A stable institutional framework has provided the foundations for growth and confidence of international markets. While a comprehensive social agenda is putting pressure on resources under the recent economic slowdown, the Chilean government has maintained a sound fiscal and monetary stance, building on its unique institutional framework based on the freedom of choice. Chile is a small open economy, for which international competitiveness is the cornerstone for sustainable growth. It needs to preserve a sound macroeconomic framework avoiding distortions that may produce excessive real exchange rate appreciation, which could hinder the incentives to invest and expand employment in the tradable sector. The deepening of financial intermediation and development of risk capital are needed to support the emergence of new and more innovative firms. A better functioning of the labour market is critical to the development of the enterprise sector, particularly increased female labour participation is desirable, and investment in human capital, especially education and workers' training, is needed to develop products with a higher technological content. The administrative conditions and regulation of product markets should also be improved. Chile is now in a position to emulate and converge towards the more advanced benchmark of OECD countries.[OECD].
