dustrial enterprises, whatever their field of activity , must be efficient in
the use of resources .
C. Reorientation of the Supply of Industrial Goods in order to Meet the

Unsatisfied Needs of the People
Of the measures designed to change the structure of the supply of

industrial goods, the most significant is the redistribution of income,
which is , of course , not a sectorial objective, but an essential objective

of the present Government's global economic policy. Obviously , many
-28
steps will have to be taken within the sector , since the redistribution of
income alone will not change the pattern of supply sufficiently to enable
it to meet the new potential demands .
The instruments to be used in the new industrial policy will include

the mass marketing of ordinary consumer goods, consumer education ,
stringent control of production of luxury goods , and the design of goods

suited to the needs of the people . The reactivation of activities which have
traditionally been regarded as " dormant " is also expected to produce ex
tremely favorable results since it is precisely these industries which are
characterized by fewer imported inputs , less technological complexity ,
less density of capital, and a maximum opportunity to use idle productive
capacity .
D. Achievement of Autonomous Development and a Capacity to Generate

Employment
The increasing rate of external dependence is not an isolated phe

nomenon but is closely related to Chile's development pattern and the so
cio - political conditions in which the country has developed .
The new industrial development strategy must be founded on an
ability to control the means of production and the type of goods which are
most consistent with the country's actual needs . It is therefore quite
clear that a pattern in which the interests of large multinational corpora
tions are paramount would not contribute to the attainment of the objectives
established by the new Government. This does not mean that the Govern
ment underestimates the role which foreign capital can play in Chilean
industrial development, but that drastic changes must be made in the ap
proach adopted hitherto .
First of all , the decisions relating to further programs must
be taken in Chile , through the State and in the interests of the people .
This means, of course, that Chile must have the capacity to formulate ,
implement and evaluate such programs. Foreign collaboration will be
welcome only in so far as it proves genuinely impossible to undertake
necessary initiatives with domestic resources .
We do not favor automatic legal channels which will permit the

indiscriminate entry of capital. Nor can we accept the transfer of enter
prises built up by Chilean effort to foreign capital.
Foreign capital will be subject to clear regulations which will elim

inate subterfuges harmful to the national interest and will give the investor
a clearly defined and stable framework in which he will have an acceptable
degree of security with regard to investment conditions .
-29
We are interested in the use of foreign capital in conjunction with

national capital, which as a general rule will play a commanding role . It
will be the primary concern of the Government to ensure that the powers
of decision remain in Chile for such matters as expansion plans, orienta
tion of demand , recruitment of personnel, selection of equipment and ex
port policy. A prerequisite of independence, apart from legal changes,
which are necessary but insufficient, is the mastery of technology .
The possible objectives of a technology policy are modest but far

reaching . The Government will adopt a realistic approach and will allo
cate scanty resources in a selective manner . In many areas it will sim
ply be necessary to keep abreast of world technological developments ; in

a very few others a great effort will be needed to establish new technol
ogies .
In the branches of specialized national activity it is absolutely es

sential that an effort is made to create technology to be applied to speci
fically national problems. This must be done both in those branches
which use specific natural resources , and in branches such as the manu
facture of capital goods. In the latter branch , technological development
may be regarded as vital for the attainment of export objectives.
The transfer of technology must be undertaken with a view to attain

ing the following fundamental objectives: the strengthening of Chile's nego
tiating capacity , for which adequate information on world supply is essen
tial; the creation of an ability to evaluate the technologies acquired , from
the standpoint of their price and their usefulness to Chile ; and the estab
lishment of an internal capacity for assimilation , therby eliminating the
need for repeated imports .
The Government does not consider it advisable to conclude con

tracts on the transfer of technology which would involve : an encroachment
on Chile's sovereign right to export goods produced by it to any country
in the world ; an obligation to acquire intermediate inputs or capital goods
from a specific source; or clauses relating to price fixing or prohibiting
the use of competitive technologies .
There is an urgent need to introduce new technologies into industrial

enterprises ; this will be done by means of mandatory measures and stim
uli. At the present time, even large enterprises are short of the neces
sary technicians and their capacity to make even marginal changes to pro
cesses and products is very limited .
It will be necessary to strengthen design and engineering capacity .

Only priority areas or those within reasonably easy reach will be cover
ed , foreign engineers being recruited to remedy internal shortcomings
only on a very selective and controlled basis .
61
-30
A considerable effort will have to be made to discover technologies

which create employment in order to alleviate the serious unemployment
problem inherited by the present Government. The reorientation of supply
in the industrial sector towards more labor - intensive branches and the
encouragement to be given to light industry and the small- scale manufac
turing industry will contribute to the attainment of this objective .
E. Selective Orientation of Investment Resources and Aggressive Foreign

Trade Policy
The basic objective of an investment resources policy must be
specialization , in depth , in certain priority branches of production on

which complementary efforts by the whole production system may be
made to focus .
The branches on which the effort to achieve industrialization will
be based will be selected in accordance with the needs of the people , the
need to create employment, and the need to decentralize economic activ
ity . In addition , consideration will have to be given to such factors as
the use of natural resources in which there are comparative advantages ,
to the use of the most effective means of stimulating the rest of the indus
trial sector and the economy as a whole , and, in particular , to export pos
sibilities .
In selecting fields for national specialization the Government will

have to take into account the possibilities inherent in the Andean Sub
regional Integration Agreement, the great possibilities afforded by trade

with the socialist countries , and , finally , the possibilities of expanding
trade in traditional markets . As a result of this channelling of investment
in the industrial sector , there will be a small group of highly competitive
goods in externalmarkets. They will be closely inter - related in order
that maximum advantage may de derived from their joint dynamic devel
opment.
In the areas selected for ' national specialization ' , which will con
sequently use natural resources or take advantage of export possibilities,
an effort will be made to create an " unbroken chain " extendingfrom the
establishment of technology to the implementation of programs includ
ing the manufacture of a substantial portion of such capital goods as may
prove necessary .
The areas which have been defined as vital for Chilean industrial
development, and on which greatest attention will be focused, are the fol
lowing :
( 1) Certain foodstuffs. Activities relating to the development of
fruit and fisheries products will be promoted. These will in
clude the production of dehydrated fruit , and concentrated , fro
zen and other products .
- 31
(2 ) Copper products. Through price discrimination in favor of the

internal market , large - scale industries will be developed and
will incorporate a high level of technology , which will enable the
products to penetrate foreign markets .
(3) Forestry products . The chief need in this field is the continued
development of the cellulose industry , and paper pulp and
derivatives - goods which use the outstanding natural resources
possessed by Chile .
In these priority areas an important role will be played by enter

prises in the State sector and a substantial portion of the effort to create
and master technology will be focused upon them .
The Governmert is confident that it will attain the objectives which

it has set itself. These objectives have been formulated in the firm belief
that the industrialization process is essential if Chile is to extricate itself
from its present state of under - development, and they are shared and en
dorsed by the broadest sectors of the Chilean population .
- 32
STATEMENT BY MR . VLADIMIRO ARELLANO , DIRECTOR OF THE BUDGET
THE FISCAL BUDGET FOR THE YEAR 1971
1. FISCAL POLICY :
The purpose of this introduction is to identify the role played by

fiscal policy within the context of the overall economic policy of the Gov
ernment of Popular Unity . An attempt will be made to define its contri
bution to the attainment of the short- term objectives and to the implement
ation of the structural changes planned by the Government,
From this year onwards , the fiscal budget and , in broader terms,
public revenue and expenditure will assume increasing importance as the
public sector , as a result of the economic program and structural changes ,
begins to play a leading role in development initiatives and to extend its
ownership of themeans of production . In defining the areas of ownership ,

the Government has reserved the strategic centers of the economy for
State control, thereby entrusting the State with direct responsibility for
economic development. This action , together with the increased empha
sis on social justice, means that the State will play an even greater part
in the acquisition of resources and their allocation to planned objectives.
It is on this basis that the Government intends to construct the new society
and to eliminate the causes of the stagnation and economic instability which
have given rise to inflation , regressive distribution of income, unemploy
ment and inefficient use of productive resources, thereby depriving the
great majority of the population of the legitimate benefits of a better and
fuller life .
Until recently State activity was aimed at remedying the contradic

tions and imbalances which existed in the types of development which were
being attempted and which invariably had the effect of maintaining the eco
nomic and social status of a minority, without influencing the structural
elements of the economy and society . Consequently , previous fiscal and
taxation policies endeavored to cushion the effects of the contradictions and
imbalances, which explains why , despite temporary successes , they never
achieved lasting results , and the problems of stagnation , unemployment ,

inflation , and regressive distribution of income still persisted.
Because of the very bases of the type of society which the Govern
ment plans to establish in Chile , it will be necessary to make far - reaching
structural changes and, at the same time, to solve the urgent problems
confronting the majority of the population . In order to achieve this two
fold objective, the traditional role of the State in the economy will have to
be revised : its activity in the field of production and in the provision of ser
vices will be broadened and , at the same time, the institutional set - up and
functions of the State will be gradually transformed .
- 33
This conception of the role of the State will entail an ambitious fis
cal policy, extending beyond the limits which used to circumscribe State
economic activity , and were aimed at remolding the structure itself, thus
charting the course of future economic and social development,
The immediate objectives of fiscal policy are , therefore, to pro

mote the following processes : reactivation of the economy, absorption of
unemployment, redistribution of national income, and the promotion of
structural changes .
he reactivation of the economy in order to increase utilization
of material resources and existing capacitation has been selected as one

of the short- term objectives of public investment policy . In addition , how
ever , reactivation will be based on the income policy, which , by increas
ing over - all demand and changing its composition , will greatly stimulate
the production of popular consumption goods.
Furthermore, reactivation of the economy is essential if unemploy

ment is to be absorbed and the living conditions of the people in such sec
tors as housing and public works are to be improved ; consequently , invest
ment programs will be related to the requirements of the social sector and
the infrastructure for development .
The public sector is contributing to the income redistribution pol

icy , which is complemented by the wages policy and policies aimed at
providing essential services on a massive scale and at restricting price
increases Within the context of the latter policy , the freezing of prices
of goods and services produced by enterprises in the public sector will
be a significant factor in price maintenance.
Finally , fiscal expendtiure will make its most important contribu

tion to structural changes through the agrarian reform program , which
because of existing legislation and the massive scope of the program ,will
be very costly .
One of the problems involved in implementation of all the above
programs is the limited amount of resources collected through existing

fiscalmachinery ; there is a discrepancy between essential program ex
penditure and potential revenue . This gap, which amounts to some 12,7
per cent of the total fiscal expenditure,will be covered by internal indebt
edness (i. e , the banking system ) as a programed deficit which will
absorbed in the economy as a whole.
The expected response by the productive system will be based on

the existence of idle capacity in the industrial sector and in the construc
tion industry , the prevailing high rate of unemployment, the reorientation
of credit (progressive control of the banking machinery ), control of mo
nopolies, incentives in the form of production contracts with the private
- 34
sector, and so on ; for all these reasons, the programed deficit is not ex
pected to have explosive inflationary consequences. Nevertheless, the Gov
ernment has at its disposal certain adjustment mechanisms to compensate
for imbalances between the increase in demand and the response by the
machinery of production ; these mechanisms include control of foreign
trade and a possible increase in imports, the encouragement of savings ,
and the absorption of surpluses through the widening of the State area .
2. FISCAL EXPENDITURE :
2.1 Level and Composition
The fiscal budget for 1971 shows an increase of more than 37 per
cent in real terms over fiscal expenditure in 1970 .
Within this increase in expenditure, ongoing expenditure has in

creased by approximately 49.5 per cent, whereas capital expenditure has
increased by some 29.1 per cent, both in real terms. This difference in
growth rates may be accounted for by the importance which the Govern
ment has attached to the redistribution of income policy, which has a
greater impact on ongoing expenditure than on capital expenditure .
In connection with the increase in ongoing expenditure , it may be
noted that wages within the fiscal sector are being increased by Som e
25. 2 per cent in real terms. There are a number of reasons for this
increase, the most important of which are the policy of granting increases
to the lowest income levels and the absorption of highly qualified personnel
to improve the technical andadministrative caliber of the State apparatus ,
In addition , if account is taken of current transfers to the decentralized
public sector and private sector, more than 80 per cent of which are used
for the payment of wages and social security , real growth amounts to
approximately 67.6 per cent for the former sector and some 43, 5 per cent
for the latter , as a result of the real increase in the wages of workers and
the increase in resources intended for social programs, particularly those
relative to education and public health and the special milk program .
There has been an increase of approximately 92 per cent in expen
diture for social security and family allowances. This may be explained
to a large extent by payment to non -working personnel of social security
benefits which had been granted previously but had not been paid , by the
real increase in pensions, and by the increased expenditures resulting
from the equalization of family allowance payments .
In the purchase of goods, there has been an increase of some 30

have
per cent , which is accounted for by increases in programs which
traditionally been postponed , such as the Ministry of Education's educa
tional materials program , and ,in general, food programs for the benefi
ciaries of services , such as hospitals , provided by the public sector .
-35
In the capital budget , fiscal investment will be increased by some

32. 7 per cent, which will largely be accounted for by expenditure relating
to agrarian reform and the housing program . This expenditure will be
reflected in an increase of some 65.8 per cent in indirect investment. On
the other hand, because of the transfer of resources from the central to
the decentralized sector , together with the completion of important invest

ment projects in 1970, the real level of direct fiscal investment will fall
by some 9 . 3 per cent .
In accordance with the Government's policy of scrupulously fulfil

ling commitments undertaken by previous administrations , there will be
a quite considerable increase in real terms in expenditure by the Public
Debt Service , interest payments increasing by 44 per cent and debt pay
ment by more than 16 per cent.
2.2 Expenditure on Wages and Social Security
The Government is aware of the disparity in wage levels , but

at the same time it recognizes the difficulties involved, in the short term ,
in implementing an equitable system of salaries and wages for all civil
servants, of whom there are almost 400,000. It has therefore formulated
a long - term policy to modify and rationalize the wages structure .
In order to establish a wages structure which would apply to the

whole of the Public Sector , it has set up a Wages Commission , consisting
of representatives of workers, business owners, and the Executive, with
the necessary technical support of their respective organizations, whose
primary function will be to analyze the existing situation and to make
practical and early proposals for action to achieve uniformity in the State
wages system ,
Within this general context, the Government has formulated the
bases of the Wages Readjustment Act for personnel in the public sector in
1971. There will be a general readjustment of wages equivalent to the vari
ation in retail prices during 1970 (34. 9 per cent), a measure which will
restore the real purchasing power of the salaries and wages of State work
ers . In order to reduce discrepancies in wage levels, two further mea
sures are being implemented : firstly , all public officials earning less than
the equivalent of the minimum wage for white - collar employees are being
granted an additional increase of 5 % and persons earning less than twice this
minimum wage are being granted an additional increase of 3 % . This mea
sure will benefit 125,000 officials , or , in other words, 30 per cent of all
State employees. In addition , an absolute upper limit of twenty times the
net minimum wage for white collar workers is being imposed on the earn
ings of all public officials .
Particular attention has been devoted to the question of family allow

ances . As a first step towards equalization according to the amount given
to each dependant, two sums only are being established : allowances of 118
-36
escudos are being increased in accordance with the general price readjust
ment ( 34. 9 per cent) and allowances of 48 escudos and 68 escudos are be
ing consolidated into a single allowance of 102 escudos, a measure which
represents and increase of 112. 5 per cent in allowances of the first type
and 50 per cent for the second type.
The same general wage readjustment policy already established for

working personnel will be applied to the pensions of former public officials ;
the respective amounts will be readjusted in accordance with the increase
in the cost of living and the increases referred to above will be applied to
incomes of less than the equivalent of one or two times the minimum wage
for white collar employees .
In addition to the general price readjustment,which also applies to

pensions, non -working personnel in the State sector are being granted an
additional increase. As a first step for this year , the taxable portion of
the incomes of working personnel is being increased from 70 per cent to
80 per cent; this measure will have an equivalent effect on the pensions of
the non - working sector whose benefits are based on the wages structure of
working employees .
The same policy will be applied to non - working personnel as to

workin personnel with regard to the amount of family allowances ; conse
g
quently , their personal income under this heading will be increased .
Retired members of the Armed Forces and Police Force will receive
special treatment; in 1970 they were awarded an increase of 100 per cent in
their pensions , but they actually received the equivalent of only 56 per cent
throughout the year. It had been planned to pay off the remaining 44 per
cent- or 375.3 million escudos - owed to them over a period of two years .
However, the Government decided to pay off the whole of this debt in 1971 ,
and has made the necessary funds available for this purpose, thereby car
rying out its economic obligations to former servants of the State in a more
equitable manner .
As a result of all these increases, the total cost of readjustment

will amount to 6 , 022 million escudos .
2.3 Expenditures for Social Purposes
The income redistribution policy does not consist solely ofmeasures

awarding direct increases in the wages of the working and the non - working
personnel referred to above . These measures are being complemented by
Government action to improve the actual living conditions of those sectors.
In putting this principle into effect, the Government has earmarked

a significant portion of public expenditure for basic minimum services ,
such as housing and sanitary installations. These services , which have
-37
traditionally not been available to the people , will be provided on a large

scale , and considerable improvements will be made in public health and
education ,
The fundamental purpose of State activity in this sector is to pro

vide housing for the whole of the population , thereby absorbing the exist
ing deficit of approximately 500,000 dwellings. The Governmenthas plan
ned to build approximately 100, 000 houses in 1971, and will make genuine
improvements in the standard of these dwellings by providing essential
services such as running water , sewage disposal, urbanization , and es
sential common facilities for the development of social activities . A11
these projects have entailed substantial expenditure, both on new commu

nities and on basic facilities for a number of communities which have
been developed in recent years but lacked such facilities .
Apart from this direct action , the Government has taken other mea
sures : it has eased the financial requirements for the granting of loans
or allocation of houses to low - income families . Such loans have been
made non - readjustable and the application requirements have been amended .
In the field of public health , additional resources have been made

available in order to intensify direct medical campaigns . Particular
emphasis is being given to campaigns to combat summer diarrhea among

children , a mass vaccination campaign to reduce the levels of mortality
and sickness resulting from communicable diseases , and dental care .
These campaigns are not only being conducted on the basis of efforts
made by the State , but are also receiving enthusiastic support at the com
munity level, where information about them is being disseminated and
direct action is being taken to change the environmental and cultural fac
tors most directly related to the health of the population . In addition , the
Govern me nt l t
has decided that all medica treatmen provided through the
National Health Service will be completely free of charge and has promptly
put that decision into effect .
Government activity in the field of public health has not only
focused on medical treatment; on the contrary , special attention has been

devoted to the problem of undernourishment, particularly among children .
Since the problem has such serious effects on the health of the population
as a whole , the Government has begun a supplementary food program
which will ensure that all children under fourteen years of age, and ex
pectant and nursing mothers will receive half a liter of milk a day .
The Government's concern to improve education at all levels stems

from the need to have qualified manpower to carry out the economic de
velopment program and effectively to promote the social and cultural de
velopment of the population ,
-38
For these reasons , a substantial protion of State resources has

been set aside to finance and broaden the educational system and to ensure
that all Chilean children have equal access to education . The Government
will make available 160, 000 new places in primary and nursery schools -
a measure which will absorb over 2.2 million pupils or 97 per cent of the
school-age population .
Enrollment in education in the area of arts and sciences will be
increased by 20 per cent, thus making it possible to absorb all pupils grad
uating from the primary level. In the technical and professional area of
secondary education , particular attention will be devoted to the industrial
and agricultural sectors, in which qualified personnel will be needed under
the Government's program to stimulate the national economy. With this
objective in view , 30 , 000 new places will be established - an increase of
30 per cent in totalenrollment at this level.
The government has devoted equally significant attention to higher

education and has begun a program which will make university education
available to all pupils graduating from the secondary level. To this end,
the fiscal contribution to universities , both public and private , has been
increased by some 30 per cent for the year 1971. At the same time an ef
fort has been made to achieve closer co - ordination between the various
institutes of higher education with a view to ensuring that resources will

be used more efficiently . The principal result of the increase in enroll
ment will be the establishment of short courses to train medium - level
cadres, who will be essential if the objectives of economic and social

change embodied in the Government program are to be achieved .
Similarly , since the State education system doesnot meet the country's
needs completely , the Government has allocated financial resources for
the payment of grants to free private educational establishments which
fall within the framework of the Government's educational policy .
However , the Government's concern for education is not restricted

merely to its quantitative aspects , but is intended to ensure equality of
educational opportunity for all Chileans . Resources intended for school
assistance grants have been increased by more than 60 per cent over 1970
levels : school children from needy families will receive breakfast, lunch ,
free clothing, educational materials , exemption from payment of enroll
ment fees, scholarships, university loans , and the like.
2.4 Fiscal Expenditure for Development Programs
In accordance with the guidelines for the Government program ,

fiscal expenditure is regarded as one of the chief incentives for economic
development and as a fundamental instrument for changes in the nation's
economic structure. Accordingly , in the Fiscal Budget for 1971 substan
tial sums have been earmarked for these objectives.
-39
In the agricultural sector resources from fiscal sources are being

increased by more than 1, 300 million escudos ; this increase, together with
the increase in resources derived from other sources, means that the
total resources allocated for this sector have more than tripled , in nominal
terms, since 1970 .
The additional funds available will be used primarily to accelerate

the process of agrarian reform , which will be undertaken within the frame
work of existing legislation on this subject. Consequently , the first stages
of this fundamental change will have to be undertaken at a very high cost
while steps are being taken to amend the relevant legislation .
However , agrarian reform is intended not only to change the struc

ture of ownership of land , but also to bring about an increase in agricul
tural production , through the cultivation of abandoned and inefficiently used
land , and to provide increased technical and credit assistance, particularly
to small and medium - scale producers, agricultural cooperatives, and the
" asentamientos" (newly established temporary bodies to supervise the
implementation of agrarian reform ).
In conjunction with the above measures, the Government has in
creased the amount of resources to be used to improve marketing facilities

for agricultural products ,
In the housing sector, the State has increased its appropriations by

more than 1080 million escudos, with the result that the total budget for
the sector has increased almost twofold and the number of dwellings com
pleted has more than doubled . This program will give a strong boost to
employment and to national production , Steps are being taken to increase
production by means of direct production agreements with industries man
ufacturing products for the contruction industry .
The Government has assigned the Chilean Development Corporation

a leading role in the country's industrial development. Consequently , it
has increased its contribution to the Corporation by 300 million escudos,
which , together with the increase in its own income, raises its total bud -
get by more than 60 per cent over the 1970 level. These additional re -
sources will primarily be used to develop industrial areas producing

goods needed by agriculture, such as cold storage facilities and ware
houses, to speed up energy and fuel programs, to promote purely indus
trial investment, and to finance the acquisition of the shares of private
banks,as a first step towards the nationalization of the banking system ,
Preferential treatment has also been given to small and medium - sized
industries, which are receiving considerable additional credit and techno

logical assistance ,
As part of the program to stimulate economic development, the

government has set aside an additional sum of 160 million escudos for the
NationalMining Board in order to promote the activities of small and
medium - sized mining enterprises, through an increase in lines of credit
-40
and investments for improvements in mineral processing plants .
Finally , the Government has increased the resources intended for

Public Works and Transportation by approximately 450 million escudos.
It has also allocated additional resources for other smaller investment pro
grams designed to increase the productive capacity of other State activities,
State workshops , the State publishing house, and so on . The various mea
sures which have been announced are expected to give a sharp boost to the
growth rate of the Chilean economy. Account should also be taken of the
change of emphasis and content of the programs now being launched , which
are aimed at ensuring that the majority of the population will participate
in a more equitable manner in the production which they help to generate,
3 .O FISCAL REVENUE
3.1 Level and Composition
There are important changes in the level and structure of fiscal

revenue for 1971 by comparison with 1970. Thus , in 1971 total revenue will
amount to 34 , 284 , 4 million escudos an increase of 37.5 per cent over the
1970 figure. Its composition will also change as a result of the expected
increase in the inflow of capital.
The increased fiscal revenue will largely be derived from the ex

pected increase in economic activity , from the changes which have been
made in the taxation system , and from the new conception of the signif
icance of indebtedness to the banking system ,
The Government considers that the present taxation system is con
ceived as a means ofmeeting fiscal needs, i . e , as a revenue - collecting

mechanism , rather than an instrument for the achievement of economic
policy objectives. For this reason , in 1971 certain changes will be made
in the taxation system which will increase revenue by some 3,600 million
escudos and will serve as a basis for a taxation reform consistent with
the Government's economic policy .
In accordance with the new conception of the meaning of the fiscal

indebtedness referred to above, use has been made of internal credit to
obtain financing for certain basic programs designed to meet the urgent
needs of the people in such spheres as housing , employment, education ,
wages, and health . Accordingly , internal loans are being increased from
2,064 , 7 million escudos in 1970 to 4 , 345.5 million escudos in 1971 - an
increase in real terms of 83 per cent.
The modifications announced previously have led to changes in the

contribution made by these sources of revenue to fiscal financing. In 1970
taxation constituted 85. 8 per cent of total fiscal revenue and internal
credit 9.4 per cent; in 1971 these percentages will be 79.4 per cent and
12 , 7 per cent respectively .
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3.2 Revenue
The Chilean taxation system is characterized by a marked prepon

derance of indirect over direct taxation . It therefore follows that the tax
ation system is regressive. Attention should be drawn to the very high
percentage of taxes on sales of goods in total taxation revenue ; such taxes,
besides hindering the equitable distribution of national revenue, are suc
cessive and distort the production process .
Other factors which have to be taken into account include tax eva -
sion , which is extremely prevalent in the high -income sectors, and a whole
series of laws which tend to favor large enterprises by granting them var
ious exemptions and privileges. Small and medium - sized industries thus
receive unequal treatment, since they cannot resort to expedients of this
sort .
Given the situation projected for 1971, the Government has made a
series of amendments to the taxation system in order to adapt it to the
requirements of accelerated economic development and to enable it to
contribute to the structural changes to which the Government has pledged
itself .
One extremely important objective of the reforms which have been

introduced is to reduce the level of tax evasion , both in order to ensure
that additional revenue is collected and as a means of overhauling the
whole taxation system . This step will serve as a starting point for the
formulation of a comprehensive and coherent reform of the whole taxation
system , which will eliminate a whole range of mutually incompatible taxes
from existing legislation and will replace them with a socially and econom
ically rational tax policy .
In keeping with these aims, the Government hopes to enact in 1971

legislative measures to standardize the taxation system , to consolidate
tardy debts , and to cancel small debts . These measures will produce
some 1500 million escudos in additional revenue.
Practical steps are also being taken to improve inspection and

administration of the tax system . To this end , the number of technical
personnel engaged in these fields in the Internal Revenue Service will be
increased fivefold .
Another objective of the reforms will be to lessen the regressive

nature of the taxation system . In that connection , taxation on capital
will be increased, thus producing 820 million escudos in extra revenue.
At the same time the lowest-income sectors will benefit from the increase
in the tax - free personal income allowance from the equivalent of one to
two times the annualminimum wage for white -collar employees. Property
taxes will also be increased , thus producing 232 million escudos in extra
revenue . Finally , there will be a selective increase in the sales tax
currency transactions (from 15 to 50 per cent) and on new automobiles .
-42
In conjunction with the foregoing measures, the Government has

submitted for the approval of Congress a proposal to establish a National
Capitalization Fund , which is primarily aimed at increasing public saving ,
so that increased sources of financing will be available to pay for invest
ment in those basic branches of national production which conform to the
criteria and priorities established in the global economic plan .
This capitalization fund will be made up of compulsory contributions

by all those industrial, commercial, mining, fishing , and other enterprises
whose capital exceeds 2 million escudos on December 31, 1970 . These
contributions will amount to 15 per cent of their annual profits .

GOVT PULS GOUT PER
EADING 1.04
CORFO
No. 78 May 3 , 1971
* FORMATION OF METALLURGICAL COMPLEX

* DEVELOPMENT IN THE PETROLEUM INDUSTRY
* EXPORT OF CHILEAN FRUIT
* COMMERCIAL AGREEMENT WITH THE PEOPLE'S REPUBLIC OF CHINA
* AGREEMENT SIGNED BY BOLIVIA AND CHILE
* BRIEFS
FORMATION OF METALLURGICAL COMPLEX
CAP, the Compañía de Acero del Pacífico (the Pacific Steel Co. )
has announced that it will direct an extensive metallurgical complex now
being formed in Chile . The principal iron mines in the country , the im
portant steel plant at Huachipato , and other firms directly connected with
the iron industry comprise the new industrial organization . Its activities
encompass not only iron mining but also the manufacture of steel and steel
based products such as appliances, port installations, ships, and naval

equipment.
The steel plant at Huachipato , which is currently being expanded ,
the mines at Algarrobo and Boquerón - Chañar, and other property of CAP
has already passed to the State controlled sector of the economy following
CORFO'S recent purchase of CAP stock (see EN 74 ). The stock of the
Bethlehem Co. has also been purchased so that the mines at El Romeral
and El Tofo have become State property . The manufacturing companies
INDAC , ARMCO , and RODINSA have already sold the majority of their
stock to the Government purchasing agent and negotiations are being car
ried out with COMPAC , SOCOMETAL , and INCHALAM .
In addition to the installations available at present, plans for the

future call for the construction of a large iron foundry capable of produc
ing 20 to 25 thousand tons of high quality metal per year. Infrastructural
expansion of existing facilities is being considered in order to augment
production capacity considerably . CAP also announced plans for the form
ation of a consulting engineering firm to be staffed mainly by the engineers
currently employed by CAP .
※※※※※
INDIANA UNIVERSITY
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MAY 1 I 19/1
LIBRARY
****** ************
Issued by CORFO Corporación de Fomento de la Producción 280 **
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The total cost of this venture is estimated at some $ 300 million

which have already been secured through credits from Japan , a European
banking " pool" , and the Chilean Government.
DEVELOPMENT IN THE PETROLEUM INDUSTRY
The need to improve the production of petroleum in Chile has led

ENAP , the National Petroleum Co. , to undertake three separate programs
designed to meet this need . First is the project of marine exploration in
conjunction with the United Nations and AID . The U.S. oceanographic ves
sel Unitedgeo II, which is owned by the Bendix United Geophysical Corp. ,
is presently carrying out a seismic study of the continental shelf off the
coast of Chile south from Concepción . Preliminary studies have indicated
the probability of petroleum deposits in this part of the Pacific as well as
in the Strait ofMagellan .
The second project undertaken by ENAP involves the formation of

the National Distribution Co., ENADI, to handle the distribution and sales
of liquid gas , combustibles , lubricants , and petroleum by - products. ENA
DI is a joint venture of CORFO and ENAP , both of which have supplied cap
ital for the new agency . Its activities will begin with the distribution of
liquid gas to the provinces of Valparaíso , Aconcagua , Coquimbo , Atacama,
Antofagasta , and Tarapacá. These provinces were formerly supplied by
privately owned companies such as LIPIGAS and SER VIGAS who recently
sold their holdings to ENAP .
ENAP's third plan is a long - range one to eventually substitute nat

ural gas for the higher priced liquid gas presently used in most of the
country . Pipe lines are being installed in Punta Arenas under the admin
istration of the newly created State agency, GASMA , and they will soon be
extended to the provinces of Santiago , Valparaíso , and Concepción . The
gas for these lines will be obtained from the ENA P - owned deposits locat
ed in Magallanes .
The advantages of natural gas over liquid gas, the lower cost of
distribution of the natural form , and the fact that pipe lines will hold up to
three times more natural gas, have been especially influential factors in
the decision to begin the proposed changes . It is expected that the change
over will take about four years; after that the surplus liquid gas produced
in Chile will be exported .
EXPORT OF CHILEAN FRUIT
Representatives of ENAFRI, the National Refrigeration Co. , act

ing as agents of the Ministry of Economy, and the Asociación de Fabrican
tes de Conservas ( Association of Canned Foods Manufacturers ) have
agreed to cooperate in a joint venture that will be of considerable import

ance to Chilean agriculture. ENAFRIwill purchase 110 , 000 cases of can
ned peaches for the amount of E ° 9,680,000 from five different domestic
-3
canning plants for export to Europe and other Latin American nations .
This figure represents a high percentage of the national fruit production
and it will now reach markets to which canned produce from Chile had
not been exported in the past .
Several advantages have been gained by this transaction . First,

there is now a stable price for the produce of the small - scale farmers
and manufacturers . Second , the fruit surplus has been reduced by the
opening of new markets. Third , the industry is now operating at 80 %
capacity as compared to 60 % prior to the ENAFRI purchase. It is ex
pected that as the new market is further developed , the beneficial effects
on the Chilean economy will be even greater .
COMMERCIAL AGREEMENT WITH THE PEOPLE'S REPUBLIC OF CHINA
In Santiago , Chile , after about two weeks of meetings between a

delegation from the People's Republic of China and representatives of
Chilean entities , a commerical agreement was signed between the two
countries. The People's Republic of China was represented by Cho Hua
Min , Vice - Minister for External Commerce ; and Chile , by Mr. Pedro
Vuskovic , acting as Minister for Foreign Affairs, since the titular , Mr.
Clodomiro Almeyda was at the moment out of the country .
Mr. Vuskovic stated that: " The agreement that we signed will
allow us to develop trade through reciprocal advantages, be it in regard
to the commercial operations themselves , or those advantages related
to customs duties and other taxes, without any limitation other than
that of safeguarding our international commitments. " He also stated
that this is a concrete and far - reaching first step between the two
countries after establishing diplomatic relations a short time ago .
Cho Hua - Min said that the signing of the agreement was the re
sult of some very friendly conversations . He added : " We are certain
that the signing of the agreement will play a positive role in the diplo
matic relations and in the development of friendship between our two
countries. "
The agreement will be in effect for one year starting April 20 ,

1971. Among the items to be traded figure, on the part of Chile : copper
ingots, semi- manufactured copper , nitrate , iodine, cellulose, synthet
ic fibers, wool, and all kinds of minerals. Among the products that
will possibly be exported by the People's Republic of China are : rice ,
soya beans, all types of canned goods as well as foodstuffs, tea, prod
ucts of light industry , refined tin , antimony , chemical products , hand
tools , machinery , and a variety of other unspecified products .
-4
AGREEMENT SIGNED BY BOLIVIA AND CHILE
Representatives of the Chambers of Commerce of Oruro, Bolivia

and Iquique , Chile recently signed an agreement to promote trade between
the two countries. One of the main points agreed upon was the cooperation
of both nations in doing everything possible to ensure the speedy completion
of the international highway that will united Oruro and Iquique (see EN 71) .
Other commitments made include arrangements to exchange commercial
samples, quotations, specifications, and catalogues in an effort to stimu
late commerical dealings . The representatives also agreed that Bolivian
merchants will be encouraged to give preference to the port of Iquiquewhen
importing large shipments. At the same time, the Port Authority of Iqui
que has promised that special rates will be applied to Bolivian shipments ,
warehouse space will be reserved for them , and everything possible will
be done to ensure that they are dispatched promptly and expeditiously.
BRIEFS
** CORFO's Board of Directors recently agreed to begin to purchase

the stock of the Compañía Sudamericana de Vapores (Southamerican Steam
ship Co. ). The company, which has been in operation since 1872, has est
ablished routes to ports in several continents. CORFO's purchase of this
stock will serve a dual purpose, that of promoting the Government's devel
opment program for international transport, as well as the financing of an
expansion program that will permit the Compañía Sudamericana de Vapores
to make full and better use of its facilities .
** The United Nations have chosen Santiago , Chile to be the site of

the Third United Nations Conference of Trade and Development (UNCTAD )
which will be held in April 1972. More than 1500 specialists and govern
ment representatives from all over the world will attend the meeting. The
Minister of Foreign Affairs , Clodomiro Almeyda , stated that the election
of Chile as host for that meeting was an honor for the nation and a challenge
to its organizational ability .
The Minister said that this appointment was a proof of confidence in

the facilities provided by the democratic environment of the country, which
permits the establishment of such an important dialogue between all of the
UN member nations , and the respectful attitude of Chile toward all the
countries of the world . He underlined that Chile's appointment also rep
resents an ackowledgement of the efforts made by the country in the fields
of commerce and trade .
***
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GOVT PULS GOVT PLR
READING ROOM
CORFO
No. 79 May 17 , 1971
* PRESIDENT ALLENDE OUTLINES ECONOMIC POLICY AT CEPAL MEETING

* CONVENTION OF SMALL INDUSTRY AND CRAFTS CONFEDERATION
* DEVELOPMENTS IN THE FORESTRY INDUSTRY
* WORLD BANK LOAN FOR FRUIT AND WINE INDUSTRIES
* ISRAELI COMMISSION VISITS NORTHERN DESERT INDIANA UNIVERSITY
* BRIEFS MAY Lund
LIBRARY
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PRESIDENT ALLENDE OUTLINES ECONOMIC POLICY AT CEPAL MEETING
The President of Chile , Dr. Salvador Allende, delivered a speech

in Santiago at the inauguration of the fourteenth annual meeting of the United
Nations Economic Commission for Latin America (CEPAL ) in which he spoke
at length about the economic policy decisions facing Latin America today , in
particular, Chile . He stated that : " It is not enough to dwell on the frustra
tions of the past decade ; rather , as we begin a new one, wemust reflect on
the responsibilites that will be encountered in the future and design an eco
nomic strategy for the next ten years. This is the opportunity to analyze
what is happening in our countries and the tasks that lie before us.
The President explained that the present economic situation in

Chile is an imbalanced one , There is an inequitable distribution of income;
a large percentage of the nation's wealth is controlled by a disproportion

ately small percentage of the population . A small number of families own
the majority of the land , the factories , and the mines and exercise tremen
dous political influence . Financial and technological dependence have also
tended to imbalance the Chilean economy . President Allende pointed out that
every year the gulf between the industrialized and the developing nations
widens further. The amount of profits that leave the country each year far
exceeds the amount that is reinvested ; the interest on loans from foreign
sources is considerably greater than the amount of principal of new loans
granted .
The crux of the question facing Latin America today, President

Allende said , is whether to continue with the same pattern of sporadic growth
and economic dependence or to create new conditions that will allow a
different kind of economic development. " Confronted with this reality , our
countries look for a new kind of development, each according to its particu
lar national characteristics but at the same time with certain elements in

-2
common because of the shared experience of the Latin American nations.

We are all striving to ensure our independence and to affirm our Own
values . We want to open new markets and reorganize the existing ones .
We want to carry on trade with the protection of advantages equal to those

of other nations. "
We must insist that the profits from domestic industry remain

in the country and that they are divided among the workers rather than
among only a few property owners . We need a more humane distribution
of wealth in order to satisfy the basic material aspirations of the people
and to revitalize the domestic market . We must develop the regional
economies in such a way as to impede the concentration of the nation's
productive capacity in a few provinces .
In order to meet the needs of Chile , there are several changes

that must be made; the nationalization of natural resources and the bank
ing system , the acceleration of the Agrarian Reform program , the reform
of political institutions, and the restructuring of the nation's industry .
President Allende explained that: " The Popular Unity Government realizes
that there is a difference between economic development and simple eco
nomic growth ; we know that the development of Chile depends on the trans
formation of the bases of a system that in the past has meant domestic
and external exploitation . " This transformation is the Chilean road to
wards Socialism , a new institutional structure that will establish a legal
regime which truly serves the interests of the majority . " This plan will
be realized not by destruction , but by the progressive replacement of the
existing order insofar as our human and technical resources permit. '
CONVENTION OF SMALL INDUSTRY AND CRAFTS CONFEDERATION
The Second Annual Convention of the National Confederation of
Small Industry and Crafts was inaugurated recently in Santiago with del
egates from all of Chile in attendance. During the opening ceremonies,
President Salvador Allende spoke about the important role of the small
and medium industries in the economic development of the nation . He
outlined some of the measures that will be taken to increase productivity
in this area , namely : the formation of a National Distribution Co .; the
establishment of a special bank ( Banco de la Pequeña Industria y Arte
sanado ), for this sector of the economy; and the construction of several
industrial parks .
The President also declared that the Government was categor

ically opposed to all illegal seizure of agricultural and industrial prop
erty . He explained that all that is deemed necessary for the social and
economic development of Chile will be done, but it will be done by the
appropriate Government agency, openly and within the law .
- 3
DEVELOPMENTS IN THE FORESTRY INDUSTRY
A group of experts from Finland are currently working in

cooperation with representatives of the Chilean forestry industry ac
cording to the provisions of a technical assistance agreement between
the two countries . The Finnish delegation visited the southern provinces
of Chile to inspect the timberland and then attended a series of technic
al conferences with members of the Sectorial Development Commission
for the Lumber Industry, the Forestry Institute , the Ministry of Agri
culture , and Corfo .
The purpose of this investigation of Chilean forestation is to
determine the type and amount of Finnish aid that will be necessary to
further long and short range development programs for the lumber and
cellulose industries. The short range programs will be designed to :
make better use of the present industrial capacity ; to reorientate pro
duction so as not to deplete the supply of raw materials ; to increase the
production in sawmills ; and to reevaluate market possibilities for wood
and cellulose products through a thorough study of market conditions .
The long range development program will be designed to expand infra

structural production capacity and construct new facilities so that even
tually Chile will not only meet the demand of the domestic market, but
that of the external market as well.
WORLD BANK LOAN FOR FRUIT AND WINE INDUSTRIES
The World Bank will grant a loan of $ 11 million to Chile for

the financing of development programs for the fruit and wine industries.
The decision to make this loan was announced following two weeks of
meetings of the World Bank officials with experts from Corfo and the
Ministry of Agriculture.
The $ 11 million will cover the expenses of development pro

grams already under consideration , and , in particular , plans to encour
age new plantings of varieties of fruits suitable
for export. In addi
tion ,infrastructural works, such as fruit centers and processing plants ,
will be financed by the loan .
Details of the wine industry development programs that will
be aided by the World Bank credit have not been disclosed as yet,
but it is known that the programs will include all of the important
zone from Santiago to Concepción .
-4
ISRAELI COMMISSION VISITS NORTHERN DESERT
A delegation of Israeli specialists in irrigation and agricultural

research recently visited Chile in order to investigate conditions in the north
ern desert in conjunction with a group of Chilean experts . The delegation be
gan its tour of the region in Antofagasta and from there continued throughout
the arrid northern provinces .
In the past, plans for the construction of a desalinization plantwere

being considered in order to provide water for agricultural and industrial de
velopment of the region . However , the Israeli experts have discovered that
there is abundant water of good quality in the subsoil of the northern desert.
The hydraulic resources of the region are such ,they stated , that the three
northern provinces of Tarapacá, Antofagasta , and Atacama could supply them
selves with vegetables from irrigated farmlands without having to purchase
anymore produce from the southern provinces .
The commission recommended that research and development ef

forts be intensified so that the considerable natural resources available
be put to the service of the country as soon as possible .
BRIEFS
** The Banco de Concepción recently sold the majority of its stock

to the appointed Government purchasing agent, thus becoming the tenth bank
ing entity to cooperate with the Government program to purchase private
national bank stock . The other banks that have already effected the sale of
their stock include : Bancos Continental, Israelita , Nacional del Trabajo , Sur
de Chile , O'Higgins, Panamericano, Talca , Valdivia , and Osorno y la Union ,
** The Chilean Minister of Foreign Relations, Mr. Clodomiro

Almeyda and a delegation of 17 experts from different fields attended the re
cent meeting in Bogotá , Colombia ,of the Comisión Mixta Chileno - Colombiana.
The meetings, whose purpose was to study possibilities for new economic
agreements between the two nations as well as cultural and scientific exchange
programs, proved fruitful in that a joint declaration was made reaffirming the
existing legal and political agreements and establishing commercial arrange
ments that will increase by 50 % trade between the two countries .
Mr. Almeyda is presently en route to Europe accompanied by rep
resentatives of various sectors of the Chilean economy. The group will be
gin in Moscow and from there will visit several East European countries .
The delegation's mission is to study import- export prospects and the possi
bilities of arranging financial and technical assistance agreements.
-
OVT PU ‫تفاح‬
GT FER
CORFO
No. 80 May 19 , 1971
THE 1971 ECONOMIC PLAN OF CHILE
This summary of Chile's Development Plan for 1971 is based on a

statement of the Oficina de Planificación Nacional (National Planning
Office ) published in Chile in accordance with the desire of the Popular
Unity Government to ensure the maximum participation of the Chilean
people in the planning process. The Government invited the people of
Chile - workers, businessmen , young people , everyone - to discuss the
plan in their various organizations so that their criticisms and suggestions
could be incorporated into it .
The economic policy for 1971 is designed both to attack the serious
economic difficulties now afflicting the majority of the Chilean people and
to initiate a process of profound structural change which will assure a basic
solution to the problems affecting Chilean society .
The Chilean economy has been suffering increasingly from economic

stagnation production per capita in 1967 did not grow at all; in other recent
years it has grown by about one percent per year. Unemployment has been
rising . Inflation has becomemore acute , culminating in 1970 in an increase
in consumer prices of 34. 9 percent. The sharply unequal distribution of in
come has been growing still worse .
The 1971 Plan is based on achieving a vigorous expansion of production

as a condition for also attaining an increase in employment, a redistribution
of income, the satisfaction of immediate necessities in the fields of housing ,
health , and education , and the generation of surpluses which will permit a
process of rapid and permanent growth to get started . An essential part of
the Plan aims at the containment of inflation .
A pre - condition for attaining these economic goals is the immediate

initiation of structural transformations, such as the nationalization of the
mining of copper , iron , coal and nitrates , the banking system , and the large
monopolies in the fields of industry and commerce; the acceleration of Agrarian
Reform ; and broadening of the public sector in foreign trade.
Home TY
80 Pine Street New York ,N.Y. 10005 (212) 344-9806_N 31971
LIBRARY
0836** WARRAR
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In outline , the main specific economic programs for 1971, are:
A massive construction program , which will be a major factor

in the reduction of unemployment;
An accelerated Agrarian Reform program ;
A program for the development of exports;
A program for the expansion of demand for industrial products

and investments in enterprises of the public sector .
Indirect measures to increase demand and thereby absorb the large

amounts of unemployment and idle productive capacity will also be taken .
Among these measures are: the democratization of bank credit by making
it available to small and medium producers and not only to large ones as
heretofore; the stabilization of raw material prices produced in public

sector enterprises or imported; an increase in purchases of the public
sector . The different measures taken will be governed by two funda
mental criteria : the stimulation of the production of popular consumer
goods and the favoring of small and medium as against large , monopolistic
enterprises .
AGRICULTURE
The Plan envisages a combination of agricultural programs for 1971,

including measures to further agrarian reform , increase agricultural pro
duction , expand agricultural exports , improve irrigation , rationalize the
distribution of agricultural products , and stimulate general rural develop
ment.
The Agrarian Reform Program for 1971 provides for the expropria
tion of approximately 1.000 large estates for the benefit of 30,000 families .
This begins a Six Year Plan whose goal is the expropriation of 3 , 800 estates ,
covering seven million hectares (each hectare equals 2. 47 acres), upon which
70,000 families will be settled . The Agrarian Reform will be realized by
legal means and will make possible the absorption of unemployment, the
mechanization of agriculture, the rationalization of crops, and the improve

ment of irrigation .
The amount of land under cultivation is expected to rise 4 % in 1971

and still more in later years as a result of credits, technical assistance ,
purchase guarantees , and subsidies granted to small and medium farmers.
Starting in 1971, great emphasis will be placed on the development of indus
tries for processing agricultural products . The program for agricultural
exports includes fruits, vegetables, cereals and animal products .
1
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Provision has been made to import increasing amounts of food to
meet the demand created by the policy of redistributing income and adjust
ing wages. Other elements of the 1971 Plan are the training of 75 , 000 peasants ,
the incorporation into unions of unorganized agricultural workers, and the
reforestation of 75.000 hectares .
FISHING
The Government will promote the output of fish through the newly
created Ministerio del Mar (Ministry of Marine Affairs). A program for the
construction of port facilities for fishing fleets, covering Valparaiso and
several other ports , will get started in 1971. Terminals and distribution
facilities will be constructed at Concepción , Valparaiso and Santiago . Inland
fishing will be developed. Fishermen will be encouraged to join cooperatives.
Ships for the technical training of fishermen will be acquired .
MINING
At the end of 1970 , 80 % of Chile's copper production was under foreign

control. The Government will follow a policy of nationalizing its basic mineral
resources . The large copper mines , iron deposits , and coal mines will be
nationalized .
Programs for the expansion of the large copper mines are expected
to raise total output to 940,000 tons in 1971. The Empresa Nacional de Minería
(National Mining Company) , will try to help the smaller copper mines by sta
bilizing the prices they receive and providing them with technical and financial
assistance . Chile will search for additional markets for its copper , including
markets in the socialist countries .
A program for scientific investigation designed to reduce Chile's de

pendence on foreign technology will be carried out.
Nitrate output will be raised to 1 million ton's in 1971 from about 650
thousand earlier . An ambitious investment program to raise iron - ore output
will be started as the first step in a planned increase in Chile's steel output.
Coal output will be raised by 8 percent in 1971.
INDUSTRY
The industrial sector will be reactivated in 1971 as a result of three

factors: a ) the effect on demand of a redistribution of income; b ) large - scale ,
new construction programs; c ) the investment programs of public sector

enterprises.
-4 .
A number of investment projects, including fruit plants in Aconcagua
and O'Higgins and a sodium chloride plant will start producing in 1971.
Other key investment projects are an expansion of the steel industry from
an output of 600,000 tons to 1 million tons in 1972 , cellulose plants in
Constitución and Arauco , and a new 60,000 ton sugar refinery . O ne
important project to be started in 1971 is a complex to produce acetate

alcohols, sulphur of sodium , silicate of sodium , etc. In all , at least
126 new projects will be under way in 1971 and the amount to be invested
in that year will reach over $ 28 million .
The government's policy is to increase the availability of mass

consumer goods; 21 per cent of the total industrial investment will be in
the food industry . Some of the new projects will turn out goods not
formerly produced in Chile , thus reducing dependence on foreign sources

and saving foreign exchange.
ENERGY
Electric power consumption will be increased in 1971 to 5.6 billion

kilowatt hours , an increase of 15.3 percent over 1970 .
Over six million cubic meters of crude oil one third from domestic
sources will be refined and 274 thousand tons of liquid gas will be pro
duced . The Empresa Nacional del Petróleo (National Petroleum Enter -
prise) will not only try to satisfy the domestic demand for petroleum deri
vates, but also to export them .
In a joint project with the United Nations Development Program ,

Chile will prospect for oil in the continental shelf of the Strait of Magellan ,
and other promising areas of the country .
TRANSPORTATION
Railroad passenger traffic is expected to increase by 4 % and rail

road freight traffic by 5 % in 1971. Railroad investment will total $ 11. 5
million and 330 million escudos (700 freight cars, 6 locomotives, and
improvement of roadbed) . Urban transportation will be greatly improved
by the introduction of 420 new buses.
Two large aircraft will be purchased , one for International routes,

including new routes to Cuba and Europe , and one for inland freight. Two smaller
aircraft for domestic routes will also be purchased .
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For marine transport, six new coal lighters and two new deep -water
tugs at a cost of $ 5.5 million will be purchased . A number of projects

to improve port facilities at Valparaiso , San Antonio, Puerto Montt and
other localities will be carried out.
Work under way on the improvement of existing highways will con

tinue and the construction of a number of new highways will be started .
HOUSING
The construction of over 83,000 dwelling units which will provide

housing for 400,000 people is planned for 1971. Basic services will be
provided for 124,000 dwelling units . The investment in housing construc
tion programmed for 1971 is double that of the preceding year. It is
expected that the program will provide work for the entire labor force in
the construction industry, 22 percent of whom wereunemployed in 1970.
PUBLIC HEALTH
The plan for 1971, provides for the expansion of food and other basic
programs, the provision of health services to the entire population , and
increased hospital construction .
The program of providing supplementary foodstuffs to children will

be increased , with four times as much milk being provided as in 1970 . A
number of special campaigns will be launched to reduce or eliminate gastric

diseases in children , to increase vaccinations , to prevent alcoholism and
rehabilitate alcoholics , and to improve general sanitary conditions. This
last includes water supply programs for urban and rural areas and the
reorganization of the garbage disposal system of Greater Santiago .
The Servicio Nacional de Salud (National Health Service) will be

democratized by giving various popular organizations a voice in its manage
ment, by ending burocratic procedures which prevent the unemployed and
needy from receiving medical treatment, by providing free hospital examina

tions and drugs, and by establishing clinics in the poorer sections of towns.
Five new hospitals in several cities and an overall total of 4,000

new hospital beds will be provided .
EDUCATION
The number of people in schools and colleges will be greatly expanded

in 1971.
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Kindergarten attendance will increase by 18. 2 percent, primary

school attendance by 3. 4 percent, attendance in public secondary schools
by 15.5 percent (liberal arts) and 38. 2 percent (técnico -profesional) , and
first year university places will increase by 62.8 percent.
The provision of free school meals will be stepped up, reaching a

total of 760,000 lunches and 2,400,000 breakfasts daily . Two hundred
thirty eight thousand smocks and overalls will be distributed .
The expansion of education will call for increased budget expenditures

and the construction of additional schools throughout the country .
TOURISM
While the Government recognizes the benefits of traditional tourism ,

it will place special emphasis on popular tourism , which will provide all
workers with rest , recreation , and a chance to learn more about their
country , The plan calls for improving the organization of the Consejos
Regionales de Turismo (Regional Tourist Boards) and the Dirección Nacional
de Turismo (National Tourist Authority ). Investments will be made in:
Buses and motor launches ;
The improvement of national parks and the construction of additional

public recreational facilities ;
The construction of 37 new public swimming pools throughout the country

and 25 in the Central Tendrán Region ;
The construction of five new camping sites and the extension and improve
ment of existing ones;
The construction of a large first class hotel in Valparaiso and additional

inns , cabañas, etc. , elsewhere ;
The construction of beach facilities , spas, mountain centers and week

end parks ;
The restoration of historic monuments and the establishment of new

museums and tourist information offices ;
Facilities to enable Iquique to host the World Underwater Fishing

Championship in 1971.
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DISTRIBUTION
Because of the strategic importance of the distribution process ,

the Government will play a more active part in it, to the benefit of both
producers and consumers. Its policy will be to avoid inflationary pres
sures which could counteract the effects of the redistribution of income
and to ensure that producers get reasonable prices. The Government
will carry out its policy through strengthening State organizations already
engaged in distribution , through regulation of key sectors in distribution ,
and through control of the prices, profit margins and credit of some
enterprises .
Steps are being taken to form an Empresa Distribuidora Nacional

(National Distribution Enterprise). The task of this enterprise will be to
regularize the supply of essential products and thus defend the interests
of the underprivileged sectors of the population .
BANKING
Credit in Chile has been distributed extremely unevenly . In 1967 ,
51 borrowers, 0.4 percent of the total, received 25 percent of the bank
6
credit. On the other hand , 28 percent of the borrowers received only 2 .
percent. The same unevenness characterizes the distribution of credit
by provinces , with Santiago province alone receiving 63 percent of all
bank credit. Many Chilean enterprises have not had adequate access to
credit .
The Government has started a process of democratizing bank

credit by making it available to small and medium - sized farmers and
businessmen and improving its geographic distribution . Interest rates

have been reduced . A process of nationalizing the banks through the
purchase of shares in private national banks is under way .
REGIONAL DEVELOPMENT
As a result of a long historic process, economic activity and

population have concentrated in the central zone of Chile and this has
been one of the main impediments to economic development. Surpluses
produced by agricultural workers and miners in all of Chile have flowed
either out of the country or into Santiago where they served the needs
of the dominant upper classes. As in other dependent countries , industry
was concentrated in the region of the capital while the rest of the country
was relegated to the task of supplying raw materials , foodstuffs , and
manpower under disadvantageous conditions. Santiago , which in 1970
contained 37 percent of the population of Chile , accounted for 58 percent
of its industrial production . The
The central
central provinces
provinces - Santiago , O'Higgins,
Aconcagua, and Valparaiso contained 70 percent of Chile's manufacturing
-8
industry. Santiago was not only a center of riches , but also of poverty , attract
ing people from other regions in search of a better life and providing them with
work of minimum productivity and pay .
Apart from the powerful social reasons for giving priority in develop
ment to Chile's underdeveloped provinces, there are also sound economic
reasons for doing so . A large part of the reserves that can be mobilized for
development - agricultural land , mineral deposits , forest resources, fishing
areas , and under-or unemployed manpower - are not concentrated in any one
region but stretch across the country . The Popular Unity Government pro
poses to mobilize these resources with the double objective of developing
both the separate regions and the country as a whole.
Thus , in Tarapacá , the northernmost province , which mainly depends

on two industries , fishing and mining , and has been suffering from economic
depression , development plans call for diversifying economic activity to in
clude textile and electronics production , deep - sea fishing , canning and refri
geration plants, and tourism . Magallanes , the southernmost province , which
has enormous natural resources , is held back because many parts of it are
inaccessible and because supplies of raw materials and consumer goods , for
which it depends on the rest of the country ,
are inadequate . The Plan calls
for improving Magallanes' air service, adding new vessels to its coastal
service , and constructing new roads; a center for supplying the region with
industrial supplies will be established . In the Valdivia and Osorno region ,
the economy will be stimulated by a program of investment in housing , public
works, tourism , cattle - raising and forestry . Throughout the country , plans
will be similarly adjusted to the needs and possibilities of specific regions.
In summary , Chile's Plan for 1971 aims at large increases in economic

activity and employment, the containment of Chile's long - standing inflation ,
an increase in the income of workers , a notable improvement in the supply of
basic necessities to the people (housing , health services, education , foodstuffs )
and the beginnings of an attack on Chile's regional problems. The Plan attacks
economic stagnation and promotes the participation of the people in the economic
decision -making that affects their lives . Only in this way can Chile achieve a
rate of development conmensurate with its natural resources and the potential
of its population .
GOVT PEI
GOVT PUBLS
EADI. G ADOM
CORFO
No. 81 June 14 , 1971
* AGREEMENT BETWEEN NIBCO AND CORFO

* STATEMENT ON FORD MOTOR CO.'s CHILEAN OPERATIONS
* IMPORT AGREEMENT BETWEEN MEXICO AND CHILE
* CHILEAN PRODUCTS TO AUSTRALIA AND NEW ZEALAND
* BRIEFS
AGREEMENT BETWEEN NIBCO AND CORFO
Corfo recently effected the purchase of the stock of Nibco , an

American bronze fitting manufacturing company, in the Chilean firm
Nibsa . Nibco's interest represented 50 % of the company's shares ; the
other 50 % is controlled by Adela , a private investment firm (25 % ) and
SGM , a Chilean firm (25 % ) .
Nibco has agreed to sell its interests in Chile to Corfo for the
amount of $ 300 , 000. and to continue to provide technical assistance and
marketing advice for future production and imports from the United
States. Activities at the Nibsa plant have returned to normal and sales
are improving , after a short period when the company's production was
upset by some economic difficulties .
STATEMENT ON FORD MOTOR CO.'s CHILEAN OPERATIONS
The Economic Department of the Ministry of External Affairs

of Chile recently issued a statement concerning the shutdown of the Ford
Motor Company's assembly plant in Chile.
The statement indicates that the estimate for production in

1971 presented by Ford was far below the minimum required by specific
directives made public a year in advance. This minimum has been
attained by the other automobile companies operating in Chile . Notwith

standing, the National Automotive Commission offered the Ford Motor
Co. every possible advantage to enable it to reach its production quota .
ITY
INDIANA UNIVERS
Issued by CORFO Corporación de Fomento de la Producción JUN

Y
80 Pine Street New York , N.Y. 10005 (212) 344-800 LIBRAR
*****
******
** ******
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The statement goes on to say that in the LAFTA (Latin Ameri

can Free Trade Association ) market, the operations of the Ford Motor
Co. have created a negative balance of $ 3.5 million in the compensatory
trade agreements for automobile parts . This is approximately one half
of the total debt of the national automotive industry in this area .
Because of declared losses by Ford in its Chilean venture, the

continued operation of the firm was based on the condition that the Chilean
Government finance some $ 9 million for operating capital. This arrange
ment would not be in keeping with the policies governing the rest of the
automotive industry in the country .
In spite of these and other related problems, the Government

offered to study suitable solutions in cooperation with the firm , Regret
ably , before anything could be done, Ford Motor Co. closed the plant ,
thus leaving some 600 workers unemployed . This action created several
problems, the most serious being the aggravation of the unemployment
situation and a possible disruption in the supply of vehicles and parts .
Under these circumstances, the National Automotive Commis

sion found it necessary to intervene in order to keep the plant running
while final decisions about its future were being studied and negotiated .
This action is taken by the Government of Chile in cases where it is man
datory to protect national economic interests. The Chilean Government ,
in the case of the Ford Motor Co., as well as in any other similar situa
tion , is basically concerned with reaching a workable solution satisfac
tory to all interested parties .
IMPORT AGREEMENT BETWEEN MEXICO AND CHILE
An agreement for the import and distribution of acrylic fibers

has been signed by the Mexican firm Cydsa and Petroquímica S. A., a Chi
lean Government concern . Approximately 300 tons of the fiber will be
imported at a price ofmore than $.5 million . This is a sufficient quan
tity to supply the present needs of the textile industry for themanufacture
of yard goods and garments for domestic consumption . Petroquímica S. A.
has announced that it will undertake a marketing program for these and
other petrochemical products from the Latin American free trade region .
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CHILEAN PRODUCTS TO AUSTRALIA AND NEW ZEALAND
A shipment of Chilean products was recently made to Australia

and New Zealand in accordance with the terms of an agreement between
the Australian Wheat Board and ECA ( the Agricultural Commerce Co.
of Chile ).
The shipment to Australia included 2 , 700 tons of fish meal,

17 tons of thread , 3 , 370 tons of wine, 5 tons of copper oxychloride, 35
tons of molybdenum oxide, 44 tons of larch wood , 1 , 200 tons of nitrate,
and other goods such as fish oil, wood veneer , and newsprint paper .
BRIEFS
** The Central Bank of Chile has announced that as of March

31 of this year , income from the sale of copper has risen 146.7% over
the amount of sales for the same period in 1970. This year sales have
reached $ 2 , 158 , 518 ; whereas for the first third of 1970 , they totalled
$ 871, 854 .
** The Central Bank also reported the comparative increases

in the sales of Chilean fruit as follows:
Jan. - Mar. 1970 Jan. -Mar. 1971
Cherries $ 121, 568, 000 . $ 240 , 384 , 000 .
Peaches $ 203 , 751. $ 434 , 990 .
Apples $ 106 , 998 . $ 153, 591.
Melons $ 105 , 651. $ 231, 639.
Pears $ 31, 974 . $ 248 , 713 .
Grapes $ 98 , 581. $ 566,672 .
** The delegates to the Seventh Congress of Latin American

Industrialists voted unanimously to hold their next annual meeting in
Santiago , Chile during the month of April , 1972 just before the commen
cement of the Third United Nations Conference on Trade and Developmen .
t
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** During the recent meetings of the Comisión Mixta Colombo

Chilena ( see EN 79 ), Chile agreed to purchase from Colombia 2 , 600
head of cattle for the amount of $ 1. 5 million . The first shipment , con
sisting of 650 steers, will arrive shortly in Antofagasta , Chile .
** Chile will export 200 tons of potato seeds to Peru in the

near future , The shipment will be transported by land from the province
of Llanquihue by a Chilean trucking cooperative .
** The first shipment of Chilean fruit to East Germany was

made recently from the port of Valparaíso, Chile . Some 2 , 500 tons of
apples and grapes from the region of Curicó were exported .
** A new Post Office complex for the sorting of mail will be

constructed in Santiago , it was announced recently . The new center will
be equipped with imported electronic equipment valued at some $ 5 million ,
** A new Chilean ship , the " Cabo Pilar " , set sail recently from
Hiroshima for Valparaíso . The ship weighs 68,000 tons and is equipped
as an oil tanker as well as a metal carrier. Its construction , which cost
$ 11 million , was the product of a joint venture of the Sociedad Anónima
de Navegación Petrolera, Compañía Sudamericana de Vapores, and Com
pañía Chilena de Navegación Interoceánica .
** An additon to the technical assistance agreement between
Belgium and Chile has just been made which will benefit the University
of Concepción in Chile by cooperating with the scientific development of
several departments of the University .
** During recent meetings between representatives of Argen

tina and Chile in Buenos Aires , programs for regional integration were
advanced. Among the resolutions adopted were the agreement of both
countries to continue infrastructural works in conjunction with the pro
motion of tourism and the commitment to conservation and protection of
international waterways .
* * *
Correction : In our Economic Notes No. 80 of May 19 , 1971, on

page 4 , paragraph 1, appears the statement that one of the important
industrial complexes would produce in 1971, among other things , " sulphur
of sodium , silicate of sodium , etc." . That line should have read , " sodium
sulphide, sodium silicate , etc. " .
WUYI PER
IVT PUBLS
ING MUOM
CORFO
No. 82 July 19, 1971
* BASES FOR AUTOMOTIVE INDUSTRY BIDDING

* THREE NEW DEVELOPMENT PLANS ANNOUNCED BY ODEPLAN
* CHILE'S INTERNATIONAL TRADE
* DEVELOPMENT OF OCEAN AND FRESH WATER RESOURCES
* BRIEFS
BASES FOR THE AUTOMOTIVE INDUSTRY BIDDING
Corfo recently confirmed the bases that will regulate the

forthcoming international bidding for the automotive industry in Chile .
There are three categories for which bids will be accepted : small ve
hicles of up to 1200 c.c. , medium - sized from 1300 to 2000 c . c . , and
diesel chassis for trucks and buses from 6 to 8 tons . One contract will
be awarded in each category for the manufacture of a single standard
model. In this way there will be a maximum of three different com
panies operating in the automotive industry, perhaps less since a com

pany will be permitted to bid in more than one category .
Bids will be accepted during the next 60 days and once the
bidding is closed , it is expected that it will be approximately 30 days
before a final decision is announced. That decision will be made by
President Allende, based on a report that will be presented jointly by
the Ministers of Economy and Finance, the Executive Vice- President
and the Executive General Manager of Corfo . A technical evaluation of
the bids presented will be made by the Executive Secretary of Corfo's
Automotive Industry Development Commission ,
The companies that are awarded contracts will form a com -

pany in which Corfo will provide at least 51% of the capital. This arrange
ment will last for ten years to be renewed by mutual consent. Its activ
ities will include the manufacture , assembly , import, export, and mar
keting of all vehicles and parts. Projections for production for 1973, at
which time the new companies will begin operations , and those for 1980
are as follows: from the first category, 20, 000 and 45,000 vehicles re
spectively ; 15 , 000 and 40,000 respectively from the second category ; and
5,000 and 15,000 respectively from the third catego **********************
INDIANA UNIVERSITY
JUN 2 2 1971
Issued by CORFO Corporación de Fomento de la coda **************

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THREE NEW DEVELOPMENT PROJECTS ANNOUNCED BY ODEPLAN
The director of Odeplan (the National Planning Office) recently

announced three different projects that will form part of the Six - Year
Development Plan (1971-76 ) currently being formulated by that office. The
goal for 1971 is one of maximum productivity in the industrial sector inso
far as installed capacity permits; in 1972 an expansion program is expect
ed to get underway financed to a large degree by investments from the
surplus generated as more and more enterprises are incorporated into

the public sector .
The three projects that were outlined have as their common
objective the achievement of a balanced economic development in the

country as a whole . Sharp regional discrepancies in the granting of loans
and other aid as well as in the provision of technical assistance have long
been a problem in Chile and a serious drawback to true development .
For this reason greatest attention will be focused on the problems of the
under - developed regions and provinces in the programming and execution
of the Six - Year Plan .
The first project outlined was one concerned with Santiago .
The director of Odeplan explained that the main problem there is a
structural one and therefore the development program for the region will
be long -term aimed at doing away with what he called " the two faces of
Santiago, one modern and the other under - developed " . To this end a
Regional Planning Office has been established for the capital and the co
operation of university and municipal entities has been enlisted .
The second project outlined is aimed at improving conditions

in the southern zone, especially in the provinces of Llanquihue, Chiloé,
Aisén , and Magallanes. One of the most serious impediments to pro
are
gress in the area is the problem of accessibility ; certain cities
virtually isolated from the rest of the country . Maritime transportation
will be improved with the addition of several vessels on the local coastal
and inter - provincial lines . New roads will also be built and existing ones
will be improved . This project also calls for an expansion of existing air
service, improvement of airports , and the introduction of airplanes
adapted to the special geographic conditions of this region .
The third project mentioned involves the triangle extending

from Easter Island to Iquique and the Peruvian border. This zone is
rich in fishing possibilities , especially that of the tuna variety ,but exist
ing installations are inadequate for full scale development of these re
sources . The program of Odeplan calls for the purchase of 2 80 - ton
fishing boats, the provision of technical assistance , and other measures
designed to benefit the region economically .
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CHILE'S INTERNATIONAL TRADE
Chile's exports during 1970 were $ 1, 286,8 million . In 1971,

they are expected to reach $ 1, 322.9 million . Following is a breakdown
of the figures as presented in the State of the Nation address by President
Salvador Allende . The numbers given are for millions of dollars .
I. GOODS 1970 1971
A. Mining Products
a . Copper
Large Mining Enterprises 703.1 726,3
Small and Medium Scale Enterprises 186.7 147.3
b . Iron
Large Mining Enterprises 13.0 15 , 8
Small and Medium Scale Enterprises 57.0 55.9
c. Nitrate, Iodine , and Sulphur 26.0 29.0

15.0 21.6
d . Molybdenum
e . Silver 5.0 6.0
f. Others 2.8 3.2
B. Agricultural and Fishing Products
a , Foods 18. 0 20.9

b . Cattle 6.8 7.2
c. Forest products 1. 2 1.2
d. Fishing 2.0 2.2
C. Industrials 107. 2 136. 3
II. SERVICES 143.0 150.0
TOTAL 1, 286.8 1, 322.9
An estimate of imports for 1971 is not yet available , but figures

for 1970 show a total of $ 1,208.9 million of which $ 1,020 million were for
imports of goods and $ 188 , 900 , 000. were for services.
DEVELOPMENT OF OCEAN AND FRESH WATER RESOURCES
During a recent meeting of Corfo's Board of Directors , the
allocation of funds was approved for several different projects, many of

which are related to the development of Chile's ocean and fresh water
resources. The first project, for which E ° 11, 264 , 608 have been ear
marked, is an investigation of water resources in the northernmost prov

inces of Chile, sponsored jointly by the United Nations and the Govern
ment of Chile represented by the Ministry of Public Works . For the
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second , E ° 709, 600 and $ 28,600 . will be invested by Corfo in a joint study
of the industrial possibilities of the algae found off the coast of Chile that
will be realized by the Institute of Fishing Development and the University
of Concepción under the auspices of the Plan for Research , Development,
and Utilization of Ocean and Fresh Water Resources. Also in conjunction
with this Plan is a third project, " Oceanographic Programs" for which
Corfo has allocated Eº989 , 800 and $ 2,200 . Another Eº981, 500 and $ 2,800 .
will be invested in a fourth project, " National Center for Oceanographic

Data " which will be directed by the Hydrographical Institute of the Navy
in conjunction with the Institute of Fishing Development.
BRIEFS
** On July 11, 1971 a joint session of the Chilean Congress

unanimously voted to ratify the constitutional ammendment by which the
basic mineral resources of Chile will again form part of the national
patrimony . The next day, the ammendment received the final approval,
that of the President of the Republic , necessary for it to become law .
the
** According to the Ministry of the Interior of Chile ,
earthquake of July 9 caused an estimated $ 250 million worth of damage .
Fortunately , however , the effect on the nation's industry was not as seri
ous as it was originally feared . The Government has mobilized all of its
resources to start repairing the damages caused to roads , telephone and
electrical lines, water supplies , etc , and to provide food , shelter , and
medical care for those who have been left homeless .
** The Ministry of Mines of Chile and the Panamanian firm

Mundogás recently signed an agreement by which Chile will export approx
imately 200, 000 tons of refrigerated liquid gas to Argentina and Brazil.
The liquid gas to be exported is produced by Enap , the National Petro
leum Co. , in a newly constructed plant in Magallanes . Mundogás will

provide the specialized transportation that is necessary for such exports .
Correction : In " Briefs of our " Economic Notes " No. 81 of
June 14 , 1971, by mistake in the transcription it was indicated that income

from the sale of copper for the first quarter of 1971 had been $ 2,158 , 518 .
against the same period in 1970 when it was $ 871, 854. Actually these
amounts represent the net US $ returns, to these figures must be added
income that was used to meet foreign obligations and other expenses. In
the same " Briefs " , the figures indicated for the sale of Chilean cherries
abroad should have been $ 121, 568 , and $ 240, 384 , instead of $ 121, 568,000
and $ 240, 384 , 000 .
---
GOVT POBIS GOVT PER

PRADING ROOM
CORFO
No. 83 July 26 , 1971
ECONOMIC HIGHLIGHTS OF
THE FIRST STATE OF THE NATION ADDRESS
BY PRESIDENT SALVADOR ALLENDE
MAY 21, 1971
President Allende delivered his first annual State of the Nation

address to Congress on May 21, 1971. " I am sure we will have the
energy and capacity' , he said , " to build the first socialist society mod
elled on freedom , democracy, and pluralism ."
Chile, President Allende said , is not moving toward social

ism because of " academic love of a body of doctrine' . It is being mov
ed by the energy of its people who feel the unavoidable imperative of
cònquering backwardness . Chile has chosen socialism through the free
vote of its people .
Chile proposes to eliminate the causes of economic depen
dence and underdevelopment, the constrictive economic structure that

produces only deformed growth . It intends to build a new economy
capable of providing prosperity for everyone. And it will attempt to
build this new economy without breaking continuity with the old one ,
conserving to the maximum the productive and technical capacity
already achieved .
The task of constructing socialism in Chile will be difficult

and will require enormous efforts on the part of all Chileans . There
is no previous experience in what Chile is attempting to do ; Chile will

have to work out a Chilean road to socialism . The task must be attack
ed realistically . " If," President Allende emphasized, we forget the
concrete conditions from which we are starting and attempt to create
here and now things which exceed our possibilities, we will fail. "
" During the first six months , we have acted on all fronts
with decision .... Chile has started a process of regaining control of
our most basic resource , copper . The nationalization of copper is not
Issued by CORFO Corporación de Fomento de la Producción is .

80 Pine Street New York , N.Y. 10005 (212) 344 -98 00 6 19 71
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an act of vengeance against any group , nation , or country . We are
simply exercising the inalienable right of a sovereign people to control

our own natural resources and we request all countries and governments
to respect this unanimous decision of a free people .
" We have nationalized another of our fundamental resources :

iron . A little while ago , there ended a negotiation with the Bethlehem
Steel Corporation through which the iron mines passed completely in
We are
to the area of social property. ... The nitrates are also ours. "
regaining them for $ 8 million payable in ten years . We have also 50
cialized other enterprises , among them cement and textile plants in

which production was so inadequate that shortages were being created .
In all the socialized enterprises , we have found the decided support of
the workers and have been able to gain immediate increases in produc
tivity .
The nationalization of the banks has been a decisive step . With

absolute respect for the rights of the small stockholders , we have
nationalized 9 banks and are on the point of obtaining majority control

of others .
The information that we have leads us to believe that we will

arrive at a reasonable agreement with foreign banks . We want to put
the new banking system at the service of the socialized sector of the
economy and of the small and medium commercial enterprises, indus

tries, and farms which hitherto have been discriminated against finan
cially .
We have accelerated the agrarian reform , fixing for this year
the task of expropriating one thousand large estates . This process is

being carried out with respect for the law and with safeguards for the
interests of small and medium farmers. We want Chile to be capable
of satisfying its food requirements . We want the people who live from
the soil to benefit fairly from the fruits of their toil .
We have not only been nationalizing strategic enterprises to

form social property , but have also been forming mixed enterprises in
which the state and private enterprises work together. Our economy
contains , therefore, three areas of property : social, mixed , and pri
vate . The mixed and private areas will also be tied to the achievement
of national economic objectives .
Our plan of structural reformswill culminate in the social

ization of all the great production and distribution monopolies, the com
plete realization of the agrarian reform , and the centralization under
the government of foreign commerce.
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Besides these actions designed to initiate a process of basic

structural change in our economy, we have also applied a short- run
policy whose main objective is to increase the supply of consumers
goods and services and channel this increase to the less favored sectors
of the population .
Chile is operating according to an economic plan during 1971.

This plan is based fundamentally on achieving a vigorous expansion of
production . The Chilean economy has been stagnating in recent years ,
with output per capita growing since 1967 at a rate of less than 1 percent
per year . The unemployment problem has been severe; in December
1970 , the rate of unemployment was 8.3 percent. A vigorous increase
in production is indispensable for achieving an increase in employment
and for the satisfaction of immediate needs in the fields of housing, edu
cation , health , etc.
The reactivation of the economy is to be accomplished main

ly through public investment and income policies. The 1971 Plan calls
for an extraordinary increase in housing construction . The amount of
public funds destined for housing is to almost double and the amount of
housing units completed is to more than double; it is planned to reach
83,000 housing starts , far more than ever achieved before in Chile . The
plan also calls for large increases in the construction of hospitals ,
schools, and public works. The construction program is intended to
have a strong effect on reducing unemployment.
Chile is also working to achieve a re - distribution of income

in favor of the working classes and others with low incomes. Realwages
of workers and public employees are to be raised by wage and salary re
adjustments while price increases are to be contained.
The crux of our policy of redistributing income, said Presi

dent Allende, is our fight against inflation . ( The consumer price index
rose by 34. 9 percent in 1970. ) Repressing price increases means that
the people will be able to conserve any increased purchasing power
they obtain . At the same time, private businessmen have possibilities
of fair profits , with smaller profit margins per unit compensated by
larger volume of output.
We know that this policy is meeting with obstacles. Certain

groups of businessmen are attempting to thwart our measures by open
ly or in a disguised manner slowing production . Also many business
men are too tied to the traditional system of low production and high
profit to take advantage of the opportunities offered by the new situation .
But our policy has already rendered fruit. We have achieved the low
est rate of inflation in recent years and we have started the most effec
tive redistribution of income Chile has ever seen .
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Both public investments and the redistribution of income are in

tended to increase overall demand which will in turn bring about an increase
in production through the use of currently idle industrial capacity .
Conscious that the increased purchasing power of the working

class will result in an expanded demand for foodstuffs , the Government has
also undertaken a campaign for increasing agricultural output. Credit is
being made available to small and medium farmers and they are being pro
vided with technical assistance . Production agreements are being made
with farmers assuring them that the state will purchase their products .
Medium farmers are being assured that they will not be expropriated . Large
farm ers are being told that whether they are subject to later expropriation
or not, the sale of the products they raise is guaranteed at the same prices
other farmers receive. Finally the government has granted agriculture
price re - adjustments much larger than in other sectors of the economy, re
quiring the industries preparing agricultural products for consumption to
absorb all or most of the increase, so that the general anti - inflationary line
can be held .
The public budget for agriculture for 1971 is about double that of
1970 in escudos of the same purchasing power . The collective farmsalready
in existence are to expand by 18. 5 percent the area under cultivation , while
it is also proposed through technical assistance provided by government
agencies to increase productivity per hectare cultivated .
Chile is introducing basic changes in its fiscal, tax , monetary , and

foreign trade and exchange policies. Fiscal policy has broader, more fun
damental tasks than formerly . Besides helping in the reactivation of the
economy, it is also a key support of the structural transformations being
carried out . This expresses itself in the program of agrarian reform which
entails a heavy cost for which aid from the budget is required . And the
structural changes, by placing the most strategic sectors of the economy
under the state, greatly increase the importance of the public sector . The
state , acting through the public budget , now bears the main responsibility
for economic development ,
The Chilean tax system is being subjected to an overall reform ,
This system has been both regressive and a burden on production . Indirect
taxes , such as the turnover tax , have outweighed direct taxes . Large enter
prises have been favored with a whole series of special exemptions. Wide
spread evasion has contributed to the unfairness and inefficiency of the sys
tem , Now measures are being introduced to attenuate the regressiveness of
the tax system . The problem of evasion is being attacked seriously . Busi
ness and real estate taxes are being increased , as are taxes on the sale of
certain luxury goods; for example , the tax on the first sale of new auto
mobiles is being increased from 15 to 50 percent. Privileges are being elim

inated . Eventually , the whole tax system will be rationalized and simplified .
2
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With the nationalization of the banking system , a series of funda

mental reforms in the granting of credit becomes possible . In the past ,cred
it was the instrument of a privileged minority . It was highly concentrated
in a number of respects . Three banks held more than 40 percent of the de
posits , made more than 50 percent of the profits, and granted more than 40
percent of the credits . In December of 1969, 1.3 percent of the borrowers
received 45.6 percent of the total bank credit, while at the other end, 62 per
cent of the borrowers received only 8.2 percent. A disproportionate share

of the credit went to Santiago and Valparaíso where the large enterprises are
mainly located . The credit system was monopolistic , anti - democratic , and
not geared to the economic development of the country . Now credit is being
n
democratized , made available to the small and medium businessme , indus
trialists and farmers , to cooperatives , trade unions and other people's or
ganizations , to families wishing to acquire a house . For the first time, the
credit system can be tied to an effective fight against inflation . Credit will
no w be gra nte d according to the priorities tied to economic development ,
The nationalization of the principal mines in Chile carries with it

a nationalization of much import and export activity. Historically , foreign
trade was the vehicle by which foreign capital drew out the national riches
of our country . Now this can no longer happen and foreign trade is being
transformed into an instrument of economic development. This will not
limit our commercial relations with foreign countries . On the contrary , it
opens fuller and more promising horizons. It is the firm purpose of the
Popular Government to maintain , broaden , and perfect Chile's commercial
relations with all countries on the basis of equality and mutual benefit.
Chile's new foreign exchange policy is tied to its fight against

price rises . In the past, successive devaluations have caused heavy in
cr e ases in the cost of living and inflationary pressures . Now m e ans
other than devaluation , such as " drawbacks" of taxes by exporters, will be

used to confront balance of payment difficulties.
* * *
Besides attempting to increase current industrial production ,

Chile is also begining the task of rationalizing its structure , The structure
of production in Chile is weak in several ways :

Chile's production consists mainly of non - durable consumers
goods. Chile turns out few producers goods and only a moderate amount
of consumers durable goods .
The mix of items produced by Chile is irrational and the techno
logical basis of Chilean industry is weak .
Geographically , there is an excessive concentration of produc
tion in the central provinces around the capital.
Corfo has been given a key part in the task of beginning to ration
alize the structure of Chile's output. Corfo's budget has been increased by
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60 percent in comparison to 1970 and this increase in resources will be used

to develop agriculturally - oriented economic areas such as cold storage
facilities and warehouses, to accelerate fuel and energy programs, and to
promote industrial investment.
Chile intends to build a metallurgical complex based on the nation

alized steel company, Compañía de Acero del Pacífico. Steel output is
scheduled to treble by the end of 1976. Chile also intends to rationalize its
automotive industry , with the aim of increasing efficiency and productivity .
According to an agreement signed at the end of March this year , Corfo will
assume control of the RCA Electronic S. A., under the new name Industria
de Radio y Televisión S.A., and a large expansion program will be put into
effect for which Corfo will receive the technical and financial assistance of
RCA International Ltd.
* * *
The Office of National Planning (Odeplan ) is preparing a six - year

plan for the period 1971-76 of which the 1971 plan will be the first part . The
plan will be worked out by Odeplan on the basis of projects prepared by each
governmental body . Once the first version of the plan has been completed ,
there will be a broad popular discussion of its objectives, programs, and
projects .
The advantages of socialism , said President Allende, do not ap

pear spectacularly at the first stages of its construction . No country has
achieved economic development without great sacrifice. We do not pretend
to have discovered the formula by which economic progress and a more
just social system can be installed without any cost. We are not offering
to construct between morning and night a socialized economy, with an equit
able distribution of income, monetary stability , full employment, and high
levels of productivity . We offer rather to construct this society at the
least possible cost given our circumstances. Socialism and the liberation
it brings with it are not gifts one finds casually along the road . We shall
have to postpone some present possibilities in order to lay the basis for a
future society which is richer and more humane and just .
* * *
NOTE : The parts of the above given in quotation marks are taken textually
from the President's message; the rest is synthesis and paraphrase
prepared by Corfo , New York .
GOVT POBLS GOVT PER
READINGROOM
CORFO
No. 84 Aug. 16 , 1971
* FINANCIAL AND TECHNICAL ASSISTANCE FROM SOCIALIST NATIONS

* FIAT TO SELL TRUCK PARTS TO CHILE
* EXPORT OF AGRICULTURAL PRODUCTS
* INCREASE IN SALE OF FISH MEAL AND FISH OIL
* PROGRAM TO PROMOTE TOURISM
* PLANT FOR PREFABRICATED HOUSING UNITS
* BRIEFS
FINANCIAL AND TECHNICAL ASSISTANCE FROM SOCIALIST NATIONS
Mr. Kurt Dreckmann , Executive Vice - President of Corfo , re

viewed in Santiago the results of the Chilean economic mission , of which
he was a member , that recently visited the European socialist countries
in order to explore possibilities of establishing lines of credit for Chilean
development needs. The financial support actually obtained as a result
of this visit amounts to some $ 110 million comprised of the following
credits and investments .
Rumania : This nation will participate in the building of three copper

manufacturing plants in Chile , each of them intended to supply different
world markets such as the socialist countries, western Europe, and the
United States . One of the projects will be a joint venture also involving
the efforts of other countries such as : Hungary , Czechoslovakia , Poland ,
and East Germany . In addition , Rumania will provide Chile with techni
cal assistance for the commercialization of forest products , for the de
sign of chemical plants , and for general development in the petroleum
industry . Rumania and Czechoslovakia together will participate in a pro
ject to construct an ammonia - urea plantwhich will constitute
ment of about $ 40 million ,
Hungary : A $ 30 million line of credit from this country will be used by
Chile for the construction of an aluminum plant and a plant to manu
facture antibiotics and other medicines . Technical assistance will
also be provided to train personnel in industrial planning, tourism , and
foreign trade .
Poland : This country will construct a plant for the manufacture of cutting
tools that will represent an investment of $ 1 million . Another $ 500,000 .
will be invested in a carbon bisulphate plant . Technical assistance will
also be provided for the treatment of organic dyes and anilines and for *************
SARA UNIVERSITY

AUGX 0 1971
LIBRARY
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the development of the fishing industry .

Bulgaria : This nation will build a factory for small - forked cranes, a plant
for mining machinery , and a plant for processing and dehydrating fruit .
Czechoslovakia : A plant for the manufacture of compressors, one for
motorcycle engines, and a third for power driven tools will be construct
ed by this country . It will also provide assistance in the fields of forest
ry and mining .
East Germany : A delegation from this nation will soon present a report
The type
to its Government outlining Chile's development necessities.
and amount of aid to Chile will be determined after studying this report,
Yugoslavia : This country will set up an engineering corporation for the
preparation , design , and execution of various industrial projects. It will
also participate in a program for the production of copper and other types
of cables and will offer technical assistance in the heavy machinery line .
Soviet Union : An investment of $ 2 to $ 3 million will be made by this nation
for the construction of a factory for the manufacture of panels to be used
in housing construction . Also included in the Soviet Union's aid program
is a plant for the manufacture of basic lubricants which will cost some
$ 11 million , a sodium sulphate plant in which $ 1.5 million will be invested,

and a plant which will cost $ 8 million to produce sulphuric acid by recov
ering the sulphur gases released in the large mining industry . The Soviet
Union will also provide assistance in some aspects of copper production ,
in the construction of fishing ports , and in the training of personnel for
foreign trade.
FIAT TO SELL TRUCK PARTS TO CHILE
The Executive General Manager of Corfo , Mr. Dario Pavez,

announced in Santiago that the Italian firm Fiat S.p.A. has been selected
by Corfo's Automotive Commission to supply the truck parts that will be
assembled in Ford Motor Co.'s Casablanca plant which is being tempo -
rarily administered by a Government appointed director since the end of
May. (see EN 81) Although Fiat already has a plant in Chile for the
a ssembly of automobiles, this new operation will be completely indepen
dent of the existing one. Fiat is committed to the sale of truck knock
down kits and parts and the provision of technical assistance. The actual
assembly will be done by the same staff formerly employed by Ford under
the provisional administration of the Automotive Commission .
Some 3 , 000 trucks will be assembled in the Casablanca plant

this year at an estimated cost of $ 17 , 380,000. The shipments by Fiat will
consist of knockdown kits (CKD ) from which certain parts willbe progres
sively eliminated to be supplied by domestic manufacturers. This pur
chase agreement with Fiat is in no way connected with the international
bidding that is presently being held in connection with the automotive
industry reorganization . (see EN 82 & 71) It will last for one year, until
1972 , when the contracts awarded as a result of the current tender will
take effect .
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EXPORT OF AGRICULTURAL PRODUCTS
The export of agricultural products during the period 1970 - 71

brought $ 20 million in revenue to Chile according to a report prepared by
the Technical Department of the Agricultural and Husbandry Service. The
most important export items were: onions, garlic , plums, peaches, melons ,
apples, grapes, and nectarines. A total of 4 , 718 , 000 cases of these products
were exported during the season to markets such as the United States, Italy ,
Germany, and other European countries .
INCREASE IN SALE OF FISH MEAL AND FISH OIL
There has been a significant increase in the sale of fish meal

and fish oil during the first third of 1971 compared to the sameperiod in
1970 .
The sale of fish meal increased from 23, 338 metric tons in 1970
to 54 , 765 metric tons in 1971 which represents an income of $ 9,051, 893.
as compared to $ 3 , 457 , 411. One of the factors that accounted for this increase
was the opening of new markets for Chilean fish meal such as Cuba , Korea ,
and the Philippines . There was also an increase in sales to the traditional
markets such as West Germany, who purchased $ 4 , 324 , 814 , as compared
to $ 1,695 , 224. in 1970, and Holland whose purchases rose from $ 399, 898 .
to $ 1 , 595 , 261.
The increase in sale of fish oil was from 3 , 692 metric tons to
7,626 metric tons in 1971, which represents revenue of $ 1, 756 , 091. , where
as in 1970 , the amount was $ 604 , 107. A new market, Colombia , has also
been opened for export of Chilean fish oil and sales thus far have amounted
to $ 807, 467. West Germany increased its purchases of fish oil to $ 221, 144 .
from $ 53 , 440 ; and Holland , from $ 550 , 667. to $ 727, 469.
PROGRAM TO PROMOTE TOURISM
Although Chile is well known for its ski resorts , fishing grounds ,
dramatic Andean vistas, and other national attractions , the Government
has undertaken a new and vigorous program of promoting tourist
interest in Chile coupled with investments in infrastructural works
in order to encourage a significant increase in the number of foreign visitors .
Much of the promotional activity for Chilean tourism is being

accomplished through reciprocal programs in Europe and Latin America.
This year some E ° 35 million will be invested in improving tourist oriented
facilities, which is more than 10 times the amount invested for this purpose
during 1970. The greatest emphasis will be placed on improvements in
roadways, hotel accommodations , and other tourist facilities , such as ski
lifts for the winter sports resorts in Chile .

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In a recent statement, the Director General of Tourism explained

that if the present trend continues, some 260,000 tourists will have visited
Chile by the end of 1971. This would represent close to $ 70 million in revenue ;
more than double the amount received in 1970 from this source. He went
on to say that tourism could possibly become the third most important source
of national income; copper and iron exports being first and second respec
tively . Aside from the economic benefits , this increase in tourism is also
important in the cultural, social, and educational exchange between nations
which is essential to improving international understanding .
PLANT FOR PREFABRICATED HOUSING UNITS
The Architectural Department of the Ministry of Public Works of

Chile and representatives of various Bulgarian entities are finalizing the
terms of a contract for the construction in Chile of a plant for the manu
facture of pre - fabricated housing units .
The physical plant, machinery, training of personnel, and tech

nical assistance will represent an investment of $ 1, 800,000 to be financed
by credits from Bulgaria . This is just one of the projects that are being
considered by the two countries since Bulgaria recently pledged $ 20million
in credits to Chile for machinery and equipment.
The plant, which will probably be located in Concepción , will also

be used in programs of the Department of Roads and Sanitation as well as
by the Department of Architecture. It will be capable of producing 16,000
sq. meters of paneling, 10 , 000 centrifugal units for water and sewage plants ,
and 17,000 cu . meters of a variety of pre- stressed building elements .
BRIEFS
** The Ministry of Economy has issued a statement which shows

that the consumer price index for July rose . 3 % over last month's index ,
with the principal increases being for food and housing . During the first
seven months of 1971 the cost of living has risen 11, 5 % , which is significant
ly less than the 26 , 3 % rise for the sameperiod in 1970. This notable decrease
was considered highly encouraging by the Ministry of Economy. It is sig
nificant that in spite of the damages to the country caused by unusually se
vere storms and snowfalls, inflation is being contained and the purchasing
power of the public has increased appreciably .
** A commercial mission from Belgium has just arrived in
Santiago to study the possible participation of that country in the construc
tion of an industrial park in the Concepción region .
** The Government of Holland has extended a credit for $ 1. 8
million to Chile to finance the import of Dutch cattle as part of the Govern
ment's livestock development program ,
GOVT PUBLSLA GOYT PER
BEADING ROOM
CORFO
No. 85 Sept. 7 , 1971
* COPPER PRODUCTION FROM JANUARY TO JULY 1971

* UNEMPLOYMENT REDUCTION AND MANPOWER INCREASE
* CREDITS FOR THOSE AFFECTED BY RECENT STORMS AND EARTHQUAKE
* RESEARCH CENTER FOR MINERAL PROCESSING
* MODIFICATIONS OF IMPORT REGULATIONS
* BRIEFS
COPPER PRODUCTION JANUARY TO JULY 1971
Corporación del Cobre (Codelco ), the Chilean Copper Corp.,

has released the following figures for copper production in the large scale
mining concerns for the first seven months of 1971 as compared with the
same period in 1970. From January through July 1971, copper production
reached 331 , 182 metric tons; while in the samemonths in 1970, production
was 301,138 metric tons .
The Executive Vice - President of Codelco explained in a recent

statement that there are technical problems in the copper mining industry
that have been in existence since before the present administration took
office . Among these technical problems are the ones related to the pro
cessing of the " Exótica " mine concentrates and the hasty opening of some
of the expanded facilities at " El Teniente " where they were incomplete and
not ready for operation according to the engineers responsible for their
installation . These and other problems are being overcome but in the
meantime they have affected copper production in the first half of 1971 ,
UNEMPLOYMENT REDUCTION AND MANPOWER INCREASE
A survey of employment in the Greater Santiago area made by

the Economic Institute of the University of Chile in June indicates that the
population of this area increased 3. 9 % over the June 1970 level bringing
the total to slightly more than 3 million inhabitants. During
the sameperiod, manpower increased 5.1% whereas employment increased
the
7.1% thus showing a real absorption of unemployed manpower since
crisis suffered by the Chilean economy at the end of 1970 .
CO913 1971

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The unemployment rate , which was 8 % in the last December

and March surveys made by the Institute , was reduced to 5.2 % in June,
the lowest rate recently recorded .
A survey carried out in the Concepción - Talcahuano area this

April showed an annual population increase of 3. 7 % and a manpower in
crease of .9 % . Employment increased 1.6 % .
CREDITS FOR THOSE AFFECTED BY RECENT STORMS AND EARTHQUAKE
On July 1, the Executive Committee of the Banco Central adopt

ed a resolution in favor of the farmers , industrialists , and merchants
affected by the storms which struck the central zone of Chile at the end
of June. Shortly thereafter , the Executive committee decided to extend
the benefits of this resolution to those who suffered damages from the
earthquakes that affected the northern and central zones of the country in
early July .
The resolution provides for fixed credits to be extended through

Corporación de Fomento de la Producción , Corporación de la Vivienda
( Housing Agency ), and banking institutions to agricultural, industrial,
and commercial enterprises to finance reconstruction ,
The loans may extend up to three years, with relatively low

interest rates and a minimum of guarantee requirements .
RESEARCH CENTER FOR MINERAL PROCESSING
The United Nations Development Program (UNDP ) and the

Government of Chile will undertake a joint project for
construction of a national Mineral and Metallurgical Research Center
for the development of improved methods of extraction , smelting , and

refining of copper and other minerals . The project , which will take five
years for completion , will cost an estimated $ 2 million ; $ 759, 600 , to be
contributed by UNDP and $ 1 , 305 , 000 , by the Government.
A paper submitted to the UNDP Governing Council during its

consideration of undertaking the project stated the following : " The larger
participation of the Government in the copper industry and its plan to
significantly increase copper exports for promoting the economic devel
opment of the country has created the need not only to expand production
but also to establish a national center which can develop improved meth
ods for the extraction and processing of copper as well as other metals ."
This need is particularly important for the processing of ores in the
small and medium scale mines . Since a considerable part of the eco
nomic activity in the arid northern provinces is based on the smaller
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mining concerns, the region will definitely benefit from the new Center.
The main objectives of the Center will be: to contribute to the

development of extractive metallurgy of copper and other metals as
well as non -metallic elements ; to introduce better technology into the

processes presently applied in the country and reduce production costs ;
to develop permanent contact and exchange of experience with the nation
almineral processing industry and to study specificmetallurgical prob
lems.
The Government of Belgium has offered to contribute towards

the financing of the Center and to provide equipment through a bilateral
program of assistance . The Government of Chile will supply profes
sional, technical, and administrative counterpartpersonnel , instruments,

pilot plant, local pilot plant equipment, land , and buildings , provided
through the aid agreement with Belgium , UNDP will provide the ser
vices of a project manager , consultant services, and technical experts
in the fields ofmineral dressing, extractive metallurgy , chemical met
allurgy, and mineralogy .
MODIFICATIONS IN IMPORT REGULATIONS
1. International exchange operations for the acquisition of for

eign currency necessary to cover imports will be regulated , as of Aug
ust 5 , 1971, by the following procedure:
a ) The acquisition of foreign exchange contracts for the payment

of all imported merchandise cannot be made before 50 days from the
corresponding date of shipment.
b ) For the acquisition of foreign currency to be used for the pay

ment of any import , the importer must show that he has complied with
the domestic clearing regulations .
c ) Notwithstanding the procedure outlined in " a " above, the equiv

alent value of the foreign currency of all imported merchandise must
be applied to the purchase of forward exchange contracts within a maxi
mum term of 60 days from the shipping document's date.
d ) For the sale of a forward exchange contract , banking enterprises

shall require fulfillment of the stipulations indicated in " a " above as
well as proof of compliance with the regulation outlined in " b " , copies
of the commercial invoice, seller's certificate, policy or certificate of
insurance, and bill of lading .
e ) On the same day of sale , the banking enterprise shall send the
corresponding request for foreign exchange approval to the Central Bank
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along with all the required covering papers on each transaction .
f ) Only after the full processing of the statement by the Central

Bank and completion of the forward sale term , can the banking enter
prises send the'equivalent foreign currency abroad .
g ) The presentation of a copy of the Import License to the Customs

authorities is necessary before themerchandise can be cleared through
Customs.
2. Banking enterprises may not effect cash sales of foreign currency

save in those cases expressly authorized in writing by the Central Bank
of Chile .
3. The following imports are exempt from the stipulations referred to

in " e " and shall be covered by the maximum terms indicated in each
case :
a ) Maximum term of 120 days
Imports effected through the provinces of Chiloé , Aysén , and
Magallanes .
b ) Maximum term of 210 days
Import of fishing nets for domestic use .
c ) Maximum term of 240 days

The import of certain goods that will be provisionally exempt.
BRIEFS
* * Enap, the National Petroleum Company, has begun work on

the marine terminal at Quintero which will be the largest of its kind in
Latin America. The preliminary stages of work consist of the connec
tion of three pipes, 42" in diameter , that will reach 2 , 600 meters out to
sea where a platform will be constructed for the unloading of oil tankers
of up to 200 , 000 tons. On the coast, 8 tanks of 35 , 000 cu . meters ca -
pacity each have been constructed for the storage of oil pumped through
the new pipeline .
* * The Government of Holland has offered to supply Chile with

the audio visual equipment to be used at the Santiago center for the U. N.
Conference on Trade and Development (UNCTAD ) in April 1972 (see EN
78 ). The equipment, which is valued at florins 1.1 million , will include
a wireless device to locate delegates anywhere in the conference building ;
closed circuit television sets; earphones , microphones, etc. for simul
taneous translation service ; and public address, recording, and trans
mission equipment.
GOVT PUBLS GOVT PER
READING ROOM
CORFO
No. 86 Sept. 22, 1971
* CHILE CONTROLS INFLATION

* PRESIDENT ALLENDE VISITS ECUADOR , COLOMBIA , AND PERU
* TECHNICAL ASSISTANCE FOR THE FISHING INDUSTRY
* INDUSTRIAL PROTEIN COMMITTEE FORMED
*******
* RECENT DEVELOPMENTS AT CORPORACION ANDINA DE FOMENTO
* THE METALLURGICAL INDUSTRY IN THE ANDEAN PACT NATIONS UNIVERSITY
SEP 27 1971
LIBRARY
CHILE CONTROLS INFLATION **********
A study of the inflationary process in Chile has been prepared by

an economist of the Central Bank . What follows contains its highlights .
For over a century Chile has suffered continuous inflation . For
this reason , the Popular Unity Government headed by Dr. Salvador Allende
placed control of inflation among its immediate goals . Now , after nine months
in office, considerable gains have been made towards this objective as well
as towards those of stimulating the economy and absorbing unemployment.
it has been possible to transform an economy

During these months ,
which hovered between recession and inflation into one that is expandingmore
rapidly than in the previous year . Together with this , a marked slowdown of
inflation has also been attained. The problem of industry at present is how
to raise production even more in order to catch up with demand .
When the Popular Unity Government took office in November 1970 ,

inflation had reached an annual rate of 34. 9 % for wholesale prices and 35.6 %
for retail prices . By June of this year, these annual rates had been reduced
to 17. 0 % and 21.1% respectively . One of the means used to attain this slow
down of inflation was to prohibit the large upward readjustments in prices
during the first two months of every year that had been the practice in pre
vious years .
What is noteworthy in the slowdown of inflation is the fact that
workers and employees have not been denied reasonable salary adjustments .
This has been especially true in the case of the lowest income brackets .
Inflation is declining and is expected to be reduced to approximately 20 % this
year and the consequent improvement is already being felt the greater
in the
consumers demand evident since February .

-2
The Government's policy on price increases has also been flexible

and has examined proposed changes on the basis of individual case merits.
Thus, of the 303 items that constitute the Index of Retail Prices , 122 prices
have been increased , 41 have been reduced , and 140 have been maintained . In
the Index of Wholesale Prices, formed by 288 products , not more than 39 have
been raised , some 18 have been reduced , and 238 have remained constant .
Two very importantmeasures have also been taken in addition to the
above : reduction of the maximum yearly interest rate from 24 % to 13 % , and the
freeze of the exchange rate to the value that it had in July 1970 .
The effects of the Government's economic policy were visible in

March when production and sales increased sharply . Industrial production was
41,2 % higher than in February . In May , the rate of expansion of industrial pro
duction was 2.7 % above the average reached in the first semester of 1970. Wich
this recovery of the economy, the anticipated results for 1971 are already bet
ter than those of 1970 .
There has been a significant extension of weekly work hours, from

42 to 48.5 , which is the first indication of recovery in the employment field .
Results were better still in June , when the unemployment rate was reduced to
less than 5. 5 % , a normal rate for the type of economy that still prevails in
Chile .
The improvement of the economy is also reflected in the fact that

credit pressures , which were very strong formerly , are now considerably
lessened . As of mid - June, savings deposits in banks increased by more than
27 % in comparison with December 1970. Last year the comparative increase
in savings was less than 13 % .
Chile's vigorous stabilization programs have been commented on by

International Monetary Fund authorities as follows: " Maybe it is advisable to
meditate that Chile offers a program of action and a social experience in which
habitual parameters for economic analysis must be revised. Also , maybe we
should take into greater consideration elements such as workers ' confidence,
which will influence the success of policies whose objectives do not always
correspond to the normal patterns of a market economy. "
PRESIDENT ALLENDE VISITS ECUADOR , COLOMBIA , AND PERU
The recent visit of President Allende to Ecuador , Colombia , and Perú

emphasized Chile's continued interest in furthering the progress of the Andean
Pact , whose member nations have shown a more than average dynamic advance
towards common economic goals . During the visit , discussions were held on
general and specific economic topics with various local counterpart groups by
the team of Chilean experts that accompanied the President.
-3
TECHNICAL ASSISTANCE FOR THE FISHING INDUSTRY
Representatives of the Soviet Union and Chile recently signed an

agreement by which the U.S.S. R. will aid in the development programs for
the Chilean fishing industry . The terms of the agreement call for exchange
of scientific and technical information , instruction of Chilean specialists in
the different fields of the fishing industry , and projects for the construction
or improvement of fishing ports on the Chilean coast with the corresponding
industrial installations. The financing of these port facilities will be in
accordance with the terms of a credit agreement made by the two nations in
1967. The option of Chile to rent fully equipped fishing vessels of over 1,000
tons capacity is also contemplated .
INDUSTRIAL PROTEIN COMMITTEE FORMED
The Board of Directors of Corfo recently approved the establish

ment of a Committee on Industrial Proteins whose purpose will be to coordi
nate research being carried out at present in the fields of production and en
richment of foodstuffs and to implement the industrial realization of the re
search findings . The committee will be directed by a council headed by the

Industrial Manager of Corfo and composed of representatives from a number
of agencies .
The specific duties of the Committee will be to : establish industries

and promote the production of enriched foodstuffs to combat the problem of
malnutrition ; to promote the production and utilization of protein concentrates
for human and animal consumption ; to establish a complete program of action
that will overcomemalnutrition including: research in the field of nutrition ,
technological and marketing research , industrial development, and finally,
biological and social evaluation of the results. The Committee will also
finance these activities and coordinate all related government projects in a
common effort to improve the quality of nutrition in Chile .
RECENT DEVELOPMENTS AT CORPORACION ANDINA DE FOMENTO
Corporación Andina de Fomento (CAF ), a development agency com

prised of the five member nations of the Andean Subregion Pact : Ecuador ,
Colombia , Bolivia , Perú , and Chile , recently issued a report concerning
industrial programs and projects .
Some of the projects already approved by CAF include a network of

silos and refrigerated warehouses for Bolivia that will allow the commercial
ization of its agricultural and livestock products , both of which have valuable
export markets in Chile and Perú. In Ecuador, there is a project to expand
tea production . Also in that country, Corporación Financiera Nacional joined
forces with Corfo -Chile to set up a mixed company to develop the tuna fishing
industry . Colombia and Ecuador will jointly establish a cement plant in
-4
Ecuador that will serve both markets . A number of other multinational pro
jects are also in various stages of development according to a statement by
Corporación Andina de Fomento . Among them are pharmo- chemical industries ,
telephone and communications equipment , food processing, glass , paints and
natural pigments , inks for the printing industry , cosmetics , linen thread and
cloth , optical lenses, domestic stainless steel products , locks , agricultural
implements , boilers, furniture, and furniture parts . Some of these items, as
well as others, are already subject to little or no custom duty ; others are in
cluded in a program to gradually reduce and finally eliminate duty .
THE METALLURGICAL INDUSTRY IN THE ANDEAN PACT NATIONS
Almost simultaneously with President Allende's visit to Ecuador ,

Colombia , and Perú, the first meeting of representatives of the metallurgical
industries of the Andean Pact nations was taking place in Santiago, Chile . The
delegates to the meeting agreed to form a Confederation of Metallurgical Indus
tries . Several agreements were made regarding quality and technical standards
for exporting products.
The Executive Secretary of the United Nations Commission for Latin

America envisions very good prospects for the immediate future of themetal
lurgical industry in the Andean Subregion .
The general economic development of the Andean Pact nations has

increased demand for capital goods and allied products and has had a vitalizing
effect on the growth of the metallurgical industry in these five countries . Pre
liminary estimates indicate that the demand for metallurgical goods, which at
present represents 18. 5 % of the total demand for manufactured products , will
most likely reach 25 % by the late eighties.
As individualmarkets , the Latin American countries could not jus

tify the manufacture of all sorts of capital goods, even consumers goods, on
the massive scale of industrial production typical of the highly developed
nations where there is extensive use of machinery . The organization of the
Andean Subregion Pact has created concrete possibilities for this type of pro
duction . The programming of these sectorial industries will be determined by
many factors, but the overall prospect is highly favorable for the multinational
initiatives now in progress as well as the ones contemplated for the future.
* * *
GOVT PUBLS GOVT PER
DEADI. G ROOM
CORFO
No. 87 October 20, 1971
* THE CHILEAN ECONOMY DURING THE LAST FEW MONTHS

* CHILE HOSTS III UNCTAD CONFERENCE AND TRADE FAIR
* FOREIGN TRADE
* AGRICULTURAL PRODUCTION INDICATORS FOR 1971-1972
* CHILE SIGNS AGREEMENTS WITH BULGARIA AND HUNGARY
* BRIEFS
THE CHILEAN ECONOMY DURING THE LAST FEW MONTHS
From reports gathered by the Central Bank of Chile ,

the National Institute of Statistics ( INE ) and the Manufacturers '
Development Association (SOFOFA ), the pattern of the Chilean
economy during the last few months may be summarized as
follows:
There has been a marked slowdown in inflation . The
consumers price index rose by 1.1% in August of this year com

pared to 2.5 % in the samemonth last year. During the first
8 months of this year the index rose by 12. 7 % compared to
29.5 % during the same period last year . The decline in the
rise in wholesale prices has also been spectacular: they rose
by 10.1% during January - July of this year compared to 27.5 %
during the same period last year .
Industrial production in August 1971 was 17.3 % higher

than in the same month last year, while the average increase
during the first 8 months of the year was 7.8 % higher.
As a means of coping with the housing shortage, the

Administration announced that 100 , 000 dwelling units would
be constructed during 1971. Between January and April ,
30 , 046 units were started .
TY
OCT 2 9 1971
LUNARY

-2
A recently conducted poll indicates that the population

of Greater Santiago rose to approximately 3 million inhabitants ,
a 3.8 % rise over the June 1970 figure. During the same period
however, the labor force grew by 5.1% and employment grew by
7.1% . The poll also showed the creation of 73, 100 new jobs in
the Greater Santiago area between March and June of 1971.
The unemployment rate registered in the December 1970

and March 1971 surveys was 8 % . In June of this year it went down
to 5.2 % , and in September it dropped to 4. 8 % , the lowest leve
since 1956 .
CHILE HOSTS III UNCTAD CONFERENCE AND TRADE FAIR
The Third Conference of the United Nations for Trade

and Development (UNCTAD III ) will open in Santiago , Chile in
April 1972. One hundred thirty - nine countries and more than
2 , 000 people are scheduled to attend this important Conference.
The Government of Chile is also organizing an Inter

national Fair for Trade and Development scheduled to take place
in Santiago at the same time as the UNCTAD Conference. Parti
cipating countries will show samples of their cultural, geographic

and commercial life , thus contributing to better mutual knowledge
and understanding. This Trade and Development Fair will further
provide an excellent opportunity to see what can be done materially
towards strengthening trade relations, especially among develop
ing nations.
FOREIGN TRADE
SHIPPING : JANUARY - JULY 1971
During the first 7 months of this year, exports reached

a value of $ 654 . 7 million , or $ 47 . 4 million less than the same
period last year . This decline is the result of a drop in copper
prices. The average CIF price for a shipment from January to
July 1971 was 49.4 ¢ per pound in comparison to 69.5 € per pound
for the same period a year ago .
-3
There were notable increases in the export of nitrates

and iodine , Not only were nitrate exports up , but iodine brought a
better price on the world market, a boon for Chile , the world's
second largest iodine producer.
Between January and July 1971, agricultural exports de

clined $ 3 . 3 million over the same period last year, mainly the
result of the reduction in shipments of wool ($ 2.7 million ) and onions
($ 1.5 million ). Fresh fruit exports registered a gain of $ 1. 4 million ,
however .
AGRICULTURAL PRODUCTION INDICATORS FOR 1971-1972
The Ministry of Agriculture has announced that food pro

duction is expected to be normal for the 1971-1972 season , despite
a hard winter . Although statistics concerning cultivated areas and
yields are not yet available , according to figures released by the
Banco del Estado , fertilizer sales are up 13 % over the same period
last year. Agricultural credits granted by the Banco del Estado
have risen to E °707 million during the first half of 1971, and loans
for machinery from Corfo have risen from E °14 to E °23 million .
CHILE SIGNS AGREEMENTS WITH BULGARIA AND HUNGARY
Representatives of the Governments of the People's

Republic of Bulgaria and Chile recently signed an agreement grant
ing Chile a $ 20 million credit to be repaid over a 12 year period at
2.5 % interest. The loan will be used primarily to import machinery
and other equipment, and Corfo technicians are already studying a
planning and investment program ,
Kurt Dreckmann , Executive Vice President of Corfo , and

Mr. Benjamin Varon , Subdirector of Technoexport, the Bulgarian
Foreign Commerce Agency, recently signed an agreement in
Santiago , establishing the conditions of the technical assistance
pact by which Bulgaria will provide Chile with an onion dehydrating
plant and technical assistance in assembling and operating it . The
plant will be built in the city of Llay - Llay , near Valparaiso .
Hungarian Vice Prime Minister Matyas Timar, during

-4
his recent visit to Chile , signed an agreement with the representatives

of Chile , under which Hungary is granting Chile a $ 15 million credit,
supplying Chile with basic pharmaceutical products and cooperating
on the installation of facilities for the manufacture of medical supplies ,
educational materials and buses .
BRIEFS
** The forthcoming 1971 International Trade Fair (FISA )

to be held October 28 through November 14 in Santiago de Chile,
is expected to be quite successful. Representatives from 14 countries
and official agencies are attending . Chile will be principally repre
sented by Corfo , the National Telecommunications Enterprise, the

Banco del Estado and the National Petroleum Company .
** The Inter - American Development Bank has allocated

$ 16 , 120,000 for reconstruction and aid to the areas devestated by
last July's earthquake .
** In a press conference called October 5 , fifty delegates

to the Regional Conference on Electric Power (CIER ), commented
on the importance of the event, which was held in Santiago from
October 4 to 8. The CIER is primarily concerned with compiling
and updating technical information and experience in the distribution
of electric power throughout Latin America .
GOVT PU.LO
READING ROOM GOVT PER
CORFO
No. 88 November 4 , 1971
* NATION'S ECONOMIC SITUATION SUMMARIZED

* INDUSTRIAL CELLULOSE PLANT PLANNED FOR PANGUIPULLI
* JOINT PERUVIAN - CHILEAN FISH MEAL PLANT
* SAVINGS ACCOUNTS REGISTER STEADY CLIMB
* CHILE - URUGUAY TRADE GROWS
* TECHNICAL - AGRICULTURAL COOPERATION BETWEEN ROMANIA
AND CHILE
* EMPREMAR TO ADD TO ITS COASTAL SHIPPING FLEET
* PLANS FOR INCREASED DIVERSIFICATION IN MINING AT ATACAMA
* MAJOR CHILEAN EXPORTS
* MOBILE CLINIC FOR RURAL RESIDENTS
* BRIEFS
NATION'S ECONOMIC SITUATION SUMMARIZED
Gonzalo Martner , Director of the National Planning Bureau (Odeplan ),

outlined Chile's general economic situation in a recent interview . Odeplan ,
a former Corfo affiliate , was placed under the administration of the office
of the President in 1965. It is in charge of mapping out the nation's economy

and making it an important instrument for development of the nation's re
sources and basic services .
Mr. Martner described the three sectors of the nation's economy as

the social (state owned ) , mixed ( a combination of state and private owner
ship ) , and private sectors. The first includes the nation's basic wealth
and large financial holdings, its minerals , banks and insurance companies,
foreign trade and large businesses of national importance, transportation
and the cement industry, and others . The mixed area will be flexible , and
both parties will be drawn together by the free recognition of opportunities to
work on jointly . In some cases the Government will ally itself with foreign
capital and /or companies that can contribute to new technological advances . In
others it would be with national sources working toward the same goal.
***
luvun
IZOL S LAON
WISEANO VNVIONI
Issued by CORFO Corporación de Fomento de la Produccion
-2
The private sector itself includes small and medium size industry,
small and medium scale mining operations, cooperatives or other agri
cultural settlements as well as small and medium size individual farms.
According to the Popular Unity Government, of approximately 35 , 000
businesses throughout the country , only 150 to 200 qualify for incorpor
ation into the social and mixed sectors. The rest will continue opera
tions as privately owned businesses, receiving low interest credits , re
vised tax treatment and other benefits that will, in fact, free them from
the disadvantageous position they had previously vis a vis the monopolies.
Small and medium size businesses will continue as part of the private
sector ; only a few distributive firms will be transferred to the social
sector, and it is expected that this transfer, already begun in the textile
industry , will be completed by the end of the year.
Mr. Martner also stated that economic stagnation , found in mod

erate to large size businesses, is not found in industry . Recent reports
show increases in industrial output . From March 1970 through March
1971, industrial production rose 7.1% , and there were indications of new
increases between April and May . We feel , he continued , that most
businessmen want to cooperate in boosting production (and there are few
examples of reticence or sabotage ). After all, Popular Unity policy
offers the private sector more than in the '60's . It offers a stable and
growing demand for goods. All indications seem to point to the fact that
from 1972 on, once the new economy is fully organized , many companies
will get back their investments on expansion facilities .
Regarding the capitalization proposal before Congress, it is felt that

it shows great initiative and will promote domestic savings . The fund will
be financed by contributions from private business based on gross value
of the company. Naturally , not all companies will make contributions as
a limit has been set , exempting companies with assets below a certain
level. This fund will be used to finance useful industrial projects , and
will be administered by representatives of both the workers and the State .
Workers , too , will contribute to such projects, through public housing pro
jects . This year between 70,000 and 80, 000 public housing units are ex
pected to go up . and workers will purchase them with savings . Moreover,
other voluntary savings systems that favor workers are being studied . An
example is a system of saving for travel and another for the purchase of
- 3
household goods .
Naturally , creation of a savings fund will depend on what happens in

Congress. It is hoped that the enthusiasm voiced by various political
groups will permit passage of such a bill .
The economic results achieved during the first half of 1971 are highly
satisfactory . Inflation has been significantly reduced ; rising prices have
been checked despite the influence of price hikes on imports such as tea ,
sugar , etc. In the beginning of June the cost of living index rose 8. 9 % as
against 21. 5 % during the same period in 1970 .
National production is up. Copper production rose 16 % between

January and April of this year despite difficulties at the Teniente Mine.
Production of nitrate rose to 277,000 tons, and a 35 % increase over last
year's figure is expected for 1971. Coal production is also up substantially .
Climbing industrial production reflects the demand created by the redistri
bution of capital and initiation of the housing program ,
Although there are few precedents to confirm this phenomenon fully ,

information recently released by the Minister of the Economy based on
surveys in specific branches of industry , as well as direct information
from the Companía de Acero del Pacífico (Pacific Steel Company, Cap )
and the Industria de Neumáticos ( Tire Manufacturing Industry , Insa ), in
dicate that from a position of widespread stockpiling by producers and dis
tributors, the situation has been reversed and existing stockpiles have
been almostdepleted . This is especially true in the field of durable goods ,
creating the objective conditions for production increases , and it is to
ward that end that the economic policy is being geared , to be most
effective, even to the point of establishing production norms in certain

industries, which have not been producing at full capacity .
One case in point is that of Cap , which had a large stockpile that
has not been distributed . Recent purchases totally depleted existing
reserves, necessitating the temporary importation of specific products

despite the fact that the industry is operating at full capacity . This ex
plains the recent increased demand in the machine and metallurgical
industry , and in the field of construction . Such increases are still not
-4
reflected in the latest statistics . A similar situation holds true in Insa ,

where shifts have been initiated round - the - clock to keep pace with grow
ing demands.
This economic upsurge is reflected in recent reports on production
for the month of March . The Sociedad de Fomento Fabril (Manufacturing

Development Association , Sofofa ), a private organization , for example ,
registered a 41.6 % jump in production over the previous month . And even
if such statistics reflect but a seasonal gain , there are clear indications
of strong economic recovery in the specific fields mentioned .
The National Statistics Institute has released the following figures

on increases in production for a three-month period this year in compari
son to the same period in 1970 .
Percentage up over last year
Sugar 28 %
Pastas 37 %
Beer 17 %
Paper 17 %
Tires 22 %
According to a detailed analysis conducted by Sofofa , it was found

that production increases are most visible in those industries which have
granted workers' wage demands , and it pointed to the following industries
and their production increases for February 1971.
Foodstuffs 38. 4 %
Textiles 83. 7 %
Clothing 165.9 %
Furniture 189.6 %
Plastics 47. 2 %
Electric household appliances 271.4 %
The construction industry on the other hand as of March 1971 had

still not reflected the same economic resilience . However, there are
-5
a few increases that can be pointed out .
Increase over the same period last year
Cement (non -metallic industry ) 3. 0 %

Glass 17.7 %
Wood 6.6 %
With regard to agricultural production , crops planted in 1970 for the

1971 harvest are expected to be up approximately 5 % over last year . Live
stock production is more difficult to predict. The Agricultural Planning
Bureau (Odepa ) estimates that production will climb anywhere from 2% to
11 % . Mr. Martner stated that if one uses the increase registered in the
first three months of 1971 as an indicator, then production will be up 3 %
over 1970 .
The social climate appears to be better now than

in previous years .
The number of strikes has dropped , and there have been none during the
first six months of this year in the copper , nitrate and coal industries, and
in public services, whereas previous years have seen long and bitter strug
gles in these sectors that seriously affected the nation's economy. This
situation is the result of a number of factors, a major one being the confi
dence in the government held by the workers , the increased buying power
of the wage earners, and the growing awareness of the people as to their
responsibilities in this historic period within our country .
INDUSTRIAL CELLULOSE PLANT PLANNED FOR PANGUIPULLI
Japanese technicians from the Marubeni- Li Co. , Ltd. of Japan

are studying the feasibility of installation of an industrial cellulose plant
in the Panguipulli region of Valdivia Province . This study is the result
of an agreement between the Japanese and Chilean governments .
Preliminary plans, expected to be completed by the end of the year ,

call for a $ 50 million investment, apart from the complementary instal
lations such as port facilities, a highway and an electric power plant.
The technicians have been highly impressed by the area's natural

-6
resources . Corfo sought the services of Japanese experts because they

are known for their wide range of experience in the short fiber cellulose
industry .
JOINT PERUVIAN - CHILEAN FISH MEAL PLANT
Peru and Chile are proceeding with plans for construction of a

fish meal processing plant in Peru . The announcement was made in Lima
by Humberto Martones, a member of the Chilean cabinet , during a 4 - day
official visit to Peru . A statement issued by both governments released
following his visit , outlined coordination of activities involved in the pro

cessing and sale of fish meal. It further called for stepping up scientific
research on specific marine species, especially the " anchoveta , a small
fish found in the seas off southern Peru and northern Chile .
Martones described the talks as fruitful, and announced that the
Peruvian Minister of the Fishing Industry is expected to visit Chile some

time in December , where the talks will continue ,
SAVINGS ACCOUNTS REGISTER STEADY CLIMB
The President of the Central Bank announced that the sale of Adjust
able Savings Certificates (Car ) from their initiation in 1966 to October 1970
amounted to E ° 448 million , Between October 1970 and October 1971, they
rose another Eº567 million , bringing the total to E ° 1, 015 million . He pointed
out that this was a very positive indication of the people's confidence in the
nation's present and future.
Funds from the sale of these bonds are earmarked for investment in
and for financing of projects designed to expand many enterprises. Two

hundred fifty million escudos have been allocated for reinvestment in the
acquisition of durable goods, i. e , assigned to factories that produce tele
phone cables, railroad materials , transformers , etc. This is intended to
permit Chilean products to compete on a more equal footing with foreign

products which , owing to their greater resources and capital, have been
able to get more favorable credit. Moreover , Corfo has allocated 260 mil
lion escudos for distribution among its affiliates for reinvestment. Likewise ,
Cap has been granted E °320 million to assist in its plans for the expansion
— -- --
-7
of its operations .
CHILE - URUGUAY TRADE GROWS
Uruguay's Minister of Industry and Trade, and Chile's Minister of

Foreign Affairs, signed a 17 - point agreement for their respective countries,
calling for active cooperation in strengthening commercial bonds between
Latin American nations within the framework of the Latin American Free
Trade Association (LAFTA ) .
Uruguay will import a number of products from Chile, including

fishing vessels , railroad materials , agricultural equipment and other
products . Uruguay will in turn sell 24 , 000 tons of rice and other pro
ducts to Chile . Both governments further reiterated their right to explore,
exploit and protect the ocean and the sea bed up to 200 miles off their re
spective coasts .
TECHNICAL - AGRICULTURAL COOPERATION BETWEEN ROMANIA AND

CHILE
The Romanian Ambassador to Chile recently paid a visit to one of

the Agriculture and Livestock Research Institute's installations (Inia ) to
familiarize himself with its functions and operation , with a view toward
future technical cooperation between the two countries in this field .
Inia was created by the Chilean Government, in part with funds from
the Rockefeller and Ford foundations and the University of Michigan . Great
Britain has donated equipment used in poultry research facilities.
MAJOR CHILEAN EXPORTS
The Central Bank of Chile has released a report on the major

agricultural, livestock and marine exports from 1968 through 1970 .
The figures listed below are in thousands of dollars (US ) .
1968 1969 1970
Wool, raw 5 , 912.9 7 , 836.7 6 , 399.1

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Lumber 3 , 121.0 6,427.9 7 , 846.0

Shrimp, frozen 3 , 536.9 2,698.0 2 , 5 14,9
Lobster , frozen 2 , 150.5 3,033.3 2 , 759.3
Bonito , frozen 70,5 0.3 16.7
Seaweed 591.1 1,053,6 1 , 394. 9
Grapes 2,839.1 3 , 378 , 2 4 , 032.6
Apples 2,689.8 2 , 365.0 3 , 480.8
Onions 2 , 213.2 1, 976.3 3,6 10.3
Beans 2 , 142.6 1 , 170 , 3 2,634 , 8
Nuts , shelled 926.4 926.4 841, 8
Mellons , Honey Dew , fresh 735.9 604.4 777.1
Prunes 922.9 591. 9 752.4
Pears, fresh 569.1 783.7 931. 3
Garlic , fresh & dried 668.4 639.5 747. 7
Peaches, fresh 495. 2 5 18.4 542.9
Chick peas 65 1.4 109.0 72.5
Mushrooms, dried 226,6 253.0 272.0
Plums, fresh 401,4 360.3 288.5
Almonds, in shell & shelled 491, 2 235.0 208,8
Barley 54.1 5 10. 2 6 13.4
Cherries 98,4 150.7 248.9
Lentils 122.1 97.0 142 , 3
Large lentils 517.2 293.0 1 , 774.4
Honey 262.6 202.1 40,4
Bee's wax 510,1 487.9 396.3
Mutton , fresh & frozen 103.8 100. 7 3.2
Sheep hides , uncured 940.0 990.6 885. 9

Racehorses 578.9 694.0 477.9
Quillay bark 315.8 399.1 1 , 023.8
EMPREMAR TO ADD TO ITS COASTAL SHIPPING FLEET
With the rise in the cost of surface transportation , the demand on

coastal shipping facilities has soared , and the director of the State Mari
time Enterprise (Empremar) has urged the Minister of Public Works to
approve the purchase of five second - hand vessels .
Among the countries which have expressed interest in selling vessels

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to Chile are Brazil , Poland and the Soviet Union . Because of the immedi
ate need to solve the increased demand for ships to handle coastal shipping
Empremar suggested that second -hand vessels be acquired rather than wait
for construction of new ships. It has requested the purchase of two 7 , 000
to 8,000 - ton vessels for the run between Puerto Montt and Punta Arenas ; a
300 - passenger ferry for the same run ; and a large ferry for the high seas ,
for the Quellón - Chacabuco trip .
PLANS FOR INCREASED DIVERSIFICATION IN MINING AT ATACAMA
Corfo's Mining Operations Committee, recently set up in Copiapó,

announced plans to prospect and mine the rich , and until now , virtually
untapped mineral deposits in the Huasco Valley and throughout Atacama
Province, famed for its large iron ore mining operations, primarily
destined for export. The Committee's aim is to diversify mining in this
area , and open up new pits thereby creating new sources of employment
there.
A major part of these untapped ores lies in the Huasco Valley of

the Huasco and Freirina departments, where there are rich graphite
deposits, while aluminum sulfate deposits have been located in Domeyko .
Cobalt and titanium deposits are also being studied . The Corfo committee
feels that prospects are good for the mining of other minerals , and should
be investigated . Plans for carrying out this diversification , part of the
Administration's policy of using the country's natural resources, are
moving forward .
CENTRAL BANK CREDIT LINES OPERATIONS
The Central Bank of Chile accepted the proposal of the Societe

Generale de Banque to extend up to 30 June 1972 the deadline for open
ing Documentary Credits under the credit granted by a consortium of
Belgian banks . The new date for use of the credits has been extended to
31 December 1972. It was further decided to accept the proposal to in
crease the total credit from Belgian francs 100 to 150 million .
The following bank credit lines granted were also approved : The
Banco Nazionale del Lavoro, New York ; the Banque Commerciale pour
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L'Europe; and the Moscow Narody Bank, Ltd. , London , for $ 3 million
each . The Banco Urquijo , S. A , of Madrid is also extending a credit
line, the final details of which are still being worked out .
MOBILE CLINIC FOR RURAL RESIDENTS
This month a modern mobile clinic will begin operating for rural
dwellers in the areas around the city of Castro on the island of Chiloé ,
in southern Chile . The unit will be equipped by the local hospital in
Castro . This area is exceedingly isolated owing to the lack of adequate

roads and its rugged topography. The clinic will be set up in a Mercedes
Benz tractor - type chassis imported by Corfo expressly for service in
this remote area . It is equipped to cross small rivers and to tackle
terrain inaccessible to other vehicles, especially during the winter months.
The unit will operate within a vast rural area providing curative , as
well as preventative medical service to the new - born and post - partum
cases in regions where there is no hospital or clinic . It will also treat
cases of infant diarrhea , a major cause of infant mortality , and operate

as part of the Administration's campaign against respiratory illnesses,
common in rural areas .
BRIEFS
** An agreement for the sale of $ 300 million worth of Chilean iron

ore to Japan was recently signed by representatives of the two governments .
** The Government of Chile has informed the United States Depart

ment of State that it will assume responsibility for the liabilities of the
former U.S. copper companies in Chile. These debts amount to more
than $ 700 million , The announcement was made by Chile's Under - secretary
of Foreign Affairs.
** The Chilean Government has contracted an English firm to study
the possibility of dredging Chile's major port basins in order to make them
more accessible to large vessels . Because of Chile's geographical form
ation , sledge and sediment constantly accumulate in the harbors and at the
mouths of the rivers that empty into the sea , hindering shipping and limit
- -
-11
ing the tonnage of vessels that can navigate freely .
** One of the lowest figures for unemployment since 1956 was reg
istered this past September , when the unemployment index hit 4 , 8 % .
This represents 3.6 % unemployed and 1.2 % looking for work for the first
time. These figures were released by the Institute of Economy and Plan
ning of the University of Chile , which regularly conducts surveys on the
unemployment index . Industry registered a 33 % upswing in employment
figures for the month of September over the same time last year , and a
25 % rise for July 1971.
** The Minister of Mines, recently inaugurated a maritime oil

terminal in Quinteros . This modern installation is one of the largest
and most efficient facilities of its kind in the world .
** A metallurgical center, designed to raise the quality of national

production was recently inaugurated by President Allende in Santiago . This
center , one of the largest of its kind in South America, is the result of a
cooperative effort of the Chilean Government, Corfo , the Pacific Steel Co. ,
the Industrial Association , the United Nations Program for Development and
the U.N. Organization for Industrial Development.
** The Chilean Congress approved the setting up of development

companies to handle the areas of Valparaiso and Aconcagua , and
Coquimbo and Atacama. The idea emerged following the latest earth
quakes in Chile . A law , creating a permanent body empowered to act
in any part of the country in the wake of a natural disaster, was recently
passed by Congress. These companies will be in charge of initiating re
construction and assistance in those areas affected by the catastrophe.
** The head of Chile's Central Bank's Development Department

announced that the Central Bank and the National Planning Board will
conduct a nationwide survey to determine the nation's export potential,
and seek new markets for Chilean products abroad .
** The Automotive Department of Corfo released the categories and

names of foreign firms submitting bids for operations in Chile . The three
categories are for the manufacture of small and medium size passenger
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vehicles, bus and truck chassis .

Bids were submitted by Pegasso of Spain , Citroen and Renault of
France, Volvo of Sweden , Peugeot of Fr nce, Fab Famus of Yugoslavia ,
Nissan of Japan , Leyland of Great Britain and Fiat of Italy .
The automotive commission of Corfo will prepare a technical report
for the Special Commission , which will submit final recommendations to
President Allende. The President will announce the companies awarded
contracts .
** Poland has granted Chile a $ 10 million credit for the purchase of

capital goods in Poland . The agreement was signed in Santiago , Chile by
the chairman of the Polish Central Bank and the head of Chile's Central
Bank .
** Canadian and Czechoslovakian trade delegations are in Chile to

discuss the possibility of cooperation on various Chilean industrial pro
jects .
The Canadian delegation , headed by the director of the Research
Institute of Hydro Quebec, includes representatives of Hydro Canada, an
electric power company , and the Canadian Minister of Industry and Trade.
The delegation will offer its services in the field of research and will ex
change information and impressions on the production and distribution of
electric power with Chilean experts .
The Czechoslovakian Minister of Foreign Trade , who heads his
country's delegation , will sign a Commercial Agreement and a Scientific
and Technological Cooperation Treaty between his nation and Chile , in
Santiago . Members of the Czech delegation include the head of the Minis
try of Foreign Trade, the Director of the Legal Department, and the
Director of the Commercial Bank of Czechoslovakia .
** The five nations that make up the Andean Sub - Regional Market
will export a total of (US ) $600 million worth of merchandise to Japan
during 1971. Chilean economist Juan Somavía , President of the Managing
Board of the Andian Pact, said that exports will be higher than the $ 517
million exported by Japan to this area . Japanese exports to Colombia ,
Chile , Ecuador, Peru and Bolivia will hit $ 200 million in comparison to
$ 184 million last year .
A permanent consultation system has been set up between the five
Latin American countries and Japan . Early in 1972, a joint commission
will begin discussions on matters of mutual interest. This December a
Japanese commercialmission will visit Chile and the other four Andean
Pact nations for initiation of discussions ,
CORRECTION
*** In Economic Notes # 86 , the article on RECENT DEVELOPMENTS

AT CAF (page 3 ) inadvertently omitted Venezuela in listing the members of
the Corporación Andina de Fomento .
Reading Rom LA
, GOVT PER
GO V T PU LS DEPT
B
CORFO
No. 89 November 23, 1971
* RENEGOTIATION OF CHILE'S FOREIGN DEBT

* STATEMENT BY PRESIDENT OF CENTRAL BANK ON SHORT - TERM
DEBTS
* PRESIDENT ALLENDE IN TELEVISED U.S. APPEARANCE
* BRITISH CREDIT LINE FOR CHILEAN STEEL COMPANY
* BRIEFS
RENEGOTIATION OF CHILE'S FOREIGN DEBT
The following is an unofficial translation of the text of President Salvador

Allende's statement of November 10 , on the renegotiation of the foreign debt.
The Government of Chile has decided to renegotiate the foreign debt to

meet adequately the interests of both the nation and its creditors .
Previous administrations have incurred more than $ 3,000 million in

debts and this is without including $ 728 million owed by the copper compa
nies , thus making Chile --along with Israel--the nation with the highest per
capita national debt in the world , and committing approximately 40% of its
income arising from exports from 1971 through 1973 ,
Despite this , until now , the Popular Unity Government has rigorously
fulfilled the commitments incurred in the past and reiterates its firm inten
tion of continuing to fulfill them .
The government of any state will understand that in the exercise of its
sovereignty, it can and should adopt measures needed to protect its develop
ment and the standard of living of its people . The United States, in order to
confront its own balance of payments crisis , adopted unilateralmeasures to
ward this end . The Chilean Government, however , prefers not to choose this
path ; and it is for this reason that the Cabinet , headed by the President of the
Republic , has decided to call on its creditors to seek , by renegotiation , a new
structure for the maturity and consolidation of its debts, keeping in mind the
following facts :
INDIANA UNIVERSIT
DEC 2 - 1971
Issued by CORFO Corporación de Fomento de la Producción LIBRARY
*************
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1. - The economic policy followed until 1970 led to a progressive

external indebtedness. This growing indebtedness reached crisis pro
portions in the last few years and has created a difficult situation for
the coming years . The amount of the accumulated foreign debt means
a drain on foreign exchange through amortization and interest during

1971, 1972 and 1973-- on the order of $ 300 million during 1971, and $ 400
million for each of the two following years . The latter figure represents
exports and reflects an

approximately 40% of the income derived from
unusual degree of indebtedness that immobilizes such a sizeable propor
tion of income that it could pa ralyze the country's economic development
and prevent service of the foreign debt itself.
2.- However, the country has continued rigorously to fulfill its

financial commitments during 1971, even when it failed to receive the
dividends and taxes from the copper companies --a figure in excess of
$ 100 million -- earned from operations prior to their nationalization . We
must add to this the fact that the U.S. banking system has closed credit
lines amounting to $ 190 million , partly because of the Edwards Bank's
failure to fulfill its contracted obligations .
To this we add the vertical fall in the international price of copper ,

resulting in a $ 150 million drop in available foreign exchange during 1970 .
3. - It should be pointed out that while scrupulously fulfilling the ser

vice on its foreign debt, Chile has had to increase imports because of eco
nomic reactivation , an 8 % expansion of the gross national product, and a
better distribution of workers ' incomes .
4. - We must also bear in mind that, as a result of the previousmon

etary and credit policy , short-term commitments contracted by private
businesses with the international financial system rose to a sum in excess
of $ 100 million .
5. - We must also stress the positive and unprecedented fact that

during the last six months the accumulated foreign debt has been redu
ced , further explaining the drop in available international reserves .
6.- The above shows that if the accumulated debt is not renegotiated ,
Chile will face serious difficulties in its balance of payments, difficulties
not susceptible to correction through partial internal change in its foreign
trade and exchange policy .
As has been shown and recognized by international bodies, the real

-3
and effective cause of the deficit in the balance of payments stems directly
from the heavy burden of the service of the foreign debt.
The Chilean Government is certain that national and international pub

lic opinion will understand that any underdeveloped nation that has accumu
lated a debt of the relative magnitude of ours , and that at the same time is
experiencing a drop in its traditional income, must initiate severe restric
tions to be able to continue its development process. It is our duty, there
fore, to explain the situation responsibly and to reiterate our willingness to
comply strictly with commitments incurred by previous administrations ,
under conditions that are compatible with the needs of the Chilean people.
STATEMENT BY PRESIDENT OF CENTRAL BANK ON SHORT - TERM DEBTS
With reference to the announcement by the Government of Chile ex

pressing its intention of renegotiating Chile's external debt with its creditors ,
the President of the Central Bank has stated that debts with foreign banks,
originating in the financing or refinancing of short - term commercial trans
actions and charged to lines of credit, as well as other short - term bank credits,
will not be included in the renegotiation . For this reason ,
obligations of
this nature incurred by the Central Bank , Chilean commercial banks , or
Chilean enterprises now valid , or new ones to be contracted , will continue to
be paid when due, as has been done till now . Furthermore , Chile will also
continue to meet its short - term obligations to suppliers .
PRESIDENT ALLENDE IN TELEVISED U.S. APPEARANCE
In a recent interview on NBC's " Meet the Press , President Salvador
Allende , referring to Chile's economic situation , stated that the rate of in

flation last year was 37 % ; this year it will be, at most , 18 % . The gross
national product has grown extraordinarily vis - à - vis last year. Industrial
and mining production will each increase by 9% . In the future, industry will
operate at full installed capacity , as compared to only 75 % last year . Allende
admitted that Chile was also facing certain economic difficulties but said that
these difficulties will be overcome through the growing awareness of the
people that a country progresses only by working more and producing more .
In response to a question posed on worker productivity and absenteeism ,

the President explained that last year unemployment reached 8.6 % , while this
year it is down to 5.2 % . He explained that as the workers and farmers
-4
identify with the Government and understand that they are represented by
the people's parties and the unions, this will prove a dynamic factor in
the development of the nation's economy. The President further clari
fied that the Government will not suppressthe right to strike ; and he added
that as the people increasingly identify with the Government, there will
be fewer strikes .
Questioned about the nationalization of North American copper and

other companies, President Allende stated that nationalization or expro
priation does not imply confiscation . Nationalization or expropriation in

volves the idea of indemnities being paid . He added that all the nationali
zations have been conducted within the country's existing legal structure ,
through Congress, in which the present Administration does not have a
majority .
The interests of two private (copper ) enterprises cannot prevail over

the interests of the people , and the United States Government should under
stand the imperative need of the Chilean people to use the surpluses derived
from copper to develop the economy and raise the standard of living of the
people . President Allende also pointed out that Chile's nationalization was
conducted within the framework of the United Nations ' Charter , which
speaks of just nationalization and just indemnity .
The amount to be paid to certain industries and the decision as to

whether others shall or shall not have a right to indemnities, is decided
by a special court , independent of the Executive Power, he explained. He
pointed to the $ 728 million debt owed by former U.S. companies which the
Chilean Government will assume.
In response to another question regarding opportunities in Chile for

private investment, the President explained that those who wish to invest
in industries which do not deform the economy are welcome.
Further, he clearly recognized that such investments are necessary for

the economy, as is technology . Chile is one of the signers of the Andean
Pact and the Cartagena Declaration which establishes the framework with
in which foreign capital can invest in Chile and other countries . But Chile's
attitude toward monopolies which control basic resources or other stra
tegic sectors of the economy is different . I would ask whether the average
American would ac cept foreign ownership of the oil in Texas, or whether
Texans would accept it .
Asked whether his government is Marxist and about the freedom of the
-5
press, President Allende said that his government was not Marxist. My
government is pluralist, he said . It is a Popular Government in which
there are two Marxist and four non -Marxist parties. In my government
there are atheists and believers , Christians and Marxists. My govern
ment, he said , was democratically elected and is operating within Chile's

laws and traditions . In sum , said President Allende, my government is
free, democratic and pluralist ; few times in history has a country been
both revolutionary and democratic and chosen a way so in line with its own
traditions and the needs of its people. Finally , said President Allende,
few countries in the world enjoy the freedom of the press that Chile does.
BRITISH CREDIT LINE FOR CHILEAN STEEL COMPANY
Chile's Compañía de Acero del Pacífico (Pacific Steel Company , CAP )

and Lazard Brothers and Company have signed a L 10 million line of credit,
in London , which will be used for the purchase of capital goods and expan
sion of Chile's steel industry installations , iron ore mines and port facilities .
The agreement has the support of the British Export Credit Guarantee
Department. Head Wrightson Process Engineering will act as management
contractor , placing CAP contracts with British firms during the next two
years . Loans in excess of L 2 million will run for 10 years from the date
of commissioning .
The funds are being provided by a consortium of British banks headed

by Lazards and including the Bank of Scotland , Barclays, Clydesdale, Coutts
and Company, Lloyds , Midland, National Westminster , The Royal Bank of
Scotland , and Williams and Glyn's .
The association between CAP and Lazards began in 1969 when Lazard
Brothers arranged a L 5 million loan for expansion of Chilean steelworks
at Huachipato .
BRIEFS
** Approximately two million people visited the International Trade

Fair of Santiago , which closed recently . Six hundred exhibitors from fifteen
countries participated in the event which ran for more than two weeks, and
featured the exhibitor's latest technical, scientific , social and cultural
achievements ,
-6
For the first time Cuba , the German Democratic Republic, Hungary ,
the People's Republic of China , and Brazil were represented .
** A model of the 9 - ton Fiat truck that the Italian firm will soon be
producing in Chile was recently on display in Casablanca , Chile . The
contract signed between the Chilean Government and representatives of Fiat

calls for an annual production of 3 , 000 units. It is expected that the first
units will roll off the assembly line late next month . Besides production ,
Fiat will set up service centers throughout the country to service the new
line of trucks.
** During its preparatory meeting in Santiago on November 22 , the
Corporación Andina de Fomento (CAF ) elected Juan Somavia , Chile's per

manent representative, as President of the CAF Board and its General
Assembly .
This is CAF's third meeting . The 14 - point working agenda included

a number of reports , as well as approval for agreements with international
institutions such as the Inter - American Development Bank , the Organization
of American States, etc. Several projects and the results of the mission that
CAF recently sent to Europe, Asia and the United States , will be analyzed .
* * *
GOVT PUBLS DEPT
Readeial GOVT PER
CORFO
No. 90 December 9, 1971
* SUMMARY OF YEAR'S ACTIVITIES AT CORFO

* LATIN AMERICAN - WEST GERMAN TRADE INCREASING
* NEW MARKET FOR CHILEAN DRIED MUSHROOMS
* BRIEFS
CORFO OFFICER GIVES SUMMARY OF YEAR'S ACTIVITIES
Corfo Executive Vice - President , Kurt Dreckmann , addressed the

workers of the enterprise and its subsidiaries at a meeting to celebrate
the Administration's first year in office. His address pointed up achieve
ments to date , analyzed errors and reported on future plans within the
Corfo structure .
Mr. Dreckmann began by explaining that, on taking office, the present

Administration encountered a deformed economic situation , which was re
flected in Corfo in the multiple duplication of programs not aimed at economic

development, but, on the contrary , that tended to favor monopolistic groups ,
leading to economic chaos both administratively and financially .
Not only has this situation been overcome but, owing to legal, techni
cal and operational changes , Corfo has become an instrument capable of
handling many difficult situations through the present Administration's new
socio - economic and political program .
Mr. Dreckmann emphasized that Corfo has increased national produc

tion and that coordinated activities with subsidiaries have strengthened the
industrial structure, as well as lessening dependence on foreign interests .
Employment has also picked up, and an increasing number of essential
domestic products are being produced nationally .
He explained that Corfo is the public authority charged with recovering

the nation's basic wealth , i.e. its minerals and agricultural resources, its
fishing and steel industries, among others. Eleven of the country's 20 banks
have been brought into the state -owned social sector , breaking the financial

-2
strangle - hold of the large financial interests . State - owned enterprises are
becoming the nucleus of the socialist economic system and are a dynamic
force for change .
Corfo has also established Sector Development Committees : branches

of the local administrative structure , carrying decisions from the central
apparatus to local levels and making them operational.
Mr. Dreckmann added that as a result of natural disasters, such as the

floods and earthquakes that have recently hit Chile , Corfo has launched an
aggressive industrial reconstruction program , encouraged by the opening of

special credit lines permitting rapid recovery to predisaster production
levels .
Corfo , as one of the State's most effective agencies in enacting

governmental policy , has been given responsibilities of great importance
toward this end . Its powers, its technical and financial structure , and its
accomplishments in the field of the nation's economic and social develop

ment have permitted Corfo to undertake the task of initiating profound trans
formation . It is actively participating in the reactivation of industrial pro
ductive capacity and organizational improvement, as the basis of the social

sector of the economy . All of this will be in addition to Corfo's traditional
functions in the areas of planning , research , and the analysis of natural re

sources; the training and professional improvement of technicians and
other personnel; the development of agricultural, livestock , industrial and
mining sectors ; the creation of new economic fronts and development of
basic sources of fuel and energy ; the increase of systems and of means of
communication and transportation ; creating new markets and distribution of
goods ; increased commercial exchange; and regional development and national
integration .
Corfo's role in stimulating industrial production has meant sweeping

revision and analysis of existing programs, as well as adapting the existing
industrial structure toward overcoming a series of limiting factors that
prevent optimal increases in production at a pace that will permit Chile to
emerge from underdevelopment.
LATIN AMERICAN -WEST GERMAN TRADE INCREASING
Trade between the German Federal Republic and Latin America has
been growing steadily during the last decade. Fifty percent of this Latin
American trade to Federal Germany flows from Argentina , Brazil and Chile ,
- 3
while West German exports are shipped principally to Argentina , Brazil

and Mexico .
The following is a partial list of Latin American -Bonn trade in millions

of dollars .
GERMAN EXPORTS TO LATIN AMERICA
1969 1970 First half 1971
Argentina 180.1 211,1 124. 3

Brazil 253.8 309.8 22 1.6
Mexico 155.9 184. 1 116.9
Venezuela 134. 3 146.1 91.8
Chile 87.5 95.5 47.5
LATIN AMERICAN EXPORTS TO BONN
1969 1970 First half 1971
Argentina 128. 8 172.6 114. 7

Brazil 287.8 308 , 7 176.3
Chile 228.7 252.4 128.9
NEW MARKET FOR CHILEAN DRIED MUSHROOMS
Italy has recently begun importing mushrooms from Chile . The
mushrooms are produced by a cooperative farm community near Panagal

del Laja in south - central Chile, with the assistance of the Chilean Govern
ment's Agricultural and Livestock Service, and Indap (Instituto Nacional
de Desarrollo Agropequario ) .
Members of the cooperative community proudly announced recently

that electricity has been installed in their village thanks to the efforts of
the coop members. They have also organized several local committees to
handle their own affairs , including one group that is working on a system to
provide the nearby village of Panagal del Laja with potable water from their
supply . The community also has a dehydration and canning plant, has set up
several centers for activities for its varied age groups , and
has begun a school for community children ,
The first dried mushroom shipment to Italy was 1, 000 kilos , and plans
-4
call for a 5,000 ton shipment from the next harvest in the spring . This
cooperative also supplies mushrooms to a Santiago plant and is planning
to stock local supermarkets in the area with this specialty .
But the community has its problems, too . The canning plant, which
processes fruits and vegetables in season , has been unable to acquire suf
ficient containers to operate at full capacity . However, it is expected that
Indap will soon be able to provide all the cans needed for full production .
The Italian market was contracted by the Regional Development

Corporation of the Biobio area .
BRIEFS
** The People's Republic of China has purchased 60,000 metric tons

of nitrate :24,000 tons of nitrate of soda potash , 18,000 tons of granulated
sodium nitrate , and 18,000 tons of crystallized sodium nitrate . The con
tract, valued at $ 3 , 320,000 , was signed between Soquimich of Chile and the
People's Republic of China . Delivery will be made during the first half of
1972 ,
** A delegation from the State Copper Corporation (Codelco ), headed

by its Executive Vice President, Jorge Arrate, left for Peking recently ,
where it will negotiate a contract for the sale of copper to People's China .
** A 26 -member delegation of prominent Japanese businessmen , headed

by the Vice President of the Federation of Economic Organizations and Pres
ident of Toshiba , visited Chile recently for talks on possibilities for greater
economic and financial cooperation between the two countries.
** Corfo and Mercedes Benz of Argentina have signed an agreement by

which Chile will acquire 1, 000 bus chassis destined for public transportation .
One hundred have already been earmarked for use in the cities of Santiago and
Valparaiso .
** Construction has begun on a plant that will turn out prefabricated

panels for use in the Government's housing program . The plant was donated
to Chile by the Soviet Union following last July's earthquake .
GOVT PER
SVT PUBLS DEPT Reading
CORFO
No. 91 December 21, 1971
A delegation of Chilean Government officials , headed by Mr. Orlando

Letelier , Chile's Ambassador to Washington ; with Mr. Alfonso Inostroza ,
President of the Central Bank of Chile as its principal spokesman ; and
Mr. Javier Urrutia , President of the New York Office of Corporación de
Fomento , was in New York City for three days, from December 13, 1971,
for informal discussion with members of the United States banking commun
ity , to exchange views and acquaint it with recent measures and plans re
garding the Chilean Government's policy on monetary and financial matters.
A number of meetings were held with individual bankers .
Under joint sponsorship of the National City Bank and the Bank of
America , a meeting took place at National City Bank offices on December
14, 1971. Officers of the two banks and representatives of thirty -nine other
banking firms with interests in Chile attended .
During this meeting it was pointed out that the Chilean economic situ
ation has not been fully reported in the United States ' press, as a direct re
sult of which a distorted picture has been created . It is a fact that during
the Administration's first year in office , the nation's Gross National Product
achieved the highest rate of growth in the last 15 years, inflation has been suc
cessfully checked , and the unemployment rate has been substantially reduced .
A complete and documented account of the country's economic position

and the program for the next five years was given , as well as the proposal of
the Chilean Government for the renegotiation of the country s debt with the
U.S. private financial institutions. Reference was made to the recent announ
cement last November by President Allende on the large foreign debt that the
country had accumulated under pa st Administrations , and calling for a sober
review of the situation . Continuation of the debt at the present schedule would
reduce the nation's import capacity to the point of jeopardizing the normal
functioning of the country's economy and future development .
INDIANA an ?!
DEC 27 1971
1
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The following is a slightly abridged version of a statement made in New

York by Mr. Alfonso Inostroza , President of the Central Bank of Chile .
The Government of Chile , as the President of the Republic announced

on November 9 , has advised all foreign creditors its purpose to reschedule
the plans and forms of amortization of the principal and interest on foreign
debts owed by its agencies and all public and private national corporations .
This decision has been made because continuation of the present rate
of payment of the foreign debt will reduce the country's import capacity
to such an extent that it would jeopardize the normal functions of the economy
and its future development .
Amortization of the debt amounts to 52 % prior to 1977 and , it is esti

mated , will rise to 90 % before 1984. These figures show the high concentra
tion of payment in a rather short period of time, notwithstanding the fact
that there are some credits whose payments stretch on past the year 2000 .
Annual service of Chile's foreign debt commits 35 % of the nation's

export proceeds, and amounts annually -- between amortization and interest- .
to about US $ 400 million .
It would not be realistic or economically sound to devote to these pur

poses such enormous amounts of resources, despite the expressed and sin
Cere desire of the Chilean Government to comply with normal service of the
foreign debt.
The balance of payments corresponding to the year 1971 will show a

considera ble deficit, which can be explained primarily by the regular servic
ing of the debt, and by the fact that despite the greater physical volume of
exports they brought less return owing to the drop in the price of copper,
which is estimated at 41 % in the last 18 months. An additional explanation
of this deficit is the price increase of many raw materials and some other
essential imports and the fact that autonomous capital transactions which in
the past have resulted in considerable surpluses showed a negative balance of
of over $ 100 million during 1971 .
This year's import values are of small significance in explaining the

deficit in the balance of payments , as they register an increase of less than
6 % . This growth in imports was necessary to overcome the production crisis
and the unemployment level that the present government inherited , and it is
also related to the steps taken to control and reduce the rate of inflation .
- 3
This year will end with a reduced rate of inflation on the order of 20 % ,
with a G. N. P. rise of 8 % , and an unemployment level of less than 4.8 % .
All important achievements when compared with figures from previous
years .
Imports necessitated by the increased level of production , as well as

the investment programs being carried out , and other proposed investment
programs, will determine starting with the critical situation of the bal
ance of payments for 1971 -- a continuation of this deficit position until 1974
at least , and low balances of foreign exchange reserves. This will occur
because it is estimated that copper prices will remain at around 46 cents
per pound , and because copper production and exports, although they rise in
these first years, will yield important results only after 1974 ,
In connection with this it should be stressed that actual production in

the large companies during 1970 was 115,000 tons less than the amount
projected in the expansion plans and that only in 1974 will the country reach
the level of production contemplated for 1971.
The other reason for the balance of payments deficit is the large sum
of the service to the foreign debt which absorbs a greater portion of the
additional proceeds expected from the increased export of mineral products
other than copper , and from industrial and agricultural exports .
These factors , plus the firm intention to carry forth the transformation
of the nation's economy in the productive , institutional and financial fields
required for the improvement of the people's standard of living; the per
manent elevation of productivity ; and in its position in the field of interna
tional commerce and finance --has led the Government of Chile to propose the
renegotiation of payment of the nation's foreign debt.
The Chilean Government recognizes that in order to overcome its de

ficit situation in foreign trade, and its difficulties in foreign financing , it should
follow a policy of effective expansion of the country's export capacity and of
an adequate use of the scarce foreign exchange reserves .
Such a policy and the efforts it implies will be made according to the
Government's program of social and economic objectives and within a general
strategy for development that has been formulated and is being carried out.
The main objective of such a strategy is to raise substantially the standard of
living of the majority of the people , which up to now has been undeniably ne
glected . It is hoped to reach that goal within the framework of an effective
democratic system and absolute respect for individual liberty .
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The content of this strategy is based on the importance that has

been given the following factors as causes of Chile's backward economic
and social development: - The exploitation of its natural resources, which
constitutes the basis of the country's exports, by foreign companies ; The
unjust and inefficient land tenure system ; - The prevailing industrial struc
ture, predominantly monopolistic , which has been oriented towards satis
fying the consumption of middle and upper sectors of the population and has
operated on low levels of efficiency ; - A financial system which acted as one
of the basic instruments for the concentration of income and wealth .
After one year of government, it can be said that the program for the
economic restructuring of the country is being accomplished ; and, further
more, results which favor the greater part of the population are evident.
Based on a constitutional reform that was unanimously passed by the

National Congress , the copper companies have been nationalized . Further
more, agreements with the previous owners of the iron and nitrate mines,
and the steel plants, have been satisfactorily reached .
Application of the Agrarian Reform Law , approved by the previous

administration , is serving to accelerate the redistribution of land , abolish
ing large land holdings , and creating a new form of agricultural property
and efficient development .
Key monopolies in certain basic industrial sectors have been incor

porated into the area of social property . In the automobile industry an
international bidding was called in order to reduce the number of auto
factories, to rationalize and raise efficiency . The large number of firms
interested in this bidding confirms the soundness of this policy and the con
fidence that the government program inspires in international financial
circles .
This policy of structural changes has been coupled with a number of

short - term measures aimed at redistribution of ino me, control of inflation ,
and reactivation of the economy .
In order to redistribute income, a new policy of prices and wages was

initiated in 1971. This has permitted the working class -- which in 1970 has
a 51% share of the national income-- to reach a 60 % share this year. The
expansion of the effective demand and the utilization of the preexisting capa
city has led to an 8 % increase in the G. N. P. and more than 10 % in industrial
-5
output. This has resulted in a drop in unemployment to proportions

previously unknown in the country, while simultaneously reducing the
inflationary spiral from 35 % to less than 20 % this year. Agricultural
production shows an increase of 5 % in 1971 over the previous year .
We are fully aware that among the many limitations that must be
overcome in future years , restraints from the external sector hold a
basic position . In effect , it is not enough to modify the existing property
relations in mining , agriculture and industry , and rationalize their con
ditions of production . Wemust also expand the output in each of those
sectors with a view toward their integration in the world market . The
equipment and technology required for this will be on the one hand ,orien
ted to the production of goods for popular consumption ; and on the other ,
to the creation of export surpluses based on the expansion of mining , the
modernization of agriculture, and the selection of a number of special
ized industrial lines .
At the same time, we firmly intend to advance in the substitution

of imports ; attempting to do this with such levels of efficiency that it will
enable the country to participate, at least in certain lines , in the advan
tages of the international division of labor . It is estimated that the need
to invest, in order to reorganize and expand the existing supply of goods,

cannot be delayed. It is clear, however , that it will be necessary to wait
several years for such projects to yield fruit in foreign exchange revenues.
We are convinced that the only alternative that can make Chile a solvent
partner in international markets of goods, capital and technology , is that
which achieves social transformation and modifications of the productive
system according to the abovementioned perspectives. To avoid or post
pone this challenge will lead not only to the frustration of the people , but
also to permanent inability to fulfill its obligations to the rest of the world .
Consequently , renegotiation of our external debt is a necessary step

to modernize and expand the productive system , and carry out the socio
economic changes demanded to give the Chilean society and economy a
new dynamism , Due to the restrictive situation created by the country's
external balance of payments deficit in the next few years , it is Chile's
purpose to adopt decisions that would overcome the structural limitations
that this situation produces. The Government's confidence in the future is
based on the certainty that it can count on the support of the great majority
of the country's workers, in the wealth of its natural resources , and in the
capacity and experience that the people and the technicians have already
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gained in the development of such complex productive activities as the oil

industry , electric power installations , steel industries , copper , iron ,
nitrate and coal mining .
After visualizing the general framework and the main ideas that
guide the strategy of development, it would seem advisable to indicate
the areas of production in which it is hoped to achieve an increase in ex
ports and those in which efforts will be concentrated for the substitution
of imports . It is believed that this would allow a better understanding of
the Chilean Government's intention to follow a strategy in which the effort
of investment in the productive sectors oriented toward export will play a
basic role. Copper will continue to play a fundamental role as far as ex
ports are concerned . Great efforts are being made to increase the tech
nical as well as the organizational level of the enterprises that constitute

the large scale mining industry (Gran Minería del Cobre ). The estimate
is that by 1975 , production goals will approach those originally proposed
in
in the expansion plans that were developed during the last few years,
whic h over $ 500 milli on were inves ted . At the same time, technological
research by Chilean technicians has resulted in a new process for high
quality copper cement . This technique should have a significant influence
on future cost and production levels .
In the iron mining industry, the expansion program for the two great
iron ore deposits ( Romeral and Algarrobo ) will be finished shortly , and ,
by 1974 , production will begin on the third ( Boquerón Chañar ). This
should raise production levels to approximately 15 million tons .
With regard to steel production , the aim is to exceed an output of one

million tons before 1974 to achieve surpluses in finished and semi- finished
products. However, the more important aim is to increase the export cap
acity of the metal-mechanical industries .
It is true that Chile has limited possibilities in regard to the tradition

al copper manufactured products , due to the low capital output coefficient
required by such industries , which serves as a stimulus for its development
in all the important consumer centers even when they are not producers
of copper . However , the same does not hold true with certain new products
of high technology that the country could undertake . For instance, copper
weld wire for high tension lines could be a massive export product of high
value . The quality of Chilean steel due to its purity and lack of industrial
scrap contamination , presents favorable possibilities also for products of
high technology such as special cables , colddrawn bolts , springs, wire cords,
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etc. There are studies being made to recover renium and molybdenum ,
byproducts of copper mining , and the vanadium of the steel industry . These
projects with an approximate total investment of US $ 20 million could pro
duce an annual revenue of $ 20 million ,
In the metal-mechanical and electrical industries there are confirm

ed export possibilities. Steel valves , iron , bronze fittings , compressor
engines , small electric motors, spare parts for automobiles, heavy
metal structures, furnaces , railroad cars, parts and replacements for
railway equipment, seemless tubes and other products will be produced by
a steel specialty plant scheduled to open shortly in the port city of San
Antonio , near Santiago . In agriculture there are also import possibilities
for the expansion of such products as fruits , wines and liquors . Finally , in
the forestry and fishing industries which already have significant exports ,
there are also favorable prospects for their expansion .
There are also concrete possibilities in regard to import substitutions .

For example a high priority project is the improved use of natural gas made
by the National Oil Enterprise (Enap ). This project aims at the use of the
natural gas of the south to be liquified and carried toward the north and cen
tral parts of the country for distribution , with the result of an annual saving
of US $ 56 million gross and US $ 30 million net. Additional advantages
would be secured in the significant decrease in the cost of electrical energy
production , with the additional result of almost double the present refrigera
tion capacity which could be used in the north and central parts of the country
for the conservation of perishable goods . The project would be ready in 1975 ,
requiring an investment of US $ 110 million , of which US $ 60 million would
be for imported components ,
In the metal-mechanical and electrical industries, substitution projects

are being studied that on a short -term basis would mean a saving of approxi
mately US $ 30 million during the next two years .
There are other substitution studies concerning the large scale copper
mining industry , the automotive as well as the agriculturalmachinery indus

try , besides the possibilities that Chile has in the shipping industry .
The above gives a preliminary idea of the type and magnitude of the
capital equipment and technology that the country will have to import in the
shows that the
next few years . On the other hand, in general terms, it
critical period will be during the next three years, which is the time required
for those projects to start yielding results .
-8
To avoid falling once again into the situation that Chile knew in the
past in which service to the foreign debt constituted an important part and
in some periods an increasing one -- of the availability of foreign exchange
for import, renegotiation of the foreign debt, as well as strict discipline in
obtaining new credits , will be an important part of the measures adopted by
the Government , For this , starting next month , a foreign exchange budget
will go into effect . Its basic purpose is the rational and orderly use of the
country's external resources .
Closely connected with this policy are the changes recently introduced
in our exchange system which on the one hand will improve the financial
position of exporters and on the other will use the exchange rate as an effec
tive instrument for a selective control of imports .
OVT PUBLS
TG : DOV
CORFO
January 1972
INDEX OF ECONOMIC NOTES
Number Date Contents
71 January 11, 1971 * Constitutional Reform Project

* Interamerican Agricultural Science Institute
* Automotive Manufacturing Reorganization
* Andean Pact Budget
* Twenty - fifth Anniversary of the Discovery of

Oil
* Briefs
72 January 18, * Mining Exploration in Los Pelambres

1971
* Cattle to be purchased from Holland
* Fixed Prices for Small Mining Companies
* Andean Pact Policy Decided
* Briefs
73
February 1, 1971 * Purchase of Private National Banks Stock

* Loans Extended for University Improvements
* Trans Andean Shipment of Containerized
Cargo
* Chemical Products to be Shipped by Rail
* Development of National Edible Oil Industry
* Briefs
74 February 27, 1971 * Economic Aims of the Government

* CORFO's Budget for 1971
* University Center for Andean Development
* Cuba and Chile Sign Trade Agreement
* Briefs
75 March 5, 1971 * Speech Given by Mr. Alfonso Inostroza ,

President of the Central Bank of Chile , at
the Banker's Club in New York , February
25 , 1971
INDIANA UNIVERSITY
JAN3 1 1972
Issued by CORFO Corporación de Fomento de la Producción LIBRARY
-2 .
76 March 22 , 1971 * Expanded Electronics Enterprise

* New Ministries and Development Plans
* New Copper Sales Operations
* Sectorial Development Commissions
* Domestic Taxi Assembly
* Purchase of Additional Private Banks Stock
* National Commercialization and Distribution
Company
* Briefs
77 April 1971 * Statement on Chile by the Minister for

Economic Affairs , Development and Re
construction of the Republic of Chile to
the Sub - Committee of the Inter - American
Committee on the Alliance for Progress
(CIAP ), February 1971
78 May 3 , 1971 * Formation of Metallurgical Complex

* Development in the Petroleum Industry
* Export of Chilean Fruit
* Commercial Agreement with the People's
Republic of China
* Agreement signed by Bolivia and Chile
* Briefs
79 May 17 , 1971 * President Allende Outlines Economic Policy

at CEPAL Meeting
* Convention of Small Industry and Crafts
Confederation ,
* Development in the Forestry Industry
* World Bank Loan for Fruit and Wine Industry
* Israel Commission Visits Northern Desert
* Briefs
80 May 19 , 1971 * The 1971 Economic Plan of Chile
81 June 14 , 1971 * Agreement Between Nibco and Corfo

* Statement on Ford Motor Co.'s Chilean
Operations
* Import Agreement Between Mexico and Chile
* Chilean Products to Australia and New Zealand
* Briefs
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82 July 19, 1971 * Bases for Automotive Industry Bidding

* Three New Development Plans Announced
by Odeplan
* Chile's International Trade
* Development of Ocean and Fresh Water Re
sources
* Briefs
83 July 26 , 1971 * Economic Highlights of the First State of the

Nation Address by President Salvador Allende
on May 21, 1971
84 August 16 , 1971 * Financial and Technical Assistance from

Socialist Nations
* Fiat to Sell Truck Parts to Chile
* Export of Agricultural Products
* Increase in Sale of Fish Mean and Fish Oil
* Program to Promote Tourism
* Plant for Prefabricated Housing Units
* Briefs
85 September 7, 1971 * Copper Production from January to July 1971

* Unemployment Reduction and Manpower Increase
* Credits for those Affected by Recent Storms
and Earthquake
* Research Center for Mineral Processing
* Modifications of Import Regulations
* Briefs
86 September 22 , 1971 * Chile Controls Inflation

* President Allende Visits Ecuador , Colombia ,
and Peru
* Technical Assistance for the Fishing Industry
* Industrial Protein Committee Formed
* Recent Developments at Corporacion Andina
de Fomento
* The Metallurgical Industry in the Andean Pack
Nations
87 October 20 , 1971 * The Chilean Economy During the Last Few

Months
* Chile Hosts III UNCTAD Conference and Trade
Fair
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* Foreign Trade
* Agricultural Production Indicators for
1971-1972
* Chile Signs Agreements with Bulgaria and

Hungary
* Briefs
88 November 4 , 1971 * Nation's Economic Situation Summarized

* Industrial Cellulose Plant Planned for
Panguipulli
* Joint Peruvian -Chilean Fish Meal Plant
* Savings Accounts Register Steady Climb
* Chile - Uruguay Trade Grows
* Technical- Agricultural Cooperation between
Romania and Chile
* Empremar to Add to Its Coastal Shipping

Fleet
* Plans for Increased Diversification in
Mining at Atacama
* Major Chilean Exports
* Mobile Clinic for Rural Residents
* Briefs
89 November 23, 1971 * Renegotiation of Chile's Foreign Debt

* Statement by President of Central Bank on
Short - Term Debts
* President Allende in Televised U.S. Appear
ance
* British Credit Line for Chilean Steel Company
* Briefs
90 December 9 , 1971 * Summary of Year's Activities at Corfo

* Latin American - West German Trade In
creasing
* New Market for Chilean Dried Mushrooms
* Briefs
91 December 21, 1971 * Renegotiation of Chile's Foreign Debt

An abridged version of a statement made by
Central Bank President, Alfonso Inostroza ,
GOVT PUIS GOVT
READLNG TUOI
CORFO
No. 92 January 5 , 1972
* CHILE SELLS COPPER TO THE PEOPLE'S REPUBLIC OF CHINA

* ARGENTINE - CHILEAN ECONOMIC COOPERATION
* GROWING MARKET POTENTIAL FOR CHILEAN SEA FOOD
* NEWS FROM CORFO
* CORPORACION ANDINA DE FOMENTO PLANS FOR THE FUTURE
* BRIEFS
CHILE SELLS COPPER TO THE PEOPLE'S REPUBLIC OF CHINA
Representatives of the Chilean Copper Company who recently returned

from a trip to the People's Republic of China announced that China will pur
chase 260, 000 metric tons of Chilean copper to be shipped over a four - year
period . Shipments will be 65,000 metric tons annually , payable in L Sterling ,
at a price comparable to that on the London Metal Market. The deliveries
scheduled for 1972 will consist of 38,000 metric tons of blister copper , 18 , 000
metric tons of electrolytic copper , and 9,000 metric tons of copper wire. The
estimated price is in the neighborhood of $ 70 million .
ARGENTINE - CHILEAN ECONOMIC COOPERATION
Alfonso Inostroza , President of the Central Bank , and Albán Lataste ,

President of the State Bank of Chile , released a joint statement to the press
announcing that the State Bank of Chile approached a number of Argentine
banks during the month of November 1971 regarding the acquisition of funds
to purchase food stuffs from the Argentine Agricultural Sales Enterprise .
The banking houses responded favorably to the Chilean request, advancing
the following lines of credit: The National Bank of Argentina (Banco de la
Nación Argentina ), US$ 8 million ; The Provincial Bank of Buenos Aires
(Banco de la Provincia de Buenos Aires ), US $ 5 million ; The Mendoza Bank
(Banco de Mendoza ), US $ 4 million ; The People's Bank of Argentina (Banco
Popular Argentino ), US$ 3 million ; The Transatlantic German Bank (Banco
Alemán Transatlántico ), US $ 2.5 million ; The Argentine Cattlemen's Bank
(Banco Ganadero Argentino ), US$ 1 million ; The Galicia Bank (Banco de
Galicia ) , US $ 1 million ; and the Italian Bank (Banco Italia ) and the Rio de la
Plata Bank (Banco Rio de la Plata ), US $ 350 , 000 . These lines of credit ,
totaling nearly $ 25 million , will be used to purchase food stuffs , principally

meat, from Argentina ,
INDIANA UNIVERS
JAN1 0 1972
LIBRARY
80 Pine Street New York , N.Y. 10005 (212) 344-9800 ************
-2
GROWING MARKET POTENTIAL FOR CHILEAN SEA FOOD
Chilean sea food is considered among the finest in the world . Lob
sters, scallops, shrimp and numerous varieties of fish are internationally
appreciated . It has gained fame principally by word of mouth . Small quan
tities are already on the market in the United States, and prospects appear
good for increased imports of several varieties, as well as the introduction
of a number still unfamiliar to the U.S. palate .
Such delicacies have a definite potential according to a recent survey

made by the Chilean Embassy in Washington . The report indicated that
Chilean producers could supply canned and frozen sea food such as sword
fish , albacore and tuna ,
The chart below shows U.S. sea food imports from Chile in relation to
total sea food imports for the 1968-1970 period .
Product Am't . Value Am't . Value Am't. Value

In thou In thou In thou In thou In thou In thou
sands of sands of sands of sands of sands of sands of
lbs . $ lbs . $ lbs . $
Swordfish , Total 7 , 298 4 , 677 7,407 4 , 998 8 , 778 4 , 973

Albacore Chile
una , Yellow- Total 346 , 234 87 , 810 390 , 242 96 , 166 416 , 979 123, 543
in , Skipjack , Chile
Albacore
Cod Total 221, 424 59, 007 280, 845 65 , 420 323, 458 90 , 874
Chile 95 16
Misc . Total 86,640 20 , 701 88, 922 22, 835 126 , 300 31, 339
varieties Chile 60 8 379 61 1,9 1 331
of fish
Sardines , Total 58 , 831 18 , 780 45 , 360 16 , 254 46,865 19 , 434

misc . va Chile
rieties
Lobster , Total 62 , 476 105 , 622 65 , 208 120 , 846 57, 335 101, 757
Lobster Chile 1 , 496 1 , 370 1 , 335 1 , 393 1 , 129 1 , 167
tails
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Scallops , Total 14 , 581 15 , 709 14 , 322 14 , 653 16 , 829 19,665

Oysters Chile 19 19 15 15
Shrimp Total 189, 452 162, 164 193 , 739 174 , 878 218 , 712 200 , 032
Chile 351 327 391 358 477 486
Shell Total 6 , 876 2,854 9 , 465 4 , 301 14 , 028 7 , 752

fish Chile 75 72 604 556 1,639 1 , 586
NEWS FROM CORFO
According to information released by Corfo's Automotive Division ,

November production of motor vehicles topped 3 , 000. Despite a near para
lysis in the industry early last year , which resulted in a drastic drop in pro
duction , the number of vehicles that rolled off the assembly lines from Janu
ary through October 1971 totaled 21, 118 in comparison to 22 , 218 during the
same period in 1970. Some observers feel that 1971 production may top that
of 1970 .
The Corfo Board of Directors agreed to set up a new company in co

ordination with Industrias de Conjuntos Mecanicos Aconcagua S. A. to be
called Industria Automotriz Arica Ltda . The new company will manage the
General Motors plant in Arica . General Motors announced cessation of its
operations in Chile effective December 31, 1971,
Corfo and its affiliate Socoagro, and the Agricultural and Livestock
Research Institute , have agreed to the creation of the National Livestock
Development Company to help resolve various problems arising from the
need to increase agricultural and livestock production in Chile .
Another new committee is the National Oceanography Committee (Cona ),

composed of representatives of the Fishing Department of the Agricultural
and Livestock Service, the Fishing Industry Development Institute, the Naval
Meteorological Service, the Geological Research Institute (a Corfo affiliate ),
the Catholic and Concepción universities , and the Ministry of Foreign Rela
tions .
Cona will coordinate the research programs, development plans, and
other activities of organizations involved in ocean studies.
CORPORACION ANDINA DE FOMENTO PLANS FOR THE FUTURE
At present Corporación Andina de Fomento (Caf ) is working on 18 pro

jects, including one for the construction of a network of storage silos for
Bolivian rice, and another for the development of a tuna fishing industry in
Ecuador which will include installation of a fishing complex with facilities
for freezing and storing 7,000 tons annually . The latter project is being
-4
carried out by the National Financing Company , an Ecuadorean -Chilean

firm , which will hold a 51% interest in the new industry , and by the
Tarapacá Fishing Company, a Corfo affiliate , which will hold a 49 %
interest .
Other projects include a study of the feasibility of the integration of

air transport services, and a planned coke plant. A working committee
composed of representatives from Chile , Peru and Venezuela is studying
the possibilities for such an installation . The Caf Board has also approved
the increase of credits for the study of the marketing of nonferrous metals
and their alloys to Bolivia , as well as loans for several industrial studies
for that country . Colombia was granted a loan for conducting a program
to assist the system of marketing industrial- livestock products .
BRIEFS
** The National Petroleum Enterprise obtained optimal results from a

new well recently opened in the Tierra del Fuego region . Prospects look
good for locating a field under the Strait of Magellan , where drilling will
soon begin . Enap technicians have expressed optimism over the new well
located 25 kilometers from the present oil field at Angostura .
** The Pacific Steel Company (Cap ) and the Japanese firm of Mitsubishi
Shoji recently signed an agreement for the sale of $ 300 million worth of iron
to Japan over a 10 - year period .
** Chile and the German Democratic Republic have signed a new agree
ment to facilitate trade between the two countries and for technical aid to be
provided to Chile by the GDR .
** Corning Glass is working on a new 100 - inch telescope lens for use
by the Las Campanas Observatory in north - central Chile , atop an 8 , 200 - foot
ridge, 100 miles north of La Serena , The new telescope will be used by both
Chilean and foreign astronomers for study of the heavens of the southern
hemisphere .
** A technical assistance agreement has been signed between the govern
ments of Finland and Chile under which Finnish experts will contribute tech
nical advice on plans for the construction of a cellulose plant in Constitución .
* * *
GOVT PE
GOVT PUELS
TEDi G ROOM
CORFO
No. 93 January 25, 1972
ODE PLAN REVIEWS NATION'S ECONOMIC ACTIVITIES DURING 1971

CHILE ACQUIRES 30 , 000 - TON VESSEL IN SPAIN
CUT - ADMINISTRATION AGREEMENT
YUGOSLAV - CHILEAN TRADE
BRIEFS
ODEPLAN REVIEWS NATION'S ECONOMIC ACTIVITIES DURING 1971
The nation's 1971 GNP rose 8.5 % over the 1970 level, while the GNP
per capita rose 6.2 % . Both figures are the highest in many years, as can
be seen from the chart below :
ANNUAL GROWTH RATE

OF THE GNP
Year Total GNP per

GNP capita
1961 6.2 % 3.6 %

1962 5. 0 % 2.4 %
1963 4. 7 % 2.1 %
1964 4.2 % 1.6 %
1965 5. 0 % 2.4 %
1966 7.0 % 4,6 %
1967 2.3 % 0,0 %
1968 2.9 % 0.6 %
1969 3.1% 0.7 %
1970 3. 1 % 0.7 %
1971 8. 5 % 6,2 %
There were also in 1971 a 12.8 % rise in the level of consumption and
a 6.8 % decline in unemployment .
Chile now has a number of important economic expansion programs

under way. In the large copper mines, a sweeping expansion program has
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.2_
begun which is aimed at boosting production to 1, 130, 000 metric tons by

1976 , a 60 % increase over the 1970 yield . An ambitious expansion pro
gram has also been initiated in the iron extracting industry which will
permit a 23.6 % rise in production by 1976. Output in the steel industry
is expected to double by 1976 .
Nitrate production in 1971 was 797, 420 metric tons, a 24 % rise over
the 1970 figure of 637 , 805 tons . Production is expected to reach one
million tons annually in 1973. Coal production during 1971 reached 1.5
million tons, and plans call for additional production of one million tons
annually . Cement production in 1971 was estimated at 1 , 360,000 tons . New
plants under construction at Antofagasta and Magallanes will enable produc
tion to reach two million tons by 1976 .
Other developments of note on the nation's economic scene include:

The petroleum industry pumped more than two million tons of crude oil
during 1971, and refined oil production rose more than 30 % over 1970 .
According to a recent agreement, Argentina will purchase 200,000 tons of
LPG (liquid petroleum gas) annually from Chile for the next 20 years .
The electric power industry marked a 15 % increase in output , and

with completion of the new El Toro hydroelectric plant in 1973, electric
power will rise by 30 % .
Chilean State Railways carried 5 % more cargo in 1971 than during

1970 . There are plans for an additional 3 , 600 Chilean -made railway cars
and for the purchase of 26 Japanese-made locomotives by 1976. LAN - Chile
carried 11 % more cargo and 41% more passengers last year than in 1970 .
In the electronics industry production rose by more than 50 % . An

innovation in this area will be a new , economy - priced TV set for low - in
come consumers , soon to be on the market . This set will be assembled
with 80 % nationally manufactured components .
And in the area of livestock , the government now controls 40 % of the

nation's poultry production with its recent acquisition of a number of major
poultry farms. Enavi, the State Poultry Company, has nearly doubled its
monthly prduction . The 1972 goal has been set at 70 million broilers
annually .
CHILE ACQUIRES A 30 , 000 - TON VESSEL IN SPAIN
Terms for construction and financing of a 30,000 dwt vessel for Chile
have been arranged with the Spanish firm Astilleros Bazán . Chile will use
the vessel for transporting iron ore from northern Chile to Huachipato . The
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$ 10 million vessel will be completed within two years, and 80 % of the cost
will be paid within 8 years.
CUT- ADMINISTRATION AGREEMENT
The Chilean Government and CUT, the national trade union organi
zation of Chile, agreed last month to a mutual policy on wages, social
security , updating labor legislation , worker participation in price controls ,

and other points directly related to workers. The points of agreement are
generally oriented toward redistribution of income and nation - wide uni
formity of social benefits.
The old minimum wage has been raised by 50 % for blue collar workers
and made uniform throughout the country . Previously minimum wages had
varied from region to region . The base pension has also been raised. Non
union workers will be eligible for wage and other benefit adjustments equal
to 100 % of the rise in the cost of living .
Other benefits touched on in the agreement concern the regional stipend

paid certain workers . This is to be extended to all workers in hardship
areas and made more equitable , with priority being given government- employ
ed manual laborers. Unemployment insurance has also been made universal.
A National Social Security Council, at the level of a ministry , has been created
to advise on and manage matters pertaining to social security . Administration
of social security offices will be handled by the workers themselves.
Amending and streamlining outdated labor legislation has been made an

immediate goal. A strict policy of price controls and the participation of
trade unions in control of production have been established . Workers will
also participate in the supply and price control boards , while the existing
mechanism for distribution of supplies is being revamped . All surpluses
from the social security funds will be used for construction of low - priced
vacation resorts and rest homes for workers, which will be managed by
the unions,
YUGOSLAV - CHILEAN TRADE
Yugoslavian official Stojan Milenkov announced that his country wishes

to step up trade with Chile . He made the statement during a press conference
during his recent visit to Chile . At present, Yugoslavia sells Chile $ 500,000
worth of goods and purchases $ 11 million annually .
Mr. Milenkov expressed interest in Chilean livestock and agricultural

products , automotive and manufactured goods . Last year Yugoslavia acquired
manufactured copper , wool, fish meal, and nitrates and sold Chile tools
-4
and machinery, electronic elements , pork , and cellulose fibre.
The preparatory commission that will oversee the renegotiation of

the foreign debt has been appointed . It willbe headed by Clodomiro
Almeyda , Minister of Foreign Relations, and will include the following
members: Américo Zorrilla , Minister of the Treasury ; Pedro Vuskovic ,
Minister of the Economy; Alfonso Inostroza , President of the Central
Bank of Chile ; Hugo Fazio , Vice - President of the Central Bank ; and
Kurt Dreckmann , Vice - President of Corfo .
Orlando Letelier , Ambassador to the United States, returned recent

ly from Chile , where he participated in consultations on renegotiation of
Chile's foreign debt. On his return to the U.S. , the ambassador came to
New York City as head of the delegation meeting for the second round of
talks with United States banking interests . The delegation that the Ambas
sador is heading is composed of Alfonso Inostroza , President of the Central
Bank ; Jorge Marshall , a Central Bank executive ; and a representative of
the New York Office of Corfo .
In early February a delegation of Chilean representatives will meet

with European banking interests in Paris where talks will continue .
BRIEFS
** The Government of Chile has been granted a US $ 10 million loan

by Czechoslovakia's Bank for Foreign Trade, for the purchase of capital
goods in Czechoslovakia .
** On January 12 , Jacques Chonchol, Minister of Agriculture, gave

titles of ownership to farmers for the land of the 106 estates with an ag
gregate area of 37, 500 acres -- recently appropriated by the government .
Corfo recently purchased 75 % of the stock of the Sociedad de

Cemento Cerro Blanco de Polpaico S. A. from a group of Dutch and
German shareholders. Payment was financed by Corfo through a credit
granted by the Algemene Bank Nederland New York . Cerro Blanco has
an annual output of 120 , 000 metric tons .
GOVT PULLS
GOVT ID
READING NUOM
CORFO
No. 94 February 8 , 1972

*
ELECTRIC POWER EXPANSION PROGRAM

UNEMPLOYMENT SUBSTANTIALLY REDUCED
* TALKS ON TRANSFER OF OWNERSHIP OF TELEPHONE COMPANY
* GERMAN TECHNICAL ASSISTANCE TO CHILE
ITALY INCREASES TECHNICAL ASSISTANCE TO LATIN AMERICA
SOVIET AID TO CHILE
PEOPLE'S REPUBLIC OF CHINA GRANTS CREDIT TO CHILE
* BRIEFS
ELECTRIC POWER EXPANSION PROGRAM
The National Electric Company, Endesa , will invest Eº 40 million in

a program to extend electric power lines in areas heretofore neglected . The
plan calls for 720 kilometers of additional lines , which will be divided about
equally between urban and rural areas .
Financing the program will come from allocations from Endesa's bud
get and from a loan from the Inter - American Development Bank , which will
underwrite the extention of electric power in the rural zones. Endesa has
also established a flexible credit system that will permit consumers to pay
for installation of electricity in their homes on the basis of a sliding scale
that corresponds to their ability to pay .
The plan is being initiated on a nation -wide basis , and will include
areas already serviced by private electric companies. Extention of elec
tric power will only be possible with the support of those residents interes
ted in receiving current, through self - help projects and the financial backing
of Endesa . Other government affiliates are cooperating in the project .
UNEMPLOYMENT SUBSTANTIALLY REDUCED
The unemployment rate for Greater Santiago dropped to 3.8 % last

December, the lowest figure since 1956 according to a survey conducted by
the University of Chile's Economics Department. This is a 50 % decline over
INDIANA UNIVERSITY
FEB 14 1972
LIBRARY
80 Pine Street New York , N.Y. 10005 (212 ) 344-9800 **************
-2 .
the December 1970 figure. The rise in employment is most noticeable

in industry and construction , In industry between December 1970 and
December 1971 employment rose by 55 % . In construction , employment
rose approximately 62 % , during the same period .
According to leaders of the construction workers ' union , unemploy

ment in this trade prior to Allende's taking office was estimated at 40 %
of the work force. The union spokesmen pointed out that it is now zero .
attributing the radical aboutface in the employment situation to the Admin
istration's building program . They added that in contrast to the previous
situation , there is now a shortage of manpower and materials owing to the
abrupt growth in the construction industry . Salaries , too , reflect the
drastic changes that have taken place . Wages have risen 136 % since
November 1970. These changes are seen in retirement benefits, etc.
TALKS ON TRANSFER OF OWNERSHIP OF TELEPHONE COMPANY
Conversations on the transfer of the Chilean Telephone Company to
state - ownership are underway . Participating are the Ministers of Defense

and the Interior, as well as the Under -Secretary of the Ministry of the
Economy .
Following the most recent round of talks, a spokesman stated that

there was no problem as to price. However , still pending is the method
of transfer from private to state - ownership .
GERMAN TECHNICAL ASSISTANCE TO CHILE
The Foreign Ministry of the German Federal Republic announced

that Germany will lend its underwater laboratory, presently installed at
Heligoland , to Chile . The laboratory will be used under the direction of
the National Commission on Scientific and Technological Research , and
can be set up off the coast of Chile .
The Student Exchange Program of Federal Germany has offered a

one-month visit to Germany through its Embassy in Santiago to the two
best Chilean high school students who apply . The Chilean students will
stay with German families and attend local schools .
The German Foundation for Developing Countries has offered the

Chilean Government the opportunity to send personnel to Germany to take
a course for hospital and public health administrators. Fifteen scholar
ships for the 9 -month course have been designated for people presently
- -
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engaged in such work .
ITALY INCREASES TECHNICAL ASSISTANCE TO LATIN AMERICA
Last month , Carlo Ferrone Capaces , General Secretary of the Italian

Latin American Institute , visited Chile at the invitation of the Chilean Gov
ernment. The Institute is entrusted with promoting Italian technical assist
ance to developing nations .
During his four - day stay in Chile , Mr. Ferrone spokewith President
Allende, Foreign Minister Clodomiro Almeyda and other government officials .
He pointed out that under the new Technical Aid Bill, recently approved by the
Italian Parliament, the amount of funds available to developing Latin American
nations will rise from $ 12 million this year to $ 21.5 million in 1976. Mr.
Ferrone concluded a technical assistance treaty for the 1972-1976 period with
Chile, and established the basis for scientific and technical cooperation be
tween the two countries .
SOVIET AID TO CHILE
Under - Secretary of Foreign Relations, Anibal Palma, announced that

the Soviet Union has granted Chile US $ 50 million in credit . The credits will
be invested in an industrial development program ,
A 16 -member Soviet economic mission , headed by M. S. Pertsev, Vice

President of Gosplan , the National Planning Bureau of the Soviet Union , is in
Chile to study new ways to aid in Chile's development. The Soviet mission ,
which met with President Salvador Allende, will spend approximately three
weeks there and is scheduled to visit numerous factories and industrial centers
throughout the country .
The delegation will conduct talks with a Chilean economic delegation ,

headed by Pedro Vuskovic, Minister of the Economy. The Soviet group has
had a series of talks regarding the purchase of Chilean copper.
PEOPLE'S REPUBLIC OF CHINA GRANTS CHILE NO - INTEREST CREDIT
Aníbal Palma, Under - Secretary of the Ministry of Foreign Relations,

announced that the People's Republic of China has granted Chile an interest
free credit of L 25 million Sterling (US $ 70 million ) to be repaid in ten
installments beginning in 1981. The loan , which will be spread over a four
year period , may be repaid in either currency or products . It will be used
for setting up small- and medium - size industries .
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BRIEFS
** Romania's Export- Import Department has granted Corfo a

credit of US$ 242 , 000 for the purchase of 100 jeeps for the Forestry
Resources Development Committees .
Corfo has arranged with Uruguayan dealers for the purchase

of 3 , 000 purebred Hereford heifers and 200 thoroughbred Hereford bulls
for Chile . The cattle will be acquired with a US $ 1,250,000 credit from
the Inter -American Development Bank ,
-- ---
COVTPET 3
LDING ROOM GOVE PI
CORFO
No. 95 April 22 , 1972
MEETING OF CENTRAL BANKS OF ANDEAN PACT NATIONS

CHILE EXPANDS TRADE
ARGENTINE - CHILEAN COOPERATION
COPPER NEWS
HYDRAULIC EXPERTS STUDY DESERT REGIONS
1971 SHOWED FAVORABLE ECONOMIC TREND
SPEEDY REPAIR WORK NETS SAVINGS FOR NATION
EXPANSION OF PENCO DOCK FACILITIES
FOREIGN AUTO PRODUCERS WIN CHILE PLANT BIDS
BRIEFS
MEETING OF CENTRAL BANKS OF ANDEAN PACT NATIONS
A meeting of representatives of the Central Banks of the Andean

Pact nations and Venezuela was held recently in Santiago , Chile , The
working group called by the Second Meeting of Bancepac (Central Banks
of the Andean Pact nations ) studied matters related to the financing of
foreign trade between these nations, and was aimed at minimizing de
pendence on the markets of more developed nations .
In his opening address, the General Manager of the Central Bank

of Chile stated that the Chilean Government considers the Andean Pact one
of the instruments thatmost authentically reflects Latin American objec

tives and functions in accord with the economic and social needs of each
member nation ,
The main subjects discussed centered around the payment's system ,

reciprocal credit, financing trade operations, and measures aimed at faci
litating tourism .
Chile presented a study of a flexible system of short- term finan

cing for regional trade, including the creation of special funds and credit
lines . The meeting recommended putting such a system into effect , con
sidering its advantages to Andean Pact nations (Colombia , Ecuador , Peru ,
Bolivia , Chile ) and Venezuela ,
*********************
INDIANA UNIVERSITY
APR 27 1972
LIBRARY
**********
Issued by CORFO Corporación de Fomento de la Producció ************
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A number of other matters came up for discussion , primarily

centering around banking acceptances, payment agreements, and size
of credits to be granted to member nations. Present practices
were analyzed concentrating on weaknesses which , for economic de
velopment and regional unity , must be overcome,
Meanwhile, Bolivia , Colombia , Chile , Ecuador and Peru have

increased mutual trade by more than $ 100 million since the signing of
the Cartegena Agreement in 1969, according to an official of the Andean
Pact organization ,
At a press conference in Lima, Peru , it was announced that

the figures show a 170 % increase in mutual trade during the last
three years , and stated that such trade is expected to rise even more
this year thanks to the lowering of tariff barriers among the Andean
Pact nations .
CHILE EXPANDS TRADE
Chile and Peru have signed a bilateral trade agreement for

1972-1973 of cver $ 48 million . Under this a greement Chile will pur
chase acrylic fiber for use in the textile industry . This year she will
buy 2,000 tons for about $ 4 million . The price for future sales, some
where in the neighborhood of 3,000 tons, has not yet been decided . Chile
will also purchase an increased tonnage of Peruvian cotton .
Peru will buy livestock and agricultural products , canned goods ,

fresh fruit especially apples, pears and peaches, Chile will sell Peru
$ 4 million worth of paper during 1972 , and negotiations are under way
for the sale of 6 to 7 million dollars worth of cellulose to Peru .
The talks have also touched on the question of industrial coopera
tion , especially in the automotive and transport in dustries. It was agreed

that Chilean and Peruvian trucks will no longer have to undergo border
checks between the two countries, thus removing the need for trans ship
ment and substantially reducing transportation costs .
Talks have also been scheduled for later this year on the
question of bilateral agreements between Chile , Ecuador, and Bolivia ,
and conversations are being scheduled by LAFTA (Latin American Free
Trade Association ) between Chile , Argentina , and Brazil for later this
years .
*
One thousand Chevy Novas and 2,000 Mercedes Benz buses
will soon be added to Chile's public transportation facilities . The smaller
vehicles , taxis and mini- buses, were acquired in Argentina , and the larger
--
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buses in Brazil. Of the 1,000 mini- buses, 550 will remain in the Metro
politan Santiago area , while the others will be distributed throughout
the country to help bolster public transportation facilities . Of the
larger vehicles, 418 will remain in the metropolitan area .
A trade agreement has been reached between Chile and the

People's Republic of Korea under which Chile will sell Korea copper ,
nitrates, iodine, paper , cellulose, fish, poultry, and various minerals .
Korea will provide Chile with machinery , tools , agricultural products and
foodstuffs , and chemicals .
* The Chilean Government will purchase 5,000 tractors from the

Soviet Union for a total of US $ 11,597,500 . The price includes a stockpile
of spare parts and technical assistance . Terms of the sale were described
as highly favorable to Chile , and will be coordinated with an agreement for

equipment and machinery signed between the two countries in 1967 .
Corfo recently signed a similar agreement with Romania for the

purchase of 3, 800 tractors, and bids are open for the purchase of 4 , 000
more which , along with those already acquired , will give impetus to agri
cultural development and production throughout the country.
An announcement of increased trade relations between Chile and

Australia followed on the heels of a recent visit to Santiago of a trade mis
sion from the land down under . " Mr. P. C. Murray, a prominent Australian
businessman and head of the delegation , expressed great optimism regarding

future trade between the two countries which began in 1968. Both nations are
extending preferential tariff treatment to the other .
Australia will sell Chile ten 120 - ton trucks for operation in the min
ing areas for a total investment of $ 3.2 million . And Chile is selling $ 5
million worth of fish meal, nitrates and chemicals to Australia ,
* The Government of Poland has granted the Chilean Government

two credits in US dollars or Swiss francs for US $ 25 million and US $ 10 mil
lion , to finance the purchase of capital goods, industrial machinery and
equipment from Poland . Interest on the credits will be 3 % and 6.5 % per
annum respectively . The Central Bank of Chile has already approved both
credit lines which will be used by Chilean banks and Corfo .
ARGENTINE - CHILEAN COOPERATION
The second meeting of the Chilean - Argentine Physical Integration

Commission was held recently in Santiago de Chile. At the meeting it was
decided to set up two sub - commissions : one on highways and transportation ,
and one on miscellaneous affairs.
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The Highway and Transportation Sub -Commission agreed to re

commend to both governments implementation of a previously approved
project to connect the areas of Río Gallegos and Río Grande , both in
Argentina, by way of Chile via Monte Aymond, Primera Angostura and
Tierra del Fuego .
Regarding communication between two points within the same

country using the territory of the other, the Argentine delegation stated
that the two nations share a common problem as the result of their com
mon geography, necessitating a mutually satisfactory solution . Suffice
it to say that it is the desire of both countries to have access to those
areas isolated by nature .
The Chilean delegation agreed to an Argentine proposal to estab

lish a special commission during the first half of 1972 to study the situ
ation and suggest possible measures to facilitate mutual access .
It expressed profound satisfaction at the signing of the Santiago

Agreement on Hydraulic Sources, the result of talks recommended by
the commission during its first session , and which will permit mutual
cooperation and benefits of the water resources of both countries.
A meeting was held in early March between representatives of

Chilean and Argentine power companies to analyze the feasibility of a
joint electric power system in the central zone of Chile and the Argen
tine province of Cuyo . The project is to be carried out by Ciecha (the
commission on Chilean - Argentine Mutual Electric Power ) which was
created at the meeting . It was further agreed to create two four -member
commissions: a technical and a financial commission . Representation
on both commissions will be equally divided between both nations.
If the project is carried out and the two systems are linked , the
resulting system will have an operating capacity of approximately 2 mil
lion Kw . , of which Chile will use 1.5 million and Argentina 500 , 000 .
COPPER NEWS
Codelco's Vice President announced that the nation's five largest

copper mines have fulfilled their production goals for the first two months
of the year by 96.3% . The goal for the first half of 1972 is 324 , 376 metric
tons, a 15 % increase over the same period last year . The greatest in
creases are expected at the Teniente Mine, with a 35.8 % rise in produc
tion predicted .
The Codelco official explained that 100 % fulfillment of the January

February goal was impeded by a period of exceptionally intemperate weath
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er earlier this year which caused extensive flooding in the area of

the mines , severe damage to the means of transportation , and affect
ing the area's power supply . Despite this , production for the first two
months of the year rose to 90,635 metric tons in comparison with

88 , 810 for the same period in 1971, and 83 , 591 in 1970 .
Codelco has issued the following provisional figures for 1971

copper production , in metric tons :
Chuquicamata 250 , 187.0

Exotica 35 , 264. 3
Salvador 84 , 908.8
Teniente 147, 280.0
Andina 53, 583.7
TOTAL 571, 223.8
1971 production registered a 5.7% increase over 1970, when total

output was 540, 658 , 2 metric tons ,
Teniente achieved record production during the first three months

of 1972, turning out more than 50, 000 metric tons. No previous three
month period has ever yielded more than 40 , 000 tons . Provisional figures
for copper production during the first three months of 1972 are as follows:
Chuquicamata 52 , 472
Exotica 7 , 422
Salvador 21, 670
Teniente 48, 091
Andina 14 , 530
Total production for the January -March period was 144, 185
metric tons as compared to 140, 924 for the same period during 1971,
and 127,510 in 1970 ,
HYDRAULIC EXPERTS STUDY DESERT REGION
A mission of Soviet specialists in desert areas arrived recently

to study the primary hydraulic sources and systems throughout the nor
thern and central regions of the country . The information they compile
during their tours of the desert regions will enable them to draft a plan
for technical assistance by which optimal use will be made of the nation's
hydraulic resources in the arid north .
The mission is headed by Alexander Kondratiev , Sub -Director of

the Institute of Water Resource Projects of the USSR , and other special
ists in hydrogeology , geography and geobotany . The group held talks with
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members of the government and with officials of the Agricultural and

Livestock Service , the Hydraulic Division of the Ministry of Public
Works, the Geological Institute and Endesa .
1971 SHOWS FAVORABLE ECONOMIC TREND
Chile's economy during the January -November 1971 period

registered a favorable rate of progress according to a recent report re
leased by the Central Bank of Chile. Industrial production was up 13. 1 %
over the same period in 1970 according to the National Institute of Statis
tics. This industrial activity was reflected in greater employment with
96.2 % of the labor force employed , as against 95.2 % for the month of
September 1971, and 91.7 % in December 1970 .
SPEEDY REPAIR WORK NETS SAVINGS FOR NATION
The Minister of Public Works and Transportation , praised the

efforts of the workers of Atacama Province, and especially those of the
region of the Salvador copper operations , for completing ahead of sched
ule the repair work on the Potrerillos railway which was damaged by the
" Bolivian Winter" which recently hit northern Chile . Their swift re
sponse resulted in a savings to the country of nearly one million dollars .
EXPANSION OF PENCO DOCK FACILITIES
President Allende recently inaugurated a 1 , 800 - meter dock , one

of the largest in Latin America , at Penco . The new facility , owned by
the South American Phosphate Company , a Corfo affiliate , has a conveyor
belt that can move 250 tons of cargo per hour . The new installation will
employ approximately 400 workers.
Its construction was a joint investment venture of national and

foreign capital. The Penco installation will be able to service larger
vessels creating the possibility for expansion and greater exploitation
of Chile's phosphate production .
FOREIGN AUTO PRODUCERS WIN CHILE PLANT BIDS
The Government of Chile has announced the foreign automotive

producers which together with the Chilean Government will operate auto
assembly plants in Chile . Renault and Citroen have been selected in the
small car category with Pegasso and Fiat producing trucks and buses.
BRIEFS
Two modern mobile clinics were presented by the Corporación

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de Fomento de la Producción (Corfo ) to the Institute of Bacteriology and

Parasitology of the Universidad Austral de Chile . The two clinics ,
valued at $ 40, 000, will be used in a program aimed at diagnosing and
stamping out parasitic and infectous diseases among cattle in southern
Chile , The plan is sponsored by Corfo and the University .
An agreement has been signed between the Central Bank of

Chile and the People's Republic of Hungary for the purchase of $ 1,5 mil
lion dollars worth of medical supplies by Chile .
** A commercial agreement between Chile and the Soviet Union

was signed recently providing for closer cooperation between the two
countries in the areas of electric power and petroleum production , light
industry , food and agriculture, The USSR will assist Chile in develop
ment of present and future programs in these fields, as well as in its
growing fishing industry .
Chile and the Soviet Union have agreed on establishment of

an exchange of scientific information , technicians, teachers, and students ,
as well as special radio and television programs.
** Chile will import half a million ewes and 2 , 000 rams from
Argentina to help build up Chilean sheep herds. Argentina in return will
import fresh shell fish from Chile . The agreement between the two
countries was concluded during the recent Livestock , Agricultural and
Industrial Fair held in Aysen , Chile .
**
Under - Secretary of the Ministry of Agriculture, Eduardo
Montenegro, announced that agricultural production last year rose 5 % ,
and that a 10 % rise is expected this year . He added that the Ministry's
entities will undergo a reorganization which will encourage local imple
mentation of specific programs.
**
Seven hundred and seven jeeps and 4 , 300 tons of urea ferti
lizer have arrived in Chile from Romania aboard the Chilean freighter
Lago Llanquihue .
**
Following his recent visit to Japan , the President of the Cen
tral Bank of Chile expressed great optimism regarding the possibilities
for expansion of trade between the two countries.
** LAN Chile is celebrating its 43rd year of operations with

the announcement of a sweeping expansion plan intended to increase
service by 70 % .
*** A Brazilian company , Brasil - Juto Uniao , will send Chile 3

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million sacks of jute for US$ 1,200,000 according to a company spokes

man who stressed that the Brazilian product is on par quality - wise with
its Asian counterpart .
GOVT PUBLS
GOVT PE :
EXDI: G ROOM
CORFO
No. 96 May 12 , 1972
ADDRESS GIVEN BY THE PRESIDENT OF THE REPUBLIC OF CHILE

DR . SALVADOR ALLENDE
AT THE OPENING OF THE THIRD SESSION OF THE UNITED NATIONS
****欢欢欢欢戏
CONFERENCE ON TRADE AND DEVELOPMENT ******************
INDIANA UNIVERSITY
SANTIAGO , 13 APRIL , 1972 MAY 1 8 1972

LIBRARY
Let me begin by voicing , on behalf of the people and those tëRÁPEPE * OK **
Chile , our appreciation of the great honor implicit in the choice of Santiago
as the venue of this Third Session of the United Nations Conference on Trade
and Development . Especially as you will discuss the world's most serious
problem : the sub - human conditions of more than half its population . You have
been called upon to correct the unfair international division of labor, based
on the dehumanized concept of mankind .
The presence of so many leaders of economic affairs , including ministers

and high - ranking officials from every part of the world , enhances the signifi
cance of this honor . It is encouraging that all member organizations of the
United Nations are represented here, as well as government and non - govern
ment agencies concerned with problems of development, and the information
media of the five continents .
Together with the representatives of the people of Chile participating in

this event, I offer our guests a cordial welcome and wish them a pleasant stay
in a country that receives them with both friendship and understandable antici
pation . I also extend my respectful greetings to the resident diplomatic corps .
To you , Mr. Kurt Waldheim , Secretary General of the United Nations, we
owe a very special debt of gratitude. In taking the trouble to attend this open
ing session so soon after assuming your high office, your intention has doubtless
been to show that you accord this Conference the priority it deserves ; that for
you development of the Third World and expansion and improvement of trade
are matters of as much urgency and importance as the most explosive political
issues ; and that you fully realize that economic stability and development are,
as stated in the United Nations Charter, essential and interdependent factors of
international peace, security and goodwill.

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You are taking up your duties as U.N. Secretary General at a time when
dialogue between the great powers is being strengthened and consolidated .
As far as collective security is concerned , this is a hopeful sign . The U.N.
Charter assigns them special responsibilities in maintaining peace. But in
regards to other matters, there is a danger in the tendency to confront the
United Nations with ready -made solution , negotiated by few but affecting many,
such as those relating to the monetary problem . In the matters inherent to
this Conference the world organization has not only lost effectiveness but
may even lose its validity . One of your major responsibilities , Mr. Secretary
General, will doubtless be to ensure that the first of these losses is corrected ,
and that the second never occurs ; that is , to preserve and strengthen multi
national economic and social cooperation .
To my good friend , Mr. Manuel Pérez -Guerrero , Secretary General of

UNCTAD , I should like to express our deep appreciation for his selfless and
efficient labors and of the outstanding quality of the preparations for the present
meeting.
And finally , to Professor Langman , Minister of Economic and Financial

Affairs of the Netherlands , I would offer the sincere gratitude of the Govern
ment and people of Chile for his nation's generous contribution of the equip
ment for the conference rooms in this building .
In UNCTAD III, I hail the gathering of the world community of nations, in

effect , of almost all mankind . Unfortunately , not yet quite all . For us, the
peoples of the Third World , UNCTAD should constitute the chief and most ef
fective instrument available for negotiation with the developed nations, Insofar
as it fulfills its institutional potentials , this assembly may assume decisive im
portance at the present crucial juncture of world economic affairs .
The basic mission of this Third Session is to promote the implementation
of the most essential objectives and commitments established in the Interna

tional Strategy for the Second Development Decade . They consist in the re
placement of an economic and trade order that is outmoded and radically unjust
by a fairer one , based on a new concept of man and of human dignity ; and in
the reformulation of an international division of labor which the less advanced
nations can no longer tolerate, inasmuch as it obstructs their progress while

it favors only the affluent nations.
From the standpoint of our countries this is a crucial test . We refuse to
go on giving the name of international cooperation for development to a mere

travesty of the concept enshrined in the United Nations Charter . The results
of the Conference will show whether the commitments assumed in the Inter
national Strategy for the Second Development Decade reflected a genuine poli
tical will, or were simply delaying tactics to ward off the pressure brought to
bear by the countries of the Third World .
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If the analyses and decisions of UNCTAD III are to be realistic and per
tinent , wemust face the world as it is, shunning illusions and mystifications,
but at the same time throwing wide the gates of imagination and creativeness
to new solutions for our old problems.
The first observation is that our community is not homogeneous but di

vided up into peoples that have grown rich and peoples that are still poor .
Yet more important is to recognize that even among the poor nations there
are, unfortunately , some which are poorer still ; and that many survive under
particularly unbearable conditions. Their economy is dominated by foreign
powers ; outsiders hold all or part of their territory ; they still suffer the
yoke of colonialism ; or a majority of their population is exposed to the vio

lence of racial prejudice and of apartheid . Worse still, in many of our na
tions deep social disparities oppress the masses and benefit only the priv
ileged few .
The second observation is that the toil and the resources of the poorer
nations pay for the prosperity of the affluent peoples. Our business here is
not to harp on old injustices but to show that the world trade structure, as
it operates today , has become an instrument of pillage by means of which
the less developed nations are sucked dry .
Manifest, too , is the validity of the Declaration signed in Lima by the

Ministers of the Third World . Between 1960 and 1969 our countries ' share
of world trade dropped from 21.3 percent to 17.6 percent . During the same
period our annual per capita income increased by only $ 40, while that of the
affluent nations rose by $ 650 .
Over the last twenty years the flow of foreign capital into the Third
World has meant a net loss for us of many hundreds of millions of dollars ,
besides leaving us in debt to the tune of nearly $ 70 billion . If to this debt
we add our real, although invisible, losses resulting from the decline in
the prices of our exports and the increase in the cost of everything we im
port ,it can be clearly seen that since the war international economic re
lations have caused a deficit to the peripheral countries of over $ 100 billion .
Direct investment of foreign capital, often presented as an instrument

of progress, has almost always proved most harmful. For example , be
tween 1950 and 1967, according to data furnished by the Organization of
American States , Latin America received $ 3 , 900 million and paid out
$ 12 , 800 million . In other words , our region paid out four dollars for every
one it received .
In the face of these figures , two patent truths apply . First, the exist
ing system of economic relations between the industrialized countries and
the countries of the Third World has been in essence an instrument for tap
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ping the resources of the poorer nations ; and , as such, is inherently bound
to perpetuate underdevelopment. Second, it keeps our countries under the
constant threat of financial insolvency, however much they increase their
contribution of goods to the world market. Proof of this is the increasing
number of countries compelled to reschedule their foreign debt.
Third, this economic , financial and trade order, as prejudicial to the

Third World precisely as it is so beneficial for the affluent countries, is
defended by the latter with bulldog tenacity , through their economic might;
through their cultural influence ; and , on some occasions and by some powers,
through almost irresistible forms of pressure (as well as armed interven
tion ) which violate all commitments assumed in the United Nations Charter .
Another development of unquestionably vital importance , which cuts a
cross and embraces the present structure of international economic relations,

and which in practice makes a mockery of international agreements , is the
expansion of the great multinational corporations . The financial, commer
cial and technological potential concentrated in these is steadily increasing,

and they are rapidly becoming the real power factor behind the current fea
tures of the world economy. They have their own objectives, their own trade
policies, their shipping policies , their own investment policies, their own
integration policies, their own outlook , their own lines of action . A world
of their own .
In economic circles, and even at meetings like this, trade and develop
ment facts and figures are often bandied to and fro without any real attempt
at measuring how they affect the human being , how they affect his basic
rights , how they strike at the right to life itself , which implies the right to
the fulfillment of the personality . The human being should be the object and
goal of any and every development policy, and of any and every desirable
form of international cooperation . This is a concept that must be borne in
mind in every discussion , in every decision , in every policy measure which
aims at fostering progress, whether at the national or at the international
level.
If the present state of affairs continues, 15 percent of the population of

the Third World is doomed to die of starvation . Since , moreover , medical
and health services are seriously deficient, the life expectancy is only half
as long as in the industrialized countries ; and a high proportion of our people
can never make any real contribution to the progress of thought and creation .
Here Imay repeat what our people are painfully made to feel . In Chile , a
nation of about ten million , where levels of nutrition , health and education
have been higher than the average for developing countries , there are 600,000
children who, for want of proteins during their first eight months, will never
attain their full mental potential. There are 700 million illiterates in Asia ,
Africa and Latin America , and as many million more have gotten no farther
-5
than the stage of basic education , The housing deficit is so colossal that in
Asia alone there are 250 million people without a proper roof over their
heads . Proportional figures are recorded for Africa and Latin America .
Hundreds of millions have no dwelling that would conform to the bearest
minimum living standard in an industrialized country .
Unemployment and underemployment have soared to a terrifying high ,

and are still increasing . In Latin America , for example , 50 percent of the
economically active population is out of work , or engaged in jobs which are
nothing more than disguised unemployment, payment for which (especially
in the rural areas ) falls far short of providing for their vital needs . This
is the logical outcome of a well - known fact : the developing nations , in which
60 percent of the world's populace is concentrated, have at their disposal only
12 percent of the gross produce. There are scores of countries in which
annual per capita income does not exceed $ 100 , and in the United States it
reaches $ 4 , 240 .
Some can look forward to a livelihood that brings all within their reach .
Others are born to starve. And even in the midst of plenty , there are mil
lions who lead a handicapped and poverty - stricken existence.
It is incumbent upon us, the underprivileged , to fight unceasingly to

transform an inequitable and dehumanized economic structure into one which
will not only be more fair to all but will come to balance at last the effect of
age - old exploitation .
The question is whether we poorer nations can meet this challenge from
our present subordinate or dependent positions . First we must recognize
that constant weakness on our part has done much to perpetuate the disparate
trade patterns which have led the peoples of the world to develop along equally
disparate lines . For example , the connivance of some national ruling groups
with the causes of underdevelopment. Their own prosperity was based pre
cisely on their role as agents of foreign exploitation .
No less important has been the alienation of the national consciousness .

It has absorbed a view of the world worked out in the great dominant centers
and presented in scientific guise as the explanation of our underdeveloped
state . Such theories ascribed an inevitable stagnation of the developing con
tinents to supposed natural factors such as climate , race or race mixtures,

or attachment to indigenous cultural traditions . But they paid no heed to the
real causes of underdevelopment, such as foreign colonial and neocolonial
exploitation , and internal class exploitation .
Another factor for which we are responsible is the fact that the Third
World is not yet united , with the unconditional backing of every single one of
our countries. This would have enabled us to exert pressure on behalf of

-6
just and feasible ways of restructuring economic relations with the developed
countries.
We must correct these mistakes and not repeat them . The same view is
expressed in the Charter of Algiers and in the Declaration of Lima, drawn up
by the Group of 77 .
The governments of the countries of the Third World have now formulated
a philosophy much more consciously in keeping with the realities of today . For
example, the Delcaration of Lima, besides endorsing the emphatic assertion
in the Charter of Algiers that the primary responsibility for our development
rests upon us , pledged its signatories to carry out the reforms in their econo
mic and social structures required to ensure the full mobilization of their basic
resources , and to guarantee their peoples ' participation in the process of devel
opment and in its benefits . The Declaration likewise condemned dependence in
any shape or form which may help aggravate underdevelopment. Not only do we
support this philosophy in Chile , but we are putting it fully onto practice. We
are doing so with profound conviction , consistent with our socio - economic and
political situation .
The people and the Government are involved in an historical process, de

signed to bring about fundamental and revolutionary changes in the structure
of Chilean society . We want to lay the foundations for a new society which
will offer all its members social equality , well -being, freedom and dignity .
Experience, a hard taskmaster , has taught us that in order to meet our

people's needs and provide each one with themeans of full self - realization,
it was essential to leave behind the capitalist regime of dependence, and forge
ahead along a new path . This path is the socialism we are starting to build .
In line with our history and tradition , we are carrying out this process
revolutionary change while deepening the democratic system , with due respect
for the pluralism of our political organization (within the legal order and using
the legal instruments with which the country has equipped itself) , not only
maintaining but extending civic , social, individual and collective liberties . In
Chile there is not a single political prisoner, nor the least restriction on oral
or written freedom of speech . All creeds and forms of worship are uncondi
tionally permitted , and are treated with the greatest respect .
Chile's revolutionary process has been launched under a multiparty regime,

with a highly developed body of law and a judicial system that is absolutely inde
pendent of other State powers . The opposition holds the majority in Parliament.
It is under our traditional institutional system that our people have taken up the
reins of power and are making progress in overcoming the internal and external
obstacles to the expansion of our national potentialities . By freeing formerly
curtailed forces in the economic system , we propose to do away with the tra
-7
ditional growth model which was based almost entirely on expansion of ex

ports and import substitution . Our strategy implies assigning priority to
popular consumption and relying upon domestic market prospects . We do
not advocate economic self -sufficiency but utilization of the immense poten
tial represented by our people and our resources as active agents of devel
opment.
To satisfy popular consumption , at this stage , we are promoting the in

stallation of small- and medium - sized factories using labor intensive tech
nologies . Thus we are giving dynamic impetus to the clothing industry, to
construction to the production of household goods, and to the food industry
which at the same time is enabling us to tackle the serious problem
of rural
development. Progressively , and in harmony with balanced development,
we shall lay greater emphasis on the expansion of heavy industry .
One of the primary objectives of the People's Government is the recov

ery of the nation's basic sources of wealth for its own use. We have nation
alized iron , steel, coal and nitrate production , which now belong to the
Chilean people . We are nationalizing copper through a constitutional reform
that has been unanimously approved by a parliament in which the Government

does not hold a majority . We have taken charge of the copper industry and
have raised production to a record figure, overcoming immense technical
and administrative difficulties , and remedying serious deficiencies imputable
to those who were drawing the profits of these mines .
The recovery of our basic resources will now enable us to use for our
own benefit the surpluses formerly sent abroad by the foreign companies .
Thus, we shall improve our balance of payments . The nationalization of
copper was an inevitable and imperative step.
To assess the harm that was being done to our economy, suffice it to
quote only a few figures. According to their book values, the copper com
panies made a net initial investment of $ 30 million in Chile 42 years ago,
and since then , without having subsequently brought in any fresh capital, have
withdrawn the enormous sum of $ 4 , 500 million (an amount almost equivalent
to our current foreign debt). They have also bequeathed us credit commitments
totaling over $ 700 million , which the State will have to repay . According to
the 1968 balance sheet, the Anaconda Company had invested only 20 percent
of its total world investments in our country , yet 80 percent of its profits
came from Chile .
I will refer to only two aspects of my Administration's socio - economic

action . One is its policy of broad and radical income redistribution , and
the other the speed up of agrarian reform with the aim of ensuring that by
the end of this year not a single latifundium will be left in Chile . This re
form includes a dynamic and realistic agricultural development strategy .
-8
In but a few years we will make up the food deficit which now compels us
to import foodstuffs to the tune of over $ 300 million annually , a sum that
is way out of proportion to our resources .
All that has been done at the national level has been complemented by
a determined policy of economic integration with the Latin American countries .
In particular, the Andean Pact * is a living example of the immense possibi
lities that exist for cooperation between underdeveloped countries when there
is a solid political will to take action .
In less than three years we have trebled our reciprocal trade and are
applying methods to coordinate the economic strategies of the individual
countries . To this end , we have agreed upon a Common Treatment towards
Foreign Investment, which eliminates our suicidal competition to tap external

resources and further corrects unfair practices that have long been in use.
We have reached the conclusion that integration among countries like ours
cannot derive solely from the mechanical interplay of market forces; joint
planning must be undertaken for the key sectors of the economy, with a view
to determining the lines of production that each country will be called upon
to undertake .
The Andean Pact, authentically Latin American, is of vital importance

not only because of the technical pragmatism with which we are tackling prob
lems as they arise but also because we are conducting an autochthonous ex
periment in integration , based on the most absolute respect for ideological
pluralism and for each nation's legitimate right to adopt whatever internal
structures it may deem appropriate .
The task assigned to the Third Session of UNCTAD is to help to design

new economic and trade structures, precisely because those established in
the postwar period , which did great harm to the developing nations, are col
lapsing and will cease to exist.
The concepts formulated at Bretton Woods and Havana , which brought

into being the International Bank for Reconstruction and Development, the
International Monetary Fund and the General Agreement on Tariffs and Trade,
were characterized by exchange , trade and development- financing systems
based on the interests of a few dominant countries. They evolved at a time
when war between the industrial countries of the West and the socialist world
seemed inevitable . As always, economic interests and political interest joined
forces to overbear the countries of the Third World . Our development was
hampered by economic obstacles ; and every time a people resolved to make
a bid for emancipation , all possible means of attack were used against it. The
systems in question established the rules of the trade game. They closed mar
* Andean Pact nations are : Bolivia , Chile , Colombia , Ecuador and Peru .
-9
kets to the products of the Third World through the establishment of tariff
and non - tariff barriers, through their own anti - economic and unfair produc
tion and distribution structures. They set up harmful practices and norms,
fixed freight rates , and thus secured a virtual monopoly of cargo . They
also left the Third World countries to watch the advance of science as out
siders and exported to us technical know - how which in many cases was sim
ply an instrument of cultural alienation and of increased dependence. We
poorer countries cannot allow this situation to continue .
Moreover, the systems conceived at Bretton Woods and Havana have

proved incapable of raising the living standard of more than half of the human
race, or even of maintaining the economic and monetary stability of their own
creators and administrators , as has been demonstrated by the dollar crisis
which precipitated the collapse.
Since the Second Session of UNCTAD , at New Delhi, which was so great
a disappointment to the developing countries, world events themselves have
transformed the whole political and economic scene ; and today there are bet
ter possibilities for UNCTAD III to take important steps in the direction pro
posed .
It is clear to all that the financial concepts of the postwar period are
tottering , that the new or strengthened centers of political and economic
power are generating striking contradictions among the industrialized nations
themselves . Peaceful coexistence between the capitalist and socialist coun
tries has finally carried the day. After twenty years of injustice and violation
of international law , the exclusion of the People's Republic of China from the
world community has come to an end . This Republic contributes not only one
third of the world's population but also an original experience in liberation
from longstanding dependence.
Furthermore, in our countries the growing resistance to imperialist

supremacy -- and likewise to internal class domination -- is daily increas
ing in strength ; a healthy nationalism is gaining renewed vigor . Possibili
ties are opening up , embryonic as yet, although promising, for the less
developed countries to make their efforts at self - improvement under a mild

er degree of external pressure and at a less heavy social cost. Among these
hopeful signs is an awareness of the factors responsible for their lack of
development, that the poorer nations are acquiring . On occasion , their con
viction is so profound that no foreign power and no national privileged group
can sway it, as is seen in the heroism of Vietnam .
Few still dare to demand that all nations of the world adopt the same
socio - economic models . What is compulsory , on the other hand , is the mu
tual respect which makes it possible for nations with different socio - political
systems to live side by side and trade with one another . The present time is
-10
witnessing the emergence of specific possibilities for constructing new

patterns of international trade, which may at last open up prospects of equi
table cooperation between rich and poor nations .
These encouraging prospects stem from two facts . First, the decisions
which substantially affect the destiny of mankind are increasingly influenced
by world opinion , including that of the countries which are supporters of the
status quo . Second , conditions are arising which make it advantageous for the
central countries themselves (although not necessarily all their enterprises )
to establish new patterns , viz, economic relations with the peripheral countries .
Obviously , the forces of restriction are not yet beating a general retreat .
The new hopes that promise liberation may end up in a new form of colonialism .
They will crystallize in one shape or another , according to our clarity of
thought and ability to act . Hence, the exceptional importance and timeliness of
this Third Session of UNCTAD , provided it grasps the significance of the pre
sent situation ,
Just as in the last century the forces unleashed by the Industrial Revolution
metamorphosed the customs, ways of life and modes of thought in all countries ,
so today , the world is being swept by a tide of new technical and scientific dis
coveries which have the power to bring about still more radical changes. This
transforming power is based on the new technology of production processes , of
management systems and of mass communication media , Once more, technical
progress, coming into conflict with preexisting social systems, is hastening
the coming of change .
We should make sure that the advance of pure and applied science is not
led , under the influence of inflexible social and political structures (both
national and international), into hampering the liberation of mankind . We
know that the Industrial Revolution and the wave of change it brought, repre
sented for many countries a mere transition from colonial to neocolonial

status and , for others , direct colonization . For example , in the international
telecommunications system a formidable danger is implicit . Today, 75 per
cent is in the hands of the developed countries of the West ; and of this propor
tion more than 60 percent is controlled by the big United States corporations,
with whose policy we are familiar . I wish to point out that, in less than ten
years, our community institutions and our homes will be flooded by informa
tion and publicity which will be directed from abroad by means of satellites of
high transmission power, and which , unless they are counteracted by timely
measures , will serve only to increase our dependence and destroy our cultural
values . This danger must be averted by the international community , which
should demand that control be exercised by the United Nations .
Another factor that sould be regarded as more favorable stems from the
increasingly obvious conflicts between the public interests (which are of real
-11
benefit to the peoples ) of the wealthy nations and the private interests of
their great international corporations . The overall cost (military , economic ,
social and political) of operating through multinational enterprises exceeds
their contribution to the central economies and becomes increasingly burden
some to the taxpayer .
We should also take into consideration the plundering of these international

cartels , and their powerful corruptive influence on public institutions in rich
and poor countries alike . The peoples affected oppose such exploitation and
demand that the governments concerned cease giving over part of their foreign
economic policy to private enterprises that arrogate to themselves the role of
agents promoting the progress of the poorer countries and that have become a
supranational force which is threatening to get completely out of control. This
undeniable fact has profound implications for the proceedings of the present
Conference. There is a serious risk that, even if satisfactory agreement is
reached by the representatives of sovereign states, the measures upon which
we agree may produce no real effects, inasmuch as these companies handle
de facto the practical application of the agreements in silence and conforming
to their own interests .
In international meetings we are discussing the visible features of the

Third World's structure of dependence, while the underlying factors of the
situation steal by us unseen , like the submerged three - quarters of an iceberg .
UNCTAD should look very carefully into this menace . This flagrant
intervention in the internal affairs of states which , condemned in the Charter
of the United Nations, is more serious, more subtle and more dangerous
than that of governments themselves. The corporations have gone as far as
seeking to upset the normal functioning of the government and institutions of
other nations, to start world -wide campaigns against the prestige of a govern
ment, to make it the victim of an international boycott and to sabotage its
economic relations with the rest of the world . Recent and well - known cases ,
which shocked the world , and which affect us so directly , constitute an alarm
signal for the international community , which is under an imperative obli
gation to react with utmost vigor .
It is for the delegations attending this conference to put forward whatever

solutions they may deem appropriate Not only is there abundant documenta
tion prepared by the United Nations, but also -- and of particular importance-
the Lima Declaration , Principles and Program of Action , This documenta
tion constitutes " the unified expression of the shared hopes and aspirations of
mankind , as expressed by the representatives of the vast majority of mankind ,
and should go a long way in evoking favorable response from the international
community and , in particular, from the peoples and governments of the deve
loped world . " It is for you to meet all the legitimate demands which the
Program of Action embodies. They are all of vital importance. I would stress
-12
the problems relating to primary commodities because they are of basic

interest to the great majority of the participants. For my own part, I want
only to place before the meeting some of the points that concern me, as
Chief of State of one of the Third World countries, with respect to certain
items on the agenda . I am aware that it is impossible for all the industrial
ized countries to respond alike . Their resources and means of action are
different, nor have they all had the same share of responsibility in the crea
tion and maintenance of the existing international order . For example ,
neither the socialist countries nor all the small- and medium - sized countries
have contributed to the generation of this irrational division of labor .
The first of my anxieties relates to the danger that the restructuring of

the international monetary and trade systemsmay once again be carried out
without the full participation of the countries of the Third World .
In connection with the monetary system , and particularly since the crisis
of last August , the developing countries have time and again recorded their
protest, in all -world and regionalmeetings, against policies and decisions
by which they have been profoundly affected . They had no responsibility what
ever for the critical situation in respect to monetary and trade machinery in
whose management they had taken no part. They have repeatedly contended
that a monetary reform must be jointly prepared by all the countries of the
world , that it must be based on a more dynamic concept of world trade, that
it must recognize the new requirements of the developing countries, and that
never again must it be handled exclusively by some few privileged countries .
It is of vital importance that the conference should unhesitatingly and unreser
vedly endorse these objectives .
True, the details of the new system can be completed in other more
specialized gatherings. But so close is the connection between monetary
problems and trade relations, as the crisis of last August showed , that it
is the duty of UNCTAD to discuss the subject in depth and to see that the
new monetary system , studied , prepared and administered by the whole of
the international community , will also serve to finance the development of
the Third World countries, alongside the expansion of world trade,
In connection with the indispensable trade reform , there are some facts
which give cause for profound alarm . A few weeks ago the United States and
Japan , on the one hand , and the United States and the European Economic
Community , on the other, both sent memorandums to GATT . These two
almost identical documents declare that the sponsors pledge themselves to
launch and actively support the implementation of integral agreements under

GATT from 1973 , with a view to the expansion and liberalization of inter
national trade . They add that , furthermore, their aim is to improve the
standard of living of all peoples , and that, among other methods, this can
be achieved through the progressive lowering of trade barriers and by seek

-13
ing to improve the international framework within which trade is carried on .
It is , of course, satisfactory that three great centers of power should

decide to subject their international economic relations to a thorough over
haul, taking into account the improvement of the living standard of all people .
It is laudable that they should mention the need to reorient trade policy
through international or regional agreements making for market organization .
But it does not escape our observation that the liberalization of trade among
the industrialized countries of the West wipes out at a stroke of the pen the
advantages of the general system of preferences for the developing nations.
And what we find most dis quieting is that the three economic powers are
proposing to implement this policy not through UNCTAD but through GATT.
The General Agreement on Tariffs and Trade has always been essentially
concerned with the interests of the powerful countries ; it has no serious link
with the United Nations and is not obliged to adhere to its principles, and its
membership is at odds with the concept of universal participation ,
This move would seem to be one more endeavor to go over UNCTAD's

head . They forget that the General Assembly of the United Nations, the
International Strategy for Development and other instruments have assigned
to UNCTAD the chief responsibility in international cooperation with respect
to trade and development, and that they have given it the task of reforming
trade systems and practices and bringing about a fairer and more rational
international division of labor. I trust that the Conference will concern it
self with this problem ,
I think that the developed nations should put an end to these continual
attacks against UNCTAD . The conference is the most representative body
of the world community in this field , and affords exceptional opportunities

for negotiating major economic and trade questions on a footing of legal
equality . On the contrary, the developing countries wish to perfect the
existing institution and broaden its authority . I think it is urgently necessary
for UNCTAD to gain full autonomy and to become a specialized agency of the
United Nations system so that it can play its part with greater freedom of
action , greater influence, greater capacity to solve those crucial problems
which fall within its province. We peoples of the Third World who did not
speak out at Bretton Woods or at the later meetings where the financial
system now in force was drawn up , who do not participate today in the
decisions of the Ten on the financial strategy of the great Western powers ;
we who have no voice in discussions on the restructuring of the world mone

tary system ; we need an efficient instrument to defend our threatened inter
ests . For the time being, this instrument can only be UNCTAD itself, con
verted into a permanent organization .
My second concern relates to the foreign debt. Developing countries

-14
already owe more than 70 billion dollars, although we have contributed to

the prosperity of the wealthy people from time immemorial, and more par
ticularly in recent decades . Our basic contribution has been the export of
capital and , above all, of primary commodities which are indispensable to

developed countries .
External debts , largely contracted in order to compensate the damage

resulting from an unfair trade system , to defray the costs of the establish
ment of foreign enterprises in our territory , to cope with the speculative
exploitation of our reserves , constitute one of the chief obstacles to the pro
gress of the Third World . The Lima document and Resolution 2807 of the
most recent General Assembly of the United Nations dealt with the question
of indebtedness . The latter resolution took into consideration , inter alia ,
the increasingly heavy burdens imposed by debt servicing on the countries

of the Third World , the weakening of gross transfers of resources to the
developing countries , and the deterioration of the terms of trade. It em
phatically requested the competent financial institutions and the creditor
countries concerned to give sympathetic consideration to requests for re
scheduling or consolidation of their debts , with appropriate periods of grace
and amortization , and reasonable rates of interest. It also invited the same
countries and institutions to examine more rational ways of financing the
economic development of the Third World . It is satisfactory that the Euro
pean Economic Community has agreed to reorient credits granted to develop
ing countries establishing different terms and a new meaning for them .
I believe it is indispensable to make a critical study of the way in which

the Third World's foreign debt has been contracted and the conditions re
quired to rescue it from this situation without impairing its efforts to com
bat underdevelopment. Such a study might be undertaken by the Secretary
General of UNCTAD and presented to the General Assembly of the United
Nations .
At the present time Chile exemplifies the seriousness of the situation .

Our total annual income is $ 1,200 million . This year we are due to pay out
$ 408 million . It is inconceivable that a country should have to earmark 34
percent of its annual income to service its foreign debt.
My third concern is directly connected with the aforementioned . It re
lates to the real and potential pressure exerted to restrict the sovereign
right of peoples to dispose of their natural resources for their own benefit .
This right has been proclaimed in the Covenants on Human Rights , in sev
eral resolutions of the General Assembly , and in the First General Principle
adopted at the First Session of UNCTAD . In the Lima Declaration , the Group
of 77 very clearly formulates an additional principle for the defense of our
countries against threats of this kind . We need to raise it from the status of
a principle to that of an imperatively necessary economic practice . It reads

-15
as follows : " The recognition that every country has the sovereign right freely
to dispose of its natural resources in the interests of the economic develop
ment and well -being of its own people ; any foreign , political or economic
measures of pressure brought to bear on the exercise of this right is a fla
grant violation of the principles of self - determination of peoples and of non
intervention , as set forth in the United Nations Charter and, if pursued ,
could constitute a threat to international peace and security . "
Why did the developing countries wish to be so explicit ? The history of

the past fifty years is plentiful in examples of direct or indirect coercion ,
military or economic -- cruel for those who suffer it and degrading for those
who inflict it -- designed to prevent the underdeveloped countries from making
free use of their basic resources , which represents the daily bread of their
inhabitants . Mexico , Central America and the Caribbean have known it . The
case of Peru in 1968, elicited sharp retort from the Special Committee for
Latin American Coordination (CECLA ) , when they declared in the Consensus
of Viña del Mar , that " no state may apply or encourage economic and political
coercion to compel another state to grant it advantages of any kind ; on the con
trary, every effort must be made to avoid policies, actions and measures which
may endanger the economic and social development of another state . "
Chile has nationalized copper, its basic resource , which accounts for over
70 percent of its exports , Little regard has been given however to the fact that
the nationalization process, with all its implications and consequences , includ
ing the establishment and payment of indemnities, has been the clearest and
most categorical expression of the will of its people , and has been carried out
in full accord with a precise mandate of provisions established in the nation's
Constitution . Little regard has been given the fact that the foreign companies
which exploited the mines have drawn profits many times greater than the value
of their investments . These companies which amassed huge fortunes at our
expense, and assumed that they had the right to burden us indefinitely with their
presence and their abuse, have stirred up forces of every kind -- including
those of their own state institutions, in their country and elsewhere to at
tack and injure Chile and its economy.
I am unwilling to leave this unpleasant subject without singling out , among

the forms of pressure to which we have been subjected, two whose impact is in
violation of the principle of non - intervention .
One is designed to prevent Chile from obtaining new terms and new time
limits for the payment of its foreign debt, which constitutes virtual extortion .
I am sure our creditors will not countenance it . Friendly countries are not
likely to lend themselves to lowering still further the already low living stand
ard of our people .
The other type of pressure is designed , through a law on foreign aid

-16
adopted by one of the largest contributors to the World Bank and to the Inter
American Development Bank , to make those banks' financial assistance to
Chile conditional upon our applying policies which would infringe constitution
al principles governing the nationalization of copper . One of these two banks
is linked to the United Nations and the other to the Organization of American
States, whose official principles and objectives forbid them to accept such
terms as these .
If such policies were implemented they would deal a death blow to inter
national cooperation for development and would destroy the very basis of the
multilateral financing systems, to which many countries , in a cooperative
effort, contribute to the extent of their ability . Such policies imply the down
fall of concepts which embodied a sense of universal solidarity , and bring to
light the shameless reality of purely mercantile ulterior motives . This would
set history back a hundred years .
I would draw the attention of this meeting also to the urgent need of the
Third World to have access to modern science and technology . The obstacles
we have encountered heretofore are factors of our underdevelopment.
Industrialization , as an essential part of the overall development process,
is closely related to a country's scientific and technical creative capacity , with

a view to an industrialization process adjusted to the real characteristics of
each region , whatever its present stage of development .
Today , our capacity for the creation of technology is far from adequate,
as the result of an historic process of dependence . For example, our re
search projects are directed by scientists and technicians trained in accord
with the theoretical models of theindustrialized world . Their work is inspired
more by the real conditions and needs of the developed countries than by those
of their own , And with steadily increasing frequency , thousands of scientists
and professionals leave their native lands to work in the affluent countries. We
export ideas and skilled personnel, we import technology and dependence.
To find the solution for this basic problem whereby we could put an end
to technological subordination is a difficult , slow and costly process. We
are faced with two possibilities . On the one hand , we can continue to base
our industrial development on foreign investment and technology, intensifying
more and more the dependence which is threatening to recolonize us . Latin
America has enjoyed a long period of buoyant optimism based on the policy of
industrial development through import substitution . In other words, the in
stallation of factories for local production of what had formerly been imported,
an operation which was subsidized with costly benefits : exchange facilities,
customs protection , loans in local currency and government guarantees for
financing from abroad . Experience has shown that this type of industrializa
tion promoted mainly by international corporations has proved to be a
-17
new instrument of recolonization . Its harmful effects include the creation

of a technician -manager stratum which has grown increasingly influential,
and has become a defender of the foreign interest which it has identified with
its own . Still more serious have been the social effects . The big industrial
plants , which use sophisticated techniques, abosrb little manpower , give

rise to serious unemployment and underemployment problems, and result
in the bankruptcy of small- and medium - scale domestic industries . We
should also mention the tendency to concentrate on industries producing

consumer goods which are of use to only a thin stratum of privileged per
sons , and indirectly create conspicuous consumption patterns and values,
to the detriment of the values characteristic of our culture .
The other possibility consists in creating or strengthening our own

scientific and technological capacity , resorting in the meantime to a trans
fer of knowledge and methods decidedly supported by the international com
munity and prompted by a humanistic philosophy which sets up the human
being as its major objective .
At present, this transfer takes the form of trade in a merchandise

which appears under different guises : technical assistance, equipment,
raw materials , production processes , etc. This commerce is conducted on
certain explicit and implicit terms which are extremely unfavorable to the
buyer country, especially if it happens to be underdeveloped . Let us re
call that in 1968, Latin America disbursed over $ 500 million under the
heading of purchase of technology alone.
These conditions must disappear: costly royalties , overpricing, pro

hibitions on exports of manufactures or semi-manufactures, and all the
rest of the limiting clauses characteristic of these abusive sales contracts .
We must be able to select technology in relation to our own needs and our
own development plans.
In this problem , as in so many others, we must not forget the share

in the effort which we must contribute to its solution . But neither can we
ignore that whatever efforts are made by the developing countries, nothing
will be possible without radical change of attitude on the part of those hold
ing the monopoly of scientific knowledge .
What can be done in these circumstances ? The world as it is , with all
its injustice towards the underdeveloped countries, cannot be changed over

night. We have no choice but to continue the struggle to reduce the negative
effects of this state of affairs and lay the foundations for constructing what
I would call a stable world economy.
The present international conjuncture is favorable for endeavoring to

change the economic order. Perhaps this is an over -optimistic appraisal,
-18
but the truth is that international events in the last few decades have led to a
gradual accumulation of factors which have finally crystallized into a new op

portunity . The most striking feature is the possibility offered to the world
of dignified relations, free from submission and despotism alike . There is
understanding between the capitalist world powers ; there is coexistence and
dialogue between these and the socialist countries .
Could something similar happen between the former colonizing and im

perialist countries on the one hand , and the dependent peoples on the other ?
The future will tell whether we peoples of the Third World will conquer re
cognition for our rights through the restructuring of international trade and
the establishment of relations that are fair to each and all . This latter ques
tion , it must be emphasized , may be the more precarious and the more pain
ful.
It is for the delegations present at this Third Session of UNCTAD to ask

themselves on what foundations it would be possible to organize a firm new
form of human cooperation after the long protracted history of oppression
that we have suffered and still suffer . Let me say that, in my opinion , one
of the bases might be to orient disarmament in such a way as to
lay the foun
dation for a stable economy on a world - wide scale , although some believe
that this is beyond the realm of possibility .
For the socialist economies, the prospect of peaceful development is

their primary historical aspiration . Once peace has been established , they
will be able to play a more active role in multinational cooperation , and to
provide the world market with technical and productive resources which
would play a decisive role in their own prosperity and would make an effec
tive contribution to the success of the Third World in overcoming the deform
ing effects of centuries of exploitation ,
In view of the experience of recent years , I do not think that the capital
ist countries should seek to perpetuate such outmoded ideas as colonialism
and neocolonialism , and to persist in maintaining a war economy to assure
full employment. Only the Third World , with its immense needs, can con
stitute a new economic frontier for the developed countries. Only such a
new frontier is capable (more so than a war economy) of absorbing the pro
duction capacity of the large companies and giving employment opportunities
to the whole of the labor force. I should like to believe that enlightened
leaders, aware of the radical changes that lie ahead , are beginning to give
serious thought to new solutions, in which the Third World and the socialist
countries will participate fully .
It is essential to search seriously for an economically viable equation

between the vast needs of the poorer nations and the immense production
of the richer countries . The solution might be found in a peace -making
-19
strategy of pacification , through a disarmament plan which would assign a

high percentage of the expenditure heretofore destined to munitions and war
fare to a fund for homogeneous human development. This fund could be
available primarily for long - term loans to enterprises in the same countries
that set it up .
As the amount spent every year on war and armaments is nowadays con
siderably more than $ 220 billion , potential resources exist that would be more
than enough to start shaping a stable world economy.
The objectives pursued would be to turn a war economy back into a peace
economy and, concurrently , contribute to the development of the Third World .
The fund would finance major projects and programs for these countries of a
kind as would absorb the manpower threatened by the reduction of expenditure
on armaments ; would produce enough to cover their costs ; and , above all,
would be set up as autonomous national companies capable of sustained growth .
At the same time, they would launch a new era of continuing economic develop
ment; of full employment of the factors of production (including the whole of
the labor force ) ; and, above all , of progressive bridging of the gulf between
the prosperous peoples and the despoiled countries.
This is not a utopia . In the world of today , which must cooperate or
perish , new ideas prompted not only by justice but invariably by reason ,
may result in worthwhile solutions for the human race.
To the delegates here present, I would say that I wish them every suc
cess in their work . Chile will do all in its power to contribute to that end ,
employing all the facilities afforded it as host, to provide contacts and create
a climate favorable to understanding. Its delegates will not seek unnecessary
clashes of opinion , but fruitful agreement. Moreover , you cannot disappoint
the millions who hope that international cooperation will help establish a new
concept of man , and his economic and social rights : a new reality in inter
national relations.
The passionate fervor that an entire people has put into the construction
of this building is a symbol of the ardor with which Chile desires to contri
bute to the construction of a new humanity which will abolish need , poverty
and fear in this and other continents .
I dare to believe that this Conference will give positive answers to the
anguished questions of millions of people . Not in vain have the most dis
tinguished leaders in the field of economics from all over the world ( in
cluding those who have the most power to turn the course of events ) made
the long journey to this distant country .
One thing at least you can be certain of: as was stated in Lima, the
-20
peoples of the world will not allow " poverty and wealth to exist side by side ,
indefinitely . " They will not accept an international order which will perpe
tuate their underdevelopment. They will seek and will obtain economic in
dependence, and will overcome underdevelopment. Nothing can prevent it :
neither threats , nor corruption , nor force .
It depends upon the urgently necessary transformation of the world

economic structure, upon the conscience of countries , whether the progress
and liberation of the vast underdeveloped world will be able to choose the
path of cooperation -- based on solidarity , justice, and respect for human
rights or whether, on the contrary , they will be forced to take the path
of conflict , violence and pain , precisely in order to apply the principles of the
United Nations Charter .
* * *
GOVT PUBLS
*****************
READING ROOM GOVT PER
INDIANA UNIVERSITY
JUN y 1972
CORFO
GOVT PE
No. 97 June 5 , 1972
* ODEPLAN REPORT ON THE NATION'S ECONOMIC ACTIVITY

DURING THE FIRST THREE MONTHS OF 1972
PURCHASE AGREEMENT OF BOLIVIAN CRUDE OIL
COPPER NEWS
BRIEFS
ODEPLAN REPORT ON THE NATION'S ECONOMIC ACTIVITY DURING

THE FIRST THREE MONTHS OF 1972
According to a report issued by the National Planning Office (ODEPLAN ),

production has continued its upward swing during the first three months of
this year .
Copper production rose during the first three months of 1972 to 144 , 185
metric tons, a 2.3 percent increase over the same period last year. It also
marks a substantial increase over the first three -month periods during 1967
through 1971. Nitrate production registered a one percent rise at the three
largest nitrate deposits for the first three months of 1972. Iodine production
for the January - March period declined 30 percent over the same period last
year due to a fire last October that seriously damaged the Pedro de Valdivia
Iodine Plant. The plant has been operating since then at only 50 percent ca
pacity , seriously hampering production . Sodium sulfate production was off

5.5 percent in comparison to last year's first three -month period due, in
large measure, to the halting of the Maria Elena plant during March of this
year .
The volume of industrial production rose 20 percent during January 1972

over the same month last year. February saw a rise of 18.6 percent over
last February . Some branches of industry and their production increases
over the same period last year are as follows: beverages, 48.2 percent;
furniture, 43.4 percent; coal and oil by - products, 38 percent; the wood in
dustry, 36.6 percent. Others registered declining production figures . For
example , the construction of machinery and heavy equipment fell 60.8 per
cent .
According to the Sociedad de Fomento Fabril , a private manufacturers'

II XIIIIILI
-2
association , industrial production for January 1972 was up 21.7 percent

over January 1971. The manufacture of intermediate goods for construc
tion was up 33.5 percent as compared to January 1971. Semi-manufac
tured products for industry rose 29.3 percent; transportation materials ,
20.9 percent; consumer goods, 19.5 percent; and durable goods, 11.1
percent.
Electric power climbed 15.8 percent during the first two months of
the year over the same period last year, while crude oil production for
the same period rose 3. 1 percent . Coal production at Lota and Arauco
rose 17 percent for the January - February period .
Since its inception , the present Administration has initiated the in

corporation of 91 businesses into the state - owned or mixed economic sec
tor, a measure that will eliminate monopolies from Chilean industry . In
the banking industry to date , 18 banks have been acquired by the state ,
and work has begun on giving the national banking system a new functional
structure .
The agrarian reform continues . Eight hundred seven estates, with

over one million hectares , were expropriated during the January - March
1972 period. According to reports released by the National Institute of
Statistics the total amount of land under cultivation rose by 2.6 percent
between 1971 and 1972 , for a total of 1 , 294 , 740 hectares. To extend the
area of cultivated land during 1973 the Administration is importing 10,000

tractors with which it expects to open up an additional 200 , 000 hectares of
farm land and increase production of cereals .
Poultry production registered a 30 percent increase during the first

three months of 1972 over the same period the previous year. Agricultural
credits granted small- and medium - sized farmers by the State Bank of
Chile rose from 230 million E ° in January - February 1971 to 811 million E °
during the samemonths in 1972 ; a 252 percent jump. Fertilizer sales rose
by 20.8 percent during the same period .
Since January the use of Soviet fishing vessels on loan to Chile has
been felt in a noticeable increase of hake available to the public . The
refrigerated ships can handle larger catches, keeping them frozen until
they reach port. The Administration is purchasing refrigerated trucks
and refrigeration counters for stores to handle frozen sea food products .
This is being done to improve the quantity of protein foods and to reduce
the need to import meat from abroad .
-4
Nacional de Petroleos (ENAP ) have signed a tentative agreement for the

sale of approximately 5,000 barrels per day of Bolivian crude oil to
Chile during 1972 and 1973. This amount could double by 1974 .
Chile has been a steady purchaser of Bolivian crude oil since 1971
although on the basis of short- term , generally three -month deals . The
present long- range agreement is the result of lengthy negotiations. Chile
is a logical customer for oil from neighboring Bolivia , The quality of
the oil from the Santa Cruz oil fields makes it possible to transport it
via back haul freight in vessels that carry so - called clean products from
Bolivian refineries to port cities in northern Chile .
COPPER NEWS
Chile's five major copper producing plants turned out a total of

48, 109 metric tons during the month of April 1971, according to a report
issued by the Chilean Copper Corporation (CODELCO ) .
During the first four months of this year , the five installations realized
92.1 percent of their expansion program . The output of the Teniente mine
during that period amounted to 65, 441 metric tons , 98. 7 percent of its pro
gramed goal, while April's production figures hit 17, 349.8 metric tons,
the highest figure in the last 20 months and the second highest monthly
figure ever .
For the four -month January - April period, El Salvador produced

29, 304.5 metric tons, 99, 1 percent of its programed target . April out
put alone amounted to 7,634 . 7 metric tons , 600 tons above target .
The Chilean Government will invest approximately US $ 57 million

in a project to develop its copper industry . The project was drawn up and
will be implemented by the CORFO and CODELCO development committees .
It is aimed at increasing industrialization of the copper industry, opening up
new sources of employment, increasing technology in national development,
and raising the volume of manufactured goods for export.
* Joint research for improved methods of copper extraction and in

creased production are being carried out by Chilean and Soviet experts at
the Chuquicamata , Salvador and Exotica mines in line with an agreement
signed between CODELCO and the Soviet Union last year .
The Chuquicamata molybdenum plant produced 1 , 800 lbs. of the

-3
During January - February 1971, the Chilean State Railways handled

597 million passenger - kilometers, while during the same two -month
period this year the figure rose to 823 million ; a 37 percent increase .
This rise is due in part to a new policy adopted by Chilean State Rail
ways for optimal use of facilities . The policy of improving and expand
ing service is reflected also in plans for the purchase of an additional
3,600 railway cars and 26
Japanese locomotives by 1976 (See EN No. 93).
The volume of cargo transported has also risen , although to a smaller
degree (4. 1 percent), and was slightly less than Chilean State Railways
had anticipated .
Truck transport rose 14 percent during the January - February period

as the result of greater economic activity . And public transportation in
major cities rose 40.9 percent in early 1972 . To handle the ever - growing
demand for good public transportation the Administration has acquired

3 , 000 buses, mini- buses and taxis which will help alleviate bottlenecks .
The Empresa Portuaria de Chile (EMPORCHI) began work on the con

struction of 16 new cranes which will modernize and speed up work at the
port of Valparaíso. During January through March the Pudahuel International
Airport facilities were expanded .
In the field of education , school enrollment figures rose sharply with

19.4 percent more children in pre - school centers and kindergarten ; 5.3
percent in primary school; and 15.2 percent in middle schools . Another
impressive figure is the 13. 8 percent rise in the number of students at
technical and professional schools .
Serious attention has been given the task of improving the quality of
medical attention through administrative measures and better use of both
facilities and human resources . The Government has negotiated a line of
credit from Brazil for the purchase of 400 standard ambulances, fifty more
equipped with special four -wheel drive and 100 carry - alls for use in more
inaccesible areas .
The number of people employed is the highest in 15 years . The cost

of living index registered a 13.4 percent increase, surpassing the rate of
inflation for 1971 , but still lower than that of 1970 or 1969. Private
savings accounts rose by 76 percent over the 1971 figure .
PURCHASE AGREEMENT OF BOLIVIAN CRUDE OIL
Yacimientos Petroliferos Fiscales of Bolivia and Chile's Empresa
-
-5
product during last March , setting a monthly record and adding to the
rising production figures registered last year .
CODELCO has announced that by the middle of next year a new

plant for the extraction of molybdenum , rhenium and other precious
metals will be in operation . The plant, which will cost an estimated
$ 2,6 million , will be located in the Rio Blanco region , northeast of
Santiago .
Thirty 120 - ton trucks have been acquired by CODELCO to help

speed up the removal of waste materials , which amount to approximately
35 million tons annually , from the Chuquicamata mine. The trucks have
been purchased from Japan , Canada and Australia .
BRIEFS
In a recent report, the Economic Commission for Latin America

(CEPAL ) pointed out that during 1971 Chile and Brazil registered the
greatest rates of growth of any other Latin American nations . The report
pointed out that the growth of Chile's GNP was 8. 5 percent .
** Chile's first fishing vessels destined for export were completed

recently at the Martec Shipyards in Coquimbo . The shipyard was recent
ly reactivated with CORFO's financial assistance . The vessels that have
been launched are being acquired by a Brazilian firm .
** The Ministry of Agriculture has announced plans to import 500,000

tons of skimmed milk , butter and cheese to be used in the schools . The
milk and milk products will be purchased from New Zealand with a US $ 18
million line of credit from that nation .
The Hereford Livestock Breeder's Association of Chile has been
accepted into the World Council of Hereford Breeders, bringing the total
number of member -nations to sixteen .
The Executive Vice - President of CORFO has been authorized to
negotiate a loan for 6 , 480, 000 Dutch florins or its equivalent in other
foreign currency with the Netherlands Investment Bank for Developing
Countries . The credit will be amortized over a 15 - year period from the
date of the signing , with a 3 - year grace period . The rate of interest will
not exceed 6.5 percent annually on the unpaid balance . The credit will
be used to maintain a livestock and dairy development program .
-6
** CORFO recently purchased 61 percent interest in the Interoceanic

Shipping Company , bringing this firm into the social or state - owned sector
of the national economy. It was further agreed to set up a mixed company
composed of Interoceanic and ENAP to transport natural gas by - products ,
A proposal put forth by France during the last session of the re

cent UNCTAD Conference congratulating Chile , was approved by acclama
tion ,
The resolution reads, in part: " In recognition of the administrative

efficiency , and the thoroughness of the preparations, the beauty and func
tionality of the Conference Center, and the warm reception that has greeted
all the delegations, we wish to congratulate the Government and the people
of Chile who have worked so hard on the preparations and organization of
this conference, and for the thoroughness that has crowned their efforts ;
we wish to express our gratitude for the generous hospitality and friendli
ness extended us by all sectors of the population ; and we wish to request
that the President of the Conference extend our profound gratitude to the
President of Chile , requesting that he transmit this to the Chilean people . "
VI PI ? GOVI PUOLS
READING ROOM
CORFO
No 98 July 17 , 1972
* FIRST PAYMENT ON RENEGOTIATED DEBT TO U.S. BANKS

* FRUIT EXPORTS TO UNITED STATES UP
* FOREIGN CREDITS
* EXPORTS
* INDUSTRIAL PRODUCTION
* CHILE - COLOMBIA ISSUE JOINT STATEMENT
* VIEXPO 172
* COPPER TO HUNGARY
FIRST PAYMENT ON RENEGOTIATED DEBT TO U.S. BANKS
On June 15 , 1972 , the Central Bank of Chile made the first payment
in the amount of a little over $ 3.5 million on the promisory notes acquired
by U.S. banks in connection with the renegotiation of Chile's debt to them ,
concluded on June 12 , 1972. As will be recalled , the Central Bank signed
promisory notes to a group of American banks which granted the credit fa
cilities necessary to refinance Chile's old debts to them ,
FRUIT EXPORTS TO UNITED STATES UP
Higher prices and greater volume for Chilean fruit exports to the
United States and Canadian markets for the 1971-1972 season were re
ported by a Chilean commission which recently visit ed the United States
to study, supervise and expedite Chilean fruit exports. The commission's
preliminary report analyzes the general progress of the season's sales
over last year's . More convenient market procedures permitted sales
directly to 85 % of the U.S. and Canadian buyers, with only 15 % being sold
at auction ,
The report recognized the need for improvement in several areas in

the United States as well as in Chile , and offered recommendations designed
to promote greater volume on the U.S. - Canadian market in the future , as
well as higher prices to Chilean producers.
Chilean fruit exports have grown steadily in recent year 8 ** According

TY
to a study made by the Central Bank, the average growth rate between 1961
SEP 7 1972
LIBRARY
******************
-2
and 1970 was 8. 3 % annually . Major fruit exports included fresh apples
and grapes, walnuts , melons, and dried prunes , 75 % of which were ship
ped to the United States, Peru , Brazil, Argentina , the German Federal
Republic and Great Britain .
FOREIGN CREDITS
** The German Federal Republic granted a $ 12,000, 000 loan to the

Central Bank of Chile to refinance some pending obligations of Chilean
firms with German creditors . This credit can be drawn against until 31
December 1972 .
** The People's Republic of China granted Chile a 20,000, 000 L

sterling interest- free loan with a ten - year moratorium on repayment. The
loan will be repaid in ten annual installments between 1982 and 1992. China
further granted Chile a second interest - free loan for 5.2 million L during
1972 for the purchase of foodstuffs from China . And trade agreements be
tween the two countries have been signed for the sale to China of 65 , 000 met
ric tons of copper; 60 , 000 metric tons of nitrate ; 300 tons of iodine; and
$ 650,000 worth of manufactured copper .
**
Bulgaria is making $ 20,000 , 000 available to Chile in foreign credits
to finance Chile's acquisition of several factories including a modern poultry
complex .
EXPORTS
Chilean exports for the January - April 1972 period dropped 5. 9 % in re

lation to the sameperiod in 1971. Exports for the same four -month period
during this year were $ 181, 555 , 605.55 in comparison to $ 192 , 933, 077.16
during 1971.
INDUSTRIAL PRODUCTION
Production in manufacturing industries rose during the January -April

1971 period over the same period during the previous year . The National
Institute of Statistics places this increase at 16.3 % , whereas the Manufac
turers' Development Association ( a private organization ) places the in
crease at 16.8% . Comparing the month of April 1972 with the previous
April, the National Institute registers a 17. 1 % rise.
The National Institute's breakdown of production by industrial sector

reads as follows :
-3
BREAKDOWN OF PRODUCTION
BY INDUSTRIAL GROUPS
(Base: Average 1969 equals 100 )
Group Value % Increase % Increase

Added April 1972 Jan , - April
over April 1972 over
1971 Jan. - April
1971
A. Non - Durable Consumer 44.8 10. 2 13.1

Goods
B. Durable Consumer Goods 7.0 13.7 5.0
c . Transportation Goods 6.2 57.4 22.4
D. Intermediate Industrial 21.0 18.6 26.7
Products
E. Intermediate Construction 12.5 17.4 18.0
Products
F. Other Manufactured 8.5 23. 2 16.5
Articles
INDUSTRIAL TOTALS : 100.0 17.1 16.8
BREAKDOWN OF PHYSICAL SALES OF

INDUSTRIAL PRODUCTS BY GROUP
(Base : Average 1969 equals 100 )
Group Value % Increase % Increase

Added April 1972 Jan. - April
over April 1972 over
1971 Jan. -April
1971
A. Non -Durable Consumer 44. 8 6.7 10.0

Goods
B. Durable Consumer 7.0 0.8 0.9
Goods
C. 6.2 11.7
Transportation Goods 16.7
D. Intermediate Industrial 21.0 18. 5 24.0
Products
E. Intermediate Construction 12.5 1.9 13.5
Products
F. Various Manufactured 8.5 24. 1 17.1
Articles
-4
INDUSTRIAL TOTALS : 100.0 9.6 13. 1
CHILE - COLOMBIA ISSUE JOINT STATEMENT
A joint statement released by the Foreign Ministers of Colombia and

Chile , during the former's visit to Chile to attend the meeting of the
Colombia - Chile Mixed Commission , stressed that trade between these
two nations (with the exception of petroleum ) rose on the order of 100 %
during 1971 over the previous year . Trade rose from $ 12.4 million in
1970 to $ 24 . 4 million last year .
The statement further pointed out that trade between the two countries
still has a vast potential. A $ 10,000,000 credit made available to Chile by
a group of Colombian banks can be increased according to the pattern of
trade that develops . Both governments foresee the formation of binational
mixed enterprises under the articles of the Cartagena Agreements in fields
such as heavy machinery , steel , etc.
The statement added that both governments have decided to promote

the creation of a multinational Andean arts and crafts company. It further
stated that good progress was being made toward cooperation between the
automotive industries in both countries.
It was reported recently that Sociedad Colombiana de Fabricaciones

Mecánicas (SOCOFAM ) will begin production soon on Renault automobile
engines. SOCOFAM also expects to sign a commercial agreement with
Chile for the purchase of gear boxes manufactured in Chile .
VIEXPO '72
The Ministry of Housing and Urban Affairs announced that forty nations
will participate in VIEXPO '72 (an international housing exposition ) scheduled
to take place in Santiago next September .
COPPER TO HUNGARY
Hungary has signed a contract with the Corporación de Cobre (CODELCO

the Chilean Copper Company ) for the purchase of 4 , 000 metric tons of blister
copper per year for the next three years. The first shipment is scheduled for
some time this month . The value of the contract is approximately $ 12,000,000.
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Chile Economic Notes

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Chile Economic Notes

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) ‫ترا‬ UNIVE I VERITAS

MDCCCXt INDIANENSI SIGIL EMDCCCXX

Chile Economic Notes

No. 71 Jan. 11 , 1971

CONSTITUTIONAL REFORM PROJECT

President Salvador Allende sent to Congress a project of constitu

During a recent public speech , President Allende spoke at length

American companies or the American people . The President also stated

The constitutional reform bill sent to Congress will follow theusual

Issued by CORFO Corporación de Fomento de la Producción

parliamentary procedures, requiring approval independently by both cham

INTERAMERICAN AGRICULTURAL SCIENCE INSTITUTE

The Instituto Interamericano de Ciencias Agricolas , Interamerican

The Director of the organization explained what has been achieved

agrarian reforms carried out by IIC A representatives to assess and imple

In 1969, for example, 42 different projects were carried out by a

There was also an exchange program that enabled 20 Chilean professors

Some of the technical training programs include higher education

of agricultural and forestry sciences ,

Research activities involve study by experts of several countries

The Institute concentrates its work towards rural development on

searches agrarian reforms.

AUTOMOTIVE MANUFACTURING REORGANIZATION

The Chilean Auto Commission announced that an internationalbid

mobile manufacture in Chile . A total of three plants are projected to be

opened to handle the production of three types of vehicles : small with up to

The decision to limit the number of auto manufacturers was mot

There are now 11 auto factories operating in Chile . Those that

Contracts will be awarded on the basis of best prices, equipment,

ANDEAN PACT BUDGET

The Commission of the Agreement of Cartagena advanced rapidly

The delegates also approved procedures for the coordination of the

TWENTYFIFTH ANNIVERSARY OF THE DISCOVERY OF OIL

December 29th marked the twentyfifth anniversary of the discov

event ended two years of intensive work by Corfo following a government

By 1949 all the necessary equipment was installed and drilling

The success of Corfo in this endeavor prompted the government to

continue the work of exploring and exploiting Chile's oil resources.

** A project for the creation of a Ministry of Marine Affairs will be

The purpose of the new Ministry would be to develop fully the

** With the pavement of the 40km . from Huara to Alto Chusmiza in

Latin American integration , social as well as economic, depends

Chile Economic Notes

No. 72 Jan. 18 , 1971

* MINING EXPLORATION IN LOS PELAMBRES

MINING EXPLORATION IN LOS PELAMBRES

The United Nations - ENAMI mining project's preliminary studies

During the past two summers geochemical and geophysical surveys

Since the results of these explorations were so promising, a new

CATTLE TO BE PURCHASED FROM HOLLAND

The Chilean sugar company , Industria Azucarera Nacional, S.A. ,

Issued by CORFO Corporación de Fomento dela Producción LIDARY*

The 1, 000 imported cattle will be sold by IANSA to sugar beet

farmers in the Chilean provinces of Ñuble and Llanquihue.

FIXED PRICES FOR SMALL MINING COMPANIES

ENAMI is also planning the creation of regional Mining Councils in

ANDEAN PACT POLICY DECIDED

Delegates from the five member countries of the Andean Subregion

The foreign investment procedures, which will become effective in

radio and television , newspapers, magazines, as well as companies dedi

Stocks controlled by national investors can be bought by foreigners

are meant to protect the development of subregional technology . Contracts