A Chile Reception
Check your ginormous southern
exposure for a potentially profitable market.
A ginormous thing happened last year that got little notice.
It was the election of Michelle Bachelet, the first woman
president of Chile and only the second woman president in the
history of South America. Last year Forbes ranked her 17th in a
list of the 100 most powerful women in the world.
I learned of President Bachelet at a dinner party shortly
after her election in March 2006. One of the guests was Chilean
by birth but hadn’t lived in the country for more than 20
years. When asked what he thought of a woman president, he
smiled and said, “I know her and she’s a very, very
As it turns out, he was more than a close family friend.
When Augusto Pincochet’s coup ousted Salvador
Allende’s government in 1973, our dinner companion and
Air Force Brigadier General Alberto Bachelet Martinez were
imprisoned together on charges of treason for supporting
Allende’s government. The General died in prison of a
heart attack. Our dinner companion was eventually released and
exiled to the United States. The general, of course, was
Michelle Bachelet’s father. Our dinner guest and his wife
have now returned permanently to Chile to live.
It’s a good story with a touch of poetic justice, but
I was curious to know more about what kind of leader President
Bachelet would be. Chile isn’t a large market, but it is
still an important one in the region.
In a 2006 report on competitiveness, the World Economic
Forum ranked Chile 27th in the world—and the highest in
Latin America and the Caribbean. The report notes that Chile
has high levels of transparency and openness rivaling some EU
countries. Its efficient market and supportive government
coupled with good macroeconomic policy have created an
environment ripe for rapid growth and sustainable efforts to
reduce poverty. The U.S. is Chile’s largest trading
Who President Bachelet is and what actions she takes are
important to brokers and their clients operating in the
country. The McKinsey Quarterly recently interviewed President
Bachelet, and her responses to key questions provide some
insight into what makes her tick.
A moderate socialist, Michelle Bachelet campaigned on a
platform of continuing Chile’s free-market policies,
while increasing social benefits to help reduce the gap between
the rich and poor. She is a medical doctor by training and
studied military strategy. She also served as health minister
and defense minister under President Ricardo Lagos.
Just a year into her term as president, Chile’s economic
outlook is good, but she faces some real challenges and
pressure is building for social change.
In her McKinsey interview, President Bachelet believes Latin
America is facing an important time. Democracy has taken root,
and all 12 elections in the past year have been democratic. At
the same time, economic and social indicators are improving.
However, social reform in some countries is lagging behind
“The problem has not been with open economies per se
but rather the lack of action in addressing poverty and social
injustice,” she told McKinsey. Her vision is for Chile to
be regarded “as a modern society with a modern system of
social protection and an open economy” and to be “a
player on the world stage”—but not to throw its
weight around, she was quick to add.
To make her vision a reality, President Bachelet says equal
opportunities from the beginning are essential, and education
is the main issue. “This is not a matter of social
justice; education is a vital economic agent.” Chile has
a shortage of people with technical qualifications, and
education is fundamental in attracting foreign investment, she
She said her government is not looking to take private more
government-owned companies because they are functioning well.
She does want to improve corporate governance in public
professionalism and the value they add for their owners, the
people of Chile,” she told McKinsey.
She also feels that public-private partnerships are key to
public works projects, such as building and improving roads,
ports and airports. Financial concessions to private companies
are an important incentive.