POLICY ROADMAP

Economic growth has slowed in Chile, with real GDP expected to fall by 1% in 2023 after two years of strong recovery from the pandemic. The unemployment rate widened to 8% and inflation reached 12% in September 2023. This marks this highest inflation rate of the past 28 years.

High inflation continues to adversely impact Chilean entrepreneurs, squeezed between rising costs and declining consumer spending. In the period January– September 2023, bankruptcies in Chile were up by 18%.

CORFO, the Chilean Economic Development Agency, in partnership with Banco Estado, announced new support mechanisms to enable entrepreneurs to access growth finance more easily and at a lower cost.

2023 Framework Conditions Review1

The overall quality of the Chilean entrepreneurial environment, as assessed by its own national experts and summed up in the National Entrepreneurial Context Index (NECI), has been reasonably stable in recent years, dipping slightly in the pandemic and then recovering. The country’s 2023 NECI score of 4.6 is slightly up from 2022 (4.5), and matches pre-pandemic levels.

Chile’s 2023 Entrepreneurial Framework Condition (EFC) scores were little changed from 2022, with
eight of 13 increasing and five declining. The largest increases were for Entrepreneurial Finance and for Government Policy: Support and Relevance, while the largest fall was for Commercial and Professional Infrastructure. As in many economies, Entrepreneurial Education at School continues to have the lowest expert quality rating, some margin behind the other EFCs.

National experts rated the social support for women entrepreneurs at 3.4, much less than sufficient and mid-ranking among the GEM economies (29th). Women entrepreneurs’ access to resources, compared to that of men, scored much better, both absolutely and relatively, with a score of 5.3 and a GEM rank of 15th (among 49 economies).

2023 Entrepreneurial Activity Review

Recent Global Reports have pointed to the Latin America & Caribbean region as an emerging global hotspot for entrepreneurial activity, with Chile playing a prominent role. GEM Adult Population Survey (APS) results for 2023 confirm this trend, with Guatemala, Ecuador, Chile and Panama having the four highest levels of Total early-stage Entrepreneurial Activity (TEA). Chile’s rate of just over three in 10 adults starting or running a new business was its highest since before the pandemic, and the third highest in GEM 2023. Levels of new entrepreneurial activity were higher for Chilean men than women, but the difference was small.

Levels of Established Business Ownership were much lower, at 5%, implying six adults started a new business for every adult owning an established one. This suggests there are serious obstacles to sustaining a new business long enough for it to become established. It may be that the entrepreneurial environment makes it much easier to start a new business than to continue an existing one.

Entrepreneurial activity is very visible in Chile. Seven out of 10 adults know someone who has recently started a business (the third highest level in GEM) and an even higher proportion believe they have the skills and experience to start a business (second highest). This confidence is reflected in a relatively low fear of failure, with just two in five of those seeing good opportunities reporting that fear of failure would prevent them from starting a business. More than one in two adults in Chile intend to start a business in the next three years.

The most popular agreed motivation among new entrepreneurs was to earn a living because jobs are scarce. Three out of four new entrepreneurs expected to use more digital technology in the next six months. Just one in 20 of them had customers beyond Chile. Despite this, one in three new entrepreneurs anticipate employing at least another six people within the next five years.

1 A brief description of the GEM approach is given in the GEM Global Report footnote on p. 107.